The economy of the Soviet Union went through many difficult periods that led to both positive and negative results. For example, at the time of the new economic policy, such a thing as price scissors appeared. Its essence lies in the imbalance of pricing between the products of the industrial sector and the agricultural. Let's take a closer look at what the essence of this term is and what are the reasons for its appearance, as well as what are the ways out of this situation.
What does it mean?
Everyone who has studied economics and international economic development knows the expression “price scissors”. What it is? In general, this term means the difference in prices for different groups of goods in international markets. The difference in value is due to the fact that there are different economic benefits that are obtained from the production and sale of certain goods. Despite the fact that it is impossible to compare prices for assorted goods, there is an opinion that the price of manufactured products is much more profitable for the seller than for fuel and raw materials. Often, price scissors explain the unjustified exchange of goods between the countryside and cities, as well as between economically developed and developing powers.
The emergence of the term in the USSR
Under the Soviet Union, the term “price scissors” was specifically introduced by Leonid Trotsky to describe the situation at that time with prices for industrial and agricultural goods. The sales crisis, which became already apparent in the fall of 1923, showed that the population was not able to purchase industrial products of dubious quality. Although it was just crowded with people to quickly sell goods and make a profit. All this was done in order to bring industry to a new level and at the same time raise the rating of the state as a whole. According to economists, this method does not always bring positive results, but it takes place in many countries of the world.
The essence of the crisis of 1923
Back in 1923, industrial products began to be sold at inflated prices, despite the fact that the quality left much to be desired. So, in October of the 23rd year of the last century, prices for manufactured goods amounted to more than 270 percent of the installed value for the same products in 1913. Simultaneously with this tremendous rise in prices, prices for agricultural products increased by only 89 percent. Trotsky appropriated a new term for this imbalance phenomenon - “price scissors”. The situation turned out to be unpredictable, as the state faced a real threat - another food crisis. It was unprofitable for peasants to sell their goods in large quantities. They only sold the amount that allowed them to pay taxes. In addition, the authorities raised the market price of grain, although the purchase price for the purchase of grain in the villages remained in place and sometimes decreased.
Causes of Crisis
To understand the phenomenon of “price scissors” of 1923, the reasons, the essence of the crisis that has arisen, it is necessary to study its premises in more detail. In the Soviet Union, the process of industrialization, in particular agriculture, began in the period described. In addition, the country was at the stage of initial capital accumulation, and the main share of the total national income came from the agricultural sector. And in order to raise the level of industrial production, funds were needed that were "pumped out" of agriculture.
In other words, there was a redistribution of financial flow, and the price scissors at this time just expanded. There was a trend in the movement of prices for products sold by agrarian business executives on the one hand, and for goods bought by them from industrialists for one or another consumption, on the other.
Solutions
The authorities made every effort to solve the problems in the economy that the price scissors led to (1923). The reasons and solutions proposed by the Soviet government included several points. At first it was decided to reduce costs in the industrial production sector. This was achieved in several ways, the most important of which are the reduction of the staff, optimization of the production process, control of the wages of industrial sector employees, and a decrease in the role of intermediaries. The last moment was achieved through the creation of a large network of consumer cooperation. How was she useful? Its main tasks were to reduce the cost of manufactured goods for ordinary consumers, to simplify the supply of markets, and also to accelerate commodity circulation.
Effort Results
All anti-crisis actions of the government led to a positive result: literally a year later, namely in April 1924, prices for agricultural products rose slightly, and industrial products fell to 130 percent. The price scissors of 1923 lost their strength (that is, narrowed), and balanced pricing began to be observed in both areas. In particular, a positive impact was exerted on industrial production. Compared with previous years, when the agricultural sector was the most important financial source in the country, industry grew into an independent source of accumulation. This made it possible to narrow the price scissors, thereby increasing the purchase price of agricultural products.
