Expansion in the Soviet

For the free-enterprise countries of the West, the U.N.'s Economic Commission for Europe had some surprising news. The Russians, said the commission in a report issued last week, are putting more of their national income into capital investments than the capitalist nations themselves.

The boom in Western Europe has lifted living standards all over the Continent, says ECE, but few Western nations have taken advantage of prosperity to step up their capital investments, and thereby boost production. Russia and her satellites, on the other hand, are investing about 25% of their national income in new factories, new machine tools, bigger inventories and more defense equipment. By ECE's rough comparison, Italy. Austria, The Netherlands and West Germany put only 10-15% of their income into expanding the economy. France spent only 8% of its income for new production, and at the bottom of the list is the United Kingdom, which invests only 6% of its income.

"Virtually all governments of Western Europe are committed, in principle, to the need for a high rate of investment," says ECE. But in trying to keep the boom from getting out of hand, many a government has resorted to high taxes, to price and currency controls that have actually restricted investment. All, says ECE, should attract more private investors into stock ownership, revise taxes and depreciation allowances to hike returns on risk capital.

Like good capitalists, the present Russian government knows that "economic growth must be continuous," says ECE. "It instructs planners to plan so as both to increase real wages now and to lay the foundations of potential future rises in real wages." Result: in the last five years Russia invested 740 billion rubles in industry, transport and agriculture (v. 765 billion rubles in the 20 years covered by the first four Five-Year Plans), thus boosted its industrial capacity about 10% yearly.

Not only has Russia passed many a European nation in capital investment, says ECE, in some industries its rate of expansion is actually faster than the rate in the U.S. By 1960 the Soviet Union will be producing 68 million tons of steel yearly. Though only about half the U.S. output in 1955, the Russian production will then be nearly 2 1/2 times its 1955 level.

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