Scissors prices - what is it? Price Scissors of 1923: causes, essence and ways out

The economy of the Soviet Union experienced many difficult periods, which led to both positive results and negative ones. For example, at the time of the new economic policy, such a notion as price scissors appeared. Its essence lies in the imbalance of pricing between the output of the industrial sector and the agrarian sector. Let's take a closer look at what the essence of this term is and what are the reasons for its appearance, and also what are the ways out of this situation.

What does it mean?

Everyone who has studied economics and international economic development is familiar with the expression "price scissors". What it is? In general, this term means the difference in prices for different groups of goods in markets of international importance. The runaway in value is due to the fact that there are different economic benefits that are obtained from the release and sale of certain goods. Despite the fact that it is impossible to compare the prices of different sorts of goods, there is an opinion that the price for manufactured goods is much more profitable for the seller than for fuel and raw materials. Often the scissors of prices explain the unjustified exchange of goods between rural areas and cities, as well as between economically developed and developing powers.

The appearance of the term in the USSR

Under the Soviet Union, the term "price scissors" was introduced by Lev Davidovich Trotsky specifically to characterize the situation prevailing at that time with prices for industrial and agricultural goods. The crisis of sales, which had already become apparent in the autumn of 1923, showed that the population did not have the opportunity to purchase industrial products of dubious quality. Although it is just zatarivali people, to quickly sell the product and make a profit. All this was done with a view to bringing the industry to a new level and at the same time raising 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 around the world.

The Essence of the Crisis of 1923

In the distant 1923, industrial products began to be sold at an inflated price, despite the fact that the quality left much to be desired. So, in October of 23rd year of the last century prices for manufactured goods amounted to more than 270 percent of the established value for the same products in 1913. Simultaneously with this huge increase in prices for agricultural products increased by only 89 percent. This phenomenon of imbalance Trotsky appropriated a new term - "price scissors". The situation turned out to be unpredictable, as the state faced a real threat - another food crisis. Peasants were not profitable to sell their goods in large quantities. Sold only the volume that allowed you to pay taxes. In addition, the authorities increased the market price of grain, although the purchase price for purchasing grain in the villages remained in place and sometimes declined.

Causes of crisis phenomena

To understand such a phenomenon as the "price scissors" of 1923, the reasons, the essence of the crisis that has erupted, it is necessary to study its prerequisites in more detail. In the Soviet Union during the period described, the process of industrialization began, in particular agriculture. In addition, the country was at the stage of the initial accumulation of capital, and the main share of the total national income fell precisely on the agrarian sector. And in order to increase the level of industrial production, funds were needed that were "pumped out" from agriculture.

In other words, there was a redistribution of the financial flow, and the price scissors at this time just expanded. There was a tendency of price movement for products sold by agrarian business executives on the one hand, and on goods that they themselves bought from industrialists for a particular consumption - on the other.

Solutions

The authorities did their best to solve the problems in the economy, which led to price scissors (1923). The reasons and ways out, which the Soviet government proposed, included several points. First, it was decided to reduce costs in the industrial production sector. This has been achieved in several ways, the most important of which are staff reduction, optimization of the production process, control of the wages of workers in the industrial sector, and the diminishing role of intermediaries. The last moment was achieved through the creation of a large network of consumer cooperation. How was it useful? Its main tasks were to reduce the cost of manufactured goods for ordinary consumers, to simplify the supply of markets, and to accelerate trade.

Efforts

All anti-crisis actions of the government led to a positive result: literally a year later, namely in April 1924, prices for agricultural goods rose slightly, and industrial output fell to 130 percent. The price scissors of 1923 lost their strength (that is, narrowed), and balanced pricing began in both areas. In particular, a positive impact was placed on industrial production. Compared with the past years, when the agricultural sector was the most important financial source in the country, the industry grew into an independent source of accumulation. This made it possible to narrow the price scissors, thereby increasing the purchase price for agricultural products.

Price scissors in Western countries

Not only in the USSR, but also in countries of Western Europe and the United States used price scissors. This phenomenon largely contributed to the exclusion from production of small farms. For example, after World War II, in some capitalist countries (Great Britain, France, the United States, and others), large commercial, financial and industrial capital gradually penetrated the agricultural sphere. Began to create agrarian-industrial associations, in the work of which it was decided to apply the latest scientific and technical developments. In addition, the agrarians were subjected to strict state control and regulation. All this led to the fact that small farms, many of which were a family business, simply could not stand competition and went bankrupt. These small farms, despite state support, did not have the opportunity to purchase expensive agricultural equipment produced by industrial monopolies.

Thus, farmers had to choose: either to become fully subordinate to influential industrial organizations and lose their independence, or to abandon agriculture altogether. At the same time, large farms, thanks to the formation of the agro-industrial complex, rebuilt and acquired features similar to modern corporations. Such kind of farm-factories due to price scissors found themselves in the usual competitive struggle for the buyer.