Political Economy of Failure: Mothballing Industrial Construction Projects in the USSR during the Industrialization Era (with Reference to the Bakal Metallurgical Combine)

This article examines the reasons and mechanics behind the mothballing of industrial construction in the USSR during the industrialization era referring to the materials on the construction of the Bakal Metallurgical Combine in Chelyabinsk. The main reason is said to have been the discrepancy between the economic interests of the top party leadership of the USSR, which wanted to meet the planned indicators for ferrous metallurgy production that had increased in 1930 by creating a large metallurgical plant in the Urals, and the Main Directorate of the Metallurgical Industry of the Supreme Council of the National Economy of the USSR (since 1932 — the People’s Commissariat of Heavy Industry of the USSR), which was aware of the isolation of the gigantic construction from the real growth potential of the branch. It is concluded that the branch administration treated the directives of the political centre formally, striving to make the results of the construction of the plant reversible and thus avoid wasting scarce resources. This was what could be called political economy of failure — a strategy of reducing costs while being unable to influence investment decisions, which allowed for the sacrifice of formally started construction projects immediately after the start of work in order to redistribute resources in favour of projects closest to completion. Since the possibilities of forcing economic agents to implement construction projects were limited, it should be noted that, in fact, the central directives regarding the construction of the Bakal Combine were advisory in nature. However, even the suspended construction had tangible material consequences in the form of a large barrack settlement, access roads, and other communications. Emotional investments were also important, forcing the Bakal project to be recalled in the public sphere, despite the absence of real work on its construction site. The combination of these consequences created the opportunity to complete the project in the early 1940s, when the priority of the project changed dramatically under the conditions of the Great Patriotic War.