Secrecy, Fear and Transaction Costs: The Business of Soviet Forced Labour in the Early Cold War

Abstract

What does it cost to do business under a dictator? In 1949 the Soviet state had entered its most secretive phase. One of the Gulag's most important secrets was the location of its labour camps. As this secret was guarded more closely, camps found it increasingly difficult to do business without disclosing a state secret: their own location. For months and then years Gulag officials worked around this dilemma, expending considerable efforts. Rather than resolve it, they eventually normalised it. This study of the transaction costs of an autocratic regime raises basic questions about how Soviet secrecy was calibrated.

Notes

I thank the participants in a panel at the 2010 national convention of the ASEEES, seminars at Erasmus University Rotterdam and Stanford University, and especially Ran Abramitzky, Richard Aldrich, Golfo Alexopoulos, Yoram Gorlizki, Paul Gregory, Avner Greif, James Heinzen, Emily Johnson, Oleg Khlevnyuk, Andrei Markevich, Tracy McDonald, Roy Mill, Christopher Moran, Leonora Soroka, David R. Stone, and Vasily Zatsepin for discussion and advice; the University of Warwick for research leave and the Centre on Competitive Advantage in the Global Economy for research support; the Hoover Institution and Hoover Archive summer workshop for generous hospitality; and the staff of the Hoover Archive for excellent assistance.

¹ Another paper (Harrison 2012) describes the procedural channel, estimates the direct burden of secrecy on a small regional bureaucracy of the Soviet state, and finds that it was surprisingly large.

² The Archives of the Soviet Communist Party and Soviet State Microfilm Collection at the Hoover Institution, Records of the State Archive of the Russian Federation, Moscow (Gosudarstvennyi Arkhiv Rossiiskoi Federatsii, Moscow) (hereafter Hoover/GARF), fond R-9414, opis 1, dela 119–205 contain these documents (also catalogued in Kozlov 2005, vol. 6, p. 94). Some are dated before 1953, suggesting preparation prior to Stalin's death; Beriya is known to have planned a fundamental reform of the Gulag but was prevented from doing so while Stalin lived (Tikhonov 2003).

³ See ‘Russian Maps and Atlases in the National Library of Russia’, available at: http://www.nlr.ru/eng/coll/maps/rus_map.html, accessed 30 September 2010.

⁴ Bacon surveys the pre-1991 literature. The most reliable clues were contained in secret sections of the Soviet national economic plan for 1941, seized by German forces during World War II and later published in the United States (Bacon 1994). The 1941 plan was drawn on by Jasny (1951) for an evaluation that turned out to be remarkably close to the figures revealed in the 1990s.

⁵ The text of the decree was published in Vedomosti Verkhovnogo Soveta SSSR, 1947.

⁶ As a result, ironically, information of the affair leaked abroad. A recently declassified document from British–American shared signals intelligence in 1947 reproduces intercepted correspondence on the ‘KR’ affair among Komsomol officials in Moscow and Frunze, Uzbekistan. The National Archives (London), UKUSA Agreement Files, S/ARU-E/T54, ‘Party Action on the Anti-State Activities of Two Soviet Professors’ (Codeword—Glint), 25 September 1947, HW 75/167.

⁷ Thus the downfall of Nikolai Voznesenskii, the wartime economic chief and once Stalin's favourite, was triggered in March 1949 by a scandal over the negligent loss of secret papers in Gosplan, but his subsequent execution in August was for treason and undermining the economy under the RSFSR Criminal Code, Article 58 (Gorlizki & Khlevnyuk 2004, pp. 83–89).

⁸ Pravda, 27 September 1947.

⁹ Hoover/GARF, f. R-9492, op. 1a, d. 513, ll. 8–18 (‘Soobshchenie prokuratora Soyuza SSR’).

¹⁰ The decree, not in the files, is reported under ‘State Secrets in Russia’, The Times, 11 June 1947.

¹¹ Hoover/GARF, f. R-9492, op. 2, d. 79, ll. 2–26 (‘Instruktsiya po obespecheniyu sokhraneniya Gosudarstvennoi tainy v uchrezhdeniyakh i na predpriyatiyakh SSSR’, Moscow, 1948).

¹² Thus typists were instructed not to discuss the content of secret documents with others, to consult only their seniors or the author of the document about illegible words, not to take dictation where they could be overheard, and to hand all waste paper to their seniors for destruction (Hoover/GARF, f. R-9492, op. 2, d. 79, l. 19ob).

¹³ Hoover/GARF, f. R-9414, op. 1, d. 335, ll. 11–12 (‘List of questions of the work of the GULAG of the USSR MVD and its peripheral organs that are state secrets (gosudarstvennaya taina)’, signed by acting Gulag chief G. P. Dobrynin, 17 June 1947). Applebaum (2003, p. 110) notes that ‘subsection’ was an internal codeword for a labour camp. On 10 December 1951, USSR interior minister S. N. Kruglov issued a similar ‘List of questions of special importance (osoboi vazhnosti) about the GULAG of the USSR MVD, correspondence about which should be classified “top secret (special file)” (Sovershenno sekretno (osobaya papka))’ (Hoover/GARF, f. R-9414, op. 1, d. 335, ll. 71–72). Items 2 and 3 were ‘The location and information about numbers of the Gulag contingents engaged in the construction of especially important closed special construction projects of Glavpromstroi’ (a reference to the newly founded Soviet atomic weapons industry) and ‘Summative information on the location of corrective labour camps and colonies and transit prisons of the USSR MVD’. Item no. 1 was ‘Summative information on the overall number of the contingent of prisoners maintained in all MVD camps (including special camps) and colonies, their physical condition and labour utilisation’; this was the second item in the 1947 list.

¹⁴ ‘Risk of loss’, rather than certain loss, because even loyal managers frequently had to trade on the side, without authorisation, in order to fulfil the plan. It was intrinsically difficult for the authorities to draw a line between the unauthorised exchanges that were plan-oriented (or loyal) and those that were profit-oriented (and disloyal). Klyueva and Roskin, for example, persistently protested their loyalty. For further discussion, see Gregory and Harrison (2005).

¹⁵ Formally, , ; , . Then, the dictator's revenue is maximised where s′ = t′.

¹⁶ In economics there is an extensive literature on information, reviewed by Stiglitz (2000). This literature has much to say about information costs, and about collective and individual choices over concealment and disclosure, notably in corporate governance and monetary regulation. It is silent, however, on the value of artificial secrecy, when information would be relatively freely observable, except for the fact that the ruler chooses to penalise its disclosure by law.

¹⁷ Surveyed by Kotkin (1995, pp. 1–25).

¹⁸ For more general discussion see Akerlof and Yellen (1985).

¹⁹ The Memorial website entry under ‘Volzhskii ITL MVD’ provides these (available at: http://www.memo.ru/history/nkvd/gulag/r3/r3-63.htm, accessed 30 September 2010).

²⁰ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 26–27.

²¹ Mailbox numbers were first issued, apparently, in 1939, to enable camps to subscribe to periodical publications without revealing their full addresses. Hoover/GARF, f. R-9414, op. 1, d. 21, l. 49 (Gulag chief Filaretov, decree dated 16 January 1939).

²² Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 1a, 3.

²³ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 4.

²⁴ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 8.

²⁵ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 26–27.

²⁶ Hoover/GARF, f. R-9414, op. 1dop, d.145, ll. 26–27.

²⁷ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 26–27.

²⁸ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 42.

²⁹ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 5.

³⁰ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 6.

³¹ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 9–13.

³² Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 12–13.

³³ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 14–16.

³⁴ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 17.

³⁵ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 31.

³⁶ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 30.

³⁷ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 22–23.

³⁸ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 35.

³⁹ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 41.

⁴⁰ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 34.

⁴¹ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 43–50. The model letter is not without interest. It is written as if from the Mikhailovskii camp chief to the Sverdslovsk branch office of Gosbank. Headed ‘Top secret’ and ‘In person only’, it reads: ‘I inform (you) that the Mikhailovskii corrective labour camp of MVD has been given the conventional designation “MVD facility no. 5401”. In connection with this I request (you), from September 1, 1950, to change the designation of settlement account no. 258 of the Mikhailovskii camp and rename it: “Settlement account no. 258 of MVD facility no. 5401 in the town of Sverdlovsk'”. In the top left hand corner is a place marker for ‘Stamp with full designation of the camp’. The words ‘with the aim of barring disclosure of the location of MVD corrective labour camps’ are crossed out from the text of the letter. This was too much information, one supposes.

⁴² This was the highest level of Soviet secrecy.

⁴³ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 51–58.

⁴⁴ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 24.

⁴⁵ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 66.

⁴⁶ Hoover/GARF, f. R-9414, op. 1dop, d. 145, l. 71. ‘Unzhenskii ITL MVD’, telegraphic address ‘Unzha’; address ‘Sukhobezvodnoe station, Gor'kii oblast’'; mailbox number 242. See the entry under the Memorial website, available at: http://www.memo.ru/HISTORY/nkvd/gulag/r3/r3-431.htm, accessed 30 September 2010.

⁴⁷ Hoover/GARF, f. R-9414, op. 1dop, d. 145, ll. 67, 70 and 73.

⁴⁸ Hoover/GARF, f. R-9414, op. 1dop, d. 157, ll. 1–2. ‘Bazhenovskii ITL MVD’, telegraphic address ‘Kombinat’; address ‘Sverdlovsk oblast’, Asbest town'; mailbox number 35 or ED-35. See the entry under the Memorial website, available at: http://www.memo.ru/history/NKVD/GULAG/r3/r3-19.htm, accessed 29 June 2011.

⁴⁹ For example, Hoover/GARF, f. R-9414, op. 1dop, d. 187, ll. 32–33 (Chuvash ASSR, 17 March 1953); file 204, ll. 24–25 (Kaliningrad oblast', 10 March 1953); file 212, ll. 18–19 (Crimea oblast', 14 March 1953).

⁵⁰ Hoover/RGANI, f. 6, op. 6, d. 1575, ll. 33–34 (report to A. N. Poskrebyshev, signed by KPK chairman Shkiryatov, 16 April 1951).

⁵¹ Hoover/RGANI, f. 6, op. 6, d. 1650, ll. 21–23 (report to KPK chairman Shkiryatov, signed by responsible controller Byshov, June 1953). The report responded to a former employee of the state committee who had complained of mismanagement and various abuses.