Who he is and his times
Vasily Sergeyevich Nemchinov was born on 14 January 1894 and died on 5 November 1964 in Moscow. His background was in agricultural statistics: from 1928 he headed a department of statistics, in 1935 he received the degree of Doctor of Economic Sciences, and in 1940 he was appointed director of the K. A. Timiryazev Moscow Agricultural Academy. In 1946 he was elected an Academician of the USSR Academy of Sciences, and in the same year he received the Stalin Prize. Among his works of that time are a book on agricultural statistics (1945) and the study Chebyshev Polynomials and Mathematical Statistics (Polinomy Chebyshova i matematicheskaya statistika, 1946).
The decisive episode of his biography was the August 1948 session of the Lenin All-Union Academy of Agricultural Sciences (VASKhNIL), at which genetics was declared a pseudoscientific field. Nemchinov, who was not a biologist, spoke on the final day of the debate. According to the Timiryazev Academy, he declared that the chromosome theory of heredity had entered the golden treasury of science, that T. D. Lysenko was wrong on this question, and that it was unacceptable to shut down the work of the geneticist Professor A. R. Zhebrak at the academy. The day after the session Nemchinov was dismissed from the post of director of the academy.
His dismissal did not remove him from science. From 1947 he was a professor at the Academy of Social Sciences; in 1949–1963 he headed the Council for the Study of Productive Forces (SOPS) of the USSR Academy of Sciences; in 1953–1959 he was Academician-Secretary of the Department of Economic, Philosophical and Legal Sciences; and in 1953–1962 he was a member of the Presidium of the USSR Academy of Sciences. As a result, by the late 1950s Nemchinov found himself in a rare position: he was at once a scholar with the reputation of a man who had not given in to Lysenko and an experienced administrator within the Academy. It was this combination that allowed him to build institutions that Kantorovich, with his position as a scientific loner, would not have been able to create.
The economic-mathematical field that Nemchinov came to lead in the late 1950s started almost from scratch. According to I. Boldyrev, after the repressions of the 1930s economics in the USSR almost disappeared as an academic discipline, and quantitative research in the social sciences remained ideologically suspect for decades. Discussion of mathematical methods in economics could be resumed only after 1953. The surviving members of the older generation — statisticians who had worked back in the 1920s, and economists such as Novozhilov and Lurie — were brought into the new community. Nemchinov, a statistician of the same old school, had the task of combining their experience with the work of young mathematicians.
Main ideas
Nemchinov came to mathematical methods from statistics and balance-based constructions. The Great Russian Encyclopedia notes that he was one of the first in Russian and Soviet science to raise questions of economic cybernetics and econometrics, and that he developed models of expanded reproduction and a statistical model of the social division of labour. A closely related tool is the input-output (inter-industry) balance: a table showing what part of the output of each industry goes to meet the needs of other industries and what part goes to final consumption and accumulation. According to a quotation given by V. V. Okrepilov, Nemchinov considered the pre-war works of Kantorovich and Novozhilov to be, in a certain sense, forerunners of both input-output analysis and linear programming, which are usually regarded as achievements of foreign science.
For Nemchinov, mathematics was a means not so much of finding a single ideal plan as of making the plan manageable in the course of its implementation. As V. S. Balakin sets it out, he wrote that mathematical methods solve extremal problems in choosing the optimal technological options for fulfilling plan assignments, and he proposed balance-matrix models that made it possible to recalculate plan indicators every month while the plan was being carried out. This is an important difference from the notion of the plan as a document approved once every five years.
His final programme is set out in the article Socialist Economic Management and Production Planning (Sotsialisticheskoe khozyaystvovanie i planirovanie proizvodstva), published in the journal Kommunist in 1964 (No. 5). According to quotations in the work of Balakin and his co-authors, Nemchinov proposed joining the planning mechanism with the system of self-financing (khozraschyot) and with the enterprise's social funds, and building the plan not from the top down but from the bottom up, starting from the enterprise; he called such a system a self-financing system of planning. Self-financing (khozraschyot) is a regime in which an enterprise covers its expenses from its revenues and is financially accountable for the result. As researchers describe it, the programme included forming the state order on a competitive basis, new methods of price formation and free trade in means of production between enterprises.
At the same time, Nemchinov differed from Kantorovich in interpreting valuations. According to Balakin and his co-authors, he stressed that objectively determined valuations (shadow prices) differ in their socio-economic nature from planned prices and are close to the shadow prices of Western economics. For Nemchinov, prices were to take shape within a system of orders and business contracts, not merely be calculated by a model; calculated valuations served as a guide but did not replace a mechanism in which the parties are responsible for performance.
What became of the ideas in practice
The organizational part of the programme succeeded. In 1958 Nemchinov set up in the Academy of Sciences the first laboratory of economic-mathematical research in the USSR; in 1959 the collection The Use of Mathematics in Economics (Primenenie matematiki v ekonomicheskikh issledovaniyakh) appeared under his editorship. In April 1960, together with Kantorovich, he held a conference in Moscow on the use of mathematical methods and computing technology in economics and planning, which, according to Okrepilov, brought together more than 600 participants; on 20 May 1960 the Presidium of the USSR Academy of Sciences resolved to create a scientific council for this field. In 1962 his book Economic-Mathematical Methods and Models (Ekonomiko-matematicheskie metody i modeli) was published, and in the same year he founded the Department of Mathematical Methods of Economic Analysis at Moscow State University. In 1963 the Central Economic Mathematical Institute (TsEMI) of the USSR Academy of Sciences was created on the basis of his laboratory.
The substantive part of the programme — the self-financing system of planning — did not become Gosplan practice. Implementing it would have meant that the bulk of decisions were made by enterprises bound by orders and contracts, while the central plan set the framework. This struck at the very structure of the system: at fund allocation (fondirovanie), that is, the centralized distribution of means of production according to assigned limits; at the right of ministries to dispose of the resources of the plants under their authority; and at Gosplan's right to approve assignments. Nemchinov died in November 1964, a year before the 1965 reform, and could no longer defend the programme in the practical debate. According to Balakin and his co-authors, his ideas were not included in the party directives of the 1970s and 1980s, and the materials of the 24th Congress of the CPSU in 1971 emphasized the leading and determining role of directive planning.
The informational side of the problem is especially clear in Nemchinov's programme. A bottom-up plan requires the enterprise to report the truth about its capabilities. In a directive system, where the assignment, bonuses and supplies depend on the report, it pays the enterprise to understate its capacity and overstate its needs. Nemchinov's answer was to replace the report with a contract: if an enterprise itself takes on an order through a competition and is financially accountable, it gains nothing by promising less than it can deliver. But this requires real prices, freedom of trade in means of production and real liability for failure — and these were exactly what the system did not allow. D. V. Didenko shows that in the late Soviet period ministries engaged in administrative bargaining over capital investment and reduced assignments.
The institutional side is no less important. Gosplan and the ministries were at the same time the bodies that set goals, allocated resources and assessed performance. The self-financing system of planning cut through this knot: the centre sets the goal, execution is distributed through competitive orders, and the result is checked against fulfilment of the contract. Such a separation deprived the apparatus of its levers, and therefore, as Balakin notes, resistance to the economic-mathematical field did not stop even after Nemchinov's death; it fell to N. P. Fedorenko to defend it.
What worked and what did not
The building of institutions worked. The laboratory that became TsEMI, the department at Moscow State University, the Academy's scientific council, the collections of papers and the journal Economics and Mathematical Methods (Ekonomika i matematicheskie metody), whose creation Nemchinov initiated, outlived their founder and shaped a generation of mathematical economists. The Lenin Prize of 1965, awarded to Nemchinov posthumously together with Kantorovich and Novozhilov, confirmed the legitimacy of the field. For Soviet science this was a rare case of a new discipline acquiring its own organizational base within a few years.
The educational part worked too. According to Boldyrev, in 1960, on Nemchinov's initiative, Moscow University opened a programme for training economists with a mathematical education — following the Leningrad programme organized in 1959 with Kantorovich's participation. The April 1960 conference, according to Okrepilov, heard 59 papers and led to the creation of the Academy's scientific council, which was to coordinate research throughout the country. It is important, however, that formally the new field was classed as “mathematical methods” and “economic cybernetics”, without any claim to be called economic theory; Boldyrev calls this the subordinate status of the discipline. This compromise allowed the methods to survive but left political economy with the right to decide how the economy is organized. Boldyrev also notes the practical side: at Moscow University the mathematician I. V. Girsanov organized a group of mathematics teachers for the Faculty of Economics and helped Nemchinov draw up a mathematics curriculum for economics students. In other words, Nemchinov built not only research institutions but also a system for training people able to understand and test models — without it, any calculations would have remained the business of a narrow circle of specialists.
What did not work was turning scientific recognition into a change in the planning mechanism. Economic-mathematical methods became a permissible tool of calculation within the old system, but the programme that would have changed the distribution of powers remained a journal article. It had no legal form, no pilot testing ground with measurable results and no protected status: everything rested on the authority of its author, who died that same year.
Difficult questions remained open within the programme itself. Combining a central plan with free trade in means of production and competitive orders required answers to who sets the prices of orders and how, how conflicts between the centre's assignment and the enterprise's benefit are resolved, and what happens to loss-making production. The published summaries of the programme do not describe these mechanisms in detail, and their absence made it easier for opponents to reject it.
Debate and criticism
The first line of criticism was ideological. According to Balakin, in the debates of the 1960s supporters of the traditional approach rejected orientation towards profit and contractual relations as a departure from communist principles. To them, a self-financing system of planning with trade in means of production looked like a return of commodity-money relations to where, according to doctrine, they had no place. This dispute continued the debate about the 1965 reform and about the proposals of E. G. Liberman.
The second line was internal, with Kantorovich. Nemchinov did not agree to regard objectively determined valuations as planned economic prices and emphasized their different nature. Behind this lies a substantive fork: whether to trust calculated prices or prices that take shape in contracts between responsible parties. In the terms of the Mises, Hayek and Lange debate, Nemchinov's programme is closer to Lange's market socialism than to purely computational planning, although Nemchinov himself did not use these terms.
The third line was political, and Nemchinov knew it from his own experience. His 1948 speech cost him his post, and as late as the early 1960s the economic-mathematical field was accused of departing from Marxism. His strategy was to defend the field organizationally: to create structures that are hard to close down and to incorporate the new methods into the recognized language of planning work. This strategy protected the methods, but not the reform programme.
Finally, from the standpoint of critics of any central planning, Nemchinov's project was a half-measure: while preserving the central plan, it did not explain how to avoid the same bargaining, merely transferred into the procedure of competitive orders. Supporters of centralization, on the contrary, saw it as a step towards the destruction of the planning system. This vulnerability on both sides is typical of intermediate schemes and explains why the programme did not find a strong coalition.
Legacy today
Nemchinov's main institutional legacy is the Central Economic Mathematical Institute, now TsEMI of the Russian Academy of Sciences, and the Department of Mathematical Methods of Economic Analysis at the Faculty of Economics of Moscow State University. According to I. Boldyrev, economists associated with TsEMI became influential experts and participants in economic policy during perestroika and the first reforms.
His intellectual legacy is the idea that the plan and self-financing (khozraschyot) must be joined, and that the plan must be recalculated in the course of its implementation. The competitive state order that Nemchinov proposed in 1964 has today become an ordinary instrument of public procurement, albeit in a completely different system. The lesson of his programme is that a good scheme for separating roles does not outlive its author without legal consolidation, pilot testing and a protected status.
For the history of planning, Nemchinov matters as a figure who brought together three lines: statistics, mathematical methods and the reform of the economic mechanism. His biography shows that scientific integrity in 1948 and organizational talent in 1958 were connected: he knew how to stand up for a position and how to turn it into institutions.
Nemchinov also knew how to acknowledge the priority of others. In an article on the use of mathematical methods in economic work, he called Novozhilov one of the pioneers of optimal programming, and described the pre-war works of Kantorovich and Novozhilov as, in a certain sense, forerunners of methods that were considered achievements of foreign science. The Lenin Prize of 1965, awarded to the three of them, confirmed this view of the school as a joint creation. For history it is important that it was Nemchinov, and not the mathematicians, who gave this school the form in which it survived the political campaigns of the following decade.
What open planning takes
- Competitive orders as the main channel of execution. Nemchinov's idea of forming the state order on a competitive basis and joining the plan with self-financing (khozraschyot) corresponds to our execution circuit: quota auctions and contracts with vector indicators and a deposit, with payment only for a verified result.
- Recalculating indicators in the course of execution. Nemchinov's balance-matrix models assumed a monthly recalculation of plan indicators. For us this is the revision rule: recalculation based on facts instead of a five-year plan, with an event log and without changing the rules retroactively.
- A contract instead of a self-report. A bottom-up plan works only if the enterprise's bid is backed by liability. In our model, the executor's bid is backed by a deposit, and performance is confirmed by a measurement report in the verification circuit, not by the executor's own report.
- An institutional owner of the methodology. Nemchinov protected the methods by creating institutions for them. In our model, the version of the methodology has an owner who is separate from the executor and from the manager of resources, and a public history of changes.
What we do not repeat
- We do not accept bottom-up bids without independent verification. A plan coming from the enterprise without measurement of the result turns into bargaining for reduced assignments and inflated resources.
- We do not leave a reform in the form of a programmatic article. The self-financing system of planning did not outlive its author because it had neither legal consolidation nor a pilot with measurable results. In our model, every decision is formalized as one of five legally significant artefacts, and the outcome of a pilot is published, including a negative one.
- We do not combine the allocation of resources and the assessment of their use in a single body. Fund allocation (fondirovanie) and reporting through the same ministries made verification fictitious; the separation rule does not allow this.
Links between ideas
Whom the author argued with, whose ideas they developed, whom they answered and whose fate they shared. All links are on the shared graph. Graph of ideas
- Vladimir Bazarov and Vladimir Groman
Develops ideas ←
In the 1960s Nemchinov’s laboratory reconstructed the 1923/24 TsSU balance in a symmetrical 79-by-79 format.
- Leonid Kantorovich
Debate and criticism →
Nemchinov did not regard objectively determined valuations as planned prices: prices should form in orders and contracts.
- Leonid Kantorovich
Practice and institutions ←
They held the 1960 conference together; the 1965 Lenin Prize went to them and Novozhilov.
- Viktor Novozhilov
Practice and institutions ←
In 1959 Nemchinov published Novozhilov’s main work and called him one of the pioneers of optimal programming.
- Nikolai Fedorenko
Practice and institutions →
TsEMI was founded in 1963 on the basis of Nemchinov’s laboratory; Fedorenko became its first director.
- Nikolai Fedorenko
Develops ideas →
SOFE inherited from Nemchinov the combination of plan and self-financing, and after 1964 Fedorenko took over the defence of the approach.
- Wassily Leontief
Develops ideas ←
The inter-branch method returned to the USSR together with the economic-mathematical school headed by Nemchinov.
- Evsei Liberman
Develops ideas ←
Nemchinov backed Liberman in 1962 and carried the debate further with his programme of a self-financing planning system.
- Oskar Lange
Parallel path ←
Nemchinov’s programme, with prices set in contracts, is by the profile’s assessment closer to Lange’s market socialism than to computational planning.
Timeline
- 1894
Born on 14 January
- 1940
Appointed director of the Timiryazev Agricultural Academy
- 1946
Elected Academician of the USSR Academy of Sciences; received the Stalin Prize
- 1948
Spoke at the August session of VASKhNIL against Lysenko's position; dismissed from the post of director of the academy
- 1949
Became head of the Council for the Study of Productive Forces of the USSR Academy of Sciences
- 1958
Set up the first laboratory of economic-mathematical research in the USSR
- 1960
Conference on the use of mathematical methods in economics and planning; creation of a scientific council of the USSR Academy of Sciences
- 1963
TsEMI of the USSR Academy of Sciences created on the basis of the laboratory
- 1964
Article Socialist Economic Management and Production Planning (Sotsialisticheskoe khozyaystvovanie i planirovanie proizvodstva) in Kommunist; died on 5 November
- 1965
Posthumously awarded the Lenin Prize together with L. V. Kantorovich and V. V. Novozhilov
Key works
- 1946Chebyshev Polynomials and Mathematical Statistics (Polinomy Chebyshova i matematicheskaya statistika)
- 1959The Use of Mathematics in Economics (Primenenie matematiki v ekonomicheskikh issledovaniyakh), editor
- 1962Economic-Mathematical Methods and Models (Ekonomiko-matematicheskie metody i modeli)
- 1964Socialist Economic Management and Production Planning (Sotsialisticheskoe khozyaystvovanie i planirovanie proizvodstva) // the journal Kommunist, No. 5
Sources
- Большая российская энциклопедия. Немчинов Василий Сергеевич. без даты
- Балакин В. С., Балакина Л. П., Палечкин Н. П.. Из истории научных идей: академик В. С. Немчинов и проблема применения математических методов в экономических исследованиях и планировании. 2012
- Балакин В. С.. Из социальной истории советской науки: академики В. С. Немчинов и Н. П. Федоренко защищают экономико-математические методы оптимального планирования (1960-е — середина 1970-х гг.). 2018
- РГАУ — МСХА имени К. А. Тимирязева. Гражданский поступок тимирязевцев в августе 1948 года. 2017
- Экономический факультет МГУ. Немчинов Василий Сергеевич. без даты
- Пензенский государственный университет. Немчинов Василий Сергеевич. без даты
- Окрепилов В. В.. Творческое содружество Л. В. Канторовича и В. В. Новожилова по формированию экономико-математического направления в отечественной науке и практике. 2012
- Диденко Д. В.. Изменение качества планирования экономики в позднем СССР: технологическая и институциональная динамика. 2021
- Белых А. А.. Экономические идеи Л. В. Канторовича и их восприятие в СССР и на Западе. 2024
- Википедия. Немчинов, Василий Сергеевич. без даты
Prepared from open sources. Dates, titles and quotations were checked against the source list at the bottom of the page; where sources disagree, the text says so.