A lack of legislation to legalize the institution of the management committees and conflict of the new party directive with earlier legislation that established the principle of one-man management hampered the introduction of the new management system. No clear-cut guidelines were provided for the scope of the management committees' competence or the numerical strength of employee representation. The function of the management committees was also undermined by higher administrative echelons through continued imposition of detailed directives concerning the work of the enterprises—contrary to the announced party policy of loosening central controls. Confusion prevailed about the relationships between management, management committees, and higher economic bodies.
There is no evidence on the effectiveness of the supplemental party decision of May 1970 in resolving the problems besetting the functioning of the management committees. A new law on the organization and management of state enterprises and institutions was passed by the General Assembly toward the end of 1971, but information on the provisions of that law was not available in early 1972.
Another new element in the management of enterprises is the general assembly of employees, introduced in 1968 along with the management committees in accordance with the principles of collective management and socialist democracy. Adequate legislation to formalize the new institution had not been passed by late 1971, but an appropriate provision may have been included in the new law on industrial organization.
As described by a high government official, the general assembly of employees or, in the case of large enterprises, of employee representatives is a forum that will assure effective participation by workers and specialists in the organization and management of the economy and in decisionmaking concerning the fulfillment of enterprise plans. General assemblies are supposed to exercise control over the activities of management committees. Their authority extends beyond the discussion of problems and evaluation of performance to recommending and adopting decisions.
General assemblies are convened twice a year. On these occasions the enterprise management committee must present to the assembly reports on the committee's activities, on the results of enterprise operations, and on the fulfillment by the enterprise of its economic and social obligations. Together with the trade union committee of the enterprise, the management committee must also present to the assembly for discussion and approval the draft of a new collective contract listing mutual obligations of the management committee and of the employees. Decisions reached by the general assembly are obligatory for the management committee. Decisions on measures that require action by higher authorities must be handled by the relevant bodies responsibly and expeditiously.
Representatives of superior economic organs, including the ministries, and of county and local party committees participate in the work of the general assemblies of employees. The reason given for this participation is the opportunity that it provides for the management to become more familiar with problems of interest to the enterprise.
Available evidence indicates a wide variation among enterprises in the degree of influence exercised by the general assemblies of employees. Toward the end of 1971 some management committees were still reported to be disregarding or downgrading general assembly proposals, but such instances were said to be growing progressively fewer.
Industrial enterprises are grouped into combines, trusts, and, since 1969, so-called industrial centrals. The centrals were created in an attempt to improve the organizational structure of industry, reduce control by the ministries and other central government agencies, and provide greater flexibility, in order to increase industrial efficiency. A major task assigned to the centrals is to introduce specialization of production.
Neither the organizational forms of the centrals nor their authority and responsibility vis-à-vis the enterprises and ministries have been clearly defined or legally established. The resultant uncertainty, experimentation, and bureaucratic disharmony have created considerable confusion in the administration of industry, which has been inimical to the attainment of the efficiency goal. At the same time, a variety of factors, including a shortage of investment funds, an inflexible price structure, and the method of evaluating enterprise performance, have militated against the expansion of specialization. Industry officials believe that it may require from three to five years to resolve the organizational problems posed by the creation of the centrals and that many other problems will have to be solved before specialization can become a reality.
Industrial combines, trusts, and centrals function under the jurisdiction of industrial ministries, of which there were eleven at the end of 1971 (see ch. 8). Industrial ministries have undergone an almost continuous process of reorganization. New ministries have been created; old ones, abolished; still others, amalgamated and split. Spheres of the ministries' activities have been reshuffled, and their internal structures have been modified—all in the interest of improving socialist industrial organization and raising the efficiency of production. One foreign observer remarked that, whenever something went wrong in the economy, reorganization in one form or another was undertaken in an effort to solve the problem through administrative means.