Fundamentals of the Organization of Cost Accounting and Its Specific Features in Research Institutes

I. D. Pleshko

The most important economic task of the present stage of communist construction is “to sharply change the orientation, to shift the emphasis to intensive methods of conducting the economy, and thereby to ensure a serious increase in the efficiency of the economy”¹.

The fulfillment of this task is to a significant degree connected with the successful work of research institutes (NII), which are called upon to ensure a high scientific and technical level of research and development and the introduction of the results obtained into the national economy.

At present the state allocates from the national income, and spends on the development of science and technology, enormous and constantly increasing sums of money. Under such conditions it is important that every ruble pay for itself as quickly as possible. If over the past five-year period (1966–1970) these expenditures amounted to 41 billion rubles,² then now, for 1972 alone, they are planned in the amount of 14.4 billion rubles.³

However, allocations for ensuring scientific and technical progress are not unlimited. In this connection, the effectiveness of the resources expended is the most important economic task in the sphere of scientific and technical progress.

The basic method of economic management aimed at ensuring the economical use of funds is cost accounting. However, the problem of cost accounting in the sphere of scientific activity is at present a matter of debate and has been little developed. There are various points of view regarding the possibility and necessity of extending the principles of cost accounting to the activity of research institutes (NII) and design-and-engineering organizations (PKO).

Perhaps the chief difficulty in solving this problem lies in the specific nature of the work and of the results of the work of scientific institutions. Therefore, this problem cannot be solved without a differentiated approach to the scientific and design-and-engineering organizations themselves and to the results of their activity.

The second difficulty consists in the fact that in the economic literature one finds widely varying interpretations of the causes, nature, and essence of commodity-money relations and of economic accounting.

It is generally accepted that economic accounting is an economic category expressing production relations connected mainly with the activity of socialist enterprises.

In the category of economic accounting, the real, ordinary, mass relation is comradely collective production of the products needed by society on the basis of public ownership of the basic means of production. It is expressed in the real collective appropriation by the working people of the means of production, on the basis of which labor is directly joined with the means of production, constituting a specific feature of the socialist mode of production.

On the basis of planned production and the exchange of goods between enterprises and society, a system of relations is created that has received the name of economic accounting. The indicated relations of enterprises among themselves and with society as a whole stimulate an increase in the output of products at the lowest cost, the growth of enterprises’ profitability, and accumulations for society.

The organization of economic accounting is connected with the use of value categories. The application of these categories makes it possible to regulate relations among socialist enterprises and between individual enterprises and society as a whole, and also to provide economic-accounting stimulation of their activity.

The chief material incentive to labor in socialist society is the satisfaction of one’s personal needs. Socialist ownership of the means of production conditions the distribution of the product in the interests of all working people and gives rise to an interest in the development of social production.

Thus, the existence of economic accounting and the value categories connected with it is conditioned by the necessity of material stimulation of labor at the socialist stage of development, as well as by the features of public ownership under socialism, which underlies comradely cooperation and mutual assistance in the process by which working people exchange their activity and jointly distribute the products produced.

The objective necessity of organizing the activity of socialist enterprises on the basis of economic accounting is also conditioned by the social division of labor.

By the known separateness of socialist enterprises as economic units, and by the relative independence stemming from this in disposing of the state resources placed at their disposal for use.

Under socialism, everyone has the opportunity to increase the product for himself, the size of the remuneration for his labor, if he has increased his social labor contribution. Thus, the system of material interest of production workers contains a firm basis for the unity of interests of the individual worker and of the whole society as a whole.

The interests of all members of society coincide in what is fundamental and principal, but under socialism there is no complete, absolute coincidence of material interests. This is above all because socialist ownership is embodied in such means of production as do not ensure an abundance of material goods sufficient fully to satisfy the needs of all members of society at society’s expense and directly.

members of society. At the same time, each member of society, realizing his right to the use of property, strives for the comprehensive satisfaction of his needs. Since the possibility and completeness of such satisfaction is contained not only in society but also in the subject himself, his material interest will therefore have a relatively separate character.

Under conditions in which exploitation is absent, the only possible form of realizing individual interest is the participation of the worker in the creation of material goods, in socially useful activity. This becomes possible as a result of the union of labor power with the means of production.

At the same time, by virtue of the existence of public ownership of the means of production, the worker cannot become isolated by appropriating to himself a part of the means of production. The union of the worker’s labor power with the means of production and its inclusion in the aggregate labor power is effected not directly, but through the mediation of the production collective of the enterprise.

Thus, outside the worker’s entry into the production collective, it is impossible for him to realize his right to the use of property and, accordingly, his economic interest.

The degree of satisfaction of material interests depends on the magnitude of the labor contribution of each member of the collective and on collective efforts; moreover, the decisive influence is exerted by the extent to which each worker, in the process of his activity, takes into account the interests of the collective and of society.

Collective interest, like personal interest, fundamentally coincides with it. Both society as a whole and every worker are interested in satisfying the needs of every member of society. However, at the given level of development of the productive forces, it is impossible directly, on a social scale, to satisfy both individual and collective interests.

The realization of these interests is carried out, for the most part, by the subjects themselves (individuals or collectives), which gives rise to economic separateness.

Economic separateness requires such relations within the framework of which, and by means of which, individual, collective, and social interests could be realized. And such relations acquire the form of commodity-money relations.

Since, owing to the heterogeneity of labor, both at the level of the individual worker and at the level of the enterprise, it is not possible to measure its magnitude by the immediately expended working time, indirect accounting and the reduction of various kinds of concrete labor to homogeneous abstract labor are required. Such reduction is possible only through the exchange of the products of labor as commodities, i.e., under conditions in which commodity-money relations exist, when the products of labor acquire a commodity form and socialist enterprises act as commodity producers.

Are scientific institutions of an applied character commodity producers?

We share the point of view of those authors (V. Pankrat’ev, V. Sominskii, M. Bashin, M. Tarnovskii) who believe that the activity of scientific-research and design organizations lies within the sphere of influence of commodity-money relations.

Under socialism, the general basis for the functioning of the law of value in the sphere of scientific activity is preserved. Science is included in the social division of labor, which is the general condition for the existence of commodity-money relations, since the predo

... presupposes an exchange of activities or of the products of labor. Science is, to a predominant degree, represented by mental labor, in contrast to direct production, where physical labor still occupies a large share. By virtue of this, direct working time as a measure of labor expenditure cannot be the basis of exchange and the criterion for evaluating the activity of the exchanging parties.

Individual workers of scientific institutions, groups, and collectives of workers realize their right as social owners and satisfy their economic interests. The satisfaction of personal and collective interests mainly at the expense of the collective, and not at the expense of society, is achieved only when it is possible to take into account the results of collective efforts, when they are embodied in such a product of labor that can be directly used in the process of personal or productive consumption. Otherwise the material basis of relative economic separateness disappears.

The economic separateness of scientific institutions is determined not by their legal status, but mainly by the fact that they appear above all as a scientific-technical, economic, financial, and organizational whole and, to some degree, realize equivalent commodity relations with customers and other organizations. This economic separateness of organizations (research institutes) may express equivalent relations with the entire national economy that arise and are carried out in the process of conducting scientific-research work.

Scientific-research institutions carrying out developments for their adoption in production are characterized by social ownership of the means of production and by the directly social character of labor. However, since the development of social ownership of the means of production and of the properties of socialist labor that characterize it as directly social labor currently expresses a quite definite level of the productive forces, to that extent, at this stage of development, the activity of scientific-research institutions is characterized by economic separateness and by elements of the commodity form.

Under socialism, the principal method that would combine centralized planned guidance with operational and economic independence on the basis of the use of commodity-money relations is economic accountability.

Genuine economic accountability in scientific-research organizations can be ensured if the following basic conditions are observed:

— endowing these organizations with fixed and working capital;

— granting the scientific-research institution rights in the field of planning, management, and organization of its production activity and capital investments, with the aim of ensuring and expanding operational and economic independence;

— using such methods of calculating the costs of conducting scientific-research work (NIR) and experimental-design developments (OKR) as would guarantee their objective magnitude;

— broad use of commodity-money categories, in accordance with their new content under socialism—price, cost, profit, credit—in the sphere of the activity of research institutes;

— full coverage of all expenditures at the expense of customers;

— material responsibility for inadequate performance of work;

— material interest in the final results of the research institutes’ activity;

— organization of control by the ruble over the production-and-economic activity of research institutes.

At the same time, the organization of cost accounting in research institutes is distinguished by substantial economic and organizational features. The conduct of research and development presupposes the use, mainly, of highly qualified mental labor. The individual character of scientific research, the long duration of work, and the specificity of final results (the possibility of obtaining a negative result) necessitate special forms of operational-economic independence for scientific institutions; moreover, by virtue of their specificity, operational-economic independence must be greater than in industry.

With the unfolding of scientific and technological progress, when science is turning into a direct productive force, one of the decisive facts is that material production makes use, on an ever-increasing scale, of the results of scientific research and development. The union of science with production and the associated change in the character of labor in scientific institutions have turned scientific research and design development into an initial component part of the production cycle. This means that the labor of the collective of scientific institutions is one of the important elements of material production. Of course, this labor appears as an advanced part of aggregate productive labor and will receive its final evaluation when it merges with labor in the sphere of material production. On the other hand, labor in this sphere may find embodiment in various technical schemes, prototypes, projects, and, from this side, the labor of scientists and designers has turned, as it were, into a part of the future (potential) value and use value which, although it does not directly satisfy a person’s personal needs, is nevertheless one of the factors of the expanded reproduction of material goods.

Undoubtedly, the results of the creative labor of research institutes have a specific form of use value and a special form of value^4. Use value in this sphere may appear in the form of the possibility of ensuring a higher efficiency of social production through a reduction in production costs. And since this use value is produced not for consumption within the research institute, but by order of industry and other branches of the national economy, there arises the need to compare the results of the labor of research institutes with other commodities by measuring the quantities of socially necessary labor embodied in them, i.e., through value.

Thus, the results of creative labor create not only use value but also value (future value), which means that the products of the labor of research institutes are commodities.

A commodity may also be such a product of labor as does not have the properties of a material thing but nevertheless possesses social use value and value. For example, it may also be embodied in a definite form of services, for a service represents “that special use value which labor delivers, like every other commodity; but the special use value of this labor has received here the specific name of ‘service’ because labor renders services not as a thing, but as an activity,—”

^4 Yu. S. Nekhoroshev, The Economic Form of the Material Products of Science. Proceedings of the Tomsk Polytechnic Institute named after S. M. Kirov. Vol. 255, Tomsk, 1972.

which, however, does not in the least distinguish it from, say, some machine—for example, from a clock”⁴.

This proposition is also applicable to the results of the work of collectives of research institutes engaged in applied research for industry and other branches of the national economy. Consequently, with respect to research institutes it is legitimate to speak also of a price for the results of applied research. This price, in view of the individual character of the product of research and development, must be established separately in each specific case and may be regulated promptly by the parties to the contract if, in the course of carrying out R&D, unjustifiably large deviations of actual costs from estimated costs are discovered.⁵

The product of applied research and development receives social recognition through a system of value indicators in the form of national-economic efficiency, which creates the possibility of commensurating costs and results, provides the prerequisites for creating an effective system of reimbursement of the costs incurred, and also for economic stimulation of increased efficiency in scientific developments. The use, in management and in the organization of evaluation of scientific and technical developments, of value indicators creates the conditions for introducing into the practical work of scientific institutions of an applied character the principles of economic accountability.

Economic accountability in these organizations faces important tasks, which may be reduced to the following:⁶

1. Improvement of the organization of developments and reduction of their cost while simultaneously raising quality indicators.

2. Growth of the national-economic efficiency of scientific research and technical developments.

3. Acceleration of the introduction of scientific and technical achievements into production.

Consequently, economic accountability must become an effective economic method of the planned organization of scientific-research work and development.

Considerable attention has recently been devoted to the organization of economic accountability in research institutes of an applied character. Thus, Resolution No. 282 of the Council of Ministers of the USSR for 1961 provided for a contractual system for performing all scientific-research and design-engineering work, with the exception of work of a exploratory character and of work of national importance.

Contracts are to be concluded between scientific institutions, on the one hand, and enterprises and agencies, on the other. However, to this day there is no effective system of economic linkage between scientific and design-engineering organizations and enterprises that would stimulate the development and introduction of progressive scientific developments into production. This means that economic accountability in the sphere of scientific activity has acquired formal features, which, in turn, gives rise to a certain formality in the principles of economic accountability in the sphere of direct production as well.

The principal shortcomings of the existing system of economic accountability are the ignoring of the principles of the organization of economic accountability and, most importantly, the absence of material responsibility of the performers for the qualitative

and the timely performance of work, while customers are interested in the fastest and most effective use of its results.

In order for economic calculation not to be merely formal in character, it is necessary to take into account all those aspects through which this method of management is realized. Making full use of all the possibilities inherent in economic calculation is a complex problem. It requires not only deep theoretical development as applied to the specific conditions of scientific research institutes, but also a high level of economic qualification among the heads of scientific organizations and the direct participants in R&D and design-and-development work; a substantial restructuring of the economic activity of research institutes and design bureaus; above all, liberation from excessive regulation of their activity by higher organizations; changes in the system of planning and reporting indicators; and replacement of the existing methods of financing and materially incentivizing the activity of research institutes.

1. L. I. Brezhnev, On the Fiftieth Anniversary of the Union of Soviet Socialist Republics. Moscow, Politizdat, 1972, p. 51. ↩

2. Materials of the XXIV Congress of the CPSU. Moscow, Politizdat, 1971, p. 130. ↩

3. V. F. Garbuzov, On the State Budget of the USSR for 1972 and on the Fulfillment of the State Budget of the USSR for 1970. Moscow, Politizdat, 1971, p. 7. ↩

4. K. Marx and F. Engels, Works, vol. 26, part I, p. 413. ↩

5. M. Bashin, Economic Accountability in Sectoral Research Institutes and Design Bureaus. “Moskovskii rabochii,” 1971. ↩

6. V. N. Lykovets, Economic Accountability and the Efficiency of Scientific-Research and Design Developments. Proceedings of the scientific symposium of the CMEA countries. Moscow, 1968. ↩