"Director's funds" at the Soviet enterprises (1946-1964): resource of the transformation of social order

Little attention of scholars is paid to the so-called «director's funds» among other Soviet economic institutions of the post-war period. The fund included a part of the enterprise's profit and was at the full disposal of managers («directors»). In fact, a legal center of accumulation and distribution of benefits which did not depend on the state appeared in a planned economy. The size of the fund fluctuated from year to year and was determined mainly by the possibility of fulfilling the state task on production. Large factories had multimillion director's funds. According to the idea of the 1946 law, managers could spend funds on social needs of workers and on the modernization of production. In real life distribution, managers adopted a paternalistic model. They had to solve the task of retaining qualified personnel at the enterprise; as a result, a significant part of the funds was invested in housing construction, workers' recovery and social payments. In addition, managers cared about the strengthening of hierarchies within the labor collective and outside the plant. In the first case, executives used bonuses; in the second one, they used voluntary public responsibilities and case patronage (of schools, for example). Investments in technical modernization were minimal. Local community believed in the manager's ability to solve any problem with the help of financial reserves. Occasionally, central or regional authorities burdened those funds with mandatory spending. However, the authorities themselves turned out to be supplicants in most cases. Control over the formation and expenditure of funds was quite weak and unsystematic, especially with respect to large enterprises. The inspection bodies found violations either accidentally or by denunciations. The punishment for directors was light. The authorities perceived funds as the exclusive competence of managers. In a similar way, managers eliminated trade unions from controlling the expenditure of the fund. In general, the funds increased the importance of factory managers in the social system and turned factories into independent sources of social benefit's distribution. At the same time, «director's funds» did not change the basis of the economic system.