National Economy, the historically formed complex of branches of production in a given socialist country, interlinked through the division of labour (see Social Division of Labour). The national economy includes the branches in the sphere of material production, where the social product is created, and the branches of the non-production sphere, which provide nonmaterial services (see Production Sphere; Non-production Sphere). Material production is, in turn, subdivided into branches manufacturing means of production (Department I of social production) and branches manufacturing consumer goods (Department II) (see Reproduction). The prerequisites for creating an economy as an integrated whole were formed for the first time under capitalism during the formation of hational states on the basis of developing productive forces, a deepening social division of labour, specialisation of the production branches, the appearance of a national market, and large-scale mechanised production. The economy under capitalism is based on private ownership of the means of production and exploitation of wage labour (see Exploitation of Man by Man); it develops, in accordance with the economic laws of capitalism, anarchically, in a cyclical way, subordinated to the main goal of capitalist production—the pursuit of profit. More vigorous interference by the state in the economy cannot overcome antagonistic contradictions and the spontaneous character of economic development, periodical crises, monetary upheavals, inflation, unemployment, etc. Under socialist conditions, the national economy is based on public ownership of the means of production, the labour of workers free from exploitation, actual implementation of the right to work, and on the universal character of labour. The socialist national economy develops in a planned way, at a rapid pace, on the basis of socialist economic laws; it is aimed at the fullest satisfaction of the growing material and intellectual requirements of the population. The aggregate social product belongs to the working people. The national economy is managed on the basis of state economic and social development plans, due account being taken of the branch and territorial principles, and centralised management being combined with the economic independence and initiative of enterprises (associations), on the basis of active participation by the working people in management. This makes it possible to make full use of the existing material and labour resources in the interests of society as a whole and of each of its members (see Democratic Centralism in Economic Management). The economy in the USSR constitutes an integrated national economic complex embracing all links of social production, distribution and exchange, and ensuring, on the basis of the socialist social division of labour, a combination of the economic interests of individual constituent republics and of the entire country. Developed socialist society ensures all the necessary conditions for the planned formation of a progressive branch structure of the national economy complying with the tasks of building the material and technical base of communism, and of ensuring a steady rise in the efficiency of social production and the people’s well-being. The scope of the national economy grew immeasurably as socialism was being built in the USSR. Multi-branch industry, large-scale agriculture and advanced science have become its foundations. The structure of social production is being further improved. The branches determining scientific and technical progress, a growing output of farm produce and consumer goods and the expansion of the services sphere for the population are developing at an accelerating pace. The distribution of the productive forces is being further improved. The fundamental advantages of the national economy under socialism are graphically illustrated by the faster development of socialist production and the steady increase of the standard of living. The national economies of the socialist countries are closely interlinked and form the world socialist economic system. 239 Especially close economic, scientific and technical bonds have taken shape and are developing between the member-countries of the Council for Mutual Economic Assistance (CMEA) on the basis of the international socialist division of labour (see Division of Labour, Socialist International), this reflecting the objective process of socialist economic integration.