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2.3 - Economic Policies: Khrushchev & CO
Problems in the Economy 1955
- High military spending
- Inherent ine ciency of the command economy
- Reduced power of the secret police and absence of terror
- Aftermath of Stalin’s policies: bureaucratic system and atmosphere of terror
which restrained initiative (wasteful and in exible)
Khrushchev’s Policies
• De-stalinisation: move away from centralised system, more focus on
consumer goods and agriculture
- Decentralisation of economy attempted to give planners more info
about factories, undermining central coordination.
- Factory managers given power - 40% of pro ts given to invest
in their enterprises
- “Carrot/stick” method: econ operated with reward system
- Sovnarkhozy: 105 regional councils set up in 1957 to decentralise
decision making & consider local conditions (Gosplan lost power)
- Incentives replaced coercion: working week reduced from 48h to
41h by 1960
- Emphasis on vocational education: specialist technical schools set
up for industrial development
• 6th 5 Year Plan (1956-60): Virgin Lands Campaign
- Military spending reduced from 1955 12% to 1958 9%
• 7 Year Plan: 1959-65
- Discovery of new mineral resources in Volga-Urals led to
transformation of chemical & fuel industry
- Liberman Plan, 1962: move towards market-based economy, more
autonomy to local managers (watered down by Stalinists in Polit)
- Reduction of grain requisitioning and taxes and increased cost of
grain (gov paid more) to boost agriculture -> planned state
purchases
1
ffi fl fi
, - Individualism encouraged, concessions to private plots
• AIMS:
- Focus on light industry to broaden base of the economy -> more
variety in industry (less focus on heavy industry)
- Aimed to increase chemical production, boost agriculture and
consumer goods and raise living standards
• RESULTS:
- Production of consumer goods increased by 60%, fertiliser
production increased by 19 million tons
- Very unpopular within Party, caused confusion in planning system,
made economy grow but failed to meet targets
- 1962 Plan’s targets changed: quantity over quality meant materials
for consumer goods were not given as needed
- Nearly all eggs produced privately
- 1964, due to Arms Race and Cold War, military spending back up to
12%
• West worried about USSR overtaking it technologically (“We will
bury you!” 1957, Yuri Gagarin in space 1959...) = increased
national pride
Agricultural Reforms
2
2.3 - Economic Policies: Khrushchev & CO
Problems in the Economy 1955
- High military spending
- Inherent ine ciency of the command economy
- Reduced power of the secret police and absence of terror
- Aftermath of Stalin’s policies: bureaucratic system and atmosphere of terror
which restrained initiative (wasteful and in exible)
Khrushchev’s Policies
• De-stalinisation: move away from centralised system, more focus on
consumer goods and agriculture
- Decentralisation of economy attempted to give planners more info
about factories, undermining central coordination.
- Factory managers given power - 40% of pro ts given to invest
in their enterprises
- “Carrot/stick” method: econ operated with reward system
- Sovnarkhozy: 105 regional councils set up in 1957 to decentralise
decision making & consider local conditions (Gosplan lost power)
- Incentives replaced coercion: working week reduced from 48h to
41h by 1960
- Emphasis on vocational education: specialist technical schools set
up for industrial development
• 6th 5 Year Plan (1956-60): Virgin Lands Campaign
- Military spending reduced from 1955 12% to 1958 9%
• 7 Year Plan: 1959-65
- Discovery of new mineral resources in Volga-Urals led to
transformation of chemical & fuel industry
- Liberman Plan, 1962: move towards market-based economy, more
autonomy to local managers (watered down by Stalinists in Polit)
- Reduction of grain requisitioning and taxes and increased cost of
grain (gov paid more) to boost agriculture -> planned state
purchases
1
ffi fl fi
, - Individualism encouraged, concessions to private plots
• AIMS:
- Focus on light industry to broaden base of the economy -> more
variety in industry (less focus on heavy industry)
- Aimed to increase chemical production, boost agriculture and
consumer goods and raise living standards
• RESULTS:
- Production of consumer goods increased by 60%, fertiliser
production increased by 19 million tons
- Very unpopular within Party, caused confusion in planning system,
made economy grow but failed to meet targets
- 1962 Plan’s targets changed: quantity over quality meant materials
for consumer goods were not given as needed
- Nearly all eggs produced privately
- 1964, due to Arms Race and Cold War, military spending back up to
12%
• West worried about USSR overtaking it technologically (“We will
bury you!” 1957, Yuri Gagarin in space 1959...) = increased
national pride
Agricultural Reforms
2
