INTERPRETATIONS USSR интерпретации СССР
Economic weakness
Background
- from 1928 to the late 1980s the Soviet economy was a command economy and led to success
under Stalin
- Eg during the mid 1950s the economy grew around 7.1% a year whilst the US economy only
grew 2.9% - there were even concerns in the US that communism might dominate the world
economic system
- however from 1958-63, the soviet economy grew at 5.3% (not helped by the arms race with
the USA)
- By the 1970s, annual growth dropped to 2%
- In 1980 this was at 0.6%
Fundamental economic weaknesses
- there were no incentives for hard work or innovation
- The di erence between rich and poor was very small - the richest 10% were only 3x richer
then the poorest 10%, compared the USA where they were 7x wealthier
- As a result there was less incentive for workers to improve and labour productivity was v low
- Waste was a huge problem
- Gosplan (central planning committee) measured and rewarded production , regardless of of
quality or proportion of actually used output - therefore although large amounts of good were
produced was often wasted
- Eg Gosplan demanded 400,000 tractors a year, of which 20% were never used due to
shortage of drivers
- In 1986, 12% machinery produced estimated never used
- Economy wasn’t modernised
- Especially in agriculture - lacked sophisticated machinery and therefore needed huge
amounts of labour
- Eg 25% of soviet workers employed in farms compared to 4.6% in the USA , which were
6x more productive
- Lack of modern storage facilities (meant grain would rot In storehouses) and e cient
transport systems
- The arms race took up a huge % of GDP
- 17% spent on defence compared to 6% in the US
- Starved other areas of the economy of much needed funds
- Centralisation
- The centralised economy meant production could not be maximised
- Eg farmings could not use their expertise to adjust their planting / harvesting calendar as it
was set centrally , who also set schedules for fertilisers at the wrong time / wrong type ,
which meant production of important crops increased slowly
Gorbachev and Perestroika
- perestroika = restructuring. Failed and led to shrinking instead of slow growth
- Three states: rationalisation 1985-86 : initial reforms to stimulate economic modernisation,
higher rates of growth and production, reform 1987-90: introduce market forces whilst
initiating political reforms to build support for these changes, transformation 1990-91:
abandoning fundamental aspects of the system like single party rule and command economy
- Alcohol production
- 1985 - Gorbachev reduced alcohol production by 50% and assigned 55,000 party members
to a task force to stop illegal production of alcohol
- Failed - alcohol consumption in 1987 was still double that of 1960 . Soviet citizens over age
of 15 were still consuming 15-16 litres of alcohol a year
- However they were now drinking samogan самогон (moonshine) and therefore government
made less money from vodka - alcohol sales dropped by nearly 70 billion roubles, 9% of the
GDP
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, Acceleration 1985-6
- Heart of the12th ve year plan - a huge increase in investment (done through the 12th ve
year plan)
- Failed - largely du to the decline of the global price of oil which the USSR had been selling to
the west
- Had accounted for 54% of exports
- Went from $70 a barrel in 1981 to $20 a barrel in 1985 - as a result, revenue dropped by
2/3
- Gorbachev nanced acceleration b y borrowing from western countries
- Debt rose from $18 billion to $27 billion
- Reforms were hindered by the fact the reformers were trying to protect their pwn privileged
positions
- Changes to military priorities were resisted by the military who pushed for even more
investment
- In some cities, later reforms were ignored eg in Leningrad the city administration withdraw
all sausages from shops and warehouses and buried them
- Gorbachev invested in energy production , ignoring advice of experts who wanted to put it
towards high tech machines (links to fault of Gorbachev)
- Soviet industry had become notorious for using outdated equipment leading to
unproductively
- Investment skewed towards construction projects which led to overspending to equip the
factories
- Agricultural sector was swallowing vast sums of investment and not leading to an
improvement in productivity
- Investment therefore did not lead to growth, just more debt (and spending more on interest)
and less money for meaningful modernisation = caused an economic crisis
Reform 1986-90
- With the failure of acceleration, o cials began to believe that the only way to recover the
marker was some degree of market reform
- Law on Individual Economic Activity (nov 1986) - made it legal ft make money from small-
scale work such as private teaching / repair and maintenance jobs
- Law on State Enterprises + Law on Joint Ventures (1987) - devolved power from central
government to factory management - eg they could set the prices for their production
- Foreign rms could establish business in the USSR eg McDonalds
- This failed as: very little power was actually devolve as Gosplan found new ways of
maintaining central control. And the ability to charge higher prices meant the government
had to pay more for goods, which increased debt .
- Foreign venture success limited by endless bureaucracy needed
- Law on Co-operatives (1988) - made it legal to set up large-scale private companies. By
1990, nearly 200,000 private companies (co-operatives) had been set up. They were
successful and increased their owners incomes 2/3 x more then those employed by state
enterprises
- They could shop around fr a buyer to o er a good price for their goods = deals were made
with richer city authorities
- Gorbachev also restricted the power of Gosplan along with these reforms, and in 1990 it was
abolished
- the new partial market which Gorbachev hoped would combine the best features of the market
with the best features of planning, could not function properly and created greater problems
- The government imposed low prices on free market goods - the price capping made
production uneconomic and caused problems for the new co-operatives
- Rationing in many cities - 26/55 regions rationed meat
Economic chaos + political problems
- The reforms created economic chaos - undermined the central planning system whilst at the
same time failing to create an e ective market alternative. There was no e ective way of
distributing goods and there were shortages of essential goods
- Eg 1990 - huge food shortages , despite 218 million tonnes grain produced there were still
food shortages
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Economic weakness
Background
- from 1928 to the late 1980s the Soviet economy was a command economy and led to success
under Stalin
- Eg during the mid 1950s the economy grew around 7.1% a year whilst the US economy only
grew 2.9% - there were even concerns in the US that communism might dominate the world
economic system
- however from 1958-63, the soviet economy grew at 5.3% (not helped by the arms race with
the USA)
- By the 1970s, annual growth dropped to 2%
- In 1980 this was at 0.6%
Fundamental economic weaknesses
- there were no incentives for hard work or innovation
- The di erence between rich and poor was very small - the richest 10% were only 3x richer
then the poorest 10%, compared the USA where they were 7x wealthier
- As a result there was less incentive for workers to improve and labour productivity was v low
- Waste was a huge problem
- Gosplan (central planning committee) measured and rewarded production , regardless of of
quality or proportion of actually used output - therefore although large amounts of good were
produced was often wasted
- Eg Gosplan demanded 400,000 tractors a year, of which 20% were never used due to
shortage of drivers
- In 1986, 12% machinery produced estimated never used
- Economy wasn’t modernised
- Especially in agriculture - lacked sophisticated machinery and therefore needed huge
amounts of labour
- Eg 25% of soviet workers employed in farms compared to 4.6% in the USA , which were
6x more productive
- Lack of modern storage facilities (meant grain would rot In storehouses) and e cient
transport systems
- The arms race took up a huge % of GDP
- 17% spent on defence compared to 6% in the US
- Starved other areas of the economy of much needed funds
- Centralisation
- The centralised economy meant production could not be maximised
- Eg farmings could not use their expertise to adjust their planting / harvesting calendar as it
was set centrally , who also set schedules for fertilisers at the wrong time / wrong type ,
which meant production of important crops increased slowly
Gorbachev and Perestroika
- perestroika = restructuring. Failed and led to shrinking instead of slow growth
- Three states: rationalisation 1985-86 : initial reforms to stimulate economic modernisation,
higher rates of growth and production, reform 1987-90: introduce market forces whilst
initiating political reforms to build support for these changes, transformation 1990-91:
abandoning fundamental aspects of the system like single party rule and command economy
- Alcohol production
- 1985 - Gorbachev reduced alcohol production by 50% and assigned 55,000 party members
to a task force to stop illegal production of alcohol
- Failed - alcohol consumption in 1987 was still double that of 1960 . Soviet citizens over age
of 15 were still consuming 15-16 litres of alcohol a year
- However they were now drinking samogan самогон (moonshine) and therefore government
made less money from vodka - alcohol sales dropped by nearly 70 billion roubles, 9% of the
GDP
ff ffi
, Acceleration 1985-6
- Heart of the12th ve year plan - a huge increase in investment (done through the 12th ve
year plan)
- Failed - largely du to the decline of the global price of oil which the USSR had been selling to
the west
- Had accounted for 54% of exports
- Went from $70 a barrel in 1981 to $20 a barrel in 1985 - as a result, revenue dropped by
2/3
- Gorbachev nanced acceleration b y borrowing from western countries
- Debt rose from $18 billion to $27 billion
- Reforms were hindered by the fact the reformers were trying to protect their pwn privileged
positions
- Changes to military priorities were resisted by the military who pushed for even more
investment
- In some cities, later reforms were ignored eg in Leningrad the city administration withdraw
all sausages from shops and warehouses and buried them
- Gorbachev invested in energy production , ignoring advice of experts who wanted to put it
towards high tech machines (links to fault of Gorbachev)
- Soviet industry had become notorious for using outdated equipment leading to
unproductively
- Investment skewed towards construction projects which led to overspending to equip the
factories
- Agricultural sector was swallowing vast sums of investment and not leading to an
improvement in productivity
- Investment therefore did not lead to growth, just more debt (and spending more on interest)
and less money for meaningful modernisation = caused an economic crisis
Reform 1986-90
- With the failure of acceleration, o cials began to believe that the only way to recover the
marker was some degree of market reform
- Law on Individual Economic Activity (nov 1986) - made it legal ft make money from small-
scale work such as private teaching / repair and maintenance jobs
- Law on State Enterprises + Law on Joint Ventures (1987) - devolved power from central
government to factory management - eg they could set the prices for their production
- Foreign rms could establish business in the USSR eg McDonalds
- This failed as: very little power was actually devolve as Gosplan found new ways of
maintaining central control. And the ability to charge higher prices meant the government
had to pay more for goods, which increased debt .
- Foreign venture success limited by endless bureaucracy needed
- Law on Co-operatives (1988) - made it legal to set up large-scale private companies. By
1990, nearly 200,000 private companies (co-operatives) had been set up. They were
successful and increased their owners incomes 2/3 x more then those employed by state
enterprises
- They could shop around fr a buyer to o er a good price for their goods = deals were made
with richer city authorities
- Gorbachev also restricted the power of Gosplan along with these reforms, and in 1990 it was
abolished
- the new partial market which Gorbachev hoped would combine the best features of the market
with the best features of planning, could not function properly and created greater problems
- The government imposed low prices on free market goods - the price capping made
production uneconomic and caused problems for the new co-operatives
- Rationing in many cities - 26/55 regions rationed meat
Economic chaos + political problems
- The reforms created economic chaos - undermined the central planning system whilst at the
same time failing to create an e ective market alternative. There was no e ective way of
distributing goods and there were shortages of essential goods
- Eg 1990 - huge food shortages , despite 218 million tonnes grain produced there were still
food shortages
fi fi fi ff ffi ff ff fi
