What explains the fall of the USSR, c1985-91

How important were economic weaknesses in bringing about the fall of the USSR?

Long-term economic weaknesses

• Weaknesses highlighted in Novobirsk Report of 1983 - inefficiency and inflexibility
• Report given to politburo - Gorbachev only member to recognise reform was needed
• Solution unclear - tried with trial and error which sent economy into chaos

Gorbachev's initial economic reforms: discipline and acceleration

• Reformers brought into party and conservatives dismissed - Yeltsin promoted
• Attacks on alcohol - drinking age raised, cost of vodka tripled
• Tax revenues fell - fiscal deficit
• Illegal alcohol produced which was unhygenic

Twelfth 5-year plan

• Focus on investement and central planning:
• Investment sweked towards construction - led to more spending which used more investment
• Equipment inefficient and broke down
• Industry slow to adapt to new technology
• Technological imports expensive
• Agriculture using lots of investment but making little progress
• Focus on quantity over quality
• Gorbachev unable to alter fundamental problems - faced too much opposition within party
• Tried to centralise resources and reduce waste with 'superministries' - unsuccessful
• Implemented by priveledged who didn't want to give up power
• Resistance from military - wanted all investment so other sectors suffered
• Went into deficit to solve this - didn't work just made Gorbachev look worse

Economic perestroika

• Restructuring of the economy - more elements of private enterprise:
• Encourgement of joint ventures, January 1987 - Foreign firms could establish business in USSR - Hoped it would make USSR more open to foreign technology
• Law on State Enterprises, June 1987 - Loosening of state control over wages and production
• Co-operatives were legalised in 1988 - Small-scale businesses established

Impact of perestroika

• Food production increased a little but still not enough
• Enterprises still subject to state intervention - state decided allocation of resources
• Products diverted from state shops to co-operatives (where prices were higher) - caused inflation and impacted poor people
• Poorer cities left devoid of adequate food and supplies
• High profits meant corrupt officials demande bribes for permission to operate
• Uncertainty led to hoarding - rationing introduced
• Power to managers led to increase in wages
• Bureasucracy made foreign investment a slow process
• Reforms undermined by officials
• The fall in price of oil had significant impact as was Russia's main export
• Weakened system without providing a replacement
• Gorbachev's failure undermined his political power

State Commision on Economic Reform

• July 1989 - report commisoned saying a radical solution needed - a market-led economy
• Split party - reformers in favour but conservatives not
• 500 days programme suggested - rejected by Soviet government, accepted by Russian Parliment
• Division between Party Leadership and national republics caused chaos
• Economy collapsed

How significant were the failures of Gorbachev's political reforms?

Glasnost and the need to reform the party

• Apparatus of state was huge and unmanageable - wasteful, corrupt etc.
• Relations between central planning and regions poor
• Glasnost was opening up party to public for new ideas

The impact of glasnost

• Became an open attack on the party:
• Complaints about housing were popular
• Investigations revealed details of Stalin's terror, the famine and…