History A-level Edexcel - Russia 1917-91: from Lenin to Yeltsin - Theme 2:2c

Khrushchev's main economic aims

- reform and modernise soviet economy

- improving living standards

- improving agriculture

- decentralising of economic control (sovnarkhozy)

- technological and scientific advancements

- expanding communist ideals economically

Challenges to Khrushchev's economic policy

- bureaucratic administration system in Moscow, climate of terror, harsh labour laws stifled initiative

- system was clumsy, wasteful and inflexible to respond to changes in demand

Khrushchev's industrial economic reforms

- 1957 - 105 Regional Economic Councils (sovnarkhozy) set up to supervise enterprise and move decision making away from centre

- harsh labour laws removed

- working week reduced from 48 to 41 hours by 1960

- managers given more influence and allowed to keep 40% of their factory profits to invest in their enterprise to encourage initiative

- greater emphasis on vocational education

- military spending cut in 1955 but increased in 1962 due to nuclear stand-offs with US

The Liberman plan (1962)

called for greater autonomy for local managers and for the market to replace the state as the decider of prices

Seven-Year Plan (1959-65) - causes

- Khrushchev's desire to overtake west

- correct failures from previous economic reforms

- shift towards consumer goods

- decentralise economic control

- improve science and technology

- strengthen Khrushchev's power

- chemical production through light industry to encourage growth

Seven-Year Plan (1959-65) - events

- discovery of new mineral resources encouraged gov to drive transformation in fuel+chemical industries

- shift of emphasis from coal to oil+gas

- linked to increased consumer good target

- regional development promoted

- increased investment in space exploration, nuclear technology, electronics

- resources allocated to consumer goods

Seven-Year Plan (1959-65) - consequences

- Sputnik (first space satellite) launched in 1957

- 1961 - sent Yuri Gagarin as first man in space

- chemicals consumer goods more abundant and living standards rose

- quality of goods often poor

- goods sometimes useless

- economy still lagged behind US as economic base smaller

- economy not designed to produce consumer goods but to meet targets

- economy focused on production and not consumption

- still poor labour productivity, inefficiency, waste

- decentralisation led to bureaucratic confusion

- planning made more difficult by Sovnarkhozy

- by 1964, economic growth slowed

Khrushchev's agricultural economic reforms

- 1955 - individual collective given greater power to make local level decisions

- MTS abolished but replaced with system requiring collective to buy own machinery

- collectives enlarged creating economies of scale and enabling greater investment but unpopular with peasants as detached from land they worked

- state procurement prices increased

- planned state purchases replaced compulsory seizure of food

- greater concession for peasants on how to use produce from private plots

- Virgin Lands Scheme (1954)

- Corn Campaign (1958)

- encouraged regional specialisation

Khrushchev's agricultural economic reforms - Virgin Land Scheme (1954)

- encouraged opening of new areas to agricultural production

- Komosol volunteers put to work in Siberia and Kazakhstan

- initially increased production but led to soil depletion

Khrushchev's agricultural economic reforms - Corn Campaign (1958)

- encouraged farmers in Ukraine to grow maize

- wheat production would be in Virgin Lands and maize in traditional farms

- maize used to feed animals and hence increase meat availability

- failure as climate, low productivity and inferior machinery and fertilisers

- less hay produced

Consequences of Khrushchev's economic reforms for agriculture - successes

- status of agriculture raised

- farmers' income grew but still behind industrial workers

- agricultural output increased initially (due to Virgin Lands Scheme and mechanisation)

- consolidated Khrushchev's position leading to more ambitious campaigns

Consequences of Khrushchev's economic reforms for agriculture - failure

- productivity and efficiency still low

- Virgin Land Scheme expensive

- 1959 - Kazakhstan grain production target not met

- poor roads and inadequate storage facilities

- USSR had to import grain from N. America and Australia

- MTS abolished so less modern equipment

- disorganisation and contradictory reform

- waste due to inadequate storage facilities

Reforms post Khrushchev (1965)

- Regional Economic Councils abolished

- Gosplan given greater coordination power

The Kosygin Reforms (1965)

- gave incentives to enterprise managers to use resources productively

- attempted to make central planning more aware of cost and profit

- achieved little as officials unenthusiastic and hostile towards reforms

- Brezhnev sabotaged reforms

- bonuses for output higher than for innovation

Brezhnev's main economic aims

- stability and maintaining growth

- preservation of central planning

- heavy industry prioritised

- improving living standards gradually

Brezhnev's industrial economic reforms

- 1973 - major industrial complexes joined scientific research institutions to ensure latest technology applied to production - 'alliance of working class with science'

- 1974 - target system further centralised and focused more on cost and profit

- increased investment in military-industrial complex

Consequences of Brezhnev's industrial reforms

- stability in SR

- military strength

- steady industrial growth

- economic stagnation in LR

- consumer goods neglected

- lack of technological progress

- inefficiency, corruption

Ninth Five-Year Plan (1971-75)

- heavy industry and military production prioritised

- slight emphasis on consumer goods

- living standard rose despite goals not being fulfilled

- Brezhnev persuaded 'metal eaters' to give resources to consumer industries and agriculture

- centralising economic control

Brezhnev's agricultural economic reforms

- Khrushchev's decentralising schemes reversed

- power returned to Ministry of Agriculture

- Virgin Lands Scheme dropped

- expansion of fertiliser usage

- continued to invest in agriculture

- steady rise in overall production and steady decline in workers' productivity as unskilled workers, equipment broke down, impassable roads

- food production failed to meet rising demand - gap made up by private production

- brigade system introduced to increase productivity but abandoned as party feared return to family farming

- continued import of US wheat showing failure

Andropov's main economic aims

- increased labour discipline and productivity

- combat corruption and waste

- improve inefficiencies

Andropov's attempted economic reforms

- focused on removing corruption and falsifying figures

- wished to improve labour discipline - conducted spot checks for slackers which added to resentment towards him and government

Economic decline (1980s)

- growth rates halting

- situation worse than figures suggested (as these based on value of goods which were based on government decided prices)

- poor quality goods

- poor productivity levels

- waste and environmental damage serious problems that were not focused on

Reasons for economic decline

- the legacy of the stalinist system

- problems inherent with a command economy

- the 'social contract'

- lack of investment

- outdated technology

- dominance of the military-industrial complexes

- falling oil prices

- falling industrial and agricultural output

Reasons for economic decline - legacy of stalinist system

- Stalin approach geared towards rapid industrialisation in 1930s and reconstruction after WW2 so system highly centralised

- bureaucrats, who benefited from this, resistant to change

Reasons for economic decline - problems inherent in a command economy

- central control didn't encourage initiative and creativity

- any reforms encouraging decentralisation thwarted by party officials

- government-set prices and costs didn't identify/ solve inefficiency issues

- central planning too rigid+inflexible for complex modern economy

Reasons for economic decline - the 'social contract'

- unstated but understood contract that gov would provide employment and reasonable standard of living in return for workers' compliance making gov unwilling to use ultimate sanction of economic failure (closing factories and unemployment) so productivity declined

- 'we pretend to work and they pretend to pay us'

Reasons for economic decline - lack of investment

- Khrushchev and Brezhnev increased investment in agriculture and not enough

- short supply of storage facilities, rural transport, reliable machinery

Reasons for economic decline - outdated technology

- production of heavy industry exceeded US in 1970s

- by 1980s, USSR struggling to keep up with technological advances in west

- use of outdated methods

- deals signed with west to gain access to new technologies and agreements made with fiat and renault but rarely extended beyond the plant

Reasons for economic decline - dominance of military-industrial complex

- soaked soviet resources and people out of working population

- Brezhnev's foreign policy increased intervention in developing world so expenditure on arms and defence necessary