How important were economic weaknesses?

Explain the Novosibirsk Report of 1983.

- compiled by Tatyana Zaslavskaya (leading economic sociologist)
- drew attention to growing crisis in agriculture due to inefficiency and inflexibility
- heading 'for internal use only', distributed Politburo = ageing members didn’t understand

What did Gorbachev realise to due to Novosibirsk Report?

- reform was needed
- less clear about solution = trial and error ending in dismantling of the Soviet economic system and plunged economy into distruption and chaos
- result = government placed in a weak and vulnerable position

What did Gorbachev's initial steps begin with?

- positioning of like-minded reformers into key positions
- rival Romanov dismissed 1985
- key reformers brought in: Ligachev and Ryzhkov
- Yeltsin and Yakolev = reformers promoted to Central Committee 1986

What was Gorbachev's initial approach?

- echoed Andropov - attacked rampant alcoholism
- would help with health and improve alcoholism

What had a detrimental effect on the workforce and what did Gorbachev do in April 1985?

alcoholism → mid-1980s = 15% household spending, many turned up to work drunk
- statement "We can't build Communism on vodka"

How did the government try to curb drinking and was it successful?

introduced a series of measures: legal age raised to 21, retail outlets where it was sold reduced, vineyards destroyed, distilleries closed, cost of vodka tripled
→ tax revenues fell = shortfall in budget, illegal moonshine liquor produced in large quantities and often in unhygienic conditions

What were the focus' of investment? (12th FYP)

science and research, especially engineering

What were the key weaknesses? (12th FYP)

- construction projects = extra spending as needed to equip factories constructed
- use of out-of-date equipment - prone to breaking down = unproductive
- industry slow to use new technology and imports of foreign tech = drain on foreign exchange which was often used to import food
- agricultural sector swallowing investment but no improvements in productivity
- quantity>quality = sometimes unusable

What did Gorbachev's policy of acceleration fail to do? (12th FYP)

address fundamental weaknesses - level of opposition to any real change (from Party and state economic planning apparatus)

What did Gorbachev say about Gosplan?

"What they want... they do" (1986)

What did Gorbachev attempt to do under the Twelfth Five-Year Plan?

attempted to streamline the state apparatus to avoid waste through duplication and to cut rivalry by competing interests

What were set up instead of decentralising decision making? (12th FYP)

'Superministries' to achieve better co-ordination and reduce waste

Why did the 'Superministries' approach never materialise? (12th FYP)

- implemented by those in priveleged positions who the reforms were threatening
- changing investment priorities = resistance from military
- industrial and military investment could only be increased if other sectors suffered = threat to government ability to maintain consumer goods

What was a short-term remedy that could not be sustained? (12th FYP)

going into deficit → 1985 -86 deficit rose 2.4% GDP to 6.2%

What exacerbated the situation? (12th FYP)

- Gorbachev's failure to grapple with the underlying economic problems
- ongoing war in Afghanistan
- increased defence spending in context of USA's Strategic Defence Initiative/Star Wars Programme

What did Gorbachev do in 1987?

- decided more fundamental economic restructuring needed
- January Plenum of Central Committee = launched propoal for economic perestroika (restructuring)

What was Gorbachev's hope? (economic perestroika)

introduction of market mechanisms and private enterprise = revitalised economy

What reforms occurred in 
1) January 1987
2) July 1987
3) 1988
(economic perestroika)

1) Encouragement of joint ventures
→ foreign firms establishing businesses, usually in joint enterprises with the state, Moscow = 1st McDonalds 1990, hope = modern technology introduced
2) Law on State Enterprises
→ loosening of state controls over wages and pries, weakened Gosplan authority, allowed element of election in manager choice, factory produce what they like after targets met
3) Co-operatives legalised
→ allowed small-scale price-setting private enterprises to be established, term 'co-operatives' appealed to conservative elements = disguised move to more of a free-market economy, result = flourishing sector in cafes, restaurants and small shop

What was the impact of perestroika on food production?

1986-7 = small increase in the growth rate from 1%-2%, still inadequate, 1/5 foodstuffs imported

What was the impact of perestroika on enterprises?

still subject to state interference (allocation of materials), attitudes of bureaucrats = tight control

What had a particularly bad impact on pensioners and other groups who lived on a fixed income?

the production of inflation and stripping of supplies from state shops due to the diversion of products (esp foodstuffs) from state shops (low prices) to cooperatives

What resulted in deals being concluded with richer city authorities? (perestroika)

co-operatives able to shop around for a buyer who would offer them a good price

What was the result of co-operatives being more productive than the state sector? (perestroika)

- attracted attention of corrupt government officials = demanded bribes for permission to operate
- criminal gangs saw potential - extortion rackets (add to wealth of illegal alcohol)

What did uncertainty over supplies encourage? (perestroika)

wave of hoarding - rationing introduced in some cities to try ease (1988 meat rationed in 26/55 regions)

What did implementing the principle of electing managers do? (perestroika)

steep rise in wages, urban wages rose 9% 1988, 13% 1989

How was the progress of reforms made slow? (perestroika)

- foreign companies keen to invest but faced with endless bureaucracy (put off)
→ end of 1990, nearly 3,000 joint ventures but most small-scale and little impact
- often undermined by officials → some cities ignored, some sabotaged
→ Leningrad = administration buried all sausages from shops and warehouses

What was the situation made worse by? (perestroika)

a fall in the price of oil - reliant as a source of foreign exchange
→ by 1984, oil and gas = 54% Soviet exports

Why was the Soviet economy massively in debt and approaching crisis point by the end of 1989?

- Gorbachev's promise of an improvement in consumer goods not achieved - made worse
- strikes increased → protested over unpaid wages and food shortages (e.g coal miners in Don Basin)
→ response = quick wage raise, but short term
- shops empty of things to buy

What report did the State Commission on Economic Reform issue in July 1989 and what was the result?

concluded more radical solution needed - move to market-led economy
→ split Politburo - reformers = quick, others e.g Ryzhkov = gradual

What led to economic collapse?

- by October 1989 economic advisor Stanislav Shatalin put forward 500 Days Programme = rapid move to market economy
- rejected by government, accepted by Russian Parliament = division and chaos

How much did Soviet output decline between 1990 and 1991?

by one-fifth

According to critics...

perestroika had led to catastroika, an economic catastrophe

What have interpretations of Gorbachev's economic reforms been influenced by?

attitudes to communism as an economic system

What view of Gorbachev's economic reforms have historians adopted in the West?

liberal free-market economics = best method of growth and supplying population with needs and wants
→ conclusion = communism inherently weak

What perspective of Gorbachev's economic reforms have historians on the political left taken?

Soviet economic weaknesses not insurmountable
→ would not in itself bring about the collapse
→ unfavourable international climate = Afghanistan war, falling oil prices, US embargo on imports of technology to USSR, collapse of communist regimes in Eastern Europe