Collapse of the USSR - economics

1980-85

There was a negative growth rate for the first time

1987

Industrial production fell by 6%, the defence budget absorbed 40% of the government budget meaning government deficit rose from 37 billion to 57 billion roubles

Oil

There was a drop in world oil prices which was 54% of USSR’s exports

Inflation

An increase in state benefits led to inflation, almost 10% by 1989

Party divides over the economy

Radical reformers wanted to follow the 1958 Hungarian economic reform which introduced decentralisation and a mixed economy, however others wanted more discipline like Andropov

Nikolai Petrakov

Economist Nikolai Petrakov told Ryzhkov (Council of Ministers) that the State Committee on Prices should be abolished, while Ryzhkov agreed he wanted to wait

Anti-alcohol campaign

The anti-alcohol programme in May 1985 shrunk the growth in government economy

1990

By 1990, many economists believed that central planning would have to give wat to an essential market economy

Power of Gosplan

State Planning Committee (Gosplan) maintained power throughout the ‘500 Days Plan’ which led to unstable leadership as an increase in prices led to inflation while privatisation occurred

‘500 Days Plan’

238 pages long and made no concessions to traditional Soviet ideology, it set out large-scale privatisation, construction of market institutions and allowed republics power

Pavlov

In 1991, Pavlov called for high-domination bank notes due to inflation

Law on Co-operatives

1988, some authorities took 90% of co-operative profits

Shatalin Plan

The Shatalin Plan aimed at privatization and normal economic relations with the outside world, while Gorbachev did support it, he lost enthusiasm so it was dropped

Brezhnev Doctrine

The ending of the Brezhnev Doctrine meant that the government was no longer spending $40 billion annually

What percentage of household income was spent on alcohol?

15%

1985-86

Deficit of the Soviet economy rose from 2.4% to 6.2%

Twelfth Five Year Plan

1986-90, focused on science but remained on quantity over quality, there was a high investment in agriculture but still no improvement

Law on State Enterprises

June 1987, it loosened state control on wages and prices which weakened the authority of Gosplan

Law on Joint Enterprises

In January 1987, it allowed foreign businesses to establish in the USSR by 1990 there were 3,000 businesses

Food

1/5 of food was still imported in 1987 but 26/55 had meat rationing in 1988

Wages

Rose by 13% in 1989

State Commission on Economic Reform

In July 1989, the State Commission on Economic Reform issued a report that more action was needed, it called for a market-led economy, this split the Politburo

Soviet output

Soviet output decreased by 1/5 from 1990-91