Historical interpretations

What were the three periods of economic reform called

1. Rationalisation (acceleration) 1985-86

2. Reform 1987-90

3. Transformation 1990-91

What was Gorbachev’s anti-alcohol campaign and what date was this

May 1985 he reduced alcohol production at state run plants by 50%, it was a cautious reform

Why did Gorbachev’s anti alcohol campaign in 1985 fail/weaknesses

1. Government revenue from alcohol sales fell by 67B roubles, alcohol revenue accounted for 9% of GDP this was a massive problem

2. In 1987 there were 4.5M registered alcoholics, twice what it had been in 1960

What was the 12th 5 year plan

Revealed at the 25th party congress, Gorbachev realised punitive measures could not solve economic problems. Instead he planned investment that would focus on improving Russian science and research - predicted this would lead to a 20% increase in industrial production in the next 15 years

What was the result of the 12th year plan

Russian debt spiralled from 18B in 1981 to 27B in 1988 - due to the decline in the global price of oil, which they sold to the West ($70 a barrel in 1981 to $20 in 1985) Soviet revenues dropped by more than 2/3

Why did Gosplan cause the failure of acceleration

Gosplan advised to focus investment on manufacturing, Gorbachev refused. (real reason acceleration didn’t produce results was because it adhered too closely to central planning) Gosplan was responsible for enacting policy and overseeing decision making, their resistance caused problems

why did Gorbachev reform the economy following accelaration

He believed Gosplan was in the way of economic recovery so he decided to use methods outside of the state apparatus through introducing market forces into the economy

What happened at the January 1987 meeting of central committee

Yeltsin denounced the slow pace of Gorbachevs economic reforms, Gorbachev and other members of the politburo denounced him, he was demoted and humiliated

Which reforms were introduced in the January 1987 meeting of the central committee

1. The encouragement of joint ventures

2. The law on state enterprises

3. The law on cooperatives

4. Central government attempts to control the free market

encouragement of joint ventures : date, what was it, example, results

January 1987

Allowed foreign firms to establish businesses in the Soviet Union with joint venture with the state, they could also earn a majority of Russian businesses

• Mcdonalds opened in red square in 1990

Results - He hoped this would create jobs, improve technology and stimulate growth but businesses were met with an enormous amount of bureaucracy putting businesses of and limited its effectiveness

Law on state enterprise : date, what was it, results

January 1987

Loosened state control over wages and prices, weakening the authority of Gosplan. Factory managers could be elected regionally rather than being chosen by the centre and factories could choose what they produced once targets had been met

Results - Gosplan ignored the new legislation finding ways to maintain control eg : using its connections in each state of the USSR to continue dominance over planning, businesses charged higher than consumers could afford increasing government debt

Law on cooperatives : date, what was it, results

1988

Gave people the right to set up large scale companies, by 1990 200,000 companies had been established, urban wages rose by 9% whilst the countryside remained poor

Result - introduced corruption (an aspect of unfettered capitalism) businesses could sell to who they liked meaning they tended to complete deals with other states and city authorities, poorer cities were devoid of investment and adequate food

Centralised government attempts to control free market : what was it, results

Perestrokia reforms attempted to eradicate the worst parts of the centralised economy (the fact that it only took the needs of the government into account, not the needs of the people) and mix it with the best parts of the free market economy

Results - they clashed, goods produced by the free market were higher than those produced by the centralised system meaning the government continued subsidising goods which added to their debt, price caps introduced were not economically rational (cost more to produce than to sell)

What was the result of the partial market reforms

undermined central planning whilst failing to create an alternative eg : although soviet farms had produced 218M tons of grain there was no longer an effective distribution system because it had been abolished leading to severe food shortages in 1990

How much did the economy shrink following the economic reforms

between 1986 and 1990 the economy shrunk by 4%

How did Gorbachev attempt to recover following the failed economic reforms and what were the results of this

He cut subsidies allowing prices to rise which would support the new market sectors by giving them a chance to set market prices

Results - prices rose rapidly, KG of butter cost 3.50 in January 1990 and 8.50 in April, 1988 meat was rationed in 26 out of 55 regions in Russia

what were the political consequences of the economic chaos following the reforms

widespread dissatisfaction within the communist government, approval rating dropped from 52% in December 1989 to 21% in November 1990

What was the 500 day programme report

recommended widespread marketisation and privatisation within 2 years, written by the state commission on economic reform

Results : split the politburo into those wanting radical change and those wanting gradual change, Yeltsin's criticisms of Gorbachevs leadership became more vocal

Yeltsin wanted reforms to be introduced right away, Gorbachev hesitated and rejected the reforms