Brezhnev Economy Flashcards
What was the Brezhnev Era
-Spanned from 1964 to 1982.
-Characterized by a period known as the Era of Stagnation.
-Marked by a significant decline in economic growth and productivity, despite initial successes in industrial output and living standards.
What did Brezhnev focus on (thesis statement link)
Brezhnev’s economic policies, were characterized by heavy industry focus and agricultural neglect, ultimately contributed to systemic stagnation within the Soviet economy.
Kosygin’s Economic Reforms ‘Era of Stagnation’
-Occurred in 1965-66 when Alexei Kosygin tried to introduce several innovative measures and the only time during Brezhnev’s rule that there was an attempt at significant economic reform.
-Sought to decentralize economic control and improve productivity.
-However, reforms were often stifled by bureaucratic inertia and ideological resistance within the Politburo. The 1979 reform aimed to enhance economic efficiency but was poorly implemented and largely abandoned after Kosygin died in 1980.
-Brezhnev had worked to undermine them because it was impossible to encourage quality production and managerial initiative whilst the state continued to set prices, wages and targets.
Economic Successes of Brezhnev
-Agricultural output increased by 21% in 1966-70. largely as a result of increasing govt. investment and the encouragement of private plots
-Soviet oil production rose by 50% in 1972-80 and in the process, the USSR became the world’s largest oil producer.
-Living standards did improve in certain areas. By 1980, most Soviet families owned a refrigerator (86%) and a TV (74%). The minimum monthly wage was increased; and a minimum statutory holiday was introduced.
-Welfare benefits were extended to rural workers who had previously been denied them. Wage differentials between rural and urban workers also narrowed, so that by the 1970s, rural workers on average, earned 90% of their urban counterparts’ wages.
-Prices of basic commodities such as bread, potatoes, and clothing, and rents for apartments were kept low by the state.
Economic Failures of Brezhnev (domestically)
-Industrial output continued to rise but at an increasingly slow rate. GNP had risen by an average of 5% p.a. in 1960-65; this fell to 4% p.a 1970-78 and 2% p.a in 1979-82.
-Agricultural output rose by just 6% in the period 1981-85, despite increased government investment.
-In 1976-80, the USSR allocated 27% of its investment to agriculture, whereas the USA budgeted a mere 4% and despite this, agriculture productivity remained low, with persistent issues such as inadequate and declining crop production.
Brezhnev’s Eleventh Five-Year Plan (1981-1985)
-Brezhnev continued the tradition of Five-Year Plans but faced stagnation starting in the early 1970s. The plan promised reforms but ultimately failed to deliver substantial changes.
-In 1981, Brezhnev acknowledged that “The food problem is on the political as well as the economic plane, the crucial question of the Five-Year Plan”. –> Soviet govt was spending 40% of its foreign currency earnings on food imports.
Economic Failures of Brezhnev (internationally)
-The technological gap between the USSR and the West widened alarmingly from a Soviet perspective. The USSR was being increasingly left behind in the computer age.
-The USSR was increasingly dependent on grain imports, particularly from the USA and other Western countries. While state investment in agriculture peaked it didn’t translate into increases in output.
-USSR becoming ever more dependent on foreign loans. By 1978, western loans totalled $50 billion. Equally, the USSR became drawn into more joint industrial and financial ventures with the West, as its technological and financial weaknesses became increasingly apparent.
-The USSR’s dependence on oil exports made it vulnerable to a drop in oil prices. This started to occur in 1980 and by the mid-1980s world oil prices fell sharply, causing huge problems for the USSR.
Living standards under Brezhnev
Although rising gradually, lagged well behind those in the West and in some of the Eastern European communist countries.
–> Car ownership was just 6% for Soviet families, whereas 40% did in the GDR.
Black market
-The black market was estimated to account for 10% of Soviet GDP in the Brezhnev era.
Underlying problems affecting the Brezhnev economy
‘Command Economy’ by Stalin didn’t work:
–> The technological gap with the West widened.
–> A lack of incentives characterised both collectivised agriculture and the state-owned and directed industrial labour leading to low productivity levels.
Brezhnev Agricultural Policies
Collective Farming: reinforced existing collective farming structures and imposed central output quotas.
Consumer Goods Neglect
Heavy industry and military expenditure overshadowed consumer goods protection, leading to declining living standards for many citizens.
