Gorbachev's New Thinking Flashcards
What was Gorbachev’s initial response to Soviet Economic issues?
Gorbachev stated at the 27th Communist Party Congress that without economic and social development, the USSR could not defend its position on the international scene
What were 4 factors undermining Soviet economic growth?
- Alcoholism
- Lack of foreign investment
- State controlled business
- Inflation and Worker discontent
How did alcoholism undermine the Soviet economy?
Employees would not show up to work meaning productivity decreases and therefore negatively impacts economy
How did a lack of foreign investment undermine the Soviet economy?
No foreign currency to stimulate growth
How did state controlled businesses undermine the Soviet economy?
Central control and planning and little recognition of consumer demand.
How did inflation and worker discontent undermine the Soviet economy?
Wages rarely stayed in line with inflation – led to unrest and strikes which undermined productivity
3 Reasons for the Soviets having to reassess their foreign policy
- Afghanistan - 15,000 deaths and $8 billion cost per year
- $40 billion to support communist governments around the world (such as Cuba, Vietnam)
- E. Europe now costing USSR money too.
What were 5 Components of Gorbachev’s New Thinking
- End to alcoholism
- Perestroika
- Glasnost
- Ending of arms race
- Sinatra Doctrine
How did Gorbachev combat alcoholism?
- Prices raised on wine, beer and vodka
- Times that alcohol could be sold were restricted
- Arrests for public drunkenness for being too intoxicated at work
What was perestroika?
Restructuring the economy as he wanted to amend economic systems rather than drastically change them
Key goals of perestroika?
- Planning to be decentralised
- Managers implement economic changes without waiting for GOSPLAN
- End state price controls
What was GOSPLAN?
The Soviet agency responsible for central economic planning
Impact/Consequences of perestroika
- Partial increase in prices and standards of living at first
- Enabled him to open the Soviet Union up to foreign investment
- High inflation
- Deficit was 13% of GNP but US was 3.5%
Impact/Consequences of alcohol reforms
Alcohol policies did not have desired effect – cost Soviet state 100 billion rubles in taxes lost due to a drop in official consumption
What was the 1988 Law on State Enterprises?
This aimed to decentralise authority and devolve decision making down to businesses and enterprises themselves
What is 1987 Law on Joint Ventures?
This allowed foreign ownership of no more than 49% of business - this had been extended to 100% by 1990.
When was the Chernobyl disasted?
April 1986
What does glasnost mean?
Glasnost was taken to mean increased openness and transparency in government
What was USSR approach to Chernobyl?
Soviets had to make incident public due to radiation levels
How did Chernobyl influence Soviet government?
These two events led to criticism of government actions and of the past and how it was officially portrayed within the USSR.
What were some aspects of glasnost?
- Open debates on past government actions
- Former enemies of the state were rehabilitated in this time period
How did Gorbachev want to reduce arms race costs?
Improve relations with the US and the West
How did Gorbachev want to reduce costs of the satellite states on the economy?
This would mean individual states would have the freedom to act without the permission of the Soviet Union. This was a rejection of the Brezhnev doctrine
Economic effects of Soviet Foreign Policies
Largest drain on FP
- Satellite states support
- Soviet Union made it clear that cheap exports of fuel and raw materials to Eastern Europ could not continue due to their domestic economic crisis (alienated Eatern states)
What happened in June 88’ regarding Soviet economy?
European Commision set up trade and cooperation agreements with individual Comecon members starting with Hungary
- This allowed countries in the Soviet orbit the ability to make their own trade agreements
Economic Impact of the Arms Race
- Afghanistan 79’ reignited arms race
- Reagan increased military spending and SDI in 1983 filled the Soviet leadership with fear and nuclear armament was accelerated
Overview of Soviet economy regarding oil and grain
Economy was the crux of the issue
- In 70 years of communism, the Soviets had only one sporadic and unsustained periods of growth usually due to exports of oil
- When oil prices dropped in the 1980s due to OPEC policies, the USSR felt it strongly
- Dependent on foreign grain
How did Gorbachev change government?
Another economic issue was the cost of large and corrupt bureaucracy
- Gorbachev needed to remove the members benefiting from the system
- He however committed vast political changes which hastened collapse of USSR
Positive aspects of Gorbachev’s economic policies
- 61 joint venture with Western companies in 1988, bringing capital and tech advancements
- Stopped collectivisation
- Removed corrupt GOSPLAN members
