How important were economic weaknesses in bringing about the fall of the USSR? Flashcards
What was annual growth rate from 1958-63 and how did this compare to the 70s and 80s?
From 1958-63 the Soviet Economy grew at 5.3% annually. In the 1970s annual growth averaged 2% per year and by the 1980s it had dropped to 0.6% a year.
What did Centralization mean for production?
That it could not be maximized
Who were Gosplan and what problems did they cause?
The State Planning Committee who were responsible for central economic planning in the Soviet Union. Quality and usage was irrelevant for Gosplan and this meant that whilst numerous products were produced, many were wasted. In 1986, Gosplan estimated that 12% of machinery was never used.
Why was participation in the global arms race detrimental for the economy?
It meant huge expenses. Between 1965-1985 the proportion of Soviet GDP spent on defense increased from 12% to 17%. To put this in perspective, American spending stood a 6%. This was a great burden for the economy and deprived other sectors that needed funding.
Name the two other long-term economic weaknesses
- Failure to modernize
2. Failure to create incentives for hard work or motivation
What are the dates and stages of Gorbachev’s economic policy? (according to historian Richard Sakwa)
- 1985-87- Initial economic reforms- designedto stimulate economic modernisation, higher rates of economic growth, and higher rates of production.
- 1987-March 1990: Reforms intended to introduce market forces into the Soviet Economy. Political reform was also introduced to inspire greater support for economic reform
- March 1990-August 1991: Fundamental aspects of the system, such as single-party rule and a command economy, abandoned.
What was Acceleration and why was it introduced?
Designed to end economic stagnation and get the Soviet economy moving again. It involved a huge increase in investment designed to modernize the economy and make it more efficient. Gorbachev was optimistic and predicted that industrial production would increase by 20% over the next 15 years.
Why did the oil crisis cause Acceleration to fail? What did this mean for the government?
- The USSR made a lot of money selling oil to the West. In 1981 the price of an oil barrel was 70$ but by 1985 it was only 20$. Soviet oil revenues fell by 2/3’s and when combined with the loss of alcohol revenues, the government had much less money.
- The government therefore had to fund Acceleration through loans from Western countries.
- This meant that the government debt stood at 27.2 billion in 1988 compared to only 18.1 billion in 1981.
Why was the economy vital in sustaining the government?
Without the economic underpinning needed to sustain an improvement in the lives of the population, the Soviet government was placed in a weak and vulnerable position.
What were Gorbachev’s initial steps to reform?
They were initially cautious and began with the appointment of like-minded reformers into key positions.
- One of Gorbachev’s main rivals in the Politburo, Grigory Romanev, was dismissed in July 1985.
- Key reformers were bought into the Politburo: Yegor Ligachev and Nikolai Ryzhkov.
- Boris Yeltsin (the First Secretary of the Party in Moscow) and Alexander Yakovlev (both leaders in the push for reform) were promoted to the Central Committee in 1986.
By the mid-1980s, alcohol accounted for how much of all household spending?
15%
This was partly due to the shortage of all other goods but it still had a detrimental affect on the workforce, many of whom turned up drunk.
The government hoped anti-alcohol campaigns would do what?
- Improve the health of the population
- Improve productivity of workers
What measures did the government introduce in an attempt to tackle alcoholism? (4)
- The legal age for consumption of alcohol was raised to 21
- The number of retail outlets where alcohol could be bought were reduced
- Vineyards were destroyed and distilleries were closed
- The cost of vodka in the shops tripled.
Was the anti-alcohol campaign a success?
It had some benefits but it became obvious that relying on the workforce to become more disciplined and productive was not going to solve the underlying economic problems.
- Tax revenues that the government received from the sale of alcohol fell significantly and caused a serious shortfall in the budget
- Drinking levels began to rise after a while as illegal moonshine was produced in large quantities and often unhygienic conditions
What approach did the government take in an attempt to improve the level of growth in the economy?
- The traditional Soviet method of increasing investment, controlled by central planning, to push the economy into greater production
- The focus of investment was to be on science and engineering, implemented through the Twelfth and final FYP, 1986-90.
What were the 5 key weaknesses of the Twelfth Five Year Plan?
- Investment in the Soviet Union was heavily geared towards the construction of projects, but these often lead to extra spending which was needed to equip the factories constructed. Therefore these lead to overspends and sucked in more investment than originally intended.
- Soviet industry had become notorious for using old machinery that was prone to breaking down and out of date. Old factories relied on old equipment and became increasingly unproductive.
- Soviet industry was slow to use new technology, and imports of foreign technology was often a drain on foreign exchange which was often used to import food.
- The focus remained on quantity over quality and so, as usual, quality remained extremely poor, sometimes even unusable.
- The agricultural sector was swallowing large amounts of investment with little successful return or increase in productivity. The government had reached a point where they recognised there was little to be obtained in terms of production growth, from the agricultural sector.
