1. Soviet Economy and Gorbachev

2. Introduction
Goal to maintain a reformed social system, revitalize the CPSU
Less state domination, back to Leninism
New form of the NEP
Perestroika
Restructuring of economy
Soon became applied to politics as well
Turned out to be the grave digger of system he was trying to reform

3. 1985 Economy
Centralized economy had delivered full employment, cheap housing, fuel
Consumer demands rising in 1980s, stagnation
Been declining since 60s
Dependent on others for grain
Could not meet minimums required for industrialization or military spending
Gorbachev’s main economic adviser, Abel Aganbegyan, suggested growth was actually zero
Said should shift reforms to social provisions, industrial technology and management of large enterprises

4. Gorbachevism
Problems of USSR probably more important than Gorbachev himself
Response of the reformist wing in modernization
Scientists, intellectuals supported him
Nomenklatura resisted him
Don’t want to give up power
Couldn’t make simple reforms, not enough capital, needed to make sweeping transformation

5. Consolidation of Gorbachev
Gorbachev running the USSR for three months before Chernenko’s death, had been supported by Andropov
Needed to strengthen his position, looking at examples of Khrushchev and Kosygin
Enemies
Grigori Romanov, Politburo
Victor Grishin, Party Boss
Allies
Andrei Gromyko, Foreign Min.
Moved supporters into Politburo, sacked and replaced opposition
Changed at local levels
Removed Brezhnevites in Central Committee
Riots in Kazakhstan, where local leader was replaced by a Russian

6. Economic Reform 1985-86 Plenum to the Central Committee 1985
Reported backwardness, poor quality of goods, unbalanced planning, wastage of energy and materials, poor labor productivity, ‘black economy’
Emphasis on discipline and modernization
First year follows uskorenie, acceleration
Pressure from the top, greater admin. efficiency
Much higher targets in Five-Year Plan of 86-90
Repression of alcoholism
Campaign against corruption
Little popularity as a result, and even little positive effect, no extra wages a factor

7. Perestroika 1986, 27th Congress, decentralization and self-management
More focus on investment rather than day-to-day decisions
Some ways a continuation of Khrushchev and Kosygin
Quality inspection, opportunities for private enterprise
Private employment still not allowed
Compared policies to NEP
But Apr. 87, PM Ryhzkov reporting declines, trade more like that of an underdeveloped country
Extraction industries running at a loss

8. Perestroika – Agriculture and Services
Knew he had large opposition groups in CPSU
Wanted to stimulate kolkhoz and sovkhoz production
1986, Law on Individual Labor Activity, allowed individual businesses

9. Perestroika – Central Planning
Gorbachev not intending to restore capitalism
Market socialism
Opposition had managed to limit his reforms
Somehow still got there
Had attempted to limit ministries to super-ministries, failure
1986, aware that nothing was changing
Found that middle-ranking bureaucrats were obstructing
Created Law on Joint Enterprises in Dec. 1986
Fears of capitalism, growing opposition
Removal of price controls would hit citizens hard
Acceleration a failure by 1987

10. Perestroika – Further Reforms
Thought more political reform was needed
Jan. 88 Law on State Enterprises
60 percent of state enterprises shifted to management control
Set own prices, trade as necessary
Still state quotas
1989, remaining 40 percent released
May 88 Low on Co-Operatives
Allowed small and medium private enterprises to operate in manufacturing and foreign trade, obstruction caused failure
1988, extended private plots with long-term leases
State ownership remained, taxed on their profits
Gorbachev appeals to the people and attacks those slow to reform
Opponents said he had no plan

11. Problems of 1990-91 Increasingly ran into obstacles
Had to create some unemployment, led to mass unrest
Market elements led to increased prices
Shortages as supplies became harder to attain
Demands for better working conditions, example of Solidarity
So living standards for workers actually declining
Slow in production
CPSU losing power, influence on management
Satellite states began implementing trade barriers
Dec voted for Abalkin Programme, gradual de-nationalization of all state property
Would only retain control of raw materials and defense
Ryzhkov called for market economy
Yeltsin sets up Shatalin Plan in 1990, wanted to end connections with satellite states, too far for Gorbachev

12. Problems of 1990-91 Shatalin Plan rejected, compromise proposed
Commercialization of state enterprises
Relaxation of state price controls
Changes to the housing market
Rouble to be fully convertible
1991, inflation crisis
1991, legalization of property ownership
Economic shock therapy applied, led to inequality in wealthy and poor

13. Paper 1 Practice