The end of the Soviet Union

THE END OF THE SOVIET UNION

Years of stagnation

01

In 1960 soviet's exports were machinery, equipment, means of transport and metals, but in 1985 it was exports of energy, oil and gas. At the same time, its imports consisted of machinery, metals and industrial consumer goods. Attempts to reform Europe's socialist economies were abandoned after the Prague Spring. The Brezhnev years were called "stagnation years" because the regime had given up trying to do anything serious about an economy in visible decline. The socialism was now increasingly involved in it and thus not immune to the crises of the 1970s. This can be illustrated by the ambiguous example of the international oil crisis that transformed the world energy market after 1973.

Years of stagnation

The oil crisis had two apparently fortunate consequences.

1. For oil producers the black liquid turned into gold. Millions poured in without much effort, postponing the need for economic reforms and allowing the Soviet Union to pay for its growing imports from the Western capitalist world with the energy it exported.
2. The other fortunate consequence of the oil crisis was the flood of dollars now flowing out of the multi-billion dollar OPEC countries and being distributed through the international banking system in the form of credit to anyone who asked for it.

Years of stagnation

Gorbachev’s reforms

02

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In 1985, Mikhail Gorbachev came to power as General Secretary of the Soviet Communist Party. He began his campaign to transform Soviet socialism with two slogans: perestroika (economic restructuring) and glasnost (freedom of information). Glasnost aimed to mobilise support within and outside the apparatus against such resistance. It meant the introduction or reintroduction of a constitutional democratic state based on the rule of law and the enjoyment of civil liberties. It implied the separation of party and state. It implied the end of the one-party system and its "leading" role. The people would have the opportunity to have a real electoral process every few years and to listen to criticism of the government from the political opposition.

Gorbachev’s reforms

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The new economic system of perestroika had only been sketched out in 1987-1988 with a legalisation of small private enterprises ("cooperatives") and a decision to allow permanently loss-making state enterprises to go bankrupt. On the other hand, the criterion of perestroika was in ways that could be easily measured and specified. It could only be judged by results. What drove the Soviet Union into the abyss was the combination of glasnost (disintegration of authority) with a perestroika (destruction of the old mechanisms that made the economy work), without providing any alternative. Economic disintegration helped accelerate political disintegration and was fuelled by it. With the end of planning and party orders from the centre, there was no longer an effective national economy

Gorbachev’s reforms

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