Key Guidance Step 1: Type in key words (highlighted in the main sections of the Communist States Textbook)
for notetaking Step 2: Type in subheadings and summarise the key points from each subheading in each section
in note format
Step 3: Provide a summary at the end of your notes assessing: What are the main reasons for the
fall of the USSR, 1985-91? What was the most significant reason for the fall of the USSR, 1985-91?
Step 4: Tick off PLC descriptors for Key Topic 4
Key Words: Notes on: What explains the fall of the USSR, 1985-91?
Pages 114-138 Communist States Textbook
Go into deficit Section 1:
• The long-term economic weaknesses of the USSR
Strategic
Defence Long term economic weakness: when Gorbachev became General secretary in 1985, the economy
Initiative was in decline. The weakness of the soviet economic system was highlighted in the Novosibirsk
Report of 1983. The report grew close attention to the growing crisis in agriculture caused by state
inefficiency and inflexibility. Gorbachev released reform was needed, but less clear about the
solution. A period of trial and error followed which ended with the dismantling of the Soviet
economic system which plunged the economy into disruption and chaos. Without the economic
underpinning needed to sustain improvement in lives of population, the soviet government was
placed in a weak and vulnerable position.
Gorbachev’s initial ideas: he began positioning of liked minded reformers into key positions in the
Politburo, for example Yegor Ligachev and Nikolai Ryzhkov. And Boris Yeltsin (first secretary of the
party in Moscow) and Alexander Yakovlev were promted to the Central Committee in 1986. There
was a campaign to attack the problem of alcoholism. By the mid 1980s, alcohol accounted for 15%
of all household spending. This was partly explained by lack of other goods. But it was detrimental
to the work force as they showed up drunk. As Gorbachev put it in a statement in April 1985, ‘We
can’t build Communism on vodka.’ The government raised the consumption age of alcoholism to
21, the number of retail outlets where alcohol could be brought was reduced, vineyards destroyed
and distilleries closed. The cost of vodka tripled, there were some successes but the tax revenues
that alcohol caused a shortage in the budget. Drinking levels rose after a while as illegal moonshine
liquor was produced in large quantities.
Twelfth Five-Year Plan: controlled central planning, to push economy to greater production. It was
hoped that this would accelerate growth in economy. The focus of investment was science and
research. The key weaknesses of this were: investment was heavily skewed towards construction
projects, but these led to extra spending and sucked more investment. Soviet industry used
equipment that was out of date and prone to breaking down, this was unproductive. Soviet industry
was slow to use new technology and imports of foreign exchange was a drain, which was often used
for food. The agricultural sector was swallowing vast sums of investment that were not leading to
improvement in productivity. The focus remained on quantity rather than quality. Gorbachev’s
policy of acceleration did little to address the fundamental weaknesses of Soviet economy.
The chief obstacle to these reforms was the fact that they implemented by the people whose
privilege positions the reforms were trying to reduce. Changes to investment priorities also came up
against resistance from the military, who were powerful in pushing for new military investment in
military technology. Industrial and military investment could only be increased if other sectors
suffered and posed a threat to the government’s ability to maintain goods for general public to
consume. The alternative was to go into deficit, a short-term remedy that could not be sustained.
Between 1985 and 1986, the deficit of the Soviet economy rose from 2.4% of GDP to 6.2%. the
problems weren’t helped by ongoing war in Afghanistan which consumed considerable amounts of
money, and increased defence spending due to develop its Strategic Defence Initiative programme
Market Section 2:
mechanism • The failure of economic reform, 1985-91: impact of initial reforms and Perestroika
Economic perestroika: by 1987, Gorbachev decided that a more fundamental restricting of the
Soviet economy was needed. At the January 1987 Plenum of the Central Committee, he launched
his proposal for economic perestroika (restructuring) he hoped that by introducing market
mechanisms and allowing an element of private enterprise the economy could be revitalised. The
encouragement of joint ventures, January 1987. The government allowed foreign firms to establish
businesses in the Soviet Union, usually in joint enterprises with Moscow getting first McDonald’s in
1990. The law on state enterprises, June 1987. This allowed a loosening of state controls over wages
, and prices meaning weakening authority of Gosplan. Factories were given right to produce what
they liked once the targets were met. Co-operatives were legalised in 1988, this allowed small scale
private enterprises to be established, these businesses could set their own prices.
Impact of perestroika:
• Food production showed a small increase in growth rate from 1 to 2% during the period
1986-87 but was still inadequate to feed growing needs of population.
• Enterprises were still subject to state indifference, the state decided on allocation of
materials.
• Products especially foodstuffs were diverted from state shops to co-operatives that charged
a much higher price, this produced inflation and stripped state shops of many supplies.
• Co-operatives were able to shop around for a buyer who would offer them a good price for
their goods. This left poorer cities devoid of adequate food and basic products.
• The co-operatives proved to be more productive than the state sector and the potential for
profits did not go unnoticed. They attracted the attention of corrupt government officials
who demanded brides, criminal gangs also saw potential to extract money. These gangs
became powerful due to making alcohol illegally.
• Uncertainty over supplies encouraged hoarding by population.
• Food rationing was introduced in some cities to try to ease the situation, in 1988 meat was
rationed in 26 out of 55 regions of Russia.
• The implementation of the principle of electing managers resulted in steep rise in wages.
Urban wages rose by 9% in 1988 and 13% in 1989.
• Foreign companies keen to invest in the USSR were faced with endless bureaucracy that
made process slow. It put off potential investors completely. By the end of 1990, there were
nearly 3,000 joint foreign ventures in the USSR.
• The reforms were often undermined by officials, in some cities the reforms were ignored
and in others they were sabotaged. In Leningrad, the city administration withdrew all
sausages from shops and warehouses and buried them.
The situation was made worse by a fall in the price of oil, the USSR became more reliant on
using oil exports as a source of foreign exchange. By 1984, oil and gas accounted for 54% of
Soviet exports.
By the end of 1989, the Soviet economy was massively in debt and approaching crisis point.
Strikes had increased, as workers such as coal miners in the Don Basin protested over unpaid
wages and food shortages. The government’s response was to quickly increase wages, but this
was a short-term measure. Gorbachev’s failure to bring about an improved economic situation
undermined his political power and position. It led to the only solution: dismantling the soviet
economic system.
State commission on economic reform: in July 1989, the State Commission on Economic
Refrom issued a report that concluded that a more radical solution was needed. It called for a
move to a market-led economy. Gorbachev faced the difficult challenge of trying to maintain
unity in the party leadership and hesitated over making decisions. By October, Stanislav
Shatalin, one of Gorbachev’s economic advisers, put forward the 500 Days Programme, which
recommended a rapid move to a market economy. The plan was rejected by the Soviet
government but accepted by the Russian Parliament. Division between the central Party
leadership and that of the national republics of the USSR caused chaos and the economy
collapsed. Soviet output declined by 1/5 between 1990 and 1991. According to critics,
perestroika had led to catastroika – an economic catastrophe.
Glasnost Section 3:
Democratisation • The impact of Gorbachev’s reforms of the Party and government
Glasnost and the need to reform the party: The whole apparatus of Party and state had
become huge and unmanageable. Under Brezhnev it had grown ro resemble power blocs of
vested interests who completed with each other. This rivalry was wasteful and the competition
between branches of administration had led to corruption and nepotism. Coupled with this
trend issue of relations between the central planning apparatus in Moscow and that at regional
level in each republic. Gorbachev recognised that the whole system needed streamlining. This
would provide the additional benefit of offering the opportunity to remove those officials who
were against reform. The need for reform was highlighted by the impact of glasnost.
