Economic Problems within the USSR

The main difference economically between the Union of Soviet Socialist Republics (henceforth the USSR or Soviet Union) and most of the world was that the USSR was communist. The leaders of the communist regime believed that communism was superior to capitalism in every way, and during the early years of communism they were able to compete on a global level with the capitalist countries. However, in the late 1980's it became clear that the communist system was failing in many ways. This was due to economic mismanagement by those in power domestically and internationally.

Internationally, the Soviet economy suffered more due to outside forces than internal ones. The Truman Doctrine, delivered in 1947 severely restricted trade between the United States and it’s allies with any and all communist countries. Anything that could be of military use, or make things for military use, werenot traded. This, as noted by A. Köves, resulted in the Soviet Union trading predominantly with countries that were part of the Council for Mutual Economic Assistance (CMEA) which were all Communist as well. This system was beneficial to the communist countries on paper but Soviet industries were forced to use sub-par materials and many sectors suffered over time as a result. A notable exception was the military sector. 

However, as covered by R. E. Hebden, in the mid to late 1970s Soviets started trading with Capitalist countries at a much higher pace. This led to the export of mostly natural resources such as gas and oil. This was of course a huge boon to the Soviet economy. However, trade with the United States remained strained, notably in regards to the emerging computer field.

Robert Allen discusses and dissects the USSR’s economy and points out a few trends. First, he points out that from the 1930s up until 1970, the USSR showed constant, prolonged economic growth. However, from that point the growth stops, even decreasing, up until the USSR’s dissolution. Allen claims this is due to communist leaders mismanaging several industries, notably in regards to energy consumption.

H.H. Ticktin, while discussing the USSR’s economy makes a few interesting points that help show the mismanagement of the agricultural and manufacturing sectors. First he states, “…it is clear that industrialisation moved the population base from the country to the towns and …it effectively ended the political importance of the countryside.” He then explains that due to everyone moving to cities for industrial jobs there were very few people out in the countryside doing agricultural work. This would lead to serious food shortages throughout the Union for the working class.

In regards to the manufacturing sector, Ticktin mentions that more people were employed to repair goods than to actually make them. He says this is due to the Soviet Union using poor materials to make the products in the first place. This in turn was due to the trade limitations discussed by Köves.
Mark Harrison, in his dissection of the Soviet Union’s economy, attempts to explain it with an economic “game”. He proposes that the main factors of running the Soviet Union’s economy were the balance between government monitoring and whatever rewards or punishments producers received. He believes the reason for the communist downfall was that by 1989 the costs for monitoring had grown and, more importantly, the threat of punishment had severely lessened under Mikhail Gorbachev’s rule. This in turn led to more producers producing less and/or stealing profits. This occurring on a large scale then led to the Union’s economy plummeting.
While I feel Harrison’s theory provides the clearest explanation for the collapse of the Soviet Union economically, it is clear due to the many other scholars that the Soviet system had problems had several flaws throughout it’s existence. At various points in time it mismanaged its resources, industries, and international relations. All of these things I think, allowed for the situation in which Harrison’s theory excels to arise.

Works Cited
1. Truman, Harry S. Truman Doctrine.http://www.ourdocuments.gov/doc.php?flash=true&doc=81
2. Köves, A. “The Impact of Western Trade Restrictions on East—West Trade After World War II.” Acta Oeconomica , Vol. 19, No. 1 (1977), pp. 67-76
3. Hebden, R. E. “Trends in Soviet Trade Since 1960” Geography , Vol. 65, No. 1 (January 1980), pp. 49-52
3. Ticktin, HH. “Towards a political economy of the USSR, Critique.” Journal of Socialist Theory (1973): 20-41,http://dx.doi.org/10.1080/03017607308413103 (accessed November 19, 2013).
4. Allen, Robert C. “The Rise and Decline of the Soviet Economy.” The Canadian Journal of Economics / Revue canadienne d'Economique , Vol. 34, No. 4 (Nov., 2001), pp. 859-881
4. Harrison, Mark. “Coercion, Compliance, and the Collapse of the Soviet Command Economy.” The Economic History Review, New Series, Vol. 55, No. 3 (Aug., 2002), 397-433


By Sean Logan