Why did perestroika fail to revive the Soviet economy? (45) Perestroika is usually translated to mean ’restructuring’ and associated with the Soviet economy. It was Gorbachev’s attempt to address the problems within the USSR, but it provoked a wide range of reactions both positive and negative. Perestroika is credited with being the final factor that caused the collapse of the Soviet Union by irreparably damaging its economy. Although the Soviet economy was approaching crisis in 1985 when Gorbachev came to power, it was still working. It was perestroika which appeared to have made everything worse, so that an ailing economy was approaching collapse by 1991. According to CIA estimates by 1989 the size of the Soviet economy was roughly half that in the United States of America. According to the European Comparison Program, administered by the U.N, the size of the Soviet Economy was 36% of that in the United States in 1990. There are a number of reasons explaining why perestroika failed to revive the Soviet economy, instead leading it to the brink of collapse. Failure in reviving the Soviet economy can initially be attributed to a serious lack in planning perestroika by the Soviet government. Several administrative reorganisations created confusion and lack of co-ordination at several levels, and enabled enterprises to ignore demands of which they disapproved. The Communist Party subsequently lost much of its power to force enterprises to conform. The largest error in the planning of perestroika was that by 1990 there were several bodies responsible for economic policy that were all competing with each other, including Gosplan, the State Commission on Economic Reform, the Supreme Soviet and Gorbachev’s own presidential bodies. This led to mass confusion, something definitely not conducive to a successful economy. Gorbachev also failed to take into account the possibility that perestroika could increase the already heated conflict with the Republics, which it would go on to do. There was a failed anti-corruption campaign, in which the majority of those arrested were key figures in the Republican administrations, leading to anger and disruption. By 1990, local Republics began to indulge n local protectionism, creating customs barriers and disrupting trade; for example, Ukrainian mines could no longer get supplies of timber needed for pit pops from Russia. It deprived the USSR of secure trading partners and this is a direct result of Gorbachev’s lack of foresight when planning perestroika; the separation of one centralised economy into separate smaller one was a key reason as to why the Soviet economy could not be revived. Gorbachev also failed to tackle the lack of incentives and the inefficiency of the Soviet economy, which was had been a featured problem since Stalin. 30% of the budget went on subsidies to keep prices low while 40% of factories operated at a loss – these numbers clearly do not represent a policy that would be helping the Soviet economy is money is being wasted. Ultimately, perestroika failed to revive the Soviet economy largely to the lack of foresight and planning that went in to the policy before it was enacted.
Perestroika failed because it became an impossible task, in part due the bad planning but also for other reasons. Laver argues that Gorbachev’s aim “was probably impossible”. This is correct because Gorbachev was hoping for the advantages of a market economy within the confines of a State-controlled economy, something that is impossible to achieve. It was also an impossible task because for the first time since Lenin introduced communism, the law permitted private ownership of businesses but it had to be re-thought because taxes and employment restrictions were too high. This meant that the policy was doomed to fail from the start due to its contradictory nature. Moreover, Laver is correct because Gorbachev faced the impossible task of attempting to fix an economy that had been largely neglected by
