THE SOVIET UNION IN 1985–1991. RESTRUCTURING

In March 1985, against the background of the country's general desire for renewal, as a result of a behind-the-scenes struggle, a new political leadership headed by M.S. Gorbachev.

Having comprehensive information, carefully hidden from the public, and realizing that the country is facing a severe crisis. Politburo of the Central Committee of the CPSU on the initiative of M.S. Gorbachev decides to start reforming society, which will later be called "perestroika" (Scheme 259). This period will become one of the most dramatic in recent national history.

Initially, it was believed that the reformation of the USSR should follow the path of improving the principles of socialism, cleansing it of Stalinist deformations, and using Leninist approaches in solving complex socio-economic and political problems.

Scheme 259

There were hopes that it would be possible to make this system work, giving it a second wind.

Already at the end of perestroika, in February 1991, M.S. Gorbachev explained the reasons for its start in the following way: “Only at first glance it may seem that everything was normal then. Already in the late 1970s and early 1980s, it became clear that it was impossible to continue doing business this way. The increase in labor productivity decreased by two times, and then it reached zero. We spent one and a half to two times more electricity, fuel, and metal per unit of national income compared to developed countries. Then the labor resources were not enough, as for the natural ones, they had to go to the uninhabited areas, making huge expenses.As they say, a carefree life is over...

I will add other reasons. Our economy is overloaded with heavy industries, too few enterprises produce consumer goods. It was the most militarized economy in the world and the largest defense spending. If we also recall what happened in the political process, no one could say a word of truth: something must be done at the enterprise, in the region, in the republic. Nobody was interested in the opinion of the working class, the peasantry, the intelligentsia."

In other words, perestroika was caused by an objective necessity, which was caused by crisis phenomena in all spheres of society.

The main stages of restructuring are given in Table. 49.

Attempts at economic transformation

At M.S. Gorbachev, when he began the reforms, apparently, there was no coherent and comprehensive reform program, therefore, initially, approaches traditional for the Soviet administrative-command system were used to achieve a rapid improvement in the state of affairs in the national economy.

The first practical step towards reform was the decisions taken at the April (1985) Plenum of the Central Committee of the CPSU, which proclaimed a course towards accelerating the socio-economic development of the country (scheme 260). This provided for the scientific and technical renewal of production and the achievement of a world level of labor productivity, the improvement of economic relations, and the activation of the entire system of political and social institutions. The emphasis was on accelerating scientific and technological progress. 10 billion rubles of capital investments were directed to the domestic engineering industry, at that time it was a huge amount of money.

Table 49

The main stages of restructuring

The initiators of perestroika saw the immediate reserve for accelerating the need to restore order in production, strengthen discipline and increase organization. To improve the quality of manufactured products, large enterprises introduced state acceptance, which, unfortunately, turned out to be just another bureaucratic structure, which led to an increase in administrative staff and practically did not affect the quality of goods.

Scheme 260

In May 1985, an anti-alcohol campaign began in the country, based on a wide range of administrative prohibitive measures. The production of wine and vodka products has sharply decreased, many hectares of vineyards in the south of the country have been cut down. As a result, revenues to the state budget were significantly reduced. The social and economic costs of such an initiative had the most negative impact on the course of perestroika.

The accident at the Chernobyl nuclear power plant on April 26, 1986 led to serious consequences for the country: people died, tens of thousands of people received radioactive exposure, large areas of Ukraine, Belarus and the RSFSR were infected.

It soon became obvious that there was no acceleration and no fundamental changes in the economy took place.

Therefore, the country's leadership, in order to revive the economy, began to look for new ways: to provide independence to enterprises, reduce planned indicators, and expand the scope of the non-state sector.

The June (1987) Plenum of the Central Committee of the CPSU approved the main directions for the restructuring of economic management. Soon, at the session of the Supreme Soviet of the USSR, the Law on the State Enterprise (Association) was adopted, which came into force on January 1, 1988, and the Council of Ministers approved a resolution on the restructuring of planning, pricing, and finance (scheme 261). Measures masquerading as radical economic reform included the following:

Scheme 261

• transfer of enterprises to full cost accounting;
• a radical restructuring of the centralized management of the economy;
• a fundamental change in planning;
• reform of pricing and financial and credit mechanism;
• creation of new organizational management structures;
• all-round development of the democratic foundations of management, the widespread introduction of self-government principles, including the election of heads of enterprises and organizations.

Enterprises were given the opportunity to independently plan their activities on the basis of relevant target figures set by government agencies, and to carry out direct horizontal links with other organizations. But these measures practically did not receive real implementation, the dictate of the central departments in establishing all kinds of standards remained, the system of supplies according to "limits" dominated, there was no wholesale trade, and the pricing reform was dragged out.

The development of private entrepreneurial activity began. The laws on cooperation and individual labor activity adopted in 1988 legalized private business in the production of goods and services. By the spring of 1991, more than 7 million citizens (5% of the active population) were employed in cooperatives and another 1 million were self-employed. But the formation and development of this direction was accompanied by great difficulties. Society showed hostility and distrust of free enterprise, was indignant at unusually high prices, and was afraid of the criminal nature of relations in this sector of the economy.

By the end of 1988, the government led by N.I. Ryzhkova finally came to the understanding that all previous attempts to revive the socialist economy by administrative methods had come to nothing. And it became clear that a transition to a market economy was necessary. In 1990, two options for transferring the country's economy to a market economy (scheme 262). One program was proposed by the government of N.I. Ryzhkov, and the other - by a group of economists led by Academician S.S. Shatalin and G.A. Yavlinsky.

The government concept of a regulated market economy was presented by N.I. Ryzhkov to the Supreme Soviet of the USSR in May 1990 and provided for a complex that combined both tough policy measures and economic leverage. Particular importance was attached to the price reform, according to which it was supposed to increase prices for consumer goods by administrative means from January 1, 1991, and for bread - from July 1, 1990. The program was calculated for six years, and its main features were the compatibility of administrative and market principles, controllability price levels and the gradual, phased introduction of market mechanisms.

Scheme 262

Radical reformers grouped around B.N. Yeltsin, who then held the post of Chairman of the Supreme Soviet of the RSFSR, prepared their economic program "500 days". It envisaged a faster transition to a market economy on the basis of the following preconditions to be created during the transition period:

• maximum freedom of the economic subject (enterprise, entrepreneur);
• full responsibility of the economic entity for the results of economic activity, based on the legal equality of all types of property, including private property;
• producer competition as an important factor in stimulating economic activity;
• free pricing, since market mechanisms are effective only if the vast majority of prices are set freely on the market, balancing supply and demand;
• creating markets for labor and finance while maintaining a significant non-market sector (defense, education, healthcare, science, culture);
• openness of the economy, its consistent integration into the system of world economic relations;
• ensuring a high degree of social protection of citizens;
• refusal of all state authorities from direct participation in economic activity (with the exception of specific areas).

This program also noted that the market needs state and public regulation in order to prevent such negative consequences as production instability, excessive property and social differentiation, and uneven development of individual regions. This program was an economically well-written document. But it aroused suspicion among many domestic and foreign scientists because of the supposed speed of the transition to the market, which, apparently, was very utopian.

Both options for the transition to market relations were presented in the fall of 1990 to the Supreme Soviet of the USSR for discussion, but neither project received support. M.S. Gorbachev was instructed to finalize these materials and to do something in between the two proposed programs. The result was a very lengthy document "Guidelines for the Stabilization of the National Economy and the Transition to a Market Economy," which was declarative in nature, reflecting intentions rather than a program for the transition to a market economy. Moreover, it soon became clear that none of the Union republics agreed to accept it for execution.

The continued deterioration of the economic situation, the general shortage of goods and the introduction of coupons for basic consumer goods against the backdrop of unsuccessful attempts by the authorities to move to a market economy increased social tension in society. Strikes began in the country. In the summer of 1989, they covered almost all the coal regions of the USSR. At first, mainly economic demands were put forward (improvement of the financial situation, expansion of the independence of enterprises), and then, from the spring of 1990, political ones began to sound (limitation of the omnipotence of the CPSU, resignation of leaders of the country and regions, etc.), which was a reflection of the accelerating processes of polarization of society and an increase in the intensity of the struggle of political forces.

At the end of 1990, in order to somewhat defuse the situation, M.S. Gorbachev decided to reorganize the Council of Ministers and create the Cabinet of Ministers under the President of the USSR. V.S. was appointed Prime Minister. Pavlov, who developed his own program of transition to the market, called anti-crisis. It provided for measures to denationalize and privatize property, stabilize the financial and credit system, attract foreign capital, and so on. But the implementation of this program never began due to the subsequent turbulent political events (the August putsch of 1991, the collapse of the USSR, etc.).