Novus America wrote:Shanghai industrial complex wrote:This was later propaganda.Economic studies show that the Soviet Union's economy still shows no signs of collapse in 1985. Although the economic data are not very good, they are not bad too.At the beginning of the reform, the Soviet Union's gold reserve was 2000 tons, and in 1991 it dropped to 200 tons. In 1985, the Soviet Union actually had no external debt; in 1991, the Soviet Union's foreign debt was about 120 billion US dollars.And all other data suggest that Gorbachev was an economic genius.Even if it can't keep up with the entire Western Script, the Soviet Union may still exist as a powerful entity.
Gold reserves are not the important thing. GPD growth dropped greatly in the period from after 1975 and remained low. Low external debt does not help much either. Romania destroyed its economy trying to pay off its debt. The austerity measures used to avoid debt harm economic growth, borrowing money is actually quite useful if you spend it on projects that generate more GDP then the consume.
Gorbachev was an economic ignoramus as well, his wrongheaded economic reforms caused more problems in many cases. He cut support to SOE’s before liberalization of prices.
Basically they had to sell at a profit despite the state controlling prices of inputs and outputs.
For example if a widget takes 1kg of iron to make, and i have to buy iron at $10 per kg but sell widgets at $5 I cannot make a profit. The more I sell the more I lose. And if the government mandates I sell at least 1 million widgets, then I am basically mandated to lose $5,000,000.
But economic problems were not the only reason the Soviet Union collapsed. The nationality problem was just as big a factor.
Planned economy is not such a stupid thing. Your description is an attempt to use the theory of market economy to describe planned economy.Planned economy is run by mathematicians, not economists.The demand side will tell the government what it needs, and then all levels of government will conduct accounting and report. The budget is then approved by the finance department and approved by the relevant bureaucrats. Finally, the factory will be told what to produce.Obviously, in the Soviet era, when there were no high-performance computers, it all needed human computation.Even Stalin could not make arbitrary decisions about prices in violation of objective laws. When an enterprise wants to purchase a part to replace the damaged part, it also has to go through such a complicated process. Obviously, it is not as flexible as the market economy.It is also impossible to predict the constantly updated civil consumer goods.
The Soviet Union's problems were not just economic, but they were clearly not irreparable.In Russian history, many time's situation is much worse than it was in the 1980s. At that time, there were many countries worse than the Soviet Union.What the Soviet Union needed was a cautious and creative reform plan.Gorbachev carried out political reform after the failure of economic reform. After the failure of political reform, he carried out institutional reform and ideological reform.After all this failed, he thought about it and found that it was the fault of the Communist Party and socialism.At this time, the Soviet Union had no energy to pay attention to Eastern Europe.The oligarchs created by Gorbachev's reform have also taken away the power of the Central Communist Party of the Soviet Union.Yeltsin took control of the army and Russia.Government officials at that time became oligarchs today.
What the Soviet Union needed was to reduce its surplus troops and gradually introduce a market economy. The Communist Party of the Soviet Union should insist on controlling state-owned enterprises rather than selling them to capitalists.Abandoning the political ambition in Central Asia and the political control over Eastern Europe.And an agreement should be reached with NATO to withdraw nuclear bombs from western and Eastern Europe and to cut down on garrison.These actions are a burden on the Soviet economy.