Soviet

1
Soviet Catch-up Development

• Planned economy
• Obliterate market forces
• Pursue state-led rapid industrialization
• http//www.youtube.com/watch?voXGThPeOJu4feature
  related

2
Soviet Catch-up Development

• Planned economyfeature 1
• Public ownership (no private)
• Collective farms
• Extracted grain, food crops
• ? Role of coercion

3
Soviet Catch-up Development
A staged photo (1921) extolling the virtues of
agricultural collectivism. In reality, most
peasants fiercely opposed this system in which
they were forced to give up their own private
farms and move to cooperatively owned and run
farms, where a certain amount of each harvest was
seized by the state. As a result of their
opposition, several million peasants were killed.
4
Soviet Catch-up Development

• Planned economyfeature 1
• Public ownership
• State-owned mines
• Extracted coal, minerals

5
Catch-up Development

• Planned economyfeature 1
• Public ownership
• State-owned factories

6
Soviet Catch-up Development

• Planned economyfeature 2
• State-set prices (no free market forces)
• Artificially LOW (below market) prices
• For raw materials
• Grain, coal
• (Note similarity to marketing boards under
  colonialism)
• LOWER costs for labor
• Food was cheap
• Relatively HIGHER prices for industrial products
• Made state industry profitableby definition
• Inputs (labor, coal, iron ore) cheap
• Outputs more expensive

7
Soviet Catch-up Development

• Planned economyfeature 3
• Planners preferences
• NOT consumers preferences
• Heavy industry with defense applications
• NOT consumer goods

8
Soviet Catch-up Development

• 3 key features of planned economy
• Planners preferences (not consumers prefs)
• State ownership (no private)
• State-set prices (no free market forces)
• ? Role of coercion

9
Soviet Catch-up Development

• How did the Soviet economy affect the average
  citizen?
• No consumer choice
• No chance to get rich,
• Little socio-economic advancement

10
Soviet Catch-up Development

• How did the Soviet economy affect the average
  citizen?
• But
• Security
• national security
• individual job security
• Relatively egalitarian
• Basic needs met
• ? Important to understanding public reaction to
  shock therapy

11
The End of Soviet Rule and the Emergence of
Post-Communist Russia

• Mikhail Gorbachev
• Communist true believer
• Last General Secretary of the Communist Party of
  the Soviet Union
• What motivated Gorbachev to initiate reform of
  the communist system?

Mikhail Gorbachev
12
The End of Soviet Rule and the Emergence of
Post-Communist Russia

• What motivated Gorbachev to initiate reform of
  the communist system?
• weak incentives
• lack of efficiency
• lack of innovation
• (graph)

13
The End of Soviet Rule and the Emergence of
Post-Communist Russia

• Key elements in Gorbachevs reform program
• Perestroika (economic restructuring)
• Glasnost (openness)
• Demokratizatsiia (limited democracy)
• ultimately led to collapse of Soviet Union

14
Introducing post-Soviet Russia

• New Russia (Russian Federation)
• Elections, but
• Not Free (Freedom House)
• HDI rank65th
• 2004 GDP lt 1989 GDP

Now, Putins Russia