Perestroika and 1990’s in Russia, Essay Example

Introduction

Gorbachev’s rise to power in 1985 meant substantial changes in the economy and political framework of the Soviet Union and the Eastern Bloc. Gorbachev realized that there was an urgent need for a reform. The proposed economic reform of the new era was called Perestroika (CVCE). The main themes of the reforms were limiting the military expenditure and limiting the international commitments of the USSR. The reforms, however, resulted in the collapse and disruption of the centralized planning system that was used in the huge country for many decades. As the system was not replaced by a market mechanism, food and other perishable good supply shortages became extremely common in the country, and production (economic output) declined (CVCE). The common discontent in the Eastern Bloc and the Soviet Union weakened the international influence of the country and the power of the USSR, which, in turn, led to the collapse of the regime and one of the largest superpowers in the world.

Initiatives

Krausz  highlights the importance of Perestroika in the history of the Soviet Union. The author states that “Perestroika began in 1985 with the aim of reforming the state socialist system, and ended with the collapse of the system, indeed of the Soviet Union itself, and the restoration of capitalism” (Krausz, 5). Based on the above statement,  it is evident that the reforms initiated by Gorbachev failed to deliver the expected results. In order to reveal the reasons for the above mentioned failure, it is important to review some of the main reform initiatives that were proposed after 1985.

Moving towards capitalism and creating a mixture of socialist and capitalist economy was the main ideology of Perestroika. However, the efforts of privatization and liberalization of markets did not deliver sufficient results. As Krausz (6) summarizes the main problem with the plan: “the output of the economic system was insufficient to sustain the Soviet Union global position or to preserve domestic welfare”. Increased democracy did not increase economic activities and the state’s income. The privatization of public property only served the interest of the rich who could afford buying companies, but it had little or no effect on the state’s deficit.

Perestroika also included a reform of the media, called glasnost. The participation of the media to highlight corruption in the Soviet Union was a good idea on paper, but it went against the interest of many powerful officials. In the end, the Gorbachev administration settled for using the media to promote state policies and initiatives, instead of fighting corruption (Pietiläinen). When the Perestroika was proven to lead to further economic problems, instead of increased income and liquidity of the state, the leadership had to finally abandon the program. As  Pietiläinen (88) states: “The difference in prices between the free market and the state shops had increased, the shortage of daily household goods had become more acute and the Communist party had given up its leading role in formulating economic policy in 1988”. Food shortages led to the increased activity in the black markets of the Soviet Union, and social problems became more prevalent. Those who could not afford to pay the price had to wait for supplies to arrive, and this led to thousands of families starving. The infrastructure of the country was outdated, the lack of quality roads and railways, the lack of petrol and other commodities led to increased poverty.

Justification of the Perestroika

Sakharov’s 1988 statement about the “inevitability of Perestroika” highlighted some of the issues that the Soviet Union faced in the 1980-s that made reforms necessary. According to Sakharov, the society was “seriously diseased”, and the country went through an “era of stagnation”. The author claimed that the lack of political pluralism led to increased state control and bureaucratization. The power was concentrated in the hands of a few dozen people. However, this did  not change following the collapse of the Soviet Union, either. The only difference is that power moved on the economic field. In the 80-s, the production and economic output fell, and new construction was painfully slow. This resulted in the hindering effect of outdated technology and infrastructure in the Soviet Union, and the Eastern Bloc. The GDP failed to grow. The agricultural production was inefficient, and unable to serve the large population without relying on imports. The selection of food stores was low, and most people suffered malnutrition. However, the author also mentions one important factor that contributed towards the collapse of the system: the USSR’s involvement in Afghanistan. The long term military engagement cost the country a tremendous amount of money. The Glanost is  described as a reform that is designed to change the moral climate of the counry. Thirty years later, it is evident that it failed to fulfill its purpose, just like Perestroika.

The Confrontation Between Gorbachev and Yeltsin

In the first year of Perestroika, based on the analysis of Krausz, Yeltsin and Gorbachev worked together to create a policy that prepares the socialist state for the 21^st Century. The XXVIIth congress of the Soviet Communist Party in 1986 was held to find solutions for three main issues, according to the ruling party: “‘renewal of a socialism for the 21st century’ and for ‘accelerating’ the struggle against ‘bureaucratic conservatism’, ‘privileges’ and ‘communist arrogance’.” (Krausz, 7). In 1987, however, Yeltsin sent a letter to Gorbachev, resigning from the post of Party Secretary. Yeltsin moved away from Gorbachev, and created his own direction, redefining socialism. By 1989, he developed the idea of an “unqualified market economy” (Krausz, 8). The West looked at Yeltsin as the true reformer of the Soviet Union, while Gorbachev represented the outdated ideas that were proven not to work.

Krausz (28) describes the Operetta-Putsch of 1991 and Yeltsin’s rise to power as the “victory of the Russian market economy” (28). Further, the new leader wanted to speed up the disintegration of the USSR, and the development of the economy.

The Failure of Perestroika

The main reason for the failure of the Perestroika and the collapse of the Soviet Union, leading to changes of the political system and Jeltsin’s rise to power are detailed in the research created by Boettke. The author states that the Perestroika was not a real economic reform of the Soviet Bloc, instead simply an attempt  “reallocate patronage opportunities”. It was unable to increase production, productivity, wages, and the profit of the state. The countries belonging to this bloc were still in debt, and unable to sustain their economies. The bureaucratic management of the economy was still unchanged, therefore, real change was impossible. The main reason why Perestroika was a failure is that “no serious effort was made to end the domination of the economy by the central government” (Boettke, 83). Further, the author claims that Gorbachev  was never an agent of real change, but instead focused on the maintenance of the old regime. The public that was, at the same time, concerned about the future of the country, and realized that the system was no longer sustainable. As Boetke concludes, the economy of the Soviet Union was unable to develop any further, and stagnated for many years before the final collapse. The Glanost and the fall of the Berlin Wall strengthened the intellectual opposition. This opened a way for Yeltsin’s liberal reforms that followed the resignation of Gorbachev. While Perestroika lacked a strategic vision, Yeltsin’s clear message about democracy and liberalism attracted the cultural and political elite. This is why he managed to rise to power and oversee the transition of one of the least democratic and most autocratic countries into a semi-liberal state.

Social Consequences and Media Liberalization in the 1990-S

As  Pietiläinen states, social problems increased in the 1990-s, and the existence of alternative media meant that the voice of the poor and the underrepresented was clearly audible. The author mentions that in 1991, reports about strikes were common in the media. While the Glasnost program sent out the message that the media should be open to political debate, the discourses published in newspapers were still monitored by the state. In 1991, however, everyday problems of ordinary people in the Soviet Union surfaced. It was free to talk about the shortages of tobacco, petrol, unemployment, and the lack of foreign currency. Things that the press never talked about, such as no hot water in thousands of apartments, loss of jobs, telephone system issues, and other problems surfaced, showing people why the old regime and economic system was no longer sustainable.

Presidency and Power of the Rich

Yeltsin proposed the Shatalin Plan in 1990, trying to speed up the economy of the Soviet Union in the following 500 days. The main theme of the program was privatization, or giving back state property for the people. Further, the government was planning to introduce society’s self-management. Unfortunately, this approach was vulnerable for abuse of power, and the lack of legislation opened back doors for already powerful people to abuse the system. The low employee morale resulted in criminal activities, and large proportions of factories and plants  were stolen before the vouchers could be bought (Krausz). The ideology of communism: “people’s property” was embedded in the society, therefore, workers did not defend the workplace any more. Once the state collapsed in 1991, managers acted as the supervisors of firms without any further control over their activities. This was convenient for managers, as Krausz (23)  states: “While in the past they had had to act illegally to line their own pockets, now they could enrich themselves within the law”. The author (Krausz) mentions one opposition leader who called the new system “mafia capitalism”. In more than one ways, it was. Directors managed to secure majority in companies by buying up vouchers, often on black market, and the trade of the vouchers increased their and criminal groups’ wealth. Obviously, the state missed out on tax income, due to the lack of regulation and order. The state did not even try to control voucher trade or privatization activities. In Eastern Europe, the main method of privatization was to make the less profitable parts of production bankrupt, while privatizing the areas of business that can produce an income. While thousands of employees lost their jobs due to privatization, the new managers managed to grow their wealth by manipulating companies’ accounts and voucher prices.

Brovkin (507) concludes that corruption was not only used for increasing personal wealth: “State funds have been used by ranking state officials not only for personal enrichment but for political ends as well”. Feudal lords and oligarchs emerged, increasing their political and economic power through illegal acts. Badovskii and Shutov (37) summarizes the situation as follows: “an oligarchy of influential officials, new entrepreneurs and members of the former “directors’ corps” as a group constitute a political corporation with opportunities for essentially unlimited control of all resources of power in the regions”.

The Poor: Voucher System

The main reason for food shortages, rising poverty, and social issues occurring during and after Gorbachev’s reign was price liberalization. The state no longer manipulated the economy, and without this control it was unable to function  (Boetke). The voucher system was introduced as the means of supporting privatization. Yeltsin introduced the public voucher system to transition the country into a liberal market. The problem with the voucher system created by the Yeltsin regime was that it came in when people were poor, and many exchanged their allocated vouchers to money or food. The high level of inflation also triggered corruption. As a result, the rich became richer, while the poor continued to struggle on. The transition hurt those who were already hit by inflation, loss of jobs, while it created millionaires.

Ellerman, an analyst of the World Bank analyzes the benefits and the pitfalls of the voucher system. According to one of the arguments, the reason why voucher privatization was selected as a preferred method was because there was a lack of cash in the Soviet Union. People’s  savings were wiped out by the inflation caused by price liberalization. Indeed, the leasing scheme that allowed private individuals to rent companies for a fee did not work, either. As Krausz argues, after the state decreased its control over the companies, managers could freely and legally direct funds into their accounts. Instead of reducing corruption and bribery, the new system favored those who were looking to get rich by avoiding taxes, black market activities, and fraudulent privatization. Two of the most powerful players of the new economy became oligarchs who used and abused their power to increase their wealth were Boris Berezovsky, Roman Abramovich.

Conclusion

The above review of the related literature 30 years after the introduction of Perestroika has revealed that the program designed by the powerful advisers of Gorbachev failed to deliver real reforms. As several authors quoted in the above essay revealed, the system was fundamentally incapable of functioning any longer. The high cost of bureaucratic apparatus, nomenclature, the shortage of supplies, decreased morals of the society made the system unsustainable. Moving towards free markets, proposed by Boris Yeltsin was, however, problematic. Privatization and the introduction of the voucher system opened new avenues for powerful and rich people to increase their influence and wealth. While the rest of the country was starving, and millions lost their jobs due to the privatization of the property, managers of formerly state-owned companies gained access to more funds, managed to manipulate markets, and rob companies. Whether or not the state could have intervened to tackle the high level of corruption is debatable,  but it is clear from the accounts reviewed above that the new regime was not prepared to enforce policies to protect the interest of common people.

Works Cited

Boettke, Peter J. Why perestroika failed. Routledge, 2002.

Brovkin, Vladimir. “Fragmentation of authority and privatization of the state: from Gorbachev to Yeltsin.”Demokratizatsiya 6.3 (1998): 504-517.

CVCE. “Gorbachev’s ‘perestroika’ and ‘glasnost’” 2015. Web.

V. Badovskii and J. Iu. Shutov, “Regional Elites in Post-Communist Russia,” Russian Social Science Review 38 (May-June 1997): 32–55

Ellerman, David. “Lessons from eastern Europe’s voucher privatization.” Challenge 44.4 (2001): 14-37.

Krausz, Tamas. “Perestroika and the redistribution of property in the Soviet Union: political perspectives and historical evidence.” Contemporary Politics 13.1 (2007): 3-36.

Pietiläinen, Jukka. “Perestroika and changed reporting of social problems in newspapers.”Perestroika: Process and Consequences (2010).

Sakharov, Andrei. “The Inevitability of Perestroika.”Gorbachev and glasnost: viewpoints from the Soviet press. Scholarly Resources, Inc Wilmington, DE, 1989. 321-327.