Adidas was one of the main brands smuggled into USSR during the peak years of, what Soviet citizens called "deficit" (shortage of consumer goods). It was a very visible brand for sporting events which were quite popular in USSR. That symbolic value added to its perception of quality, but outside of the quality and iconic status in sports, it was a rare commodity that had to be imported, which made it a status symbol.
Russia Economy Thread
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Very true about Perestroika. Really led to political divisions and sewed mistrust. Initiated racially charged politics as well and stoked division.
Gorbachev was a very weak leader. Cared more about optics in the west than actual improvement with the USSR. Didn't help thus Yeltsin was a bully. A lot of Soviet citizens fell for western propaganda as well. After the fall, they realized that they were tricked but it was too late.
manqiangrexue
Brigadier
IMF cannot reduce anyone's growth; they can only reduce or increase their guess of someone's growth. IMF estimates 0.6% Russian GDP growth this year, only 6X faster rather than 9x faster than the EU's 0.1%.
Russia energy week started with Saudi Prince Salman. The same Prince that few months ago Russia asked for investments in Far East. They already have Gas OPEC in addition to Oil OPEC. Russia has proposed Rare Earth alliance to them and i think Gold trading is very extensive all the way to Africa.
Russia gas consumption is upto 70% of US. it can surpass US consumption considering scale of single family home construction.
Russia gas consumption is upto 70% of US. it can surpass US consumption considering scale of single family home construction.
Why are you claiming twice the emphasis on the destruction of the USSR in WWII?
Do you know which countries also emerged from WWII destroyed?
Japan.
Basically almost all of Europe, and especially West Germany.
Do you know what they have in common? They all had a higher standard of living than the USSR.
I don't need to use the US (an untouched hemisphere) as a comparison with the Soviet economy to show how flawed the Soviet economic model was.
This is no excuse for the economic failure of the USSR.
The fact that you want to emphasize this is a glimpse into the absurdity of your defense of the Soviet economy, because even among comparisons of nations that were decimated in WWII, some countries emerged much more prosperous than the Soviets, which had a flawed economic model.
Another emphasis in your argument is perestroika. If the Soviet economy "was, for the most part, 'well' and developing," there was no reason to carry out perestroika in the first place.
Do you know why Gorbachev came to power?
Gorbachev came to power determined to promote several reforms to keep the Soviet Union afloat. In the 1980s, the Soviet Union found itself in a very delicate situation. The Soviet economy was in a severe crisis, with the country accumulating deficits due to high spending.
The Soviet economy was dependent on oil exports, and due to the drop in the price of this commodity on the international market, Soviet revenues began to plummet. Furthermore, Soviet agriculture suffered from low yields, forcing the government to export grain from foreign markets. The Soviet government also saw its economy bleed due to excessive spending on the Afghan War.
Politically, there was also strong popular dissatisfaction with the Soviet government, mainly due to the poor performance of the Soviet economy.
The fact that you say that until 1986, things were going well for the bloc economically is quite funny, because none of that is true. For example, using the example of motor vehicle production in the USSR increasing before Gorbachev and then decreasing with the implementation of Gorbachev's reforms is even funnier.
Do you know why this happened?
You yourself ended up answering in your comment. Here's your comment:
The problem with central planning is not the inability to produce competitive products.
I recommend you read the book "Icon" by Frederick Forsyth. In the book, he gives several descriptions of how the Soviet shadow economy worked. This economy was excellent for allocating scarce resources to which it had access, but manufacturing scarce resources was another matter. The book also shows how several Russian millionaires "magically" emerged after the end of the USSR: they were people who accumulated hard currency in the informal market by selling food or gasoline during the communist years. These people eventually became the Russian mafia. This is why today it is speculated that the black market always represented 40-50% of the entire Soviet economy.
It is well known that since the end of Brezhnev's rule, the Soviet economy had been stagnant. Andropov took office promising economic reforms to stem the economic crisis and the stagnation of the Soviet standard of living. There is no shortage of articles analyzing the descriptive scenario of the Soviet economy at the time:
Andropov died prematurely. He remained in office for months, promising to embark on a set of economic reforms. But like all failed Soviet planning, several Soviet economic experts believed his modernization program could be undermined by the entrenched central planning bureaucracy. This was the fate of the Brezhnev-Kosygin of 1965-70.
You need to consider the economic context.
The Soviet regime's preference for scarcity over inflation has its roots in the hyperinflationary history of the Soviet economy. By the mid-20th century, Soviet planners were well aware of the dangers of hyperinflation. With the end of the Tsarist regime and the conclusion of World War I, the new socialist regime took control of a country that was already bankrupt and highly dysfunctional. Hyperinflation soon followed. The Bolsheviks attempted to abolish money altogether, but this naturally failed, and a series of monetary reforms followed. By the late 1920s, however, the regime was engaging in widespread price control efforts, including the highly unusual tactic of rationing in peacetime. This limited price inflation for many goods and set the stage for the "suppressed inflation" that would become a pillar of the Soviet system for decades. Prices, however, began to rise rapidly in many areas, and World War II brought a new wave of price inflation, and prices soared. This was followed by another monetary reform—namely, the devaluation—of the Soviet ruble in 1947. Price control efforts were redoubled, and overall prices actually fell during the 1950s.
For much of the 1950s and early 1960s, the regime was perpetually concerned about price inflation. Indeed, Soviet ideology stipulated that inflation did not actually exist in the USSR. As Vasily Garbuzov, the Soviet Finance Minister, stated in 1960:
This is propaganda, of course, but in a sense, Garbuzov was right. A socialist state could indeed moderate the effects of monetary inflation on prices by reducing living standards and consumer choices whenever prices appeared to be rising.
This was necessary because the money supply continually expanded as wages rose. In their 1985 study of the Soviet economy, Igor Birman and Roger Clarke wrote:
In an unencumbered economy, wages are closely tied to worker productivity, so wages would not rise disproportionately to the quantity of goods and services available in the economy. In a socialist economy, however, the price of labor—that is, wages—was arbitrarily set like all other prices. Wages under socialism are also paid by the public treasury and can be raised at the regime's convenience. This often meant wage increases because higher wages were politically popular. Rising wages potentially created the impression of prosperity, even when the economy was not actually more productive. Furthermore, as Birman and Clarke note:
Increasingly, after 1965, the Soviet money supply became disproportionate to the economy's productive capacity. In a relatively free economy, this would quickly lead to price inflation, but the Soviet regime had ways to shift the economic burden elsewhere.
Thus, prices were kept under control not through fiscal discipline but through price controls. This led to shortages because, if wages rose while product prices did not, demand quickly outstripped supply. Soviet citizens often found they had very little to spend their money on, resulting in the long lines and empty shelves we associate with the Soviet economy today.
Through this mechanism, the regime could continue to inject new money into the economy, but also prevent ordinary people from spending "too much" money and thus raising consumer prices. The downside, of course, was that living standards fell considerably, as historian Steven Efremov :
The result was essentially forced savings. Efremov continues:
In some respects, this was beneficial for the regime, as these unspendable savings could also be used to purchase government debt. But this accumulated money—known as the "monetary surplus"—increased much faster than the production of goods and services, and Efremov concludes that "the money supply had grown far more than was necessary for regular circulation." This would come back to haunt the regime when the economy began to open up and consumers were finally able to spend their money, causing prices to soar.
An additional method of reducing official inflation figures was subsidizing consumer goods. Retail price subsidies were introduced in the Soviet Union in 1965 as part of a major package of economic reforms. Soviet authorities then began implementing price subsidies on "basic foodstuffs such as meat, milk, bread, sausages, sugar, and butter." The goal was to keep prices stable. These subsidies survived subsequent economic reform efforts and became an increasingly large part of the economy in the early 1980s, with government spending increasing rapidly to put downward pressure on prices through subsidies.
None of this actually helped Soviet living standards.
To counter the effects of monetary expansion and falling living standards, the Soviet regime relentlessly tried to increase production to reduce the gap between monetary growth and productivity growth. However, due to the impossibility of economic calculation under socialism, Soviet central planning failed to coordinate goods and capital efficiently, and worker productivity stagnated.
Another result was an even greater decline in government revenue collection. Although taxes were levied and some revenue could be raised from imports, government monopolies—that is, state-owned enterprises—that controlled a variety of goods and services produced much of the income on which the regime depended. These enterprises could theoretically increase their revenues by increasing production, but production often stagnated as wages—that is, production costs—rose.
Government budgets, therefore, increased in tandem with falling revenues. Byung-Yeon Kim notes, for example, that "retail price subsidies…increased from 4 percent of government budget expenditures in 1965 to 20 percent in the late 1980s."
However, the availability of consumer goods certainly did not keep pace. Instead, consumers had few places to spend their money, and "the share of forced savings in total monetary savings increased from 9 percent in 1965 to 42 percent in 1989."
Judging by the prevalence of shortages, it's clear that the Soviet economy was in a state of stagnation in the late 1970s. Shortages worsened further. Kim concludes:
Wage increases continued to have little positive effect. Throughout the 1980s, Soviet state-owned enterprises raised wages in an attempt to create a "wealth effect" and placate dissatisfied workers. However, with few goods available to purchase, wage increases ceased to be a significant incentive to work harder. Birman and Clarke note that, after a while, wage increases "become ineffective—additional, unspendable money no longer provides an incentive to work harder or more productively." Worker productivity suffered. This problem only accelerated as the decade progressed, and, as Igor Filatochev and Roy Bradshaw note, "wages increased four times faster than labor productivity throughout 1989 and 1990."
All this spending on wages and subsidies combined to create conditions under which government deficits increased, leading to even greater monetary expansion. Kim concludes:
Until the 1970s, there was a connection between revenues and expenditures to the point where deficits were manageable. As time passed, borrowing to cover deficits became increasingly costly for the regime, and printing money—in addition to the need for wages—became increasingly seen as a way out:
Money printing began well before the late 1980s, that is, from 1977 onward, and tended to increase throughout the late 1970s and early 1980s. Overall, the Soviet budget tended to destabilize the consumer market, at least after 1977, by putting money into circulation. In particular, a sharp increase in money printing in the late 1980s suggests that the Soviet economy was on the verge of collapse.
Byung-Yeon Kim, “Causes of Suppressed Inflation in the Soviet Consumer Market, 1965–1989:
None of this has much to do with your claim that the Soviet economy is "backward" or "stagnant".
USSR having worse conditions than Western Europe has been a fact for basically its entire existence.
Vietnam is a worse place to live in than Japan or Korea. Which economy is more "stagnant"?
And no, there are very few nations that were as thoroughly destroyed as USSR. Moreover, even among States that did really well, some did better than others and the USSR wasn't horrifically behind other developed States. So this argument just doesn't hold water.
Things were going quite well for the bloc.
Domestic perceptions of "backwardness" and envy at Western European living standards is understandable, especially when we look at consumer goods. Moreover, many parts of the country were much more rural and less developed than others.
Your remark that "none of that is true" is really just more of the same prattle about how USSR was just horribly backwards and terrible to live in, when it's not remotely true. In a globe full of actual bakcwards, stagnant, deteriorating, and even rapidly developing the USSR was a firm "second place" to live in after the "First World". The bloc had done an amazing job with literacy, minimizing poverty and even homelessness. Things you cannot necessarily put a value on. But that's one of the issues with common goods. It's very hard to put a GDP number on these things.
If it's really just more of the same then I'm not interested. I'm well read on the Western perspective on the Soviet economy. I don't consider this perspective useless, but it's really just the same thing as you're saying.
Incessant whining and criticism about the Soviet Union and how bad it was. Focusing on dissidents and critics and never the other way around.
The reality for the Soviet citizen is that the vast majority had a steady job, secure shelter, and a disposable income. The country provided a solid improvement year on year to the average citizen. All of that disappeared, replaced by political instability, destructive economic change, and a very difficult decade in the aftermath of the Soviet collapse. Soviet nostalgia was sizeable even into early 2000s.
Not that the USSR didn't have it's problems, one of the main ones being poor at measuring its own economy.
No, it's well known that there is a perception of the USSR being stagnant and backward. Dooming about your own country is a practically a cultural feature of Russian history.
Many Russians to this day believe that their country is horribly stagnant and backward, despite much evidence to the contrary.
This is like talking to Kasparov about Russia. There will be no end of criticism despite evidence to the contrary.
Present Japan is artificial country created and sustain by combined efforts of US and Gulf Royals. where did the first Toyota Land Cruiser got exported? where that Toyota Taxi with large capacity engine started? who owned the first Lexus dealers.
Yeltsin in Kazan. that was the end of USSR. no amount of GDP growth could have save it. and yes 1917 revolution could not be stopped as it was supported by people of high intellect. i am sure you know it. Thats why when i mentioned Russian empire/Soviets were only empires in history that faced combined forces for longest time. and despite all the bad conditions Russia was and is fully developed country. Its B and C team in Maths and hard sciences olympiad could easily beat its Western counterparts even when West was at its peak
Putin certainly can say USSR was less wealthy and backward compared to Western Europe overall but there was Excellence that goes far beyond West
Putin very polite and sophisticated person. He can say any things up to justify current condition and any lack of improvement under his term. He created this Nashi movement to find out what kind of Post Soviet generation in Russia. if Putin has positive opinion about Russians he would not have built so many Mosques and thats the reason i think he keep them even more poor untill they learn those values.