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The Management Monopoly

"Gorbachev Factor"

Of all the different reasons that brought about the collapse of the USSR, the economic factor was probably most decisive. In the 1980s the economic system that had enabled the Bolsheviks to transform the predominantly agrarian Russian Empire into a great industrial power and then to turn it into one of the worlds two nuclear superpowers seemed to have lost all its vitality and was rapidly going into decline. In the case of the Soviet Union, the failure of the command-bureaucratic model of socialism was especially embarrassing, as the country possessed all human and natural resources necessary for building a highly developed economy. 

 
 

A number of characteristics of the Soviet economy help explain the causes of its decay and ultimate collapse. First, the monopoly of state ownership of the means of production stifled innovation and competition. Enterprise managers were under intense pressure from central planners and local party bosses to fulfill their plan targets, and they habitually tried to cut corners by reducing quality. The incentives faced by heads of enterprises tended to militate against improvement, entrepreneurship, and innovation. The result was technological stagnation: the system had no incentives to upgrade continually the technological base of production and to raise labor productivity.  

Second, the management monopoly of the party-state bureaucracy bred recklessness, irresponsibility, and arbitrariness in economic policy making. The prime examples are the administrative collectivization of the late 1920s, the superindustrialization of the 1930s, and the complete liquidation of peasants small private land allotments in the 1950s. Paradoxically, the Soviet system of centralized planning did not have any built-in mechanisms to prevent arbitrariness and unpredictability in economic decision making. No amount of the most careful planning could override authoritarianism and willfulness as the cornerstones of the command-bureaucratic system.

Third, the eradication of market mechanisms and of private ownership deprived the economy of vital driving forces such as self-interest. Lack of personal motivation and material incentives affected all structural levels of the economy. In a Soviet-type economy, the worker is provided with no stimulus to work better and to increase labor productivity. As a result, state coercion and similar pressures of noneconomic character become the main driving forces of the economy.

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The Economic Structure

 

Soviet Russia

Understanding the Soviet Period
Russian Political Culture
Soviet Ideology
The Soviet System
Soviet Nationalities
The Economic Structure
The Socialist Experiment
"Great Leap" to Socialism
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