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Fourth, the Soviet economy was extravagantly wasteful and “uneconomical.” The system favored extensive growth, that is, growth by increasing inputs of labor, raw materials, factories, and investment capital. 

 

In the 1930s and 1940s the Soviet Union had a large pool of unemployed workers, seemingly infinite supplies of oil, coal, and other raw materials, ample land for cultivation, and capital squeezed from the rural sector through collectivization. But in the postwar decades the USSR no longer enjoyed surplus labor, land, or capital resources waiting to be exploited. New gains in production had to be achieved through intensive growth—that is, through more efficient use of existing resources—by increases in labor productivity, automation, mechanization, and the application of new technologies. All of the reforms introduced by successive postwar leaderships—from Khrushchev to Gorbachev—attempted to shift away from the Stalinist model of extensive growth, but all produced little or no effect.

Fifth, the system of centralized planning seriously failed Soviet consumers. Endemic deficits of consumer goods, chronic food shortages, overcrowded housing conditions, and primitive consumer services became the hallmarks of a Soviet-type economy. All attempts by Soviet leaders to find ways of making the system more responsive to consumer wants proved futile. In contrast to the capitalist economy, with its periodic crises of overproduction, the command-bureaucratic economy could never overcome the underproduction and constant deficit of consumer goods despite all the promises and exhortations of Soviet leaders.

Finally, the Soviet system was severely handicapped as a result of its tendency toward self-isolation. No modern national economy can develop successfully without many ties to the economies of other countries, and without participating in the global economic division of labor. The Soviet system was isolated not only as a result of ideologically motivated political decisions of its Communist leadership but also on account of its technological backwardness and inability to compete with the more advanced economies.

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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
Stalinism
The USSR in World War II
Stalin's Legacy
De-Stalinization
Brezhnev's Stagnation
The Economy in Crisis
Political Reform
The USSR's Collapse

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