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The West's Economic Challenge

"Gorbachev Factor"

In the postwar period the capitalist world confronted the Soviet system with a powerful economic challenge. In the late 1940s and early 1950s, the leading industrialized countries of the West entered the era of a scientific and technological revolution. This opened a period of rapid transition to a new, postindustrial, stage of development. As the technological revolution advanced, it was becoming more and more obvious that the inherent characteristics of the Soviet economic model stood in the way of technological progress. With the only exception of the military-industrial complex, the latest scientific and technological achievements were slow to enter into production on a nationwide scale. Overcentralization, the absence of competition, and a lack of self-interest, motivation, and material incentives at all structural levels of the economy were the main impediments to technological progress.  

1953 test of the Soviet hydrogen bomb

During the war, overcentralization and planning, as the chief underlying principles of the Soviet economic system, had been developed to the utmost. In the extreme conditions of war they stood the Soviet Union in good stead, allowing to redeploy the countrys industrial capacity to the safety of the eastern regions and to concentrate all available economic resources for the attainment of victory. But the retaining of that system after the war was hardly justified economically.

Nevertheless, the Soviet government continued to pump huge resources into the military-industrial complex and the development of new types of weapons. In 1949 the USSR successfully tested the atomic bomb, and in 1953 it overtook the United States in the development of nuclear weapons by being the first to test the hydrogen bomb. In the early 1950s direct military expenditures accounted for 25 percent of the Soviet budget. Heavy industry was the next priority, second only to the defense sector, with machine-building, metallurgy, and energy generation allocated the biggest share of state investment.

As a result of the regimes obsession with continued expansion of the USSRs military and heavy industrial capabilities, Soviet agriculture, the light and food industries, and the services sector were severely underfunded. Particularly desperate was the plight of the peasants. Agricultural production had been seriously undercut by the war and the severe drought of 1946. The wages the peasants received in collective farms were a pittance.

The villagers survived mainly thanks to the minute patches of land that had been left to them by the state for their individual use as household plots. These privately owned allotments were a concession that Stalin had been obliged to make to the collectivized peasants in the 1930s in the face of violent and widespread resistance to collectivization. During the war, when the states grip on agriculture had somewhat relaxed, the peasants had been able to chip off strips of the collectivized field to augment their private plots. In 194647 this creeping privatization was uncovered, and the strips were reconfiscated. Yet the miniature individual plots, amounting to some 3 percent of all cultivated land, remained the key element of the subsistence economy in the village and also supplied agricultural produce to peasant markets in the cities. Peasants household plots were also used to support privately owned livestock. Overall, they produced nearly half of all Soviet meat, milk, and green vegetables. By contrast, the work on collective and state farms was, by and large, performed carelessly and inefficiently. By the early 1950s state-controlled agricultural production had managed to reach its prewar level only to enter a period of drawn-out stagnation.

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Stalin's Legacy


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