How did the economic system of the Soviet Union manage to hold up and function relatively well for many years, and why did it collapse so quickly in the end?
In: Economics
Very oversimplified: The Central Committee of the Communist Party (CCCP) basically ran a command economy. They made plans and had them executed through government mandate. This led to economic growth, which wasn’t too hard because Czarist Russia was a feudalist backwater and the economy didn’t have anyplace to go but up. It is important to know there was no history of liberal government or what we see as capitalism in Russia prior to the Revolution.
Primer: In an “ideal” capitalist system there is much less direct government intervention in how the economy acts, with multiple private companies competing. If this can grow and mature over time, basically the different companies will see opportunities to profit by making sure all the needs and desires of a population is met, with government intervention, non-profits, etc to fill in the gaps.
In the late ‘80’s the CCCP under Gorbachev started to try to have less control of the economy to spur economic growth, but there was no history or understanding of how to do that and people had gotten accustomed to a lot of graft. In ‘91, hardcore Commies tried to overthrow Gorbachev, which within month lead to the dissolution of the USSR. Because of that there was no on at the wheel, no history or practice of capitalism, and everyone was out for themselves. People’s government jobs disappeared overnight. It was turmoil.
This is really oversimplified, but democracy and capitalism in Russia were a disaster for most people.
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