Russian Politics - Part 2 - Economic Development and State Penetration

IV. Penetration Crisis - Stalinism, Post-Stalin - Soviet Industrialization

        a. Stalinism  (1928-1953)

            1. Stalin gives up on any hope of European proletarian revolution - promotes idea of "socialism in one country"

            2. Main features of economic policy:

                a. complete state ownership of the means of production - end of NEP

                b. End of partial markets, comprehensive state planning, autarky

                c. Collectivization of all farms - rapid urbanization and growth of industrial working class

                d.  Emphasis on heavy industry over light

                e.  Use of threat of repression as main element of "labor discipline"

             3.  Moscow trials - reinforce idea that "no one is safe" and thus obedience is unconditional

             4.  Stalin's cult of personality

        b. Post Stalin (1953-1985)

            1. Stalin dies in 1953 - power struggle ensues

            2. Khrushchev's "Secret Speech" to 20th Party conference - denounces Stalin's "excesses"

            3. Changes in economic policy

                    a. Now with Eastern "sphere of influence" more collaboration with Eastern Europe/China possible
                        (CMEA steered trade within sphere of influence)

                    b.  Less reliance on terror, but overall results were decreasingly promising over time

                    c.  Problems:

                            1. Bureaucratic controls excessive, impeded innovation and firm responsiveness

                            2. Emphasis on heavy industry created absence of consumer oriented "incentive goods"

                            3. Very large military spending impedes investment in other sectors such as agriculture

                            4.  Very high environmental costs to industrialization

                            5.  Slow to convert to computer age

                            6.  Limited trade and general isolation impaired transference of new technologies and production methods

                            7.  Population standard of living slow to rise, life expectancy declines

            c. Gorbachev  (1985-1991)

                    1.  Perestroika

                           a. some decentralization of control, less bureaucratic planning

                            b. some openness to foreign trade, influences

                            c.  Overall, state subsidies and control over commanding heights continues without clear direction -
                                lower output, shortages, trade problems  result

                    2.  Glasnost

                            a. more contested elections, greater press freedom

                            b. foreign policy - reaches out to the West (questions of joining the IMF, World Bank, WTO/GATT emerge).

                    3.  Internal tensions

                            a. 1991 - failed coup by pro-communist forces fails

                            b. Soviet Union falls apart, replaced by Commonwealth of Independent States (CIS)

        d. Russia (post-Soviet period, 1991-)

                    1. Economic Policy

                        a. Privatization/shock therapy 1991 - end to price controls, subsidies

                            1. Fiscal restraint lacking as govt. tries to prevent social dislocations -
                                inflation, govt. incurs debt to pay off previous debt - 1998 bankruptcy

                            2. Sharp drop in real wages

                            3. Business failures, unemployment, unpaid salaries, capital flight, tax avoidance

                            4. Lots of insider deals when privatizing - managers scheme to keep control,
                                creates class of "newly rich" esp. in raw materials/finance

                            5. Agriculture, slow privatization, inefficiencies numerous, subsidies continue

                            6. Foreign investment increases, but lawlessness and "mafia" impair business climate, Europe and US give aid

                            7. Regions not always compliant to Moscow

                   2. Social Policy

                        a. Previous welfare state was generous - many subsidized goods/services, although shortages frequent and quality low

                               1. Free health care, education, child care, maternity leave, early retirement, small pensions

                        b. Now welfare state continues underfunded, but with sharper demands due to unemployment, higher costs, heavy burden on women