Gorbachev’s Perestroika

As discussed in Chapter 7, Gorbachev inherited a deeply entrenched, but increasingly dysfunctional, totalitarian political system and a sickly staterun economy. On the one hand, even the party elite was getting tired of the old-fashioned, inefficient command economy and other methods of running the country. On the other, the economy stopped growing. Much of the country's foreign earnings came from exports of petroleum from the west Siberia economic region. Unfortunately for the Soviets, Saudi Arabia and other Organization of the Petroleum Exporting Countries (OPEC) members greatly expanded their oil production in the early 1980s, to counterbalance the price shocks in the aftermath of the Iranian revolution. Global oil prices went from $75 to less than $20 per barrel—roughly the break-even point for the Russian oil producers. Much of the hard currency earned by the Soviet Union from the oil sales had to be spent on purchases of imported food and basic consumer goods in any case. In short, the economic picture was not pretty. There is evidence that Gorbachev, even when he tried, could not obtain reliable in-country statistics on how bad things truly were (Aslund, 2007).

In the late 1980s, over 60% of the Soviet Union's industrial output was in the form of heavy machinery (tractors, turbines, engines, etc.), thought to be necessary for the production of better goods and weapons. Less than 30% was accounted for by consumer goods. The persistent problems were these:

  • a few basic designs in each category were available.
  • Lack of quantity. Some regions had more than others; planners routinely overplanned or underplanned production, which was inevitable, given the lack of a free market.
  • Lack of quality. There was no incentive to produce better goods, because there was no competition among the factories; some quality control was in place, but it was rarely adequate to ensure durability, consistency, freshness, and so on.

The productivity per worker was only a fraction of that in the West (see the discussion of per capita gross domestic product [GDP] at the end of Chapter 7). Ministries duplicated some of their functions: One would be busy shipping coal 4,000 km from Kuzbass in central Siberia to Rostov-on-Don near the Black Sea, while another would ship local Donbass coal from Rostov-on-Don to Krasnoyarsk, bypassing Kuzbass on the way. Stealing among workers was common, as people tried to improve their lives by stocking up on goods that were not available from the half-empty Soviet stores. Special warehouses for the nomenklatura would distribute Western-made consumer goods and luxury items to the privileged party members. In the biggest cities, including Moscow and the republican capitals, a higher diversity of goods and services was available to all. For instance, one could buy beef sausage at a Moscow grocery store at almost any time in the 1970s, albeit sometimes after a long wait in a line. Meat products were simply not available in state shops in most of the rest of the country. Most people survived by growing their own food on small dacha plots, by stealing whatever was available through work, by bartering rare Western goods, and by getting some exotic food items a few times a year through their employers.

The economy of the Soviet Union was not only struggling to provide for itself. It also was supporting millions in the developing world: Cuba, Nicaragua, Angola, Mozambique, Ethiopia, Vietnam, North Korea, six countries in Eastern Europe, and many others were all directly dependent on supplies from the U.S.S.R. Moreover, the mounting military costs of the Cold War were beginning to take a toll on the country's ability to protect itself. Finally, few party members seriously believed in the coming bliss of Communism any more, and even fewer wanted the return of a Stalinist level of repression to make people work harder. Gorbachev realized that if things were allowed to continue in the old ways, the Soviet system would quickly collapse under pressures from both within and without. Still, it seemed impossible to dissolve the party or to abolish socialist ideals overnight. Gorbachev felt a need to reform the system slowly and after much deliberation.

An early reform idea was to require state enterprises to become more accountable. This khozrasschet system was intended to ensure that every enterprise kept a running inventory of all supplies and products, and to provide regular reports to the planning authorities as feedback. No enterprise was supposed to run at a deficit. Of course, such a system was utopian from the onset, for what Soviet directors would want to report bad things about their enterprises? Or the government could try to replicate Lenin's New Economic Policy (NEP), which had been sidelined by decades of Stalinism, with its emphasis on gargantuan factories and massive farms. A return to the NEP in the 1980s would not be impossible, but would certainly be difficult. For example, in a city like Cherepovets—with a massive steel combine employing 50,000 workers at a loss, and no other factories around—what could possibly be done? Open small barber shops? Gorbachev felt that perhaps something more realistic was needed.

To add farther urgency to the situation, the Chernobyl nuclear disaster happened in April 1986. After denying the rumors about the incident for 76 hours, the state news agency finally had to admit that something went terribly wrong, after Swedish scientists began picking up increased radioactivity over northern Europe and complained. The Gorbachev government's first serious failed test was its inability to effectively confront the disaster, mobilize resources, and ask for foreign help, all in the matter of a few critical days. Over the summer of 1986, hundreds of thousands of people had to be relocated; the destroyed reactor had to be sealed; and the hard questions about how it all happened needed to be answered. The accident was not just preventable, but was absolutely avoidable: It resulted from a very poorly conceived idea of fooling around with the cooling system in the absence of an external source of power. (It was a little bit like trying to drive your car after disconnecting the alternator and draining all the oil.) The Chernobyl reactor was also of an obsolete graphite-controlled type. When the core got too hot during the planned experimental shutdown, the rods could not go back in and preclude the meltdown. All U.S. and many Soviet reactors at the time used pressurized water, not graphite, and those would be much safer to tinker with. Incredibly, the chief designers of the Chernobyl reactor were not even consulted before the experiment.

Although we still do not know every detail about the accident, it was one of the final nails in the coffin of the Soviet system. Too many people felt that the government had failed them on too many counts: The closed society could not adequately protect its citizens, or adequately explain to them what had happened and why. Some people in the regions began to demand more political openness. Environmentalists were at the forefront of this movement. Besides the environmental vulnerability to large-scale disasters, and the political powerlessness of the masses, the accident also highlighted the poor communication between the center and the periphery of both the government and the whole nation. The strict top-down hierarchical chain of command, common under leaders from Stalin to Brezhnev, was beginning to fall apart. Chernobyl was in Ukraine, a separate republic from Russia, and it had its own branch of the ministry of atomic energy carrying out the experiment without proper consultation with Moscow. Also, local police, firefighters, and political leaders had to depend on some decisions being made for them in Kiev and other decisions in Moscow.

To sum up, three factors played a role in moving Gorbachev toward the reforms: (1) the ineffective, stagnating economy; (2) political pressures from abroad, coupled with growing dissent at home; and (3) the environmental fiasco of Chernobyl. Early in 1987, Gorbachev addressed the party and the nation by proposing a three-pronged approach to reforms. He was very cautious; in no uncertain terms, he explained that this was to be an evolution, not a revolution, of the Soviet economic structure. The three aspects he announced were these:

  • Perestroika, or restructuring of the worst elements of the Soviet planning system.
  • Glasnost, or political openness, including freedom of the press and real elections.
  • Uskorenie, which means “acceleration” (i.e., not simply rebuilding industries, but producing more, better, and faster to catch up with the West in the production of high-tech and consumer goods).

In the end, the only success was glasnost. Gorbachev's major accomplishments here were releasing political prisoners; abolishing the oneparty policy; lifting most restrictions on the mass media; and allowing multiple-candidate local and federal elections, freedom of meetings and demonstrations, freedom of association, freedom of religion, and (toward the end of his tenure) freedom to travel abroad.

With respect to perestroika (i.e., actual economic reforms), little progress was made. The main problem was Gorbachev's inability to go beyond mere cosmetic changes. Not remodeling, but whole-scale demolition and rebuilding was needed. Gorbachev was a smart man, but his main fault seemed his inability to realize the ultimate futility of the socialist system of production, at least in its late Soviet form. He seemed to be willing to allow a few new types of semiprivate or private ownership, but on a very small scale of cooperatives: a toy shop here, a barber shop there. Most of all, he was afraid to lose the Soviet Union, the Communist Party, and Russia's central place in both, and of course this was precisely what happened in 1991 anyway. On the one hand, he started promoting a reformist agenda; on the other, his hands were tied by his connections to many of the still-powerful Communists who were not at all convinced that his reforms were needed. Gorbachev did manage to assemble a strong reformist team of political advisors and economists, some of whom continued to work with Boris Yeltsin on the much more drastic reforms of the 1990s.

Some of the political reforms implemented in 1987–1989 included curtailment of the power of central administrators to control agricultural and industrial production; greater autonomy of Soviet directors to decide on what to produce, when, and with whom; expansion of workers' rights; encouragement of some small-scale private enterprises in food production and services; a focus on the production of critically needed consumer goods; and pursuit of joint ventures with foreign capital. Ventures of this last type were not entirely new: Pepsico had been present in the U.S.S.R. since the early 1970s, for example.

The C.P.S.U. monopoly was broken in 1988, and the Central Congress of People's Deputies was transformed from a merely rubber-stamping body into a real parliament, with the deputies introducing diverse legislative proposals. The first true multiparty elections took place on March 26, 1989. Gorbachev also had to control the military, which was a hard task, especially with the rise in nationalism in Georgia, Armenia, Azerbaijan, Moldova, and the Baltic states at the time. The state's weakening grip on power was correctly interpreted by the various oppressed social groups in the Soviet republics as an indication that the time to act was now. Some examples of the rising nationalism included violent protests in Baku, in Tbilisi, and in Vilnius in 1988–1990, resulting in casualties after Soviet tanks moved in. In 1988 pogroms took place in Baku against the Armenians, and in Yerevan against the Azerbaijanis, as two republics were preparing to commence a real war over control of the disputed Nagorno-Karabakh area. Gorbachev chose not to intervene.