The Soviet System: From Crisis to Collapse

By Alexander Dallin; Gail W. Lapidus | Go to book overview
Eastern Europe and the Soviet Union. Durham and London: Duke University Press, 1988, 259-284.
4.
See Hewett, "Perestroika-'Plus'."
5.
Domenico Mario Nuti, "Remonetization and Capital Markets in the Reform of Centrally Planned Economies," Paper presented to the Third Annual Conference of The European Economic Association, Bologna University, 27-29 August 1988. Those who are familiar with the literature on economic systems will recognize this as basically an "unravelling" of the various possible zones of influence between state and individual preferences discussed by Jan Drewnowski in "The Economic Theory of Socialism: A Suggestion for Reconsideration," Journal of Political Economy, Vol. LXIX, No. 4 (August, 1961), 341-54; reprinted in Morris Bornstein (ed.), Comparative Economic Systems: Models and Cases, Homewood, Ill.: R.D. Irwin, Revised Edition, 1969, 110-127.

28 Beyond Perestroyka:
The Soviet Economy in Crisis

THE SYSTEM IN CRISIS

After six years under Mikhail Gorbachev, the Soviet economy is in crisis. This crisis has several elements: an accelerating decline in production, worsening inflation, a breakdown in interregional trade, and a fierce political struggle between the center and the republics over the future of the multinational state. Rather than responding to these problems with reforms, since last fall the union authorities have attempted to reassert central control over the economy and politics. This approach has been counterproductive. Although a new approach to the country's economic and political ills may be in the offing if a center-republic accord signed in late April bears fruit, previous agreements of this sort have proved fragile and fleeting.


SHARP DETERIORATION
IN ECONOMIC PERFORMANCE

The Soviet economy had a bad year in 1989, but the period since January 1990 has been much worse. For the first time since World War II, the Soviets have acknowledged that overall output is declining—by 2 percent in 1990 and by a startling 8 percent during the first quarter of 1991 compared to the same period last year. Our own estimates, while subject to greater uncertainty than in years past, continue to

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