The Economic Demise of the Soviet Union: Unraveling Choices and Consequences

1. Introduction

7. A Journey of Choices • Opportunity cost – the benefits of the foregone (next best) alternative The Economic Demise of the Soviet Union

8. Choosing Is Refusing

10. 1917 • 3% literacy • serfdom • just beginning to industrialize • Wealth held by Romanovs

14. 1921: New Economic Policy (NEP) “We are taking one step backward in order to take two steps forward.” farmers’ market

17. Results: Five Year Plan, 1928-33 Benefits: Burden on consumer: Slow growth in consumer goods increase of 1% food rather than other consumer goods Livestock production fell 8% • Urban electrification • New towns, factories, mines • Growth outpaced West (Great Depression) • 48% increase in GDP 1928-33 • 113% increase in producer goods output • 227% increase in electricity

20. Step 1: “de-kulakization” A parade under the banners "We will liquidate the kulaks as a class" and "All to the struggle against the wreckers of agriculture.“ http://www.yale.edu/annals/siegelbaum/images/siegelbaum_photos.htm "Endless fields of people - women, children, old people - and universal wailing. They were being loaded on to cattle trucks to be sent off to Siberia. I was there for fifteen minutes and I asked the station master there, ' What's this? What's happening here?' and he said, ' What's up with you? Have you just landed from the moon or maybe you've just arrived from Persia? This is the collectivisation and the elimination of the kulaks as a class.' And it turned out there were so many people, and not enough trains that, with the cold weather, people were literally just dying there .” https://whewert.wikispaces.com/5-Focus+3 The Economic Demise of the Soviet Union

22. Nazis Invaded USSR, June 1941 . . . and . . .

23. . . . lost the war German POWs in Moscow

24. USSR: world power

25. Choice: nuclear weapons program “Lightning 1” 1st Soviet atomic bomb test 1949 “Joe 1” 1st Soviet atomic bomb

26. Choice: education

28. 1950s - “Golden Years” of the Soviet Economy SOURCE: Ofer, 1987; Laurie Kurtzweg, “Trends in Soviet Gross National Product” in United States Congress, Joint Economic Committee. Gorbachev’s Economic Plans, Vol. 1, Washington D.C., pp. 126–165; James Noren and Laurie Kurtzweg, “The Soviet Economy Unravels: 1985–91” in United States Congress, Joint Economic Committee. The Former Soviet Union in Transition, Vol. 1, Washington D.C. pp. 8–33, 1993; Angus Maddison. Monitoring the World Economy 1820–1992, OECD, Paris, 1995; Angus Maddison, The World Economy : A Millennial Perspective, OECD, Paris, 2000. The Economic Demise of the Soviet Union

29. “Thaw” in the Cold War Khrushchev’s U.S. tour Yale University Choir in Red Square after Lacy Zarubin Agreement The Economic Demise of the Soviet Union

30. the “Secret Speech” - 1956 “On the Cult of Personality and Its Consequences” • called for return to Leninist ideals • begins the “de-Stalinization” of the USSR • Denunciation of Stalin’s military and party purges • Note: did not denounce coercion of populace used to advance the interests of the party and the state Twentieth Congress of the Communist Party of the USSR The Economic Demise of the Soviet Union

31. Leonid Brezhnev: 1964 - 1982 The Economic Demise of the Soviet Union

32. “Good Ol’ Boy” Communism Brezhnev opened the Olympic Games in Moscow, 1980 to showcase the Soviet Union to the world Brezhnev years characterized by emphasis on image and Soviet prowess on the world stage, while ignoring serious underlying problems in the Soviet economy The Economic Demise of the Soviet Union

33. Behavior encouraged by Output Target Incentives: • Characteristics of Factory Directors: • anti-innovation • risk-averse • hoarder • defend status quo • understate capacity • overstate (ratchet) resource needs tolkachi – procurers of production supplies by trading with other factories hoarding misallocated supplies, or through the black market. The Economic Demise of the Soviet Union

34. no bridge from invention to innovation • Invention: new knowledge or ideas • Innovation: application of knowledge to production

35. BZ1-C Redline C-Core Baseball Bats The world's best baseball bat: patented Carbon Core technology combines   Easton's exclusive Sc500 Scandium alloy walls, the strongest in the game, with   carbon graphite reinforcement, resulting in the thinnest walls ever without sacrificing   durability.     Extended barrel for maximum hitting area.   Alloy: Sc500/graphite 

36. no bridge from invention to innovation Scandium alloys were first made commercially available in 1996 by the Ashurst Technology Group. Easton Sports first used Scandium alloys in February 1997, the product was the Redline C-Core bat. http://www.precisiontandems.com/eastonscandium.htm • Invention: scandium alloy • Innovation: baseball bats bicycle frames The Economic Demise of the Soviet Union

37. End of the Brezhnev Era Yuri Andropov November 1982 – February 1984 Konstantin Chernenko February 1984 – March, 1985 The Economic Demise of the Soviet Union

38. Mikhail Gorbachev 1985-1991 The Economic Demise of the Soviet Union

39. The Demise of the Soviet Union - 1991 • Reagan’s presidency • Afghanistan • Chernobyl Major blows to citizen support of the Soviet regime: The Economic Demise of the Soviet Union

40. Reagan: On-going Challenge Strategic Defense Initiative (“Star Wars”) “The Soviet Union is an Evil Empire, and Soviet communism is the focus of evil in the modern world” March 8, 1983 The Economic Demise of the Soviet Union

41. Afghanistan: Dec. 1979 – Feb. 1989 Soviet casualties: Killed: 15,000 Wounded: 30,000 # Served: 600,000 Avg Troop strength: 100,000 The Economic Demise of the Soviet Union

42. Chernobyl Nuclear Accident: April 26, 1986 The Economic Demise of the Soviet Union Message: they don’t care about us

43. Gorbachev’s Reforms: Glasnost & Perestroika Solzhenitsyn in gulag, 1953 Glasnost • political “opening” • allowed dissent • ended party monopoly of elected regional & local offices • greater regional representation • encouraged social research • admitted social problems despite Gorbachev’s invitation, Solzhenitsyn didn’t return to Russia until 1994, 20 years after being exiled The Economic Demise of the Soviet Union

44. Gorbachev’s Reforms: Perestroika Perestroika economic “restructuring” allowed some private (cooperative) business some decentralization of control over state production The Economic Demise of the Soviet Union

45. Russian Dissident & Chess Champion Wins Human Rights AwardGarry Kasparov to Receive UN Watch Prize at League of Nations Hall in Geneva (April 2013) “Gorbachev had as much to do with the fall of the Soviet Union as Louis the XVI had to do with the French Revolution.”

46. August, 1991 Boris Yeltsin declares Russia’s independence from the USSR The Economic Demise of the Soviet Union

47. 1940 Katyn Forrest Massacre ”I was dumb; I believed it all. I would have given my life for the Motherland.” * *Lenin’s Tomb by David Remnick The Economic Demise of the Soviet Union