WHAT EXPLAINS THE FALL OF THE USSR C1986 - 1991?

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WHAT EXPLAINS THE FALL OF THE USSR C1986 - 1991?

Causes

  • ECONOMIC PERESTROIKA
  • 1. The encouragement in joint ventures, January 1987
  • 2. The Law on State Enterprises, June 1987
  • 3. Co-operatives were legalised in 1988

Effects

  • Whilst food production increased from 1-2% between 1986-87, it still did not meet the needs of the population
  • Enterprises were still subject to state interference as the state decided on the allocation of materials
  • The diversion of foodstuffs from state shops to co-operatives which charged higher prices meant that inflation occurred
  • Co-operatives were able to shop around for a buyer which resulted in deals being concluded with rich authorities, leaving poor cities devoid of products
  • Co-operatives proved to be more productive than the state sector and so corrupt government officials would demand bribes for permission to continue selling
  • Uncertainty over supplies encouraged a wave of hoarding
  • Food rationing was introduced in some cities to try and control the hoarding of goods
  • Implementation of the principle of electing managers resulted in a steep rise in wages
  • Foreign companies trying to invest in the USSR were faced with endless bureaucracy and this put them off
  • Reforms were often undermined by officials

Overall summary

The reforms had weakened the apparatus of state planning but provided little to replace it, resulting in the Soviet economy having massive debts by the end of 1989. Strikes had increased due to wages and food shortages. The government's response to this was to simply increase wages but this was only a short term measure. 

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