Gorbachev Reforms

@alperenzl

The Soviet economy had long been in an arms race with the United States, which outnumbered it in both total GDP and per capita income.

While the US spent 7% of its GDP (gross domestic product) on armaments, this was 27% in the USSR. In this race, although the USSR was backward, the growth rates in the industry declined in the 70s, when the arms industry was given importance instead of consumer goods to equalize the situation. This led to a decrease in the production of goods. Most of the factories were shifted to armament. In 1972, the value of all manufactured goods was 120 billion rubles. This was due to both over-planning and massive military expenditure on the military. However, Brezhnev chose to close his eyes. There were several mild reform attempts within the administration, but this was thwarted by the powerful leader Brezhnev. Yuri Andropov, who came after his death, remained in power for a short time, and his influence was not much. The real reform is Glasnot and Perestroika! (openness and restructuring), that is, the Gorbachev era.

Social life was democratized under Gorbachev. Industries were more financed. Under Gorbachev, economic management was turning from socialism to social-democracy. The concept of 'khozraschyot', or profit, entered Soviet planning. These did not exist in the economy of the USSR before. This posed a price issue. Produced goods cannot be evaluated on profit and loss because they did not have market prices, so resources were spent inefficiently. (See Ludwig Von Mises socialism's economic calculation problem and Hayek's information problem). Seeing this, the producer moves here, because the producers increase, the goods produced increase and the price decreases, then the same happens with another good, etc. that is, prices naturally inform all of us what should be produced. Also, since the goods do not have prices, cost-profit calculation could not be made, and the principle of the most efficient goods for the cheapest was not working.

(There are also things like military spending arguments, here is my interpretation) That's why the eastern bloc faced the problem of inefficiency, although the people theoretically accessed everything for free, there was no supply-demand balance and prices since the manufacturers could not know this, X product was in the markets for a month, could not be found another month, while the other month was taken very little, this time product y was missing.

In addition, another radical reform was to allow private ownership in the service sector, manufacturing, and foreign trade sectors. Instead of the rigid centralism of planning, all working members began to run the business directly through assemblies. These reforms were gathered under the name of 'Perestroika!'.

Another important reform was gathered under the name of 'Glasnot' (Openness). After the Chernobyl disaster, the confidence of the USSR society in state officials was shaken. For him, the solution to this was a common area of ​​discussion and democratization. In this way, problems could be raised and solutions would be quicker and more effective in an environment where all segments of the public participated.

So what do you think about Gorbachev's reforms, was he a traitor who sold his country? Or did he save a country from a long misery by making the right moves at the right time?