failure of economic reform 1985-1990 - Gorbachev

Question 1

Gorbachev’s policy

Answer 1

designed to address the problems with the economy
went though 3 stages

Question 2

what were the 3 stages of Gorbachev’s policy?

Answer 2

• rationalisation - tried to improve the way the command economy worked
• reform - attempted to introduce some market measures in to the command economy
• transformation - abandoned the command economy and tried to introduce a market economy

Question 3

rationalisation

Answer 3

continued Andropov’s anti-alcohol campaign - cutting state production by 50%
introduced acceleration - designed to modernise the economy

Question 4

early failures of his first measures

Answer 4

anti-alcohol campaigned failed as citizens brought it illegally
revenues dropped 67 billion dollars - campaign was abandoned

Question 5

2 reasons why acceleration failed

Answer 5

funded by borrowing money from Western governments - debt rose to almost 30 billion leading to inflation
invested in energy production and ignored the advice of experts who argued for more investment in high-tech machines

Question 6

what did the failures of acceleration lead to?

Answer 6

series of laws to allow market forces to play a bigger role in economy (market reform)
- made it illegal for people to make money by doing small-scale jobs
- law on state enterprises allowed factory managers to set the prices for the goods they produced
- law on co-operatives made it legal to set up large co-operatives which functioned like private companies

Question 7

failure of market reform

Answer 7

created growing economic chaos
undermined the central planning system and failed to create an effective market alternative
no effective way of distributing goods and shortages of essential goods was severe

Question 8

political consequences

Answer 8

GDP shrunk by 4%
inflation
senior party members were growing rich as they seized the economic assets that were being privatised
approval ratings dropped