Economic Collapse of Soviet Union
Why did the USSR fall first? Page 9

Introduction

Theoretical unpreparedness
Page 2

Dumas analysis
Page 3

Breakdown of technology
Page 4

Breakdown of science
Page 5

Resource diversion
Page 6

Unproductive activity
Page 7

Militarization and bureaucracy
Page 8

Why did the USSR fall first?
Page 9

Did the USSR have any choice?
Page 10

Notes
Page 11

In The Overburdened Economy, Dumas makes a convincing case that the U.S. as well as the USSR has been economically devastated by the counter-productive effects of military spending. Unlike the USSR, however, the U.S. devastation does not show up directly in shortage of consumer and producer goods. This is because, unlike the Soviets, the U.S. is integrated with the global capitalist market and flooded with imported goods. Instead, the U.S. suffers from the unemployment and under-employment that results when domestic production is replaced by imports.

Given the similarity in the underlying economic dynamic in the two societies, why did the Soviet economy fall first? Dumas correctly predicted this in 1986 because the Soviets were trying to match U.S. arms production, weapon for weapon, with a smaller initial baseline economy:

Partly because the economy is younger and not as large, and partly because the resource base is itself smaller, the burden of maintaining an overlarge distractive sector has fallen more heavily on the Soviet than on the American economy. The drain of technologists and of production and infrastructure capital (and perhaps of other resources as well) is apparently on a scale comparable to that in the U.S., a result of the Soviet society's struggle .to compete with America in distractive-sector output. The proportionate resource drain on the Soviet economy is thus almost certain to be higher. The distractive sector of the U.S. grew dramatically following World War II. This distractive growth occurred alongside an advanced, well-developed, and booming contributive economy. The Soviet distractive economy, on the other hand, developed alongside a contributive economy and society horrendously damaged by the war and struggling hard to develop. Thus the Soviet civilian economy was never able to work on breaking its chronic supply problems with a major, systematic, sustained effort. On the contrary , shortages were continually made more severe by the demands of the distractive sector as the arms race between the superpowers escalated. (20)

To explain the greater vulnerability of the Soviet economy, there is another factor that Dumas fails to mention - the foreign profits of imperialism. To a great extent, the U.S. capitalists offset their losses by overseas profits, which have risen to $139 billion by 1989.(21) And this is not to mention the additional profits made from the depression of commodity import prices which are engineered by imperialism. These were estimated at $65 billion in 1985 alone.(22) In this sense, the imperialists can "justify" taking some loss in counter-productive military spending, because it pays off in imperialist profits.

Another advantage of the imperialists is the extent to which they are multinational. U.S. imperialists can demand and obtain certain concessions from Europe and Japan on the grounds that the U.S. imperialists are footing the bill for the Cold War, which benefits the European and Japanese imperialists.

The Soviet Union, in contrast, never received imperialist profits to offset the counter-productive cost of military production. Throughout the post-war period, Soviet trade with socialist partners has been structured to benefit the other socialist countries. Their purpose was reasonable: to build up the economies of the other socialist countries and create a thriving world socialist economic system as an alternative to that of the capitalists. This was most marked in Soviet trade with Cuba and Vietnam, but it could be seen as well in trade with Eastern Europe which received Soviet oil at below-market prices. The CIA was well aware of this drain on the Soviet economy, and argued that it would eventually drive them bankrupt. Their contracting firm, the RAND Corporation, estimated that the Soviet Union was losing $30 billion to $50 billion a year by the beginning of the 80s. (23)

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