Progress of Economic Reform in the USSR

By Otto Latsis
First Deputy Editor-in Chief of the journal
Kommunist (USSR)

World Marxist Review
Number 12, December 1989

The goal of drastically reforming economic management was formulated by the June 1987 Plenary Meeting of the CPSU Central Committee. In this way new possibilities will be opened for using the advantages of socialism - not in words, as was the case over the decades, but in reality. More than a year ago I discussed in WMR [WMR, No.7, 1988] some problems of especial concern to the Soviet people. The present contribution deals with issues in the focus of attention of the Soviet political and economic leadership.

To begin with, a few words about the reasons behind the economic crisis in the USSR. The road we have been travelling since October 1917 has not been straight. In the 1920s, the organisation of production and distribution by methods of military communism was replaced with a New Economic Policy (NEP) , based on commodity-money relations. Industrialisation, launched by the end of that decade, quickly propelled the country to a qualitatively new level of development; regrettably , NEP was dismantled in the process. By the outbreak of World War II the Soviet Union was Europe's biggest and the world's second biggest industrial producer. Realities, especially the complex international situation, made it imperative to give priority to basic industries.

However, due to our historical circumstances as the world's first, and for a long time only, socialist country we staked everything on what I would call the extraordinary method of development: it was a war-time economic model imposed to a large extent by objective circumstances and then, solidified by Stalinist deformations. Naturally, it performed superbly in 1941-1945. The Soviet Union had one-half to one-third the combined industrial potential of Nazi Germany, its allies and the Nazi-occupied countries, and, moreover, lost half its industry in the early months of the war. Nevertheless, in sum it produced more weapons of a better quality than Germany did, and won the great Victory.

The glitter of that miracle blinded us for decades, and the command-administrative methods of the extensively developing economy took firm root in the country. The "rationale" of our former economic strategy was production for the sake of production.

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