The article excerpted in the following pages was written in 1991 before the final collapse of the Soviet Union, but it describes some of the economic processes that were most responsible for it. As described, these factors resulted from the arms race and the culture of war.
A similar analysis was made about the same time by the Soviet economist Otto Latsis, who says in an article in the World Marxist Review that the Soviet "war-time economic model" had been seen as a "miracle." "The glitter of that miracle blinded us for decades, and the command-adminisrative methods of the extensively developing economy took firm root in the country." For years, the Soviet government was running in the red, but this was not revealed until a session of the Supreme Soviet in October 1988. By then the deficit amounted to 120 billion roubles which was almost a quarter of the entire government budget, according to the Latsis article.
Economic factors were linked to political and psychological factors. As Latsis says, "the gloomy background of the worsening market situation ... has a depressing effect on people." Also, the explosion of the Chernobyl atomic power plant and the war in Afghanistan had drained the country both economically and psychologically. Some idea of the psychological effect can be obtained from accounts of what the soldiers went through during the ten years of the war (see US military analysis).
As contradictions mounted, the Soviet people became more and more cynical about the propaganda of government-controlled media. It was common to hear the Russian people say that you could find truth anywhere except in Pravda and the news anywhere except in Izvestia. This was exacerbated by the propaganda warfare carried out by the West in Radio Free Europe and by dissidents in self-published Samizdat.
In the end, however, the Soviet Union had devoted its economy to the arms race with the West, and it was a losing cause. As explained in the following pages, capitalism is able to profit from the culture of war while socialism only suffers from it.