Economic Collapse of Soviet Union
Resource Diversion Page 6


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

Page 11

Technology is only the leading edge of a more pervasive counter-productive effect of military production. Dumas makes it clear that the diversion of all capital investment has a major counter-productive effect. The degree to which this diversion of capital investment occurs in today's economies is difficult to calculate with precision. Dumas notes that in the recession years of 1980-1982, U.S. military investments in plant equipment came to $3.3 billion, which amounted to 38 percent of all new investment in plant equipment in those years.(12) In a recent interview about economic conversion, Oleg Baklanov, Secretary of the Soviet Communist Party Central Committee, minimized its importance by claiming that Soviet defense industry makes up only 6.4 percent of the overall industrial assets of the country.(13) Some Western analysts claim that the figure is actually twice as high.(14) In any case, if those assets are allowed to drain the best scientists, engineers, materials, and machinery, then even 6.4 percent could have a significant counter-productive effect.

The counter-productive effect of military production shows up primarily in deficits of quality goods. But it shows up in services as well. For example, I have mentioned above the inferior technical preparation of many scientific support-personnel I encountered in the Soviet Union, which can be traced to technological lag in the educational system. Similarly, the medical care system although it is universal, has been increasingly unable to deliver services due to deficits in medicines and medical supplies such as disposable needles and syringes.

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