3-GORBACHEV+Fang,+Jason


 * Soviet Reform in the Gorbachev Era **
 * Consumer Goods Industries **

**What was the situation for that group/institution before Gorbachev became Premier?**

“Over the long term, however, there is ample reason to doubt whether a behavior pattern so deeply rooted can be extirpated, especially habits that have put money in the state's pocket via its monopoly on alcohol production(even as they have taken it away in productivity) and have contributed, in some measure, to the relative political quiescence of a population deprived of liberties and consumer goods long common in the West. If the regime continues to mean business, it may cut the production of liquor further, only to see some of its market ceded to the producers of samagon (privately brewed alcohol). Illegal distillers, mainly rural, are targeted in Gorbachev's campaign, but their numbers are large and rural law enforcement is notoriously difficult. Finally,without more goods and services to reward greater discipline and productivity, there will be no positive incentives for the Soviet masses to moderate their drinking.” From //The Soviet Union under Gorbachev: Assessing the First Year//

While the Soviet Union rivaled the United States militarily, politically, scientifically, and technologically, etc., the Soviet Union’s citizens certainly did not enjoy a high standard of living as the citizens of the United States did. Since the early days of the Soviet Union, heavy industry, production of industrial goods (goods that serve as input for production of final goods), and production of military goods had always been the top priority for the Soviet economy instead of the consumer good industry (final goods that are to be used for consumption, such as food, clothing, shoes, fuel, household appliances, etc.). Additionally, private production of consumer goods had always been severely restricted. As a result, the Soviet Union had been among the world’s top three manufacturers of basic industrial goods, but not consumer goods. Consumer goods were in major shortage and were of poor quality, so they were very scarce and hard to come by. Consumer goods from overseas was too expensive for ordinary people. Central planning and distribution systems were inefficient, and workers had no incentive to produce. Distribution of consumer goods was also highly uneven, with those who supported Stalin being rewarded with access to consumer goods. As a result, lack of consumer goods was commonplace in the Soviet Union.

**How did that group/institution interpret the application of those policies to it?** “The general secretary informed his compatriots in blunt terms that unless they apply themselves enthusiastically to the economic reforms, there will be little improvement in the standard of living. Conversely, he predicted that success will bring a number of enticing consequences. Real per capita incomes will rise as much as 80 percent by the end of the century, welfare funds will be increased, education will be much more richly funded, consumer goods of high quality will be more readily available, more people will be nudged into service jobs (housekeepers, mechanics, repairmen),more housing will be built, and improved medical services will be provided.” From //The Soviet Union under Gorbachev: Assessing the First Year// Gorbachev’s reforms was interpreted to increase the number of consumer goods. The Soviet Union had long suffered shortages of consumer goods, and in recent years the income of its people had been increasing, which led to an inadequate standard of living for such a powerful country. Gorbachev hoped to increase the quantity and quality of consumer goods and thus the standard of living in the Soviet Union. Consumer goods included not only basic foodstuffs such as meat and vegetables, but also entertainment and household appliances such as radios, televisions, sewing machines, washing machines, and refrigerators. Also, the increase in the production of consumer goods would also increase the wealth, health, and number of jobs in the country.

**How did the Soviet state apply those policies to that group/institution, and what were the effects?** “True, Gorbachev inherited a consumer sector in great disarray, and he moved quickly with a spate of measures to set things right. But his programs have gotten off to a bad start, and some have misfired.After three years, the state of the consumer sector is as bad as it was before--and in some respects worse. In fact, Western measures of real per capita consumption indicate a small decline over the past three years.Random shortages and queues, along with special distribution systems, have become more prevalent, leading Gorbachev in his plenum speech to lament, ‘There are lines everywhere.’” From //Milestones in Glasnost and Perestroyka: The Economy//

Gorbachev’s reforms were free market in nature. Gorbachev reduced the government’s control over the economy, especially in the consumer goods industry. The reforms allowed factories and manufacturers to determine how much they wanted to produce based on consumer demand and sell surplus goods. Initially the factories and manufacturers were controlled by workers’ collectives, but later on private ownership of most businesses was legalized. The reforms tried to create incentives for individuals to start their own businesses and allowed businesses to keep their profits. However, Gorbachev also tried to curb the production of alcohol and limit the import of consumer goods, which seriously hurt the growth of consumer goods. Furthermore, the infrastructure and factories of the Soviet Union were not built for the production of consumer goods but for the production of industrial goods; as a result much of the consumer goods produced were of poor quality, effectively limiting the actual number of high-quality consumer goods. Additionally, the government still controlled the prices of goods; the government raised prices at a rate higher than the growth of the income of the people, so the access to consu mer goods was limited. The effects were that consumer goods were still suffering in both quality and quantity and the situation of the consumer sector was just was bad as it was before, if not worse.

**What was the significance of Gorbachev’s reforms as it pertained to that group/institution?**

“Shortages of almost all consumer, commercial, or industrial product are part of life in all eastern European countries. Caused by inefficient central planning, poor workmanship, totally outdated distribution systems, and hostage consumers, shortages will eventually decline as a result of economic democratization. Paradoxically,shortages have become more extreme in the Soviet Union and Poland as free market forces produce entrepreneurs who often obtain products in high demand at low prices from government-owned enterprises and resell them at a mark-up of as much as 500 percent. In addition, shortages of many price-controlled items have generated not only a thriving underground economy, which has always been part of commerce in a centrally planned economy, but also, in the Soviet Union, a homegrown Mafia.” From //Perestroika: A Comparative Perspective//

Gorbachev’s reforms were significant in that they were attempts to remedy the problems caused by a command economy focused on industry and military with free market economy ideals and that they showed that government recognized the inherent problems caused by a command economy focused on heavy industry and military spending. For the first time since the existence of the Soviet Union, the government focused on producing consumer goods and improving the standard of living for its people rather than focusing on heavy industry and the production of industrial goods and military goods. Gorbachev’s reforms allowed for more freedom in the consumer goods industry and concentrated on productive efficiency and incentivization. Gorbachev’s reforms marked a transition towards the application of elements of a free market economy towards the consumer goods industry and a movement away from a strict command economy.

Works Cited
Boettke, Peter J. Why Perestroika Failed: The Politics and Economics of Socialist Transformation. New York: Routledge, 1993. Questia School. Web. 2 Mar. 2014.

Gunlicks, Arthur B., and John D. Treadway, eds. The Soviet Union under Gorbachev: Assessing the First Year. New York: Praeger, 1987.Questia School. Web. 2 Mar. 2014.

Shama, Avraham, ed. Perestroika: A Comparative Perspective. New York: Praeger, 1992. Questia School. Web. 2 Mar. 2014.