Limited attempts at reform after 1964

• • Kosygin reforms aimed to divert funds to light industry.
  • Increase in military investment.
• • Many industries gave more than 80% of their profits to central government.
  • Military spending increased to 13% in 1964.
• Kosygin Reforms

  • Kosygin advocated for reforms that were designed to cut investment in the inefficient collective farms and divert the funding into light industry.
  • Proposed giving power over production to factory managers and judging their success by the profit they made over the production levels.
  • Designed to force factories to produce goods that consumers wanted.
  • Introduced in Jan 1968, ended in August.
  • Similar reforms in Czechoslovakia, led to Prague Spring.
  • Rebellion discredited Kosygin reforms.
  • Therefore reforms halted in August.
  • Authority returned to central planners.
• Restoration of the economy under Brezhnev

  • Khrushchev’s fall led to rejection of many of his reforms.
  • Party reunited and the division between agriculture and industry was ended.
  • 7YP: abolished. From 1966, return of 5YP’s.
  • Brezhnev continued what Stalin had set up, however, like Khrushchev he also wanted an increase in consumer goods.
  • However, Brezhnev, a lot less ambitious in terms of quality and quantity of consumer goods.
• Increased military investment under Brezhnev

  • Brezhnev increased military spending.
  • Goal was to achieve nuclear parity with USA.
  • During the Berlin Crisis of 1961 and Cuban missile crisis of 1962, Khrushchev had been forced to back down due to the scale of power held by USA.
  • Brezhnev wanted to be equal to the USSR and therefore won’t be forced to back down by the USSR.
  • Military spending increased from 11% to 13% from 1964-1970.
  • Policy was successful and nuclear parity achieved by 1970.
  • However, maintaining this parity drained the economy which led to more economic issues.
• 'Developed Socialism' under Brezhnev

  • Dropped Khrushchev’s idea of 'communism by 1980'
  • Slower economic growth and increased military spending led to pragmatic and realistic expectations.
  • Although, Brezhnev still pushed for rising living standards in the USSR.
  • Abandoned Khrushchev’s promise of communism by 1980, and replaced it with ‘Developed socialism’
  • Economy with job security and low prices.
  • Low food prices achieved by importing a lot of grain from the West, rather than expanding Khrushchev’s Virgin Land’s Scheme, or by reforming the economy.
• Impact of oil prices under Brezhnev

  • Soviet economy in the 1970’s = declining growth and rising standards of living.
  • International prices of oil in the early 1970’s masked the issues of the Soviet economy.
  • Rising prices ensured the USSR made more money from selling oil.
  • Oil production increased from 243 Million tons in 1965 to 603 million tons in 1980 in order to supply international demand.
  • Allowed soviet government to import grain from the west
  • Soviet government was able to borrow from the West based on income from oil.
  • As a result, Living standards continued to increase.
• Declining growth under Brezhnev

  • In 1945, the Soviet Economy was the fasted growing economy in the world.
  • From 1950-1958, the economy grew at an average rate of 7.1% a year versus the USA at 2.9%.
  • However, Soviet growth rates declined to 2% per year in the 1970s.
  • Failure of command economy; focus on 'extensive growth' rather than 'intensive growth' meant Gosplan never had accurate information so could not improve efficiency of individual factories.
• Andropov's Labour Productivity Campaigns

  • Anti-Alcohol Campaign.
  • Operation Trawl.
  • Anti-Alcohol Campaign.
• Second economy under Brezhnev

  • Brezhnev also accepted the black market, as a “necessary evil”
  • Rather than try to get rid of it, Brezhnev allowed it to exist as it increased access to consumer goods and food and eventually raise living standards