Economic History of Russia

Economic History Of Russia

For about 60 years, the Russian economy and that of the rest of the Soviet Union operated on the basis of a centrally planned economy, with a state control over virtually all means of production and over investment, production, and consumption decisions throughout the economy. Economic policy was made according to directives from the Communist Party, which controlled all aspects of economic activity. Since the collapse of Communism in the early 1990s, Russia has experienced difficulties in making the transition from a centrally planned economy to a market based economy.

Much of the structure of the Soviet economy that operated until 1987 originated under the leadership of Joseph Stalin, with only incidental modifications made between 1953 and 1987. Five-year plan and annual plans were the chief mechanisms the Soviet government used to translate economic policies into programs. According to those policies, the State Planning Committee (Gosudarstvennyy planovyy komitet—Gosplan) formulated countrywide output targets for stipulated planning periods. Regional planning bodies then refined these targets for economic units such as state industrial enterprises and state farms (sovkhozy; sing., sovkhoz) and collective farms (kolkhozy; sing., kolkhoz), each of which had its own specific output plan. Central planning operated on the assumption that if each unit met or exceeded its plan, then demand and supply would balance.

The government's role was to ensure that the plans were fulfilled. Responsibility for production flowed from the top down. At the national level, some seventy government ministries and state committees, each responsible for a production sector or subsector, supervised the economic production activities of units within their areas of responsibility. Regional ministerial bodies reported to the national-level ministries and controlled economic units in their respective geographical areas. The plans incorporated output targets for raw materials and intermediate goods as well as final goods and services. In theory, but not in practice, the central planning system ensured a balance among the sectors throughout the economy. Under central planning, the state performed the allocation functions that prices perform in a market system. In the Soviet economy, prices were an accounting mechanism only. The government established prices for all goods and services based on the role of the product in the plan and on other noneconomic criteria. This pricing system produced anomalies. For example, the price of bread, a traditional staple of the Russian diet, was below the cost of the wheat used to produce it. In some cases, farmers fed their livestock bread rather than grain because bread cost less. In another example, rental fees for apartments were set very low to achieve social equity, yet housing was in extremely short supply. Soviet industries obtained raw materials such as oil, natural gas, and coal at prices below world market levels, encouraging waste.

The central planning system allowed Soviet leaders to marshal resources quickly in times of crisis, such as the Nazi invasion, and to reindustrialize the country during the postwar period. The rapid development of its defence and industrial base after the war permitted the Soviet Union to become a superpower.

The attempts and failures of reformers during the era of perestroika (restructuring) in the regime of Mikhail Gorbachev (1985–91) attested to the complexity of the challenge.

Read more about Economic History Of Russia:  Transition To Market Economy, 1991-1992, 1993, 1994, 1995, 1996, 1997-1998, 1999, 2000-2007, 2008-2009 Сrisis Years, 2010-present

Other articles related to "economic history of russia, russia, economic":

Economic History Of Russia - 2010-present
... In March 2010, the World Bank report noted that Russia's economic losses were lower than expected at the beginning of the crisis ... of 2010, GDP growth rate (2.9%) and the growth of industrial production (5.8%), Russia took the 2nd place among the "Big Eight", second only to Japan ...

Famous quotes containing the words russia, economic and/or history:

    To believe that Russia has got rid of the evils of capitalism takes a special kind of mind. It is the same kind of mind that believes that a Holy Roller has got rid of sin.
    —H.L. (Henry Lewis)

    ... the living, vital truth of social and economic well-being will become a reality only through the zeal, courage, the non-compromising determination of intelligent minorities, and not through the mass.
    Emma Goldman (1869–1940)

    Man watches his history on the screen with apathy and an occasional passing flicker of horror or indignation.
    Conor Cruise O’Brien (b. 1917)