The Cold War between the United States and the Soviet Union - Essay Example

COLLAPSE OF COMMUNISM AND GORBACHEV REFORMS Communism is a system of politics and economics that is based on the beliefs that most of the economic resources should be owned by the state and there should be no private property or class difference. The collapse of Soviet Union communism is one of the most striking stories of the 20th century. The collapse of communism in the Soviet Union Republic caused the global economic and political environment to change radically. This process of collapse began with the Cold War post World War II. Mikhail Gorbachev, leader of the Soviet Communist Party, was credited with finishing the Cold War. This achievement is not the only reason Gorbachev is famous. The end of Cold War was actually a by-product of a major event caused by the Gorbachev: fall of communism that led to the collapse of Soviet Union itself. The Cold War between United States and Soviet Union drove the latter to the edge of ruin. The World War II had caused most of the capital to be diverted to the military weakening the economy of Soviet Union. The country’s economy was less healthy as compared to United States not only because of the war. The economic weakness of Soviet Union had other reasons also. Since communism was in place, citizens were taught not to accumulate wealth therefore causing less motivation to work hard. The Soviet Union’s economy was centrally planned in which the allocation of resources and decisions such as what to produce, how much to produce and whom to distribute were all made by the government. In addition, the goals set under the communist system were inefficient as the officials who made economic decisions knew very little about the daily operations of the economy. As a result, the citizens usually faced food and consumer goods shortages. As the criticisms were dealt with repressive measures by the government, citizens were scared to complain about the economic conditions or suggest any change. The Soviet Union’s economy had a negative GNP. Mikhail Gorbachev was compelled to change the economic conditions from decline and decay. Like the former presidents, Gorbachev wanted Soviet Union to catch up with economic advances made by the capitalist countries. Gorbachev wanted to prove that socialism is innovative and productive as capitalism. One by one, new political, economic, social and foreign policies were introduced to save the disintegrating Soviet Union. Gorbachev brought in two-tiered policy reforms. One the first level, he started the policy of Glasnost and on the other level an economic reform known as Perestroika. Gorbachev believed that liberalism was the solution to the economic and social problems. He believed that mass participation, high morale, and freedom and openness of speech were needed to revitalize the society. Under the Glasnost policy, Gorbachev encouraged the citizens to openly exchange new information and ideas as well as criticize the government which was no longer illegal. He complained that the leaders had placed themselves beyond the reach of criticism and some had also become accomplices in criminal activities. Under this policy, Gorbachev released many political prisoners such as Andrei Sakharov, father of Soviet Union’s hydrogen bomb, who was exiled for speaking against the Soviet troops. In addition, more freedom of speech was allowed in newspapers and television. The Perestroika policy was to restructure the economy. This policy was a top down process that lacked the power of imagination rising from citizens outside the government bureaucracy. Sticking to the socialist idealism, Gorbachev denounced unearned incomes. In addition, certain restrictions on alcohol were applied to improve the work force. Prices of alcohol were raised; supplies and hours of sale were reduced. Orders were given that the embassy parties and receptions had to be alcohol free. Salaries of the scientific and technical personnel were increased by 50% while that of others were adjusted to the quality of their work. To increase the effectiveness and efficiency in central economic planning, super agencies were created to administer the economic developments. These agencies would develop voluntary guidelines for corporations to change their outlook toward long-term economic objectives; issue state order for development of important economic products and national defense. Under the Perestroika policy, the existing centralized supply system would be replaced by the wholesale system of distribution responsive to decisions of individual corporations. Increase in production of consumer goods and services was included in the reforms Perestroika policy was also designed for international policies. Gorbachev planned to improve the trade and financial interaction with the West in order to facilitate the process of restructuring the economy. As a first step, Gorbachev decentralized the trade system in 1986 ending the monopoly of Ministry of Foreign Trade. Soviet Union requested an observer status in the GATT by saying that the domestic economic forums would eliminate obstacles for participation in market-oriented organization but was denied as Western countries were suspicious of Soviet Union’s motives. Economic cooperation was also pursued with Western countries by Gorbachev to increase exports and obtain technology. Western European firms readily initiated joint ventures with Soviet Union unlike US firms. Agricultural reforms were also on Gorbachev’s list. The new agrarian policy initiated in 1989 by Gorbachev was aimed to decentralize the sector and provide opportunities for the private sector. The state bureaucracy was supposed to be dismissed delegating the decision making power to the regional and local governments. Price became more flexible so that profits can be pursued. Although the introduction of reforms were to better the economy, these were implemented purely by the judgment of the bureaucracy. Due to this, Gorbachev learnt that there is no quick solution to the problems of the Soviet Union. The agrarian policy increased the grain harvest allowing the country to reduce its imports but the economy still declined. The policy on alcohol under Perestroika back fired. Citizens were waiting in long queues for the diminished supply which also caused decrease in the government sales tax revenues. Imports of consumer goods were also reduced owing to the reduction in oil sales abroad. As a result, citizens’ income had been rising while spending decreased as there was very little to buy. The Gorbachev’s plan to invest in economic developments caused deficit spending causing a big disaster for the economy. To cover the deficit, money was printed which increased inflation. The new bureaucracies set in place by Gorbachev caused more confusion as the people did not know whether to work on their own or wait for government to tell them what to do. Ministries could not guarantee any allocation of inputs as production quotas were not fulfilled. The corporations therefore turned in to a self-help system that used personal connections, bribery, and barter to obtain the inputs in order to keep the production and their enterprises running. The system failed causing a decline by 4% in real GNP in 1990 followed by 13% decline in 1991. The senior economic bureaucrats wanted to maintain state ownership but under Perestroika policy privatization was the only option to retain control over the revenues generated by the cash flows of the corporations. Therefore, the existing ministers favored transfer of ownership to the existing corporation managers in order to preserve their own power and privileges under this policy. Due to this entire economic crisis, the reforms of Gorbachev were met with resistance and were denounced as being too Western. The citizens grew tired and frustrated of Gorbachev’s promises and the confidence of the public in him fell. Everyone expected immediate gains from the Gorbachev’s reforms but the economy of Soviet Union was too damaged to improve quickly. The Glasnost reforms that allowed freedom and openness of speech also turned against Gorbachev. Minority groups in the country began to ask for more freedom for themselves which was combined with majority group’s hues and cries for better economy. Labor strikes were rising everywhere due to declining economy as well as ethnic violence toward the Russians as they were blamed for the misery. Move toward independence was also underway in Soviet Republics of Latvia, Lithuania, and Estonia. Ultimately, the limited transformation of Soviet Union, which was designed to save the Soviet Union’s socialism, caused the collapse of the system. As a result, Gorbachev fell from power in 1991 with 15 states of Soviet Union emerging independently. Read More