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Monday 16 March 2015

Compare and contrast the economic policies of Khrushchev and Gorbachev

Outline
-       Intro
-       1st p
o   Aims
§  Khrushchev
·      1) Raise living standards for Soviet citizens 
o   i) Raise grain production
o   ii) Switch focus from heavy industry to consumer industry 
·      2) Decentralize government power and economy. Khrushchev sought to limit government control by making the state “wither away”
§  Gorbachev
·      Overcome economic stagnation by modernising the system
·      Reduce detailed centralised planning with more self-management at local enterprise level
·      Reducing the power of the CPSU and the Soviet state industrial ministers in Moscow over the economy
-       2nd p
o   Policies
§  Khrushchev
·      Agriculture
o   Increased the amount that they state paid for grain and reduced some quotas as well as the taxes on farming profits from private plots
o   Merged many collectives into larger state farms over which the government had greater control to where experts were sent from Moscow to advise on more modern methods
o   Virgin Lands January 1954
§  Idea was to farm land that had not previously been used for agriculture
·      Industry
o   May 1956
§  Khrushchev establishes 105 regional ministries based on the existing administrative structures
o   Feb-Mar 1957
§  Abolished most of the All-Union economic ministries in Moscow and reformed Gosplan
o   1957
§  Seven-Year Plan to concentrate on consumer production, light industry, chemicals and plastics, as well as mineral resources
o   In total 40% of investments were directed to the relatively neglected eastern regions of the Soviet Union as Khrushchev wanted to focus on regional development in an attempt to create a more balanced soviet economy
§  Gorbachev
·      Perestroika
o   Reduction of centralised planning with more self-management at local enterprise level
§  Factory and farm manager were given a greater say in what they produced and whom they employed
§  Self-financing was phased in
·      Enterprises paid for their own operating costs out of their profits
o   Ended subsidised prices
o   The policy became effectively a partial re-privatisation in agriculture and service industry
§  Nov 1986 Law on Individual Labour Activity
·      Allowed individuals in the service sector to start private enterprises
o   Reduced the number of industrial ministries
o   Dec 1986 Law on Joint Enterprises
§  Supposed to encourage foreign companies to invest in joint schemes in the USSR
o   Reducing state control
§  Jan 1988 Law on State Enterprises
·      60% of state enterprises were shifted from tight central control to control by their managers
·      1989 the remaining 40% of state enterprises were similarly released from state control
§  May 1988 Law on Co-operative
·      Allowed small and medium sized private co-operative enterprises to operate in the service sector and in manufacturing and foreign trade
·      Workers’ co-operative and small private businesses could be set up
§  From 1988 the agriculture continued to move towards privatisation
·      Extending the private plots that peasants already had
·      Peasants and farmers were now allowed to take out long-term leases on land belonging to the collective (the ownership of the land would therefore still belong to the state)
-       3rd p
o   Outcome
§  Khrushchev
·      Agriculture
o   Virgin Lands
§  In the first year 2.4 million hectares were ploughed but many of the new farms failed because people did not understand the local weather conditions and there were often shortages of fertiliser to rejuvenate the quickly exhausted soil
o   Despite record harvest in 1962, which did however fall short in many places of the target, the harvest in 1963 was disastrous. Grain production dropped by nearly 30% creating a serious shortage in animal feed. This led to large quantities of North American and Australian grain that had to be bought
o   Historians John Keep and Peter Kenez have also pointed out that despite some sound attempts to improve agriculture the underlying problems still remained.
·      Industry
o   By 1965 the gross national income had grown by 58%, industrial output by 84% and consumer goods by 60%
§  Gorbachev
·      In 1987 there was reported a decline in economic growth, which resulted in a large and increasing budget deficit. In 1985 it was 3% of the national income and by 1989 it was 14%
·      The end of subsidies prices led to an increase in prices and unemployment
o   In 1990 25% of Soviet citizens were below the poverty line
o   Products were often scarce
o   By the end of 1988 rationing had to brought in for certain foods in some areas
·      Labour unrested occurred from 1989 to 1991
·      The reduced party and state control of the economy meant that the government/party was increasingly unable to take strong actions to solve the problems. This led to further unemployment and an increasing economic slowdown

-       Conclusion

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