The Soviet economy faced severe problems. Unlike the economies of Western Europe and the United States, which experienced booms during the Cold War, the communist economies of Eastern Europe and the Soviet Union stagnated. Central economic planning led to inefficiency and waste. In competition with free market economies of the West, the Soviet command economy began to collapse. It could not match the West in production of quality consumer goods. People saw little improvement in their lives and envied their western neighbors.
The arms race put an additional strain on the Soviet economy. By the 1980s, both superpowers were spending massive sums on costly weapons systems. U.S. President Ronald Reagan began a massive military buildup, partly because he believed that the Soviet Union could not afford to spend as much on defense as the United States. When Reagan launched a new round of missile development, it was clear that the Soviet economy could not afford to match it.
In 1985, an energetic new leader, Mikhail Gorbachev (GAWR buh chawf), came to power in the Soviet Union. In foreign policy, Gorbachev sought to end Cold War tensions. To ease tensions, Gorbachev renounced the Brezhnev Doctrine, which had asserted the Soviet Union had a right to intervene militarily in any Warsaw Pact nation.
Gorbachev struggled at home, but the United States welcomed Soviet reforms. President Ronald Reagan and Mikhail Gorbachev shake hands before a summit near Geneva in 1985. In a 1987 speech near the Berlin Wall, Reagan urged Gorbachev to “tear down this wall!”
He signed arms control treaties with the United States and eventually pulled Soviet troops out of Afghanistan.
At home, Gorbachev launched a two-pronged effort at reform. First, he called for glasnost, or openness. He ended censorship and encouraged people to talk openly about the country's problems.
Second, he urged perestroika (pehr uh STROY kuh), or the restructuring of government and the economy. Gorbachev's reforms also included a lessening of restraints on emigration. Natan Sharansky, a Soviet scientist and human rights activist, had been imprisoned for ten years for treason. Long denied permission to emigrate, he was released in exchange for a Soviet spy in 1986 and settled in Israel.
Streamlining government and reducing the size of the bureaucracy, he hoped, would boost efficiency and output. He backed some free-market ideas, including limited private enterprise. But he still wanted to keep the essence of communism.
Corrupt or inefficient officials were dismissed. To produce more and higher-quality goods, factory managers, instead of central planners, were made responsible for decisions. To increase food supplies, farmers were allowed more land on which to grow food to sell on the free market.
What economic problems did the Soviets face in the 1970s and 1980s?
Gorbachev faced a host of problems. His policies brought rapid change that led to economic turmoil. Shortages grew worse, and prices soared. Factories that could not survive without government help closed, throwing thousands out of work. Old-line Communists and bureaucrats whose careers were at stake denounced the reforms. At the same time, other critics demanded even more changes.
Glasnost encouraged unrest in the multinational Soviet empire. The Baltic republics of Estonia, Latvia, and Lithuania, which had been seized by the Soviet Union in 1940, broke away in 1990, declaring independence soon after. In Eastern Europe, countries from Poland to Bulgaria broke out of the Soviet orbit, beginning in 1989. Russia's postwar empire seemed to be collapsing.