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Published by EH.NET (July 2001)

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Michael Ellman and Vladimir Kontorovich, editors, The Destruction of the Soviet Economic System: An Insiders’ History. Armonk, NY: M.E. Sharpe, 1998. xxiv + 327 pp. $87.95 (cloth), ISBN 0-7656-0263-6; $35.00 (paper), ISBN 0-7656-0264-4.

Reviewed for EH.NET by Perry L. Patterson, Department of Economics, Wake Forest University.

Ellman and Kontorovich have compiled in this volume a unique set of appraisals of the perestroika era written by economic advisers and decisionmakers from inside the Soviet government and influential academic institutes. The editors seek answers to two broad questions: (1) What caused perestroika to occur at the precise historical moment when Gorbachev rose to power? and (2) What caused perestroika to fail? Along the way, the editors, who also author the first two overview chapters of the book, explore hypotheses regarding the degree of democracy and the quality of high-level decisionmaking mechanisms in the former Soviet Union. They conclude that perestroika was not the result of a groundswell of public discontent, so much as the botched attempt at a top-down reform designed not to destroy but to enhance a still-viable socialist economy.

The raw material for this intriguing book was gathered during the mid-1990s, after the dissolution of the Soviet Union, but with major events still fresh on the minds of the economists and others who write here. Their comments will be of particular interest to scholars seeking to understand the state of the Soviet economics profession and the nature of the information signals being received by Soviet decisionmakers in the late phases of the command economy and during perestroika itself. Sadly, the articles here collectively indicate a profession and a management system in general and systemic disarray.

A short article by Gregory Khanin provides a convincing and detailed picture of one aspect of this disarray. Khanin, as early as 1973, had begun to produce research that strongly pointed to declining future output and productivity growth. Yet, this work could not be broadly published until 1987, when the decline was well advanced. Worse, perhaps, repeated delays and obstructions in even limited dissemination of the research suggest that even well informed top policymakers could not have been aware of Khanin’s pessimistic forecasts. Meanwhile, as other pieces in this volume attest, Gosplan continued to produce optimistic predictions, not because Gosplan economists believed them, but because the Party required them.

Distortions to economic decisionmaking in the late Soviet period arose not only from poor productivity forecasts. Multiple authors point to wildly inflated assessments of US capabilities for producing tanks and other weapons, which served to encourage further Soviet defense spending. Interestingly, though, some of the authors also claim that the Reagan-era Star Wars initiative was correctly seen as a bluff (at least in the short run), and that this did not lead to significantly greater outlays for the military. In turn, the editors conclude that a fear-induced burst of new defense spending in the 1980s was not the major cause of system collapse. However, one notes that the claim of informed savvy on which this conclusion partially relies stands at odds with the more common theme of information inadequacy in other matters.

Perhaps the Party was never seriously interested in accuracy in planning and forecasting. Required optimism at Gosplan came along with sometimes-haphazard reliance on specialists in general. In one telling incident described here, it would appear that an individual with a concentration primarily in philosophy was asked to draft quickly the main technical features for Gorbachev’s emerging new laws on state and collective enterprise. Moreover, the individual in question now claims that his own chief interests were in the return to an idealized pre-communist Russia, something Gorbachev hardly seems to have desired.

An alternative theory is that the Party was genuinely confused regarding which experts to turn to, especially when it seemed to become serious about reform in the late 1980s. There would have been good reason for such confusion. The very weak connections of Soviet-era economic science to Western sources of data and theoretical knowledge are well illustrated in many of the articles here. It is clear as well that some of this damage to the profession has been relatively long lasting. Some of the authors’ comments from the mid-1990s continued to rely without comment on very weak data sources. Not all of the contributors managed to avoid ad hominem attacks on fellow Soviet and other economists; not all had come to understand standard inflation theory in the years since the information barriers had fallen.

Although this volume, due to the complex and varied perspectives of its contributors, will not decisively resolve many of the issues raised by the editors, it contains valuable data that sheds a useful light on the quality of information and decisionmaking in the period of Soviet economic slowdown and collapse. Scholars whose interests lie in the political economy of the late Soviet period will be particularly interested in the debates raised in the editors’ introductory chapters. Many of the articles contributed by other authors would find excellent use in undergraduate classes focusing on the economics, history, or politics of the Gorbachev era.

Perry Patterson is author of “Searching for Macroeconomic Stability in Ukraine,” Ukrainian Economic Review, nos. 4-5, 1998, 42-64.

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