Armageddon Averted: The Soviet Collapse, 1970-2000 Read Online Free PDF Page B

structural economic troubles.
    Those troubles derived from the country’s successes.
    Whereas, in the 1920s, the Soviet economy had been about 20 per cent industry, transport, and construction, by the mid-1980s that percentage had risen to around 70.
    No other country ever had such a high percentage of its economy in big factories and mines. And much of Soviet industry had been built during the 1930s, or rebuilt after the destruction of the Second World War according to 1930s specifications. The USSR’s Bethlehem Pennsylvanias and Sheffields numbered in the thousands , and they were even more antiquated. But, flush with its oil windfall, the Soviet Union had avoided the painful devastation that befell the substantial, yet smaller, rust belts of the United States, Great Britain, and Germany. But it could not do so forever. In the 1990s, the overthrow of socialist planning would lay bare a far greater challenge of massive enterprise restructuring. Post-Communist Russia would inherit, and grandly privatize, history’s largest ever assemblage of obsolete equipment.
    Socialism’s politically driven economy proved very good—too good—at putting up a rust belt; and, unlike a market economy, socialism proved very bad at taking its rust belt down. What had once been a source of the Soviet 17
    history’s cruel tricks
    Union’s strength and legitimization would become, when Russia rejoined the world economy, an enormous energy-consuming, value-subtracting burden, and ultimately, an invitation to scavenge and plunder. In the 1990s, export earnings from energy sources would continue—extending the elite’s post-1973 oil debauch. Rather than supporting a huge military build-up and a sprawling empire, however, the oil (and gas) money would go into private offshore bank accounts and hideaways on the Spanish and French Rivieras. Russia’s economic debacle embodied a delayed end, on a bigger scale and slightly camouflaged by oil flows, to an entire industrial epoch, of which it, too, formed a part, and whose demise had been clearly visible twenty years before in Germany’s Ruhr Valley, Sheffield and England’s North, and America’s Midwest.
    And that was just half the story. Obsolete industry can in theory be overcome, no matter how vast its extent. But even after junking planning, Russia was not able to overcome its unprecedentedly large industrial junk heap, or quickly to create substantial new, dynamic sectors. That was because Russia lacked the indispensable liberal institutions that make markets work, while it possessed a plethora of the kinds of institutions that inhibit effective market operation. Here was a banal but useful reminder: the market is not an economic but a political and institutional phenomenon. The proof of that proposition lies not in countries such as the United States, where effective courts and indispensable government regulation are taken for granted, or even ideologically denounced, but in 18
    history’s cruel tricks
    the post-Soviet countries, where most market-facilitating institutions are lacking or function egregiously. Thus, obsolete as its physical plant had become, the Soviet Union’s central dilemma—as post-Soviet Russia would demonstrate—was really political and institutional.
    The twentieth century’s great turn
    The central Soviet dilemma was also geopolitical. In the 1980s the economy of India was arguably in worse shape (for different reasons), but India was not locked in a global superpower competition with the United States (allied with West Germany, France, Britain, Italy, Canada, and Japan). That rivalry, moreover, was not merely economic, technological, and military, but also political, cultural, and moral. From its inception, the Soviet Union had claimed to be an experiment in socialism, a superior alternative to capitalism, for the entire world. If socialism was not superior to capitalism, its existence could not be justified. In the interwar period, during Stalin’s violent