Was the Socialist Development Model overshadowed by Liberal Policies? The Collapse of the Soviet Union and the Transition from a Planned Economy to a Market Economy

Abstract

Following the Bolshevik victory in Russia, the Union of Soviet Socialist Republics was formed on 30 December 1922. During this period, the USSR adopted the socialist development model, and Stalin's agricultural, industrial and economic policies were highly respected. From 1929 onwards, collective farms known as 'kolkhozes' and state farms known as 'sovhozes' were established. The First Five-Year Plan (1928–32), implemented by Stalin during this period, focused on developing heavy industry and collectivising agriculture, which resulted in a significant reduction in consumer goods. After World War II, a bipolar world order emerged, with the USSR and the USA as rivals. In this world order, the USSR and Eastern European countries, which had adopted a planned economy and the socialist model of development, became rivals with the USA and Western European countries, which had adopted liberal policies and a market economy. In the post-1970 period, the economic system in the USSR, as in the rest of the world, entered a period of recession. After 1975 in particular, the Soviet economy declined significantly and growth rates slowed down. The economic stagnation that began during Khrushchev's final years was attempted to be overcome through Brezhnev's early reforms, but without success. At the beginning of the Brezhnev era, there were some improvements in agriculture and other production sectors. However, this situation was not sustainable in the long term. The country's economic situation deteriorated in the 1970s due to the excessive allocation of resources to the arms industry and insufficient investment in agriculture. By the 1980s, the country was unable to meet its own needs. Since the 1980s, economic reforms have been carried out in Soviet-dominated socialist countries in order to establish free market conditions. In this context, many protectionist policies have been abolished. Concepts such as liberalisation, privatisation and opening up to international trade and investment came to the fore. However, following these reforms, stores in Soviet countries were flooded with foreign goods that domestic producers could not compete with, resulting in a significant decline in production. The purpose of protectionist policies is not to protect domestic industries from international competition indefinitely, but rather to buy time to internalise technologies and develop new organisational skills. However, liberalisation policies were implemented in the USSR without these conditions being met. This is the inevitable fate of any country that implements free market conditions before reaching a competitive level.

Affiliated Institutions

• Bursa Uludağ Üni̇versi̇tesi̇ TR

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