Download Industrial and agricultural change in Russia 1917-85

Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
Teaching notes
This resource is one of a sequence of eight resources, originally planned for Edexcel’s
Paper 1 Option: Russia, 1917-91: from Lenin to Yeltsin. The sequence focuses on the
theme ‘Industrial and agricultural change, 1917-85’. Although the content of the
resources is drawn from this particular specification, there is no reason why they
couldn’t be used to support the teaching of other similar courses, perhaps with some
adaptation of the suggested activities.
The eight resources in the sequence are:
1. War Communism (search ‘25198’to find it on Teachit History)
2. The New Economic Policy (search ‘25199’)
3. The First Five-Year Plan (search ‘25200’)
4. Collectivisation (search ‘25201’)
5. Soviet Industry and Agriculture in WW2 (search ‘25202’)
6. Virgin Lands (search ‘25203’)
7. Stagnation and the Brezhnev era (this resource)
8. Reform under Gorbachev (search ‘25205’)
Each resource contains a section of reading followed by some suggested tasks. These
could be completed in class or as independent homework tasks.
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Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
Background
Nikita Khrushchev was probably the last Soviet leader who genuinely believed that a
communist society would eventually emerge in the Soviet Union. His successor, Leonid
Brezhnev certainly did not share that view when he took power in 1964. However, for
the first decade of his leadership from 1964 to 1973 the economy of the USSR continued
to grow and there was a gradual improvement in living standards (though these were
still far behind those of Western Europe and the USA).
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In 1973 this growth came to an abrupt halt and did not revive
itself for the remainder of Brezhnev’s time in office. The era
of stagnation had an effect on both the peasants and
industrial workers in the USSR but Brezhnev, unlike any Soviet
leader before him, had no intention of making any kind of
economic reform or adjustment to respond to Russia’s
economic problems. He and the rest of the politburo had no
desire to repeat Khrushchev’s attempts at liberalisation and
his denunciation of Stalin. There had been far too much
unrest as a result and Brezhnev was prepared to sacrifice
economic performance for stability. After all, he claimed, a
socialist society in the USSR now existed and it was his job to
maintain it. This, which he described as ‘mature socialism’,
was a world away from the revolutionary upheavals of Lenin
and Trotsky.
Stagnation
Throughout the world during the early 1970s, economies, including the USSR’s, were in
crisis. Historians have debated why the Soviet Union fell into stagnation during this
period and the following factors have been suggested:
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



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A large defense sector and expensive Cold War military commitments.
The failure of the Virgin Lands campaign to supply the USSR with enough food.
An inefficient, centrally planned command economy that did not respond to market
demand.
Widespread corruption in the soviet bureaucracy and industry.
The cost of providing subsidised oil and gas to the USSR’s satellite states in the Warsaw
Pact.
The lack of any kind of entrepreneurship or a private banking system to support it.
The development of a new post war generation of soviet citizens who had no memory of
Stalinism and who wanted the same rising living standards as westerners.
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Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
One of the main problems that the government faced was a growing level of resentment,
militancy and anger from the workers. Shortages in stores meant that wages paid with
paper money were increasingly worthless. The soviet policy of full employment meant
that the threat of the sack for unruly workers carried little weight. An overall
reluctance to work, absenteeism and poor levels of productivity became a permanent
feature of working life in the USSR. Gone were the days of the Stakhanovites, where
workers sacrificed everything to help build socialism.
Food shortages
After 1962, the USSR began to import food from abroad. One of the biggest food
exporters to the USSR was America, despite the two powers being locked in bitter Cold
War rivalry. The need to import food created a critical weakness within the soviet
economy. Animal fodder was made from imported grain and a third of Russia’s bread
was made from imports. Even with all Khrushchev’s efforts to boost the grain supply
during the Virgin Lands campaign, it was impossible to undo the damage caused by
Stalin’s collectivisation. The USSR’s dependence on imports meant that Russia could not
be insulated from the rest of the world economy
− it was affected by the inflation of the early
1970s that caused chaos in Europe and America.
This resulted in a poor food supply and an
inability to control food prices. The prosperity
and relative stability of America, Britain and
other wealthy nations was based primarily on a
plentiful supply of cheap food. The USSR’s
inability to achieve this by the 1960s was a key
component of economic stagnation.
Arms spending
In the 1960s and 1970s the other expensive commodity was oil. Russia had large
reserves of oil and natural gas and was capable of exporting this to generate large sums
of foreign currency. The money was not directed towards the civilian economy or
improvements to the industrial infrastructure of Russia, instead it was invested in the
soviet military and the arms industry. In total, 15 percent of the country’s GDP was
consumed by military spending, which diverted resources away from a civilian consumer
economy. With an economy that was stagnating, high levels of defence spending
became a luxury that the Soviet Union could ill afford, especially since the country was
also forced to import food to feed the population.
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Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
Kosygin’s reforms
In 1965, following the removal of Nikita Khrushchev from the role of Chairman of the
Council of Ministers, Alexei Kosygin was appointed to the post. In September 1965
Kosygin, who was now in joint charge of the Soviet economy along with Brezhnev,
proposed a significant change to economic policy. He argued that the existing model of
state planning was inefficient and could not motivate the workforce to produce goods
efficiently. Economists close to Kosygin argued that introducing a ‘profit motive’ into
the economy would help to motivate the workers.
Since the Five Year Plans, workers and state industries had not made profits and had not
been intended to. All goods were priced simply to reflect the labour that had gone into
making them, unlike in a capitalist economy, where some items can be sold at far higher
prices than simply the worker’s wages. The soviet economy actually rewarded managers
for producing surplus goods, meaning that large stockpiles of unwanted goods built up in
warehouses or went to waste.
Kosygin’s reforms enabled factory managers to set their own targets and enabled soviet
enterprises, from coal mines to textile factories, to invest their own budgets in new
equipment or supplies. Managers would be rewarded for increased profitability and
workers would be paid incentives from a special fund. The Kosygin reforms also
removed the state’s commitment to eliminating unemployment; managers could receive
incentives for firing unproductive or poor workers. Businesses could access state banks
and pay back loans with interest, meaning that the state was now making profits from
lending money to state enterprises − a key feature of the capitalist system.
There were, however, limitations to the reforms. Industries still had to have their
production targets vetted by officials, but the output of the economy did improve in the
second half of the 1960s. Central planning bureaucrats and politicians were uneasy
about the reforms and believed the decrease in control over the economy represented a
threat to their authority. By 1969 a backlash against the reforms from conservatives
within the communist party had begun but they were unable to overturn the new
policies. However, their resistance did ensure that the reforms were never as far
reaching and comprehensive as they needed to be in order to be fully effective.
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Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
The second and third Kosygin reforms
In 1973, as the world economy dipped into a deep recession and the soviet economy
stalled, Kosygin tried again to weaken the power of centralised planners. He created
regional associations that increased the power of local planners and diminished the
control of centralised bureaucrats. These local associations encouraged state
enterprises to share technology and expertise with one another and to champion
innovative thinking and ideas. This approach was alien to the soviet system of central
planning and once again faced resistance from them. The associations were introduced
slowly and in a piecemeal fashion but were unpopular not only with central ministries
but also with factory managers, both of whom lost power and control to the new
associations. Many industries in the new associations had factories dotted across the
country, so it became very difficult to group industries together regionally anyway.
By 1979, when the third Kosygin reform was introduced, half the Soviet economy was
organised into associations and some appeared to work well (such as the Leningrad
Gorkii automobile plant), but for many, a new tier of bureaucracy and directives made
life even more complicated. The third reforms were a complete reversal of their
predecessors and re-centralised power. They sought to improve the state planning
system and improve the quality of work and efficiency in soviet industry, but were
quickly abandoned after Kosygin’s death in 1980. The final abandonment of Kosygin’s
reforms meant that reactionary, conservative ideas in Brezhnev’s government had
triumphed over attempts to bring limited market principals into the Soviet economy.
Reform would not be attempted again until Perestroika and this would have dire
consequences for the fate of the Soviet Union.
Tasks
1. Work in pairs and follow the instructions below:
Kosygin’s dilemma
Imagine you are Kosygin. You are faced with the problems of the Soviet economy.
a. What would you try to reform first and why?
b. Could there be any unexpected consequences of these reforms?
Fill in the table on the following page to record your ideas.
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Industrial and agricultural change in Russia 1917-85:
Stagnation under Brezhnev
Economic
problem
Rank (1-7 1= top
priority, 7 = low
priority) give a reason
for each ranking
What reforms could
you introduce?
What might be the
consequences?
The USSR’s
expensive cold
war military
commitments
Food shortages
and inefficient
agriculture
An inefficient,
centrally planned
economy
Widespread
corruption in the
soviet
bureaucracy and
industry
The cost of
subsidising oil
and gas to the
Warsaw Pact
countries
The lack of any
entrepreneurship
or private
banking
The new
consumerist
aspirations of
soviet citizens
2. Discussion points
a. To what extent was Kosygin able to make any reforms at all?
b. Was the soviet economy still trapped by the legacy of Stalinism?
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