Era of Stagnation

Robert Service, author of the History of Modern Russia: From Tsarism to the Twenty-first Century, claims that with mounting economic problems worker discipline decreased,[14] which the government could not counter effectively because of the full employment policy. According to Service, this policy led to government industries, such as factories, mines and offices, being staffed by undisciplined and unproductive personnel ultimately leading to a "work-shy workforce" among Soviet workers and administrators.[15] While the Soviet Union under Brezhnev had the "second greatest industrial capacity" after the United States, and produced more "steel, oil, pig-iron, cement and ... tractors" than any other country in the world,[16] Service treats the problems of agriculture during the Brezhnev era as proof of the need for de-collectivization.[17] In short, Service considers the Soviet economy to have become "static" during this time period,[18] and Brezhnev's policy of stability was a "recipe for political disaster".[19]

Richard Sakwa, author of the book The Rise and Fall of the Soviet Union: 1917–1991, takes a dimmer view of the Brezhnev era by claiming that growth rates fell "inexorably" from the 1950s until they stopped completely in the 1980s. His reasoning for this stagnation was the growing demand for unskilled workers resulted in a decline of productivity and labour discipline. Sakwa believes that stability itself led to stagnation and claimed that without strong leadership "Soviet socialism had a tendency to relapse into stagnation."[20]

According to Edwin Bacon and Mark Sandle, authors of Brezhnev Reconsidered, the economy under Brezhnev was as dynamic as the economy presided over by Nikita Khrushchev, but this dynamism had stalled by the time Yuri Andropov, and subsequently Konstantin Chernenko, became General Secretary.[21] Mark Harrison claims that the economic performance of the Brezhnev era has not been looked at objectively as analysis of the period sometimes used lower estimates.[22] Harrison further claims that in the period between 1928 and 1973 the Soviet economy grew in a phase that would surpass the United States "one day". During the international oil crisis, growth in the Soviet Union and the Eastern Bloc halted abruptly and stalled for a longer period than in the West[23] causing the economy to begin stagnating.[24] One explanation, according to Harrison, is that the Soviet economy could not sustain its extensive growth patterns.[25] Other explanations include: the lack of Soviet, and communist bloc, transparency with other nations hindering globalisation[26] and misinterpretation of a "permanent" post–World War II economic boom leading to faulty economic decisions.[27] He claims that the economic policies of Andropov, and Chernenko, had improved the economic situation in the country and Mikhail Gorbachev inherited a more dynamic and vibrant economy in a "pre-crisis situation" where the economy was still growing with low internal and external debts, compared to the economy that Andropov and Chernenko inherited.[28]

Archie Brown, author of The Rise and Fall of Communism, claims in his book that the term Era of Stagnation "was in many ways a fitting description, for this was a period of declining growth", but noted it could be misleading in non-economic spheres.[29] Brown states there were high growth rates in the mid-to-late 1960s (during the Eighth Five-Year Plan) claiming that the Soviet economy "enjoyed stronger growth in the second half of the 1960s than it ever did thereafter". The link between these growth rates and the Kosygin reform is, according to Brown, "tenuous",[30] but says that "From the point of view of communist rulers, the Brezhnev era was in many ways successful".[31] While the Soviet Union was in no way an economic power, its natural resources provided a strong economic foundation, which bore fruit during the 1973 oil crisis and "turned out to be an energy bonanza".[32] On the other hand, Brown states it was a sign of weakness that the Soviet Union grew so dependent on her natural resources, as she did in the 1970s.[31]

Scholars are generally unsure as to what effect the "Kosygin reform", named after its initiator Alexei Kosygin, had on economic growth

Philip Hanson, author of The Rise and Fall of the Soviet economy: an Economic History of the USSR from 1945, claims that the label stagnation is not "entirely unfair". Brezhnev, according to Hanson, did preside over a period of slowdown in economic growth, but claims that the era started with good growth that was at a higher rate than during the end of Khrushchev's rule. Economic slowdown began in 1973 "when even the official estimates began to show Soviet per capita production no longer closing the gap with the US." Before 1973, there was a reform period launched by Alexei Kosygin, which many believed would become as radical as those in the Socialist Republic of Czechoslovakia and the previous reform attempts in Hungary.[33] According to Hanson, many assumed that growth during the Brezhnev era did not stop but started to stagnate.[34] Not everything stagnated, however, as per capita consumption grew by 1.9% during the 1970s, which is a "highly respectable rate" of growth. Another point that Hanson makes is that, in contrast to the repressive policies of Joseph Stalin and instability-inducing policies of Khrushchev, the Brezhnev era was stable and a "period of (comparative) plenty".[35]

Robert Vincent Daniels in his book, Russia's Transformation: Snapshots of a Crumbling System, claimed that the hallmark of the Brezhnev era was the status quo, which in turn led to the development of a great paradox; "the contradictions of what it was and what it could be became obvious". Net growth, in excess of 50% and as high as two thirds, was primarily in the urban sector resulting in high population growth and urban growth higher than that of the United States. Industrial development continued to grow rapidly, and in certain sectors surpassed the United States.[36] As an example, coal production in the Soviet Union increased from 85 million metric tons in 1964 to 149 million metric tons in 1981 while in the United States it grew from 100 million to 130 million metric tons in the same period.[37] The Soviet Union became the largest exporter of petroleum in the world and by the end of the Tenth Five-Year Plan (1976–1981) the Soviet GNP "reached about 60% of the American level, and the net current investment was actually greater in absolute terms". The failure then, according to Daniels, was that the Soviet economy was not able to deliver in certain sectors; agriculture is a sector where this failure occurred. Throughout Soviet history, deficiencies in agriculture and consumer goods always existed. During Brezhnev's reign, the Soviet Union became the largest producer of wheat in the world but was unable to produce meat in sufficient quantities.[38] According to Daniels, the economy began to stagnate in 1975 rather than 1973 and that the following period contradicted the previous one "in almost every way".[39]

The research in second economy in the Soviet Union, pioneered by Gregory Grossman, indicated that during 1970s-1980s the effects of the central planning were progressively distorted due to the rapid growth of the shadow economy. It is suggested that failure to account for it by Gosplan contributed to the stagnation, and ultimately to the collapse of the Soviet economy.[40]

One of the suggested causes of stagnation was the increased military expenditure over consumer goods and other economic spheres.[41] Andrei Sakharov, the veteran dissident, claimed in a 1980 letter to Brezhnev that the increasing expenditure on the armed forces was stalling economic growth.[42] David Michael Kotz and Fred Weir, authors of Revolution from Above: The Demise of the Soviet System, argue that militarisation cannot be the prime cause for the economic stagnation, as military spending had historically been high (17% of GNP in 1950) and had increased on par with economic growth without previously destabilising the economy.

During the Nixon Shock and the 1973 oil crisis, economic growth in the rest of the world plummeted but the Soviet hard currency earnings grew as a result of oil exports. Following the crisis, overall economic activity decreased markedly in the Soviet Union, the Western Bloc and Japan, but in the Soviet Union it was much more pronounced. Kotz and Weir argued that ultimately, economic stagnation in the Soviet Union could only have been caused by internal problems rather than external.[43]

Some Marxist–Leninist writers have argued that economic stagnation was a result of revisionism in Soviet economic policy during Khrushchev's leadership. According to authors like Harpal Brar, Khrushchev's de-Stalinization program was also used to implement economic reforms that would move the USSR away from central planning and towards market socialism. This is also supported by comparing economic performance preceding the reforms with post-reform economic performance.[44]

One of the main causes for Khrushchev's dismissal from power was the relatively poor economic growth during the early 1960s. Overall economic growth was 6% from 1951 to 1955 but had fallen to 5.8% in the subsequent 5 years and to 5% from 1961 to 1965. Labour productivity, which had grown 4.7% from the 1950s to 1962, had declined to 4% by the early 1960s. Growth, capital out and investments were all showing signs of steady decline.[54] Another problem was Khrushchev's unrealistic promises such as committing to reach communism in 20 years, a near impossibility with the then-current economic indicators.[3] Ultimately, as a result of his failure to deliver on his promises and the problems engendered, Khrushchev was dismissed in October 1964[55] by a collective leadership led by Leonid Brezhnev and Alexei Kosygin. To counter Khrushchev's promise of reaching communism, the Soviet leadership created the term developed socialism, which meant that the Soviet Union had developed to a sufficiently advanced stage that the country would move "naturally" to communism (in an unspecified amount of time).[56]

Khrushchev's dismissal led to the establishment of a more conservative Politburo; Kosygin, Nikolai Podgorny and Andrei Kirilenko were the most liberal members, Brezhnev and Arvīds Pelše belonged to the moderate faction while Mikhail Suslov retained his leadership of the party's hardliners.[57] Kosygin and Brezhnev strongly disagreed over economic policy; Kosygin wanted to increase investments in consumer goods and light industry whereas Brezhnev wanted to increase investment in heavy industry, agriculture and defence.[58] In 1965, Kosygin introduced an economic reform, widely referred to as the "Kosygin reform", which aimed to reform the planned economy within a socialist framework. In a bid to improve the Soviet economy Kosygin copied some of the measures used in the Western Bloc, such as profit making,[59] which Brezhnev agreed to as the Soviet economy was entering a period of low growth.[60] Kosygin's reforms on agriculture gave considerable autonomy to the collective farms, giving them the right to the contents of private farming. As a result, during the Eighth Five-Year Plan (1966–1970), large-scale land reclamation programmes, construction of irrigation channels, and other measures, were enacted.[61][note 2] Overall, the reform failed and links to any high growth rates during the Eighth Five-Year Plan are considered to be "tenuous".[62]

The Brezhnev era, which had begun with high growth, began to stagnate some time in the early 1970s. Kosygin's "radical" reform attempts were halted in 1971 and his second reform was more modest. The second reform was halted because of the 1973 oil crisis, when an international increase in oil price prompted economic growth based on selling oil. Another reform was implemented in 1979 but this, too, failed as by this time the Soviet economy had become "addicted" to high oil prices.[61]

In 1980, RIA Novosti reported that the Soviet Union showed the highest, in Europe, and second highest, worldwide, industrial and agricultural output. The Soviet statistics claimed that in 1960, the Soviet Union's industrial output was only 55% that of America, but this increased to 80% by 1980.[61] The 18 years of Brezhnev's leadership of the Communist Party saw real incomes grow by more than 1.5 times.[61] More than 1.6 billion square meters of living space was commissioned and provided to over 160 million people. At the same time, the average rent for families did not exceed 3% of the family income. Housing, health care, and education were affordable and low priced. As the circulation of the work force could not be balanced by salaries, there was a lack of workers in some areas, largely in the agricultural sector. This was partly solved by forcing "nonproductive" urban population (older pupils, students, scientists, soldiers, etc.) to work during the harvesting time as agricultural workers. The practice has been informally called "naryady na kartoshku" (Russian: наряды на картошку "assignments to potato fields").[61]