Gorbachev’s reforms

During the 1970s growth had slowed down and by the time Gorbachev came to power in 1985 many people were pressing for fundamental economic reforms. Gorbachev responded with his policy of perestroika, which among others included the following •Making managers more involved in preparing their own plans rather than merely being given instructions. •Insisting that firms cover their costs of production. If they could not, they state might refuse to bale them out and they could be declared bankrupt. The aim of this was to encourage firms to be more efficient. •Improving the incentive system by making bonuses more related to genuine productivity. Workers had come to expect bonuses no matter how much or how little was produced. •Organizing workers into small teams or brigades. Bonuses were then awarded to the whole brigade according to its productivity. The idea was to encourage people to work more efficiently together. •Stringent checks on quality by state officials and the rejection of substandard goods. •Allowing one-person business and co-operatives to be set up. •A greater willingness by the state to raise prices if there were substantial shortages. These reforms, however, did not halt the economic decline. What is more, there was now an unhappy mix of planning and the market, with people unclear as to what to expect from the state. Many managers resented the extra responsibilities they were now expected to shoulder and many officials saw their jobs threatened. Queues lengthened in the shops and people increasingly became disillusioned with perestroika. Following the failed coup of 1991, in which hard-line communists had attempted to reimpose greater state control, and with the consequent strengthening of the position of Boris Yeitsin, the Russian president and the main advocate of more radical reforms, both the Soviet Union and the system of central planning came to an end. Russia embarked upon a radical programme of market reforms in which competition and enterprise were intended to replace state central planning. The Stalinist system now appears to e but a fading memory.