“If what you have done yesterday still looks big to you, you haven’t done much today”,- Mikhail Gorbachev.
Mikhail Gorbachev is said to be one of the most influential political figures of the Soviet era. He is also denoted as a man with a vision. ‘Perestroika’ or ‘Resurrection’ was one of such visions. It was started by Gorbachev after he took over as leader of the Communist Party in 1985. Compared to his predecessors, his staff had a larger Russian presence. It appears that Gorbachev initially shared the view that the U.S.S.R.’s fundamental economic structure was sound and that only minor modifications were required. As a result, he followed an economic strategy that intended to boost both capital investment and economic development.
In an attempt to successfully implement the strategy and know the possible risks, he also launched another one of his visions called ‘Glasnost’. Through this, he dismantled the empirical system, which was known as the Soviet Union. To this day, the dismantling of the union into many separate and sovereign nations is seen as a political mistake by many. However, the West greeted this approach with a warm heart. This is exactly why Gorbachev’s vision gained more popularity to the western people.
By taking actions that Soviet economists at the time regarded as audacious, Gorbachev extended perestroika to the Soviet Union’s international economic sector. The Ministry of Foreign Trade’s former monopoly over the majority of trade activities was essentially destroyed under his program. Instead of going via the bureaucracy of trade ministry organizations, it allowed the ministries of the different industrial and agricultural branches to carry out international commerce in the sectors under their jurisdiction. Additionally, regional, municipal, and particular state firms were allowed to engage in international commerce. This adjustment was made in an effort to address a significant flaw in the Soviet system of international trade: the lack of communication between Soviet suppliers and end users and their foreign counterparts.
The most important change made by Gorbachev in the international economic sector was to enable foreigners to participate in the Soviet Union through joint ventures with state-owned companies, cooperatives, and ministries. The original Soviet Joint Venture Law, which took effect in June 1987, set a 49 percent foreign ownership cap on Soviet ventures and mandated that Soviet nationals hold the chairman and general manager roles. After receiving complaints from prospective Western partners, the government changed the rules to permit majority foreign ownership and control.
Gorbachev turned to the market reforms being implemented in Eastern Europe and China in an effort to restore the Soviet Union’s economic dominance, but neither path seemed viable. With no indications of a fresh development spike, the Eastern European republics were becoming severely owed to western banks and the I.M.F. They also experienced the 1990s as a lost decade, with the exception of Poland, which benefited from a debt relief program offered by the west but not to Moscow.
However, Gorbachev underestimated the influence of socialism as an alternative to capitalism. In the end, ‘Perestroika’ and ‘Glasnost’ contradictions could only produce one of two outcomes: either a political revolution in which the working class overthrew the bureaucracy and restored true workers’ democracy; or a return to capitalism. For that time and with Yelstin in power, capitalism was the best option. Along with dealing with the fallout from Gorbachev’s poor economic decisions, the new Russian administration also had to figure out how to revamp the country’s overall economy. The effects on the general populace were terrible. Production declined by over 60% between 1990 and 1995. The wages decreased by 43% from 1991 to 1993. The situation for those who were most at risk quickly worsened. In the past, women often made 70% of what males did, but by 1997, that percentage had dropped to only 40%. Death rates, meanwhile, increased 30 percent after 1989.
Gorbachev saw how communism was resulting in a stagnant economy for the country. His only goal had been to revamp the political system and resuscitate the struggling economy of his nation. His actions served as the impetus for a chain of events that ended communist authority not just in the U.S.S.R. but also in all of its former satellite republics. Western nations were first sceptical of him but eventually accepted his perspectives. Hailing from the workers’ class, Gorbachev introduced the concept of capitalism into a communist society. He even famously quoted, “The market is not an invention of capitalism. It has existed for centuries. It is an invention of civilization.” This concept of his would be fully adapted by his successor Yeltsin. But Gorbachev laid the foundation which would forever change the Russian economy as well as other former Soviet nations. His visions for economic and political reforms even won him a Nobel Peace Prize for bringing about radical changes in the east and the west.
Even though he may have won in the minds of the west, the reception was not the same for the Russians, as most saw everything as a failure. However, Gorbachev undoubtedly tried to resuscitate the economy of his nation and end the cold war. His visions would lead the modern Russian authority to see the economy differently.
