The Soviet Economy and the Need for Reform

Because he was interested in rapid growth, Stalin decided to do away with private forms of economic ownership and the freely formulated prices and markets of the traditional economic system and replace them with state ownership and central planning. This brought some initial growth but considerable distortion of the Soviet economy. There was an overemphasis on heavy industry. Gorbachev in particular came to recognize how misguided such an approach has been, but recognition is not the same as implementation. The essence of his reform is to increase the role of private and cooperative decision making while reducing the role of central planners in decision making and state-owned enterprises. There have been many false starts in this process, and so far the results have not been encouraging. If anything, the real standard of living in the Soviet Union has declined, and Gorbachev's reforms are being blamed for many of these problems.