The big winners to emerge from World War II were two superpowers that – like mighty stags that feel compelled to do battle – locked horns for 40 years. The resulting Cold War was a fierce struggle to secure global dominance, with the USA and Soviet Union representing diametrically opposed political systems. One was the torchbearer for democracy, individual freedoms and laissez-faire capitalism. The other espoused autocracy, tight social control and a centrally managed economy.
Intense rivalry led to an arms race based on the appropriately named doctrine of MAD (Mutually Assured Destruction), requiring each side to possess nuclear weapons capable of destroying the world. There were other expensive contests, like the space race and aid to Third World client states. Desire to reign supreme even led the participants into disastrous foreign wars. The USA notably failed to roll back the tide of communism in Vietnam, while the Soviet army was humiliated by ragged mujahedeen resistance fighters in Afghanistan.
It was the latter that determined the outcome of this titanic struggle. The cost of fighting the Afghan war – from 1979 until 1985 – bankrupted the Soviet Union’s command economy, already stagnating as a result of intrinsic inefficiency and widespread corruption. But cometh the moment, cometh the man – in this case reforming leader Mikhail Gorbachev. The Soviet economy had long been guided by five-year plans that delivered infrastructure, heavy machinery and military hardware, but couldn’t satisfy the complex demands of a modern consumer economy.
Gorbachev’s new policy of Perestroika (economic reform) saw brief improvement, but it wasn’t enough. By 1991 the economy was in such dire straits that the Soviet Union simply disintegrated, with autonomous republics declaring independence and subjugated Eastern Bloc states regaining their freedom. In the end it was not a rival superpower that destroyed the once-mighty Soviet Union, but economic incompetence.
When was the Soviet Economic Collapse: 1979-1991
Where was the Soviet Economic Collapse: Soviet Union
What was the Soviet Economic Collapse toll: Russia and the 15 former Soviet republics that rose from the ashes of economic disaster found it hard to come to terms with the realities of global commercial life in the post-Soviet era.
You should know: The Soviet Union passed a law in 1988 that effectively marked the end of central economic control. The Law on Cooperatives allowed the private ownership of businesses, but merely hastened the process of economic collapse. By 1990 the government had lost control of the economy as the weakening of central control led to the economic and financial anarchy that would prove terminal for the toppling superpower.