3-GORBACHEV+John,+Derek


 * Consumer Goods Industries Research **

http://books.google.com/books?id=G1auWun706gC&pg=PA214&dq=consumer+goods+industry+soviet+russia&hl=en&sa=X&ei=rmAVU_jmEqnXygGs4oGgAw&ved=0CCkQ6AEwAA#v=onepage&q=consumer%20goods%20industry%20soviet%20russiaprepier&f=false
 * 1)  What was the situation for that group/institution before Gorbachev became Premier?

During early 1950’s to 1975, the Soviet’s gross national product increased an average 5 percent per year. This statistic was outpacing the average growth of the United States and keeping pace with many West European economics. In addition, the Soviet Union was able to acquire significant growth through extensive investments by infusing the economy with large inputs of labor, capital, and natural resources. But the state-set prices did not reflect the actual costs of inputs, leading to enormous misallocation and waste of resources. Also, the heavily bureaucratic economic decision-making system and the large emphasis on meeting quotas discouraged the introduction of new technologies that could improve the productivities of the consumer goods industry sectors. Central planning also skewed the distribution of investments throughout the economy. The poor quality of the Soviet goods and services that resulted from the state monopoly over production and the lack of priority given the consumer sector in the planning process did not reveal itself in the aggregate Soviet growth rates. With time, diminishing returns from labor, capital, and other forms of input caused a severe slowdown in Soviet Economic growth. Additionally, the availability of inputs such as capital, labor, and technology was decreasing drastically. Falling birth rates, particularly in the European republics of the Soviet Union placed heavy constraints on the labor supply. By the mid-1970s and into the 1980s, average Soviet GNP growth rates had plummeted to about 2 percent, less than half the rates of the immediate postwar period, indicating declining consumer goods industries. Such rates would have been acceptable in a mature, modern, industrialized economy. However the Soviet Union still trailed far behind the United States and other Western Entities. Also in the 1980’s, Japan arose from the newly industrializing countries of East Asia in terms of consumer goods production. Furthermore, the standard of living for the average Russian, which had been generally below a citizen in the United States, was declining. In the 1980’s, with the advent of modern communications that even Soviet censors found impossible to restrict, the citizens of the Soviet Union began to question the rationale of their country’s economic policies. This was the atmosphere that allowed the Gorbachev regime to swoop in and implement serious economic reform in the late 1980’s. " Yet notwithstanding the fact that he is a superb politician, Gorbachev has lost much of the credibility that he once had when it comes to dealing with the economy. To pull himself out of this mess, it is not sufficient simply to prevent further mistakes. The momentum is in the direction of further inflation and inadequate supplies of consumer goods. That is why in December 1989 Gorbachev and his advisors decided to revert to central planning and price control. They promised that this would last no more than three years and that the main emphasis would be on the production of more consumer goods. By then, they insisted, the consumer goods shortages will have disappeared and it will be possible to introduce a market system. But central planning serves to create shortages, not eliminate them. The odds are that it will take years for the economy to correct itself, and it is unclear at this point if the population has enough confidence or trust in Gorbachev to sit idly by for the length of time he will need to remedy his past mistakes as well as restructure the economy. Already there are worrisome signs that conservative and worker's groups have linked up in a "Peronist" opposition to reform. The United Front of Workers is opposed to price reform, cooperatives and any retreat from central planning." http://www.foreignaffairs.com/articles/45436/marshall-i-goldman/gorbachev-the-economist
 * 1)  How did that group/institution interpret the application of those policies to it?

After taking control in the March of 1985, Gorbachev took extensive measures to immediately resume the growth rates of the earlier decades. The Twelfth Five-Year Plan (1986-90) called for the Soviet national income to increase an average of 4.1 percent annually and labor productivity to increase 4.6 percent annually, rates that the Soviet Union had not achieved since the early 1970s. Gorbachev hoped to improve labor productivity by implementing an anti-alcohol campaign that actively restricted the sale and consumption of vodka and other alcoholic beverages by established work attendance requirements. Gorbachev also shifted investment priorities toward the machine-building and metalworking sectors that could make the most significant contribution to retool and modernize existing factories, rather than building new factories. Also, during his first few years, Gorbachev also restructured the government bureaucracy. He combined ministries responsible for high-priority economic sectors into bureaus or state committees in order to reduce staff and red tape and to streamline the administration. In addition, Gorbachev established a state organization for quality control to improve the quality of Soviet production. The consumer goods industry, as well as the general public, viewed the application of Gorbachev’s policies with mixed emotions. Calls for reform of the judicial and legal systems as well as for several economic policies were voiced constantly in 1986, which signified favor towards Gorbachev’s leadership from the public and various consumer industries. It was not long, however, before signs of opposition to Gorbachev's policies arose, and a "conservative backlash" occurred. Although the opposition appears to have been led by disgruntled party leaders such as Egor K. Ligachev, the second-ranking member of the Politburo, the KGB probably joined forces with these conservatives. The KGB would not allow the democratic reforms to go too far. http://books.google.com/books?id=_zYkqS6ymjkC&pg=PA30&dq=gorbachev+economy&hl=en&sa=X&ei=4V8VU57eN-nlyQHk44BA&ved=0CCkQ6AEwAA#v=onepage&q=gorbachev%20economy&f=false
 * 1)  How did the Soviet state apply those policies to that group/institution, and what were the effects?

** How did the Soviet state apply those policies? **  After gaining the post of general secretary in March 1985, Gorbachev moved with unprecedented speed to implement personnel changes in the party and government. His success in getting rid of so many potential political opponents in such a short time surprised Western Soviet experts, particularly because Gorbachev did not have a substantial power base or patronage network of his own when he took office. Gorbachev apparently relied on the same bases of support that Andropov had used in his ascent to the top, which included the KGB. According to Western experts, Gorbachev appealed to the KGB for help in purging the Brezhnev old guard. The main vehicle used by Gorbachev in carrying out these purges was the anticorruption campaign. There were numerous signs that pointed to the fact that the leadership of Gorbachev was bring in good relations with the KGB by maintaining its high prestige and political status. KGB chairman Chebrikov was promoted to full membership in the Politburo just a month after Gorbachev came to power. He also was heavily involved the Soviet media. At the Twenty-Seventh Party Congress in February-March 1986, for example, he delivered a speech that was an unprecedented assertion of the power and authority of the KGB. At the Twenty-Seventh Party Congress in February-March 1986, for example, he delivered a speech that was an unprecedented assertion of the power and authority of the KGB. Although Gorbachev continued to rely on the KGB in his drive to purge the party and state apparatus of corrupt officials, toward the end of 1986 signs indicated that his relations with this organization were becoming strained. The KGB cannot have been pleased about the reformist policies promoted by Gorbachev, in particular openness in the media and liberalization of cultural norms. Calls for reform of the judicial and legal systems, voiced with increasing frequency in the autumn of 1986, signified that the Gorbachev leadership was attempting to curtail arbitrary KGB actions against citizens. This attempt became even more apparent in January 1987, when Chebrikov acknowledged, on the front page of Pravda, that employees of the KGB had committed illegalities. Such an acknowledgment of KGB abuses was unprecedented. Even during the Khrushchev era, when the crimes of Stalin's security police were exposed, the KGB was never criticized in the press. Observers speculated that, having depended initially on KGB support to purge the Brezhnevites, Gorbachev decided by early 1987 that he was strong enough to embark on reforms that might antagonize this institution. ** Effects of policies on Consumer Goods industries ** The Law on Cooperatives, enacted in May 1987, was the most radical of the economic reforms during the early part of Gorbachev’s reign. The law permitted private ownership of business in the services, manufacturing, and foreign-trade sectors. The law had previously placed high taxes and employment restrictions, but it was later revised to avoid discouraging private-sector activity. Under this provision, cooperative restaurants, shops, and manufactures became part of the Soviet scene. Gorbachev purchased Perestroika to the Soviet Union’s foreign economic sector. The program that he initiated virtually eliminated the monopoly that the Ministry of Foreign Trade. It permitted the ministries of the various industrial and agricultural branches to conduct foreign trade in sectors under their responsibility rather than having to operate indirectly through the bureaucracy of trade ministry organizations. In addition, regional and local organizations and individual state enterprises were permitted to conduct foreign trade. This change was an attempt to redress a major imperfection in the Soviet foreign trade regime: the lack of contact between Soviet end users and suppliers and their foreign partners. One of the most crucial of Gorbachev’s reforms in the foreign economic sector allowed foreigners to invest in the Soviet Union in the form of joint ventures with Soviet ministries, state enterprises, and cooperatives. The original version of the Soviet Joint Venture Law, which went into effect in June 1987, limited foreign shares of a Soviet venture to 49 percent and required that Soviet citizens occupy the positions of chairman and general manager. After potential Western partners complained, the government revised the regulations to allow majority foreign ownership and control. Under the terms of the Joint Venture Law, the Soviet partner supplied labor, infrastructure, and a potentially large domestic market for consumer goods industries. The foreign partner supplied capital, technology, entrepreneurial expertise, and, in many cases, products and services of world competitive quality to Soviet Russia, which in turn benefited the consumer good industry in its entirety. Gorbachev believed that advancing the Soviet Union's economy required mass participation, higher morale among the Soviet Union's work force and more freedom and openness – glasnost. He likened the economy to a family's home, and democracy to ownership of the home. "A house," he said, "can be put in order only by a person who feels that he owns this house." He spoke of the goodwill necessary in making an economy work. And regarding corruption versus worker morale, he complained of leaders having placed themselves beyond the reach of criticism and of some who had become accomplices in, if not the organizers of, criminal activities. As a part of freedom to express oneself, Gorbachev started releasing political prisoners. The Soviet Union's most outspoken dissident, Andrei Sakharov (the father of the Soviet Union's hydrogen bomb) was allowed to return to Moscow from the city of Gorky, where he had been exiled for speaking out against Soviet troops being sent to Afghanistan. The Gorbachev regime allowed more openness in newspapers and on television. Gorbachev's popularity with the Soviet masses was rising.
 * 1)  What was the significance of Gorbachev’s reforms as it pertained to that group/institution?

http://books.google.com/books?id=IITy3gVV66YC&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q=with%20economic%20growth&f=false

Gorbachev’s attempts at economic reform were not radic al enough to change the country’s long history of bad economy in the late 1980’s. The reforms made some inroads in decentralization, but Gorbachev and his team made sure most of the fundamental elements in the communist system was left intact. (Price controls, inconvertibility of the ruble, exclusion of private property ownership, and the government monopoly over most means of production.) By 1990 the government had lost control over economic conditions. Government spending ascended rapidly as an increasing number of unprofitable enterprises required state support and consumer price subsidies continued. Tax revenues declined because revenues from the sales of vodka had declined during the anti-alcohol campaign and because republic and local governments withheld tax revenues from the central government under a rising attitude of regional autonomy. The central control over production decisions was eliminated and this led to the breakdown in traditional supplier-producer relationships without contribution to the formation of new ones. Although the incomes of consumers had been rising, there is too little on the shelves for people to buy, and too much money funding too few goods. It was the opposite of what capitalist nations had faced in the Great Depression, when too little money was in the hands of consumers compared to what was available for purchase. Essentially, Gorbachev’s decentralization caused new production bottlenecks for the consumer goods industry.

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Curtis, Glenn. "Russia - The Economy - Historical Background." //Russia - The Economy - Historical Background//. Washington: GPO for the Library of Congress, n.d. Web. 1 Mar. 2014. .

[|Friedberg, Maurice, and Heyward Isham.//Soviet society under Gorbachev: current trends and the prospects for reform//. Armonk, N.Y.: M.E. Sharpe, 1987. Print.]

Goldman, Marshall. "Gorbachev the Economist." //Foreign Affairs//. N.p., n.d. Web. 1 Mar. 2014. .

[|Jouvenel, Bertrand de, Dennis Hale, and Marc Landy. //Economics and the good life essays on political economy//. New Brunswick, N.J.: Transaction Publishers, 1999. Print.]