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The Struggle to Save the Soviet Economy-Book Review

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The author of the book Chris Miller is an associate professor of international history, and co- director of the Russia and Eurasia programme at Tufts University‘s Fletcher school of Law and Diplomacy. He has been quoted frequently in the Wall Street Journal, the New York Times, and has appeared on CNBC, and NPR. 

The best histories challenge our assumptions, force us to re-evaluate our constructs, andreconsider old issues from new perspectives. This is what Miller’s informative and captivating book provides by offering a distinct perspective on an early question: CouldMikhail Gorbachev (General Secretary of the USSR) have reformed the Russianeconomywhile retaining the Union of Soviet Socialist Republics?

To answer this, Chris Miller considers the current Russian remorse over the “Chinese path not taken” by the Gorbachev administration during the latter half of the 1980s. Could Moscow have followed the Chinese lead, and prevented the 1990s economic collapse?

In his book, Miller presents a convincing picture of Mikhail Gorbachev, i.e., a political leader facing the same challenges as any other significant leader of the Soviet Union would have faced, including dealing with interest group politics, scheming advisers, and tough financial choices.

Miller is correct in saying that “many researchers have lost interest in pursuing new explanations of Russia’s move from central planning to market economy” because they believe (inaccurately) that documentary evidence is difficult to come by or (however still inaccurately) that there is no recent date to add. Moreover, Chris Miller mentions several other false assumptions, such as the devastating impact of the fall in oil prices and, hence, the unavoidable collapse of Soviet finances, and the economy.

Today, China is known as a rising economic power that has left behind its economic socialism to progress in an era of economic capitalism, whereas the Soviet Union has now become “a figment of past dreams and nightmares.” 

Hence, Miller’s book “The Struggle to Save the Soviet Economy,” written 25 years after thecollapse of the USSR, and his effort to re-contrast the Soviet-China economic reforms of the1980s and explain “why it was that China and the USSR, following relatively similar reform programmes in the 1980s, ended up in quite dif erent places by the early 1990s,”appears appropriate and pertinent.

Miller argues that the failure of Perestroika was political rather than economic, as the Soviet economic system was much more centralized, and bureaucratic than China’s, hence the reforms failed: “Powerful interest groups hindered Gorbachev’s reforms, which resulted in political indecision and inaction, overspending, and ultimately collapse.” 

Chris Miller’s short and thought-provoking book is prefaced with the question, “CouldtheSoviet Union have pursued a Chinese path?” To rephrase the question, could the Soviet Union have survived if undemocratic politics were maintained and market reforms wereimplemented? which is a straight “NO” for Miller. Furthermore, his conclusion makes it

obvious that the better issue is: why were Chinese-style market reforms unable to revitalise the failing Soviet economy? So, what makes China so significant to consider? For Miller, the Chinese success, and the failure of Soviet reforms was not a matter of economics (“the Soviet Union managed to mix inefficiency with stability for seventy years”) or Soviet ignorance, but rather “the result of the policies and politics during the time of Gorbachev, i.e., political decisions and uncertainty induced by political conflicts destroyed the country’s economy.” Miller addresses this scenario with the term “entrenched elites,” who were uncompromising in their opposition to change and the free market.

These groups, which range from the industrial-military complex to the agriculture lobbyists, are blamed for excessive budgetary demand, rising inflation, and inevitable political deadlock. Hence, instead of being a fearless reformer, Gorbachev was a hostage to the powerful

Miller begins the book by providing an overlooked and significant context, claimingthat it was not Europe, and the United States that was considered an exemplary economic model to reform the Soviet economy. Instead, many theorists fromboth Easternand Western Europe envisioned “Asian Economic Tigers” such as China, Japan, and SouthKorea as the way forward with their “state-led capitalist system.”

Since the mid-1950s, it has been widely known that Soviet reformers paid close attention to developments in Eastern European satellite states like Hungary and Poland, where private businesses were being gradually restored and farmlands were no longer collectively owned. However, from the perspective of the mid-1970s to the mid-1980s, these Eastern European states, and Western models seemed to be in crisis for many observers.

However, Miller, in the second chapter, demonstrates that Soviet intellectuals, for instance, Fedor Burlatskii, were conscious of the developments taking place in China. The market-based economic reforms undertaken by Deng Xiaoping were intensively researched and tracked by Soviet leaders, policymakers, and analysts connected with various research institutions. Furthermore, the chapter also explore show China became a “trump card in politburo meetings.”

Deng’s leadership allowed foreign investment and training in China, created Special Economic Zones free of bureaucratic intervention, and increased cooperation with capitalist states. These initiatives that rejected socialism, and surrendered its market to capitalism seemed to be incredibly effective in restructuring the Chinese economy and legitimising the Chinese Communist Party.

The third chapter, on the influence of pressure groups on Perestroika’s policy results, is the most fascinating section. By delving into the heated discussions over whether or not to reduce state subsidies on consumer items—a move that would have significantly lessened the fiscal deficit but resulted in skyrocketing prices — Miller explains the intricate interest-group dynamics at the core of Soviet reforms. Miller describes the driving force behind the economic policies of Gorbachev as “the necessity to unify the Soviet rust belt and end the ever-increasing usage of the state budget to support businesses with diminishing output.”

The problem was that these sectors included some of the most powerful people in Soviet politics, and as such, they fought hard to protect their privileges. Miller demonstrates in the next chapter how industrial interest groups slowed down much-needed reforms to Soviet industries and firms, finally exchanging their approval for additional government investment that worsened the USSR’s fiscal woes. 

Moreover, chapter five examines the Soviet Union’s failed attempts to emulate China’sspecial economic zones, illuminating the fact that reformers knew that they needed lawandorder, and improved infrastructure to captivate foreign investment but had trouble puttingthese ideas into practise before the Soviet Union’s eventual collapse. Gorbachev sawthesuccess of SEZs in China as a means to improve the Soviet economy since they brought inmuch-needed foreign cash and advanced technology. There were two main issues withSEZs

in the case of the Soviet Union. The first problem was that the Soviet Union’s high cost of labour made it difficult to bring in outside capital, even for relatively low-risk export sectorslike textiles. The SEZs were placed in the Soviet Far East regions on purpose to take advantage of low-cost Chinese labour.

There was also a fundamental shortfall in governmental capability. For instance, property rights for foreign investors were not properly guaranteed even in the so-called “peripheral zones,” which raises the intriguing issue of whether or not SEZs would have been successful had they been implemented before 1989–1990.

The restructuring of the agribusiness sector is Miller’s second example of interest- group politics in action. Despite claims that Gorbachev was uninterested in agriculture, Chapter 6 argues that the failure of the Soviet agricultural sector can be traced back to the entrenched managerial elites who blocked efforts to transform inefficient collective farms into leaseholds and demanded greater subsidies for the restructuring that they did pass. The contrast with China serves as a focal point, as it has in prior chapters. What if the USSR had taken a page out of China’s playbook and begun economic reform by de-collectivizing the agriculture sector, therefore addressing the economy’s weak spot?

Miller demonstrates once again that political considerations were the deciding factor in the negative response to that query. Despite the advice of many specialists, the agricultural-industrial complex exerted extreme political influence, and its representatives in the Politburo battled tooth and nail to halt any changes. However, Miller claims that Gorbachev avoided an early conflict with this lobby because he understood its influence. 

Miller concludes his book by articulating the politico-economic origins of the Soviet financial meltdown in chapter seven. Moscow’s inability to rein in subsidies promptedit toprint more money, creating inflation that underscored the Kremlin’s impotence, hamperedefforts to collect taxes from newly independent firms, and deepened the Soviet state’s fiscal difficulties. Miller then explores the political consequences of the collapse of the USSRin1991. Could the Soviets have used force to prevent the USSR’s disintegration, andtocreate an authoritarian-capitalist economy, as China did?

Answering this, Miller considers another under-appreciated element that caused the political crisis of the USSR” its long budget crisis.” Without being able to reduce spending owing to pressure from entrenched elites such as the military-industrial complex, Gorbachev had to depend on public mobilisation to stave off his challengers and mitigate the effects of inflation on people’s standard of living. As a result, financial authority was devolved to the republics, which exacerbated the fiscal situation.

After the failed coup in 1991, the Soviet Union faced its final crisis, which opened the door to much-needed radical reform. When the State Committee on the State of Emergency (GKCHP) took power, it was to represent the military-industrial complex and other influential groups that were suppressing Gorbachev’s reforms. As a result, unlike China, the Soviet Union not only required an authoritarian group capable of enforcing state capitalism, but there was also no political support for an authoritarian-capitalist option, making the coup’s failure unavoidable. 

Hence, Miller’s central argument on the collapse of the Soviet Union is that Gorbachevfailed to use the authority of his position to advance perestroika because he met with theunyielding resistance of the sectoral managers who were responsible for the day-to-dayoperations of the Soviet Union and ultimately brought it to its knees.

Also, Gorbachev’s push for political reform in this setting was not the result of an idealistic focus on democratisation at the expense of economic measures but rather a result of the pressing necessity to side step the opposition of agricultural, military, and industrial lobbies for urgently required economic reorganization.

Lastly, Miller states that the Soviet system was unreformable “not because the country’s economic issues were insurmountable, but because it handed tremendous political authority to entities that had every motivation to undermine attempts to overcome the country’s economic challenges.” How feasible would it have been for the Soviets to implement market-based economic changes while preserving their Communist one-party state? In this controversial book, Chris Miller gives a definitive “no” and states that “authoritarian politics of the Chinese type could never have supported Soviet economic reform since the most conservative institutions—particularly the military—were the most resistant to the steps required to stabilise the economy.” Miller also dispels the myth that Perestroika was an effort to copy Western practises.

He shows that “the West in general and America, in particular, were significantly less prominent as providers of economic ideas before 1989 than is typically imagined.” While the United States in the late 1970s andearly1980s was experiencing a series of financial crises, including inflation, high unemployment, and structural losses in manufacturing, the Soviet Union turned to the East for ideas.

Soviet economic experts hailed the Japanese “economic miracle” despite a century of geopolitical antagonism between the Soviet Union and Japan. Hence, Miller configures our perception of perestroika by investigating its “Asian origins” and by mentioning Gorbachev’s speech in Vladivostok in 1986 as a “sea shift in Soviet thinking about international politics and economics.”

Furthermore, Miller uses data to argue that the drop in oil income only amounted to a small percentage of the Soviet GDP. He elaborates, saying, “It was simply one aspect of a bigger budgetary pressure that included diminishing alcohol tax income, high consumer price subsidies, and a variety of inefficient but politically powerful investment programmes in industry and agriculture.” The fall in oil prices was not enough to bring down the Soviet Union without all of these other concerns. 

Questions are to be expected in response to the arguments on such a weighty and intricatetopic. However, some authors show correspondence with Miller’s arguments, such as that thePRC “was a peasant agrarian society” at the outset of its reform drive while the Soviet Unionwas, if anything, “over-industrialized,” as pointed out by Jeffrey Sachs and Wing ThyeWoo, who further stated that Deng Xiaoping came to power in 1978, and 71%of Chineseemployees were involved in agriculture at that time; in 1985, when Gorbachev took power, the percentage of Soviet employees employed in industry was more than double that of Chinain 1978, and the shares employed in transportation and construction were five times greater.

Although the Soviet Union may have turned to China for guidance, the two countries’ economies are at vastly different stages of development. Moreover, Yakov Feygin from the University of Pennsylvania reviews Despite its communist ideology, China in the late 1970sconfronted problems that other developing nations had as well, namely, how to go from an agricultural-based economy to an industrial-based one.

In contrast, the Soviet Union faced an entirely new challenge: how to implement structural adjustment to turn its centrally planned middle-income economy into a combination of high-tech manufacturing, and services capable of successfully competing with North America and Western Europe. 

On the other hand, there is a group of historians who differ in their explanationof the”Soviet collapse,” such as Vladislav Zubok from the London School of Economics andPolitical Science. 

“Miller claims that powerful vested interests were the primary reason that the Soviet economy collapsed. These interests prevented the top-down changes that may have preservedthe country’s economy. The data leads me to a different conclusion: Gorbachev’s adoptionand pursuit of mistaken reforms of economic decentralisation and later political liberalisationunintentionally released the uncontrolled forces that destroyed the old economy rather thanconstructing a new one that was productive. To put it frankly, the Soviet economy andthe

Soviet Union were doomed by Gorbachev’s economic changes, with or without resistancetothem.” 

Isaac Scarborough, an expert on the impact of Soviet changes on Central Asia’s periphery, stated 

“By the final years of the USSR, Gorbachev’s reforms had taken full effect: cooperatives numbered in the millions, enterprises were in full accordance with the 1987 Lawon Enterprises, refusing government contracts and producing fewer and more expensive goods, and actual production and tax revenues were dropping swiftly.”

Miller is wrong to suggest that these results were caused by the ineffectiveness of Gorbachev’s reforms; rather, they were the inevitable outcome of those changes. Hence, Miller’s book defends Gorbachev’s liberalising of the Soviet government against the authoritarian “right” opponents who thought he had wasted reform opportunities. 

Furthermore, another historian who has drawn parallels between China’s reforms and Gorbachev’s policies argues convincingly that the Soviet leaders were envious of China’s success with reform and therefore did nothing similar.

After the massacre at Tiananmen Square, the Soviet leader vowed once again that his country would not follow China’s example and would instead pursue “democratisation,” or the decentralisation of government and the economy. 

However, in my analysis, Miller’s study is less of a traditional history of perestroika, and more of a political, and intellectual history of economic reform, and as such, it avoids making direct comparisons between Soviet and Chinese reform programmes or providing substantial data on the performance of the Soviet economy.

Our attention is instead directed to the political discussions that took place in Moscow, including how Gorbachev and his advisers saw the need for change and the outcomes they expected to see as a result. Miller persuasively shows how China influenced Gorbachev’s thinking, and how China functioned as both a reform model and a “trump card” against those who opposed marketization.

Nevertheless, the Struggle to Save the Soviet Economy is arranged not just chronologically but also thematically, i.e., the book is not only separated into chapters but may be broken down into (two) parts: the first part discusses the history of perestroika and China’s involvement in bringing about Soviet reform (chapters one through three), while the second part examines the actual reforms implemented and their effects (chapters four to seven). The work’s accessibility and satisfaction come from its clarity and lack of extensive statistics; readers can get a clear picture of the conservatives, and reformists battling it out in the politburo in the late 1980s.

Furthermore, Miller notes that unlike the Soviet Union, the PR C does not have powerful, entrenched lobbyists, but Miller might be overlooking the Gorbachev camp’s delusions about the parallels between China, and the USSR by laying so much blame on their opponents. However, even if internal resistance had been eliminated, it is not apparent to me that this route (the Chinese Reform Model) would have succeeded in the Soviet setting given the fundamentally different obstacles the two enterprises faced.

Also, was all that Miller listed enough to topple the second superpower? Important topics like the zero-sum struggle between Soviet leaders Mikhail Gorbachev and Boris Yeltsin, the dissolution of ideological certainties caused by glasnost, and the emergence of popular belief in the supernatural in the 1990s are not addressed in this book.

Hence, the omission of competing variables, i.e., a book about Gorbachev and Perestroika, and the near-total lack of coverage of glasnost that mobilised nationalist movements, is off-target. At last, Miller’s study does a lot to improve our understanding of how political disagreements contributed to the collapse of the Soviet economy. Moreover, the book’s success rests on the process of transforming economic concepts into policy; yet, one might argue that a more critical and less narrowly focused approach would have improved the arguments even more. 

To conclude, those interested in understanding the reasons for the USSR’s demise from a new perspective can read “The Struggle to Save the Soviet Economy.” Miller avoids lengthy quotations in favour of presenting his arguments in a smooth and persuasive manner befitting the book’s exhaustive evidential basis. Also, the book provides the clearest analysis of the internal politics of Soviet economic reforms. Due to its conciseness and clarity, it would also be an excellent addition to reading lists for upper-level undergraduate and graduate courses on the Cold War and Soviet history.

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Hafiza Syeda Azkia Batool is an undergraduate student, following a degree in International Relations from National Defense University, Islamabad.

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