Why was perestroika a failure

The years of Communist rule had choked the economy—stifling innovation and destroying initiative—and produced political cynicism born of overt corruption of the ruling elite. Gorbachev knew full well the extent of the situation he inherited.

But after six years in power and despite much talk about renewal and restructuring, the economy is worse off and the Soviet Union no longer exists as a political entity.

As a program of economic restructuring, perestroika must be judged as an utter failure. Glasnost to be sure produced a political and cultural awakening of sorts unknown during the 74 years of Communist rule, but perestroika failed to deliver the economic goods.

Instead, economic reform was limited to inconsistent and incoherent half-measures. The law on individual economic activity, the law on state enterprises, and the various price-reform proposals, for example, amounted to nothing more than half-measures incapable of producing the desired economic results even if they were implemented in an ideal environment.

Conceptually, economic reform is a fairly simple matter. Private property in resources must be established and protected by a rule of law; consumer and producer subsidies must be eliminated; prices must be freed to adjust to the forces of supply and demand; responsible fiscal policy should be pursued that keeps taxation to a minimum and reins in deficit financing; and a sound currency must be established.

Introducing such reforms—even within Western economies—is anything but simple. And the major problem is not just a conceptual one of designing the appropriate sequence or plan of reform. One of the most important insights derived from academic research in modern political economy is the potential conflict between good economics and good politics.

In democratic regimes, where politicians depend on votes and campaign contributions to remain in office, research has shown that the logic of politics produces a shortsightedness with regard to economic policy.

Popular economic policies are those that tend to yield short-term and easily identifiable benefits at the expense of long-term and largely hidden costs. Several administrative reorganisations created confusion and lack of co-ordination at several levels, and enabled enterprises to ignore demands of which they disapproved. The Communist Party subsequently lost much of its power to force enterprises to conform.

This led to mass confusion, something definitely not conducive to a successful economy. Gorbachev also failed to take into account the possibility that perestroika could increase the already heated conflict with the Republics, which it would go on to do.

There was a failed anti-corruption campaign, in which the majority of those arrested were key figures in the Republican administrations, leading to anger and disruption. By , local Republics began to indulge n local protectionism, creating customs barriers and disrupting trade; for example, Ukrainian mines could no longer get supplies of timber needed for pit pops from Russia.

Gorbachev also failed to tackle the lack of incentives and the inefficiency of the Soviet economy, which was had been a featured problem since Stalin. Ultimately, perestroika failed to revive the Soviet economy largely to the lack of foresight and planning that went in to the policy before it was enacted. Whether you agree or disagree with the arguments the book gives an excellent and consistent view on the topic.

From review in Europe-Asia Studies , 45, no. The events in the former Soviet Union from to were nothing short of spellbinding. Academics, pundits and the man on the street were all transfixed by the "Gorbachev phenomenon. Boettke argues that Gorbachev's reforms ultimately failed because they were not based on a sound understanding of market and political processes.

This is not what is most interesting about the book, however, as other authors have already been over this ground. Instead, Why Perestroika Failed represents an important contribution to the literature on the post Soviet-type economies in two respects.

First, Boettke analyzes the Soviet system, perestroika, its collapse and the post-communist transition from an unabashedly public-choice theory to a Soviet-type economy and a subsequent transition to capitalism, it does represent the most recent and comprehensive undertaking in this regard.

Second, Boettke's book also constitutes a provocative integration of public choice theory, sovietology, history of economic thought and Russian economic historiography, with attendant implications for the post-communist economic transition. New York: Routledge,