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Did Putin Create the System that Gorbachev Wanted to Save?

With the passing of the last Soviet leader Mikhail Gorbachev, a man whose policies and actions, contrary to his initial objectives, led to fall of the USSR and the end of the Cold War, it would be worthwhile to examine whether he might have prevented the demise of the USSR had he taken a path resembling that of current Russian President Vladimir Putin. I am not stating in this article that the USSR should have survived or was worth saving. I am simply posing a theoretical argument.

On Christmas Eve 1991, Mikhail Gorbachev signed the document that officially dissolved the Soviet Union. On Christmas Day, he resigned as the General Secretary of the Communist Party. The following day, millions of Soviet citizens and viewers around the world watched as the Soviet flag was lowered for the last time over the Kremlin. The Soviet experiment lasted just under 70 years. For six years, Gorbachev introduced greater openness (glasnost) in society and economic restructuring (perestroika). These changes, however, were not enough to prevent the collapse of a country that was one of the world’s two superpowers. Researchers have written a great deal about the causes of this collapse. Some have argued that the collapse was inevitable; the inherent structure of the Soviet system was not sustainable. Others have viewed the way in which the reforms were implemented as the actual catalyst for the system’s demise. If Gorbachev had taken a different approach, which focused mainly on improving the economy without increasing political freedom, the Soviet Union would perhaps have had a realistic chance of surviving.

So why did Gorbachev fail? Gorbachev’s actual political and economic choices did not save the Soviet system but rather led to its rapid demise. Although younger and more open to new thinking, Gorbachev was still the product of a Soviet upbringing. His education and experiences were forged within the framework of the socialist system in the USSR. Gorbachev continued to believe his reforms could be supported through Leninist ideology. It was not until 1989/1990 that he began to realize that reliance on Party teachings would not be effective. This was much too late to pivot to other areas of support. He had no deep understanding of market economics and relied on economic advisors who had no direct experience functioning within the type of economy that was needed to cure the ills of the Soviet economic model. His chief economic advisors, Abel Aganbegyan and Tatiana Zaslavskaya, were Marxist-trained economists. Both Aganbegyan and Zaslavskaya had been critics of the Soviet system, having consistently called for needed reforms. Yet their thinking was framed in Marxist terms. They were not able to provide the guidance that could have enabled Gorbachev to make better decisions on economic policy. In fact, his economic advisors were proposing reforms similar to those proposed in the Khrushchev years and which were squashed during the Brezhnev years. New, modern ideas based on market economics were needed. Unfortunately, Gorbachev and his economic team failed early on to take advantage of the goodwill built with western countries by requesting managerial and financial support. Gorbachev’s fatal error was his failure to see the need to shift the economy to a more consumer-based one. This was a failure from which he was unable to recover. He promised the benefits of perestroika to Soviet citizens without delivering on those promises.

Gorbachev’s insistence on greater freedoms in expression and in politics, especially in the absence of economic improvement, proved an obstacle to progress and actually worked counter to his reform agenda. His decision to promote glasnost concurrently with perestroika did not provide him the luxury of executing a gradual, long-term strategy for improving the economy. Soviet citizens needed to see an immediate and positive impact on their standard of living. Gorbachev’s mixed approach did not deliver immediate results, and created disillusionment and resentment amongst a population now encouraged to express these feelings. Criticism came from all sides, leaving Gorbachev to undertake ever more drastic policy swings to placate these competing groups. In the end, he was left with no reliable base of support either on the left or the right. Each side became more radicalized in its positions. Supporters of reform went on to find other political leaders judged more effective, i.e. Yeltsin. Those still loyal to the current system turned more hardline in their views resulting in the 1991 putsch to remove Gorbachev and to re-establish a more traditional Brezhnev-type government.

The lack of swift, focused reforms allowed the entrenched Soviet bureaucracy to dig in its heels and to hinder the successful implementation of his economic reforms. Gorbachev thought he could utilize the vast Soviet bureaucratic machine as the engine for implementing his reforms. He thought that the bureaucrats would become promoters of his reform agenda with proper reorganization and better incentives. As in any country, the state bureaucracy exists primarily to protect and further its own privilege and power. Bureaucrats see political leaders come and go. They play the long game and prolong the execution of any policy seen as a threat while waiting for the new ideas to lose traction/support. The proposed reorganization of Soviet ministries directly threatened the interests of the key bureaucrats, mainly bulwarks of the current system. These ministries were able to defend their interests and block the implementation of key reforms as Gorbachev failed to devise a clear, focused strategy. This muddled approach enabled the ministries to drag out or simply to ignore the implementation of reforms. This reaction of the ministries severely hindered any potential positive impact on the economy.

Gorbachev also failed to appreciate the changes affecting the world’s other main Communist country, China. During this same period, the Chinese government, led by Deng Xiaoping, was experiencing similar problems as the USSR but addressing them very differently. When asked why he didn’t follow the Chinese model during an interview in 2011, Gorbachev responded by adding that “This would have meant dismantling the economic structure of state socialism while keeping the political system as it had always been. But, in order to reform our country “the Chinese way,” we would have had to have a different country—probably populated by the Chinese…” Gorbachev seemed to not understand the importance of economic over political change in the minds of the Soviet people. China was just beginning to recover from the damage resulting from the disastrous policies of Mao Zedong era, which had ravaged the Chinese economy. In contrast to the USSR, China did not opt for greater openness in expression and politics but rather took advantage of the changes taking place in the Chinese countryside by local farmers who were, on their own initiative, splitting up collective land. The local farmers increased the agricultural output to supply the population. The Chinese leadership then devised a strategy to rapidly transform the Chinese economy to become more competitive. This resulted in a dramatic improvement in the daily well-being of most Chinese citizens. That is not to say that China did not adjust its political system. Certainly, China restructured its ministries and created new incentives for its bureaucracy, but it was done while maintaining its one-party system. Certain elements of democratic systems such as competition, accountability, and limited decision-making power were instilled into the bureaucracy. Yet, Communist party hegemony was not questioned.

Key factors in the success of the reforms in China were speed and decisiveness. With the support of the Chinese Communist Party (“CCP”) senior leadership, Deng Xiaoping composed a comprehensive and aggressive plan to accelerate the Chinese economy based on market principles. Unlike Gorbachev, Deng did not take a gradual approach and introduce contradictory policies. China introduced its economic reforms quickly before any significant opposition could arise. Like Gorbachev, Deng used the ministries as his engine for driving reforms into practice. What the Chinese leader did differently, though, was change the one-man rule structure of these ministries into a collective leadership, thereby reducing the power of the single ministry leader. Term limitations and mandatory retirements were also introduced to further reduce the power of the ministries. The Soviet leader continued to rely on the individual ministry heads, which maintained their own personal power bases and were better able to resist reform. The Chinese cascaded these reforms into the bureaucracy's lower levels, creating income and revenue generation incentives. Lower-level cadres were evaluated on specific economic growth targets and penalized for failure to meet these targets. Political openness was also penalized. Gorbachev was not able to create significant change within the lower levels of the Soviet bureaucracy due to resistance from ministry leaders. In fact, he argued that he faced stiffer resistance than the Chinese leadership, “In China, economic reforms faced no resistance from the party bureaucracy. In the Soviet Union, the nomenklatura—the party and economic bureaucracy—was extremely strong; they had stopped previous attempts at reform.”

China had a capitalist past and had welcomed, although under tight restrictions, assistance from western countries.

The Soviet Union did not immediately look at itself as a strong economic partner with the West. Economic reforms under Gorbachev aimed to improve the domestic economy for the wrong reasons. Gorbachev believed a strong domestic economy would increase the USSR’s military and ideological competitiveness with the West. The USSR never saw itself as a major supplier, beyond the energy and military sectors, to non-communist countries. Foreign investment was viewed in domestic terms. The USSR would allow limited foreign investment in the form of joint ventures to improve internal consumption. However, investors never had confidence in the Soviet legal/tax structure to make significant enough investments. On the other hand, Deng Xiaoping had a model that he could use for expansion throughout mainland China: Hong Kong. Chinese authorities in Beijing had seen strong economic growth in Hong Kong under British rule. In the 1960s and 1970s, Hong Kong served as a low-cost producer of consumer goods for western countries. It was no surprise that just over the border from Hong Kong, Shenzhen became the showcase city for China’s economic reforms.

The Chinese economy offered more opportunities for western business than the USSR, whose products, as noted, had an international reputation for poor quality. China had a population that had an entrepreneurial culture. In contrast, the Soviet Union and the Russian empire had limited historical experience with a market economy. Thinking in market terms was not ingrained in much of the Soviet population, many of whose ancestors had been peasants. Furthermore, Stalin and Brezhnev harshly suppressed innovation and entrepreneurism. Due to a more logical reform strategy and rapid implementation, China experienced surprising economic growth during the same period in which the USSR saw production decline, inflation increase, and political opposition grow to threaten the existence of the entire system.

With hindsight, it is easy to say what Gorbachev should have done in order to save the Soviet Union. Events move much more slowly when one has the benefit of viewing them through the lens of 30 years. What is clear is that had Gorbachev committed more quickly and decisively to perestroika, even at the expense of glasnost, his reform agenda would have had a better chance of success. Taking a more pragmatic approach more closely resembling the Chinese model could have enabled the Soviet leader to have demonstrated early success, which would have been crucial to building popular support and allowing for time to implement deeper, more transformational economic reforms. The muddled, middle-of-the-road path taken by Gorbachev caused general dissatisfaction leading to his failure, and ushered in the Yeltsin era with its chaotic approach to market economics that brought the country to the brink of bankruptcy. The result was the appointment of Vladimir Putin, who, although not fundamentally altering Russia’s economy and its reliance on energy, has focused on economic stability while placing greater controls on political and press/expression freedoms.

Putin seemed to learn the lessons of the Gorbachev/Yeltsin era. Putin took advantage of the rapid increase in world oil prices in the early 2000s to build significant hard currency reserves. These reserves were maintained to offset future drops in oil prices. During his early terms in office, the oil fund reserves allowed Putin to consistently improve Russia's economic growth rates, thereby increasing the standard of living for Russians. The Russian people have generally been supportive of Putin’s approach. They have accepted the increasingly tighter political and press restrictions in return for greater economic security. However, it remains to be seen how long this support lasts as political/personal restrictions have further tightened and strict western sanctions resulting from the tragic invasion of Ukraine demand additional economic sacrifices. Nevertheless, Putin may have established what Gorbachev set out to create with his reforms in the 1980s. Had Gorbachev instituted a system similar to Putin, the Soviet Union might still exist today.



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