The Economy of Russia
The Soviet Planned Economy
For most of the 20th century, the Soviet state planned production, owned nearly all firms and set prices, with mixed results.
To understand today’s Russia, start with the Soviet system.
Central planning
A state committee, Gosplan, set output targets for factories and farms.
Achievements
Rapid industrialisation, heavy industry and military strength, and universal education and health.
Problems
Shortages of consumer goods, poor quality, waste and little incentive to innovate.
Collectivisation
Forced merging of farms in the 1930s caused severe famine and lasting damage.
Shortages of everyday items led to long queues, while factories met quotas that did not match what people wanted.
It built industry but misallocated resources.
- Gosplan set targets.
- Heavy industry grew fast.
- Consumers faced shortages.
- Collectivisation caused famine.
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