When Mikhail Gorbachev took power in 1985, the Soviet Union was in what its own citizens called the era of stagnation, and he led a cohort of reform-minded party officials in their forties. His first program, uskoreniye or acceleration, tried to make central planning run faster, but by 1987 he turned to perestroika, a term coined by economist and sociologist Tatyana Zaslavskaya. The 1987 Law on State Enterprise let factories set part of their output and required them to finance themselves, and the May 1988 Law on Cooperatives allowed private business in services, manufacturing and foreign trade for the first time since the 1920s.
Because price controls stayed and the ruble remained unconvertible, factories stopped making goods they had to sell below cost, and empty shelves followed. This episode contrasts that top-down approach with China’s bottom-up reforms in agriculture and special economic zones, and traces how glasnost, which Alexander Yakovlev used to turn Lenin’s authority against Stalin’s legacy, opened the March 1989 elections in which voters crossed out unopposed party candidates. As the republics staged a parade of sovereignty, the Bush administration refused a financial bailout.
- Joint ventures first capped foreign ownership at 49 percent and reserved the chairman and general manager posts for Soviet citizens.
- Factories had to fill state orders before producing anything consumers actually wanted.
- Gorbachev cited a 1986 article warning that the apparatus broke Khrushchev’s neck.
- Czechoslovak president Václav Havel asked the U.S. Congress to help the Soviet Union on its road to democracy.
- Gorbachev had counted on Western aid comparable to the Marshall Plan.
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