Comparing the shifting fortunes of Russia and China over the last fifty years, one cannot but be struck by the dramatic reversal in the two countries’ fates. In 1967, the Soviet Union was in the midst of a massive military buildup that would eventually enable it to reach superiority in conventional arms and parity in nuclear arms with the United States. The Prague Spring was a year away, and in spite of earlier interventions in Hungary, socialism in the Eastern Bloc enjoyed prestige among intellectuals in the West. The Soviet economy grew at a respectable five percent annually or so. China, meanwhile, was still reeling from the effects of the Great Leap Forward when, in 1966, Mao Zedong plunged the country into the Cultural Revolution. Millions of people were persecuted, and China’s leadership nearly triggered a war with the USSR following clashes over islands in Northeast Eurasia.
Today, the two countries present quite a different story. True, since Vladimir Putin was named, then elected, President in 2000, Russia’s economy year after year until the global recession of 2008-09. And having prevented the collapse of a Middle Eastern client in Syria, not to mention Russian influence in European and American elections, Putin can present himself as a confident paladin of Russian power in the world. Yet these triumphs were built only upon the ruins of the Soviet Union, which collapsed in December 1991. And Russia today has to deal not only with the United States, but also a rising People’s Republic of China whose economy is nearly an order of magnitude larger than Russia’s. Even on a per-capita-basis, Russians are only approximately 10% wealthier than their Chinese counterparts.
Reviewing this reversal, those contemplating the decline (and subsequent revival) of Russian state power might point to 1989 as the crucial turning point. In the summer of that year, the PRC’s government imposed martial law as student protesters swarmed Tiananmen Square in central Beijing. The Chinese Communist Party declared the protests “counter-revolutionary” and launched a massive crackdown that resulted in perhaps thousands of deaths. Communist Party control over China—albeit now promoting “socialism with Chinese characteristics”—remained intact, as it does today.
In Eastern Europe, however, the Soviet General Secretary’s refusal to use Soviet military force to put down mass protests in Berlin, Prague, Budapest, and elsewhere led to the collapse of satellite regimes won at the cost of 26,000,000 lives. And whereas Chinese economic reforms strengthened the legitimacy of the ruling Communist Party, soon, in the Soviet Union itself, Mikhail Gorbachev’s economic reforms contributed to the centrifugal dissolution of the world’s largest land country into fifteen successor states.
Could things have gone differently? Could the Soviets have reformed their economy into something along the lines of the Chinese success story? Could there have been a Soviet Tiananmen Square scenario that would have prevented Boris Yeltsin from coming to power, and thus averted what Vladimir Putin dubs the “greatest geopolitical catastrophe of the twentieth century”? It’s a huge question—and also one that our most recent guest to the Global History Forum, Christopher Miller (the Associate Director of the Brady-Johnson Program in Grand Strategy at Yale) takes on in his recent book The Struggle to Save the Soviet Economy: Mikhail Gorbachev and the Collapse of the USSR (University of North Carolina Press, 2016).
Using sources in Russian and Chinese and exploiting underutilized Soviet archives, Miller’s work challenges the conventional wisdom about the great Soviet-Chinese counterfactual. Far from ignorant of Deng Xiaoping’s reinvention of Chinese socialism, Mikhail Gorbachev and the advisors around him were well aware of how the Chinese were transforming their economy. While some criticized the Chinese for abandoning socialism altogether, Gorbachev and his team consciously sought to imitiate Chinese reforms throughout the 1980s. It wasn’t for a lack of awareness or effort that would-be Soviet reformers failed to match Deng Xiaoping’s results. Rather, Miller suggests, the answer to the failure of Soviet economic reforms lies in the political economy of interest groups in the late Soviet Union. Indeed, it was precisely because large lobbies in the military, the oil and gas industry, and collective farms refused reforms that a Soviet Tiananmen would have been impossible in content if not in form. Even had the coup planners who briefly seized power from Gorbachev in August 1991, there was no way they could have imposed the austerity measures on Russians that Deng imposed on Chinese, for such cuts would have meant cutting into their own bloated budgets.
In short, Miller’s work offers not only a tight empirical reconstruction of key events in the history of the Soviet Union and the People’s Republic of China, but also offers a new vista on the political economy of Russia and China as they emerged from that annus horribilus (for the regimes, if not tens of millions of Europeans) of 1989. In order to discuss some of the issues raised by The Struggle to Save the Soviet Economy, Toynbee Prize Foundation Executive Director Timothy Nunan recently sat down with Dr. Miller to discuss his road to writing the book, some of the results of his research, as well as his ongoing research agenda.
Before we dive into the heart of Miller’s book, we ask him to discuss his upbringing and education. Raised in the suburbs of Chicago, he explains, he had the freedom during his teenage years to read widely outside of class, although history was not an obvious interest when he arrived at Harvard for his undergraduate education. What turned him on to his eventual palette of topics was a year-long seminar class with Professors Charles S. Maier and Niall Ferguson (the latter since moved to the Hoover Institution) that covered the global history of intenational institutions as well as international political economy. It was incredibly ambitious, notes Miller, but the class turned him on to debates in economic history.
Miller decided to pursue a PhD in History at Yale University to work with mentors like Paul Kennedy and John Gaddis, and when he was there, he noticed that debates about political economy so developed vis-à-vis the United Kingdom or Germany were less rich when it came to socialist economies, like the Soviet Union or the People’s Republic of China. Miller began learning Russian with an eye toward contributing to longstanding debates about the economy history of Russia. More than that, he comments, “while the Soviet Union was often taken to be the opposite of Western-style capitalism,” he found that the study of Soviet economic history offered interesting parallels and inversions to themes in American or European economic history. For example, he explains, “while the United States could afford, in terms of legitimacy and political support, to let its Rust Belt decline because there was a welfare state to pick up some of the slack for those left behind, in the Soviet Union, the Soviet Communist Party could not dismantle its Rust Belt, since the factories themselves were the welfare state, supplying apartments, healthcare, schools, and so on.”
Soon, the idea of comparing Soviet reforms to Chinese reforms entered the picture, for all of the aforementioned reasons. Miller began learning Chinese to complement his Russian skills, and soon, he was off to Moscow to begin scouting out potential source bases for his project. Readers might wonder about the accessibility of documentation in Soviet archives, particularly for a period as late as the 1980s—after all, many countries impose 30-year declassificiation regimes. However, Miller explains that the conventional wisdom might blind one to the actually vast holdings (more or less) freely available to foreign researchers. A major source for Miller’s research, for example, were the holdings of the Academy of Sciences of the Russian Federation (formerly of the Soviet Union). These archives contain the papers of academic institutes like the Institute for the USA and Canada, or the Institute for the Far East; but they also contain the private papers of leading scholars—economists, area studies specialists, and the like. This might make it sound like a “mere” university archive, but in reality, many of these Institutes functioned more like think tanks, with academics there regularly writing memos for Communist Party institutions. Hence, the files at the Academy of Science Archives offered Miller a deep view into Soviet analyses of China.
However, this was only one part of the puzzle; Miller also needed to understand how (and if) Soviet policymakers took account of these analytic briefs. One way to do this was to look through the state archives of Soviet ministries (as distinct from the parallel institutions of the Communist Party). However, since he was working on the Gorbachev years, Miller had the advantage of access to the Politburo discussions of those years, all of which have been preserved and published by the Gorbachev Foundation (access to similar discussions remains challenging for scholars working on the years from 1964-1985). This meant that Miller could actually see the ways in which Gorbachev and other top CPSU officials understood the proposals and analyses emanating from economists and those returned from trips to China. It also allowed him to see what the actual blind spots were in Gorbachev’s komanda (“team”) as they sought to find compromise between their reform ambitions and their opponents within the Communist Party.
Moving to the main content and argument of The Struggle to Save the Soviet Economy, we ask Miller to explain what, exactly, Soviet leaders saw as the problem with the economy by the mid-1980s. “For most of the postwar period,” he explains, “most Soviet officials believed their country had discovered an economic model far superior to the West’s. America and Western Europe had higher standards of living than the USSR, but the Soviet Union’s rapid growth during the 1950s and 1960s meant that few questioned socialisms basic economic capabilities.” What was more, following the oil shocks of the 1970s, Western capitalist economies performed less impressively and were plagued by the disease of “stagflation.” In 1976, the United Kingdom, the birthplace of modern industrial capitalism, was forced to borrow billions of dollars from the International Monetary Fund to stay afloat. Socialism, for a time, seemed to be winning.
Yet at almost the same moment, growth in the socialist block (already slowing since the 1960s) ground to a halt. By the mid-1970s, growth in the Soviet Union and the Eastern Bloc had stopped altogether, and some analysts today even believe that the Soviet economy saw contraction during the early 1980s. This made the geopolitical competition with the United States even more difficult to square with promises of full employment and stocked grocery market shelves at home. So, too, did declining growth hamper Moscow’s ability to subsidize Eastern European satellite states (themselves already strapped and dependent on loans from Western banks to stay afloat). In short, some kind of dramatic change to the system would be needed to kick-start the Soviet economy again.
Where would such ideas come from? To state the obvious, because top Soviet leaders like Mikhail Gorbachev and his second-in-command Yegor Ligachev were socialists, they refused to simply emulate Western economies, or the economies of Japan, South Korea, or Singapore. But Eastern European experiments in reform were of limited utility. Countries such as Hungary had implemented quasi-market pricing reforms in 1968, making state-controlled prices closer to where they would have stood in a free market. Similar reforms had been effected for Hungarian agriculture. But by the 1980s, Budapest was hardly a standout performed in terms of growth. Nor were Soviet leaders prepared to absorb the political cost of imposing austerity, whether through wage cuts or hidden inflation. The Soviet Union was supposed to offer a superior way of life, not a return to horse-drawn carts and scythe farming (the picture under Romanian austerity programs in the 1980s).
The People’s Republic of China offered a more attractive model. Since Deng Xiaoping had consolidated control over the Chiense Communist Party and begun to implement economic reforms, China’s growth had surged to around 8% annually during the 1980s, well outpacing world average growth during the same period. What was more, while many Soviet policy intellectuals and advisors remained resolutely anti-Chinese (whether due to Beijing’s criticism of Moscow as “social imperialist” or its de facto alignment with the United States), others, like Fedor Burlatsky looked behind the clichés to determine what was really taking place following the removal of the Gang of Four. Researchers like Burlatsky noticed how Deng had spoke of how “every family should have a bike, sewing machine, and TV,” and analysts at the Soviet Union’s Far East Institute established clearly by the late 1970s and early 1980s that Chinese was “abandoning socialism” in favor of “allowing market elements into the economy.” The question, however, was whether this constituted Deng’s cardinal sin – or virtue. When researchers like Burlatsky were able to tour the Chinese countryside in the early 1980s, he was agape at factories whose productivity had nearly doubled over a span of four years, in large part because firms could keep or re-invest their profits. Radical as it sounded, was this a solution for the flagging Soviet economy?
Maybe. When Communist Party official Mikhail Gorbachev was named the youngest-ever General Secretary in 1985, he brought with him top scholars like Oleg Bogomolov, Georgy Arbatov, and others who had led major research institutes and were attuned to ongoing debates in the scientific literature. Economists like Burlatsky and Tatyana Zaslavskaya, another proponent of economic reform, spoke frequently to Gorbachev about new policy ideas. And Anatoly Chernyaev, Gorbachev’s top foreign policy aide, had been a consistent critic of the regime’s ignorance of academic findings. Gorbachev, who regularly turned to Lenin’s collected writings for influence, may have also been looking for inspiration in the New Economic Policy of the Soviet Union from the 1920s, when private enterprise was permitted and agriculture had not been collectivized. Yet in the concrete context of Politburo meetings and arguments about policy, proponents of reform had simply to point to Chinese growth rates to win the day. “Look at China” became the refrain of many a reformer.
Why, then, did reform prove so problematic? Miller’s account stresses the enduring influence of Soviet interest groups that had formed within the Communist Party and Soviet state ministries since the 1950s. “Under Stalin,” Miller notes, “the regular jailing and killing of party leaders meant that the leadership regularly changed.” If factory managers failed to meet production targets, they would be shot; what’s more, because so many such managers and Party officials were shot (many for totally spurious reasons) few cliques were able to form within the Party that would defend certain industries’ special interests. Once, however, Stalin died in 1953 and his successor Nikita Khrushchev denounced Stalinism as an aberration from true socialism, the Communist Party and Soviet cadre management systems became more humane. Now, not only were firms not allowed to go bankrupt, but cadre were no longer shot. Missing performance targets might mean “forced retirement” or transfer to man an enterprise or Party cell in a truly dismal location, but it would not necessarily cost Communists their head, as it had under Stalin.
Yet this humane shift to the Soviet system allowed for the formation of interest groups whose bonds and shared interests grew deeper and deeper during the 1960s and 1970s. For example, because Soviet enterprises were often judged on raw outputs (among many other factors, granted, but crucially excluding profit), managers and Party cadre often needed to secure (scarce) inputs through social connections with other enterprise managers and CPSU cadre. The boss of a cement factory, for example, might need to ensure limestone deliveries in order to produce the required hundreds of thousands of tons of cement demanded by the Five-Year Plan, but these limestone deliveries were not simply guaranteed through contracts. Instead of buying them on a market with transparent prices, he might have to negotiate them informally with a mine manager whose firm-owned apartments needed construction materials available via the black market from the cement firm. And if planners in Moscow opted to produce less cement (or cut back further on construction materials for the apartments), both managers would be in trouble.
In reality, the entanglement of individual firms, indeed entire industries, was much more complex. Zaslavskaya, the economist who met frequently with Gorbachev, called the Ministries running the economy “the most important structure in state power.” Indeed, with institutions like the Ministry of Machine-Building (not Agriculture) in control of more milk production on its farms than many countries, Ministers boasted considerable clout to punish and reward their subordinates and make deals to benefit their lobby. Among the many interest groups of the USSR, however, Miller argues that three stood out in size and clout: the military-industrial complex, the “fuel-energy complex” (as it was called in Soviet parlance), and the agro-industrial complex. Together, these sectors almost certainly comprised more than half of the Soviet economy, and their lobbying power (and connection to prominent figures within the Communist Party) made them nearly untouchable. Hence the drama of reform. As one of Gorbachev’s economic advisors noted, military cuts were a must if the new General Secretary hoped to reform the economy. But even if one were able to convince the generals to accept cuts, Soviet military prestige was high, and CPSU elites felt that ordinary people would never forgive the Party “a repetition of the tragedy at the beginning of World War II.”
Hence, reforms would somehow have to avoid touching the largest sectors of the Soviet economy. As if this were not difficult enough, however, Gorbachev and his team faced a growing budget deficit that has gone on to enjoy a certain reputation in accounts of the Soviet collapse. By the mid-1980s, Soviet export earnings were in decline, and the deficit as a percentage of GDP was rising from a respectable 2% to 8% in only one or two years. Some analyses of the demise of the Soviet Union argue that the main factor in the rise in deficits was the decline in oil prices in the mid-1980. Some authors have gone so far as to suggest that a gentleman’s agreement between the United States and Saudi Arabia was to blame for the decrease in oil prices that (allegedly) sunk Moscow into the red. Miller is skeptical, however, noting that “oil was just one of several factors in the USSR’s budget crisis” and that it at most accounts for a quarter of the decrease in the USSR’s fiscal position. Of the same magnitude as the reverse “oil shock” was what one might dub a “vodka shock,” namely the decrease in tax revenues on sales of liquor following Gorbachev’s anti-alcoholism campaign. Few analysts-not yet, at least-have ascribed blame for the abstinence campaigns to the Saudis.
In any event, the worsening fiscal position of the Soviet Union meant that even standing still sans reform was unacceptable. The big interest groups continued, as was their wont, to demand larger and larger inputs – more tractors, more missiles, more chemicals – even as they failed to deliver growth. The Politburo consciously chose to avoid fights over austerity with the big interest groups, and decided to enter into deficit financing (printing money) in order to meet their needs in the short term. Since prices in the Soviet Union were not determined by the market, prices did not immediately rise to track the increased money supply; instead, lines for basic goods grew as more cash chased fewer items. The real question was now whether the much-vaunted Chinese-style reforms could transform the Soviet economy in order to unlock the productivity growth that would then allow more goods and services to chase the inflated money supply.
Miller’s account of Gorbachev’s economic policies focuses on three major such attempts: enterprise reform, special economic zones, and agricultural reform. Attempts at enterprise reform had already been undertaken in the Soviet Union in the mid-1960s (the Kosygin Reforms), but they failed to win the backing of enterprises that saw little incentive in efficiency drives that would, definitionally, mean fewer resources for the same or greater output. Limited reform efforts continued throughout Brezhnev’s Soviet Union, with similar results. Predictably, firm managers argued that only more investment could deliver growth. By the 1980s, however, Soviet analysts followed events in China’s Sichuan Province. There in China’s most populous province, economic reforms spearheaded by Zhao Ziyang halted the old policy of all profits being redirected to central state coffers (a tax of 100 percent, in other words). Instead, firms could keep more of their profits, and were allowed to sell goods above plan quotas. Chinese citizens were allowed to invest themselves in small-scale industry as well, increasing employment opportunities for former peasants leaving the farm for the first time. Gorbachev’s advisors were impressed with the province-level experiments ushered in by Zhao, and sought to bring similar reforms to the USSR.
Yet the results of this transfer – the Law on State Enterprises and the Law on Individual Labor Activity – were muddled. Gorbachev’s attempts to allow Soviet citizens to work outside of state enterprises rain into significant ideological critique, as many Politburo members held that work outside of the command economy could create exploitation. The 1977 Soviet Constitution had explicitly recognized the right to work on one’s own, but there were still severe restrictions (private manufacturing was completely banned), and Gorbachev chafed at the opposition of other top CPSU members. When the law was passed, it still contained sweeping prohibitions on employing non-family members, and opposition to the law acted as if imposing taxation on individual income was so complicated as to invalidate the whole experiment altogether.
The Law on State Enterprises was an even tougher sell, as enterprise managers had no incentive to make themselves more vulnerable to scrutiny and the discipline of self-financing. When the law was finally passed, it did include provisions for self-financing and even granted that firms could go bankrupt, but certain industries that supplied so-called “state orders” were almost completely freed from the requirement to self-finance themselves. Many enterprises, moreover, remained subject to 90% tax rates, eliminating all incentive to boost production. In short, the interest groups who had so much to lose from Sichuan-style politics of efficiency largely scuttled the reforms – something Gorbachev’s advisors conceded.
What was more, in order to make even these very limited gains of perestroika (restructuring), Gorbachev had, in effect, to bribe the interest groups with a parallel policy of uskorenie (acceleration). Feeding industries’ demands for more inputs, the new General Secretary “accelerated” capital investment into these major industries, resulting in some short-term growth in 1988. But the same problems that were already plaguing the Soviet economy at the beginning of the decade did not disappear. As Miller notes, by the late 1980s, the Soviet Union had perhaps four times the number of tractors as did the United States. But in spite of this army of hardware, it produced much less in agricultural goods. At the peak of the acceleration campaign, agricultural production actually fell by eight percent, even as capital investment into Soviet farms increased by sixteen percent. The additional investment did little good, in other words, all the while adding to deficit. Soviet cooperatives – legalized through a 1988 law – were a bright spot, as Soviet citizens were allowed to form private businesses together, but the clock was ticking on Gorbachev’s race against inflation and the lobbies.
Special Economic Zones (SEZs), however, offered a solution. Soviet economists had watched as China under Deng Xiaoping opened select parts of Guangdong and Fujian Provinces, as well as all of Hainan Province to foreign investment. Shenzhen in particular went from being a sleepy town in the shadow of Hong Kong (immediately to the south) to a hub for manufacturing. The combination of China’s domestic enterprise reforms and foreign investment also provided jobs for the tens of millions of peasants freed from subsistence agriculture in the countryside. Soviet economists liked what they saw, and as Miller shows, in December 1988, the USSR began experimenting with SEZs in Vladivostok, the easternmost major city in the USSR and a plausible gateway for the Soviet Union to participate in the economic boom remaking East Asia.
However, the plans to reinvigorate the Soviet economy through SEZs went awry. Delays meant that the introduction of SEZs into places like Vladivostok, or the Soviets’ westernmost port of Leningrad, took place as the Soviet economy was in a state of free fall. Part of the reasons why plans to introduce SEZs were delayed, however, had to do with their ambiguous place in Soviet economic thought. Some interest groups saw foreign capital as a threat and demanded that foreign ownership of enterprises in the SEZs be limited to 49%. In contrast, Chinese politicians viewed foreign ownership from a different viewpoint altogether, demanding that foreigners own at least 25% of the enterprises they were involved in. Last but not least, there were perennial disputes between central Soviet state authorities in Moscow and local interest groups in Vladivostok (seven time zones ahead of the capital!) about how to interpret and enforce rules on foreign investment. Predictably, investors often took their money to Shenzhen, Seoul, or Singapore as they sought to gain a foothold in East Asian markets. As the Soviet economy collapsed, many of the SEZs became nexuses for money laundering schemes to ferret capital out of Russia, rather than to attract into the country. For example, the SEZ of Ingushetia, a province in Russia’s Northern Caucasus less known for its manufacturing than ethnic cleansing between Ingush and Ossetians, was used to export capital to fake companies and banks outside of Russia during the 1990s.
As the case of the SEZs shows, but as Miller emphasizes throughout his monograph, attempts to modify Chinese reforms for Soviet conditions often overlooked key differences between the two countries. Most obviously, China was still a largely peasant society, whereas the Soviet Union had become a majority-urban society in the 1970s. Many of these poor peasants were perhaps less sensitive to reforms in agriculture (of which more in a moment), since they had less to lose than their relatively wealthy counterparts on subsidized Soviet farms. More than that, however, when and if peasants did leave their farms, they formed an enormous army of cheap, easily exploitable labor that made Chinese manufacturing so competitive from the late 1980s onward. Whereas investors and manufacturers would later talk about “the China price”—the ultra-cheap cost for manufacturing widgets in China—there was no equivalent “Soviet price” associated with moving operations to a middle-income, high-regulation economy.
More fundamentally, however, Miller’s work raises the question of the role that China’s Cultural Revolution (1966-1976) played or did not play in economic reform. While Miller is careful to emphasize that more scholarship is needed on the subject before jumping to conclusions, The Struggle stresses how Mao’s decimation of the CCP’s Party apparatus in the late 1960s contrasted with the “stability of cadres” policy emphasized by Soviet General Secretary Leonid Brezhnev. Whereas interest groups’ ties with one another became stronger—and arguably unbreakable—under Brezhnev’s tenure, Mao’s scorched-earth policy against Party cadre led to a more broken Party that lacked the cohesiveness to oppose Deng’s reforms later. Similarly (if also rather speculatively), Mao’s actions against Lin Biao and the Chinese People’s Liberation Army (PLA) in the early 1970s broke the PLA as a political force that could demand the kind of budgets and spending that the Soviet Army could vis-à-vis Gorbachev. Sino-American détente may have also played a role, but Miller stresses that most of Chinese economic growth in the 1980s was fueled by internal markets rather than exports to the west. The story of Chinese growth, then, is much more internal Chinese dynamics than simply a “China opens to the world” narrative.
With SEZs proving less effective than envisioned, Gorbachev’s trump card was reforming Soviet agriculture. In official Soviet propaganda, the collectivization of Soviet agriculture into collective farms and state farms in the early 1930s numbered among the greatest achievements of socialism. However, when Miller looked through the archives, he notes, he was struck by how ambivalent many Communist Party officials were toward collectivization. Stalin’s agrarian policies are perhaps most infamous for their results in Ukraine (and Kazakhstan), but even in regions less flattened by collectivization, like Gorbachev’s native Stavropol oblast’, locals were skeptical about whether more private agriculture (geared toward production and not just private consumption) could resolve the Soviets’ agricultural problems. The Russian Empire’s grain exports had fed Britain and France until the outbreak of the First World War, but by the 1970s, the Soviet Union was reduced to importing grain from the United States. Not only that, but in spite of more capital equipment on farms and higher outlays on fertilizer, Soviet farms were dramatically lest productive than their counterparts in the USA, Canada, or France.
Gorbachev had attempted to introduce reforms to Soviet agriculture as the Politburo’s chief official on the subject from 1978 onward, but because Brezhnev also took an interest in the topic, it was only in 1985 that Gorbachev could attempt reforms. Here, again, Gorbachev’s team sought to introduce more profit-oriented incentives so that farms would have an incentive to increase production. Drawing on his experience with itinerant farm laborers in Stavropol, Gorbachev sought to introduce “agricultural contract brigades” that could farm parts of collective farms and be rewarded handsomely for surplus production; similarly, he introduced the possibility of “family contract brigades” that would allow households to lease collective farm lands for private production on long-term contracts. As Politburo discussions show, Gorbachev was quite radical on the topic of collective farms, often questioning the entire legitimacy of collective farms in the first place. Politburo conservatives like Foreign Minister Andreĭ Gromyko vehemently explained to their young General Secretary that “the question of ownership was solved in October 1917,” referring to the Bolsheviks’ revolution itself. Whether they were true believers or not, moreover, collective farm bosses and members of the agro-industrial complex had every reason to support the argument of figures like Gromyko.
Yet the failure of Gorbachev to impose Chinese-style reforms on the Soviet economy soon led to bills being delivered that the General Secretary could not pay. In the realm of agriculture, the Soviet political compact meant that prices for bread had not been raised in decades—a social deal that had to be bought at the cost of billions of rubles in agricultural subsidies that weighed heavily on the Soviet budget. Gorbachev’s strategy of withdrawing from theaters like Afghanistan was designed, in part, to reduce Soviet military spending, but clients like Afghanistan’s Najibullah required more military aid to stay afloat against the mujahidin once the Soviet batallions had left. Military “retrenchment” cost more money than it saved. Since Gorbachev had opted to finance these rising costs and budget deficits through printing money (albeit without adjusting prices), more and more money was chasing fewer and fewer goods. And when Gorbachev began plans for a “New Union Treaty” that would reform the USSR into a new, looser, confederal “Union of Sovereign States,” a group of conservatives from the Soviet military, the KGB, and major interest groups declared a state of emergency on August 19, 1991. Gorbachev, they declared, had been “incapacitated” in his Crimean dacha. The new “State Committee on the State of Emergency” (“GKChP” in Russian) would restore order—namely, by cancelling all plans for confederation and re-righting the Soviet economy.
As traditional accounts of August 1991 explain, the State Committee’s plans to restore order broke down almost immediately, in no large part thanks to the resistance of ordinary Russians and the Russian politician Boris Yeltsin. Recently elected President of the Russian Republic of the USSR, Yeltsin made memorable speeches on top of tanks in front of the Russian White House, helping to spur military defections and defeat the coup. However, in his account, Miler takes the ideas of the coup plotters seriously—and finds them wanting. The coup’s leaders were opposed to the breakdown of the economy that had occurred under Gorbachev, particularly from 1989-1991. Earlier that year, prices for basic staples had increased, while many consumers were in effect robbed of their saved rubles when larger notes were removed from circulation with little advance notice. Yet because they slammed Gorbachev for mishandling the economy, the coup ploters could not realistically impose further austerity measures or currency withdrawals. Further, as Miller reminds readers, alongside military men and the KGB were representatives from the Peasants’ Union of the USSR and the Association of State Enterprises. Representatives of the major interest groups could not realistically be expected to impose cuts on themselves. In short, the coup plotters had no realistic plan to reform the country—one of many reasons why they were easily defeated.
It’s by understanding the political economy of Russia’s 1991, Miller explains, that we can begin to appreciate the tumultous subsequent nine years in terms beyond clichés about “neoliberalism” or the lack of a “Marshall Plan for Russia.” As Miller explains, the failure of the coup discredited the military in the eyes of many, finally creating an opening for Yeltsin to impose the brutal cuts that neither Brezhnev, nor Andropov, nor Chernenko, nor Gorbachev had the backing to approve. Estimates are rough, but from 1992 to 1999, Russian defense spending cratered by nearly 75%. Third World clients like Afghanistan’s Najibullah saw arms supplied curtailed overnight, with the results (mujahidin in Kabul, a surge in heroin supplies to Russia, and the need to dispatch Russian peacekeepers to the former Soviet-Afghan border) piling on to Russia’s balance sheets again. And inside of post-1991 Russia, what had been the world’ premier ground military failed to put down a Chechen insurrection. Yeltsin’s political triump also allowed for a lifting to price controls in January 1992, causing prices to double or triple and wiping out the life savings of many. More broadly, Yeltsin’s banning of the CPSU on Russian territory and the general collapse of the Party blew up the lobbying connections that had formerly connected industries with one another.
Thus, by the 1990s, Yeltsin was able to take on individual lobbies (whether the military or agriculture) one by one. Indeed, as Miller points out, of the three major Soviet interest groups (energy, military, agriculture), only Gazprom (the reformer Ministry of Gas) remained untouched. Photographs of a demoralized Russian Army in Chechnya or price rises may have miffed ordinary Russians. But due to the compromised quality of the 1996 Presidential election, Yeltsin could stick ordinary consumers with the bill. Yeltsin’s policies caused hyperinflation, massive income inequality, and the reduction of Russia to a bystander as NATO airplanes bombed Bosnia, Kosovo, and Serbia; but without concrete ways for Russian publics or interest groups to depose him, the show went on.
Could there have been another outcome, then? It’s an obvious question that hangs over Miller’s narrative, and one that The Struggle to Save the Soviet Economy discusses in its conclusion. Was the Soviet system simply unreformable? “I think the standard answer today of where things could have gone in a positive direction is Yuri Andropov,” says Miller, referring to the short fifteen-month interregnum of 1982-1984. “Putin has made this argument, saying that Andropov had credibility with more conservative elements of the Party through his long tenure at the KGB but that he knew what needed to be done in the economy.”
Miller is skeptical of this line of reasoning, however, “I don’t buy that argument, because I think it would have run aground on the same factors that tanked the Kosygin Reforms 20 years earlier. When those were attemped, Brezhnev had all the credibility he needed among conservative circles, but it was decided that it wasn’t worth pursuing. Political elites in 1965 decided not to pursue those reforms not because they thought they were bad ideas, but because they were politically difficult. It would, they reasoned, simply be easier to kick the can down the road. So, as a result, I don’t buy the Andropov scenario, where you could have had a Chinese-style scenario in 1982. One can speculate about what would have happened if Andropov, or less plausibly, Konstantin Chernenko had lived another thirty years to 103. But I think where we need to look is the 1950s and 1960s if we want to understand missed opportunities.”
As our interview with Christopher Miller draws to a close, we inquire as to his current research agenda. While he notes that he is busy this semester teaching two classes at Yale (including one on Russian and Soviet economic history), he says that the Russian 1990s remain a perennial source of interest for him. The fate of privatization in the Russian Federation remains controversial, he says, and he could imagine re-examining such episodes in future projects. More broadly, however, he remains interested in the conjuncture of the late 1970s and 1980s in global economic history. “We have a traditional view of the period as being about Reaganism and Thatcherism,” he explains, “but the picture of the period is more complicated.” Chinese economic reformers, for example, were hardly inspired by Milton Friedman, and as The Struggle for the Soviet Economy explains, Soviet economic reforms were much more part of an exchange within the socialist world than with capitalist economists outside of it. What’s more, cases like the austerity politics of Augusto Pinochet and the economic liberalism of Turkish Prime Minister (and former IMF official) Turgut Özal offer examples of economies outside of the core regions of the global economy that nevertheless made some kind of transition to “neoliberalism,” however vaguely defined. Future projects, Miller notes, may tackle a broad reconceptualization of the turn between the 1970s and the 1980s.
Along those lines, when we ask Miller about recent or soon-to-appear work that has caught his eye, he focuses on recent historical and anthropological work on non-Western economic history. He highlights the scholarship of Columbia anthropologist Adam Leeds on mathematical economists in the late Soviet Union, as well as that of UCLA graduate student Dong Yan, who is currently completing a dissertation on the evolution of public debt in Qing China. Beyond these two young scholars, he also highlights the work of Jacob Feygin, a graduate student at the University of Pennsylvania working on the economic history of the late Soviet Union, and Alessandro Iandolo, a Lecturer at the University of Oxford writing on Soviet-African relations, as key members of the broad intellectual milieu he sees himself contributing to.
Was there a way to avoid “the greatest geopolitical catastrophe of the twentieth century”? Answers to that question will persist perhaps as long as Russia’s road to post-empire continues. As the experiences of France and Britain show, the story of great nations coming to terms with imperial involution is long, hard, and slow. Christopher Miller’s story complicates the politics of nostalgia that inevitably enter into such discussions. The Struggle to Save the Soviet Economy reminds readers that economic history has to be a crucial ingredient in debates about the rise and fall of empires. It also reveals to us a Gorbachev somewhere between the figure at the center of “Gorbymania” and the incompetent fool that Gorbachev is sometimes made out to be in post-1991 Russian discussions. Political leaders, not least those of Russia, have to navigate between interest groups while also seeking to incorporate those ideas for reform that could genuinely regenerate their countries if only they were implemented fatefully. As Putin seeks to manage that task between Western sanctions and a Chinese economy still growing at 6%, Miller’s work will certainly provide perspective on those choices. We are grateful to him for the conversation.