Rise And Fall Of Perestroika

Perestroika is widely regarded as one, if perhaps not the sole reason, that the Union of Soviet Socialist Republics, or U.S.S.R, came to a dissolution on December 26th, 1991. The economic reforms that it pushed for and prompted are what allowed non-communist aspects to be incorporated into the Soviet Union and caused an uproar in political reforms such as Glasnost and the eventual fall of a traditional eastern communist system to a new western style capitalist system. To understand why Perestroika was created and what it aimed to do, one must first examine the history surrounding it, the conditions that allowed it to blossom and become one of the most controversial political reform movements in history. Years of proxy wars with the United …show more content…
The Law of State Enterprise was an attempt to boost economic growth, by introducing private sector funds into the communist market. It stated that state enterprises could produce product according to the demand of the consumer, as long as the enterprise first fulfilled the orders of the state. Business’s would purchase supplies and raw product from suppliers (the communist government) at prices decided by the state, and would use said supplies to create products which would then be sold back to the state. The excess could be sold to the consumer for the enterprise’s profit. However, because a business now had the ability to produce excess money for its own use, the state made it so that enterprises were self-financing and could no longer rely on government money or bailouts. They were to provide all the currency needed for their own wages and other costs through the use of selling the excess product after completing government contracts . However, contrary to the CPSU’s and Gorbachev’s hopes that this would enable enterprises to help jumpstart the economy, it had quite the opposite effect. Due to years of traditional government control, enterprises did not have the technology nor the knowledge on how to run a privately maintained business. Furthermore, because of this, many enterprises instead of producing more goods and hiring more laborers, preferred to raise prices and pay higher wages. They would also seek government partners in order to financially stimulate and stabilize new developed private sectors instead of other private individuals. This caused businesses who did not know how to handle new influxes of demand for products to fall short on production and take loans and bailouts from the public sector, further increasing debt across the market economy . These production