Economy of the Soviet Union

The economy of the Soviet Union was based on <a href="/facts/State_ownership/Jr4dPDo3">state ownership</a> of the <a href="/facts/Means_of_production/J7dkhvzF">means of production</a>, <a href="/facts/Collective_farming/lSyD3fCR">collective farming</a>, and <a href="/facts/Industrial_engineering/TjInYQeC">industrial manufacturing</a>. An <a href="/facts/Administrative-command_system/CdcunXCu">administrative-command system</a> managed a <a href="/facts/Soviet-type_economic_planning/s7rUa0YU">distinctive form</a> of <a href="/facts/Economic_planning/VcyWUNuU">central planning</a>. The Soviet economy was second only to the United States and was characterized by state control of <a href="/facts/Investment/VrMookcv">investment</a>, <a href="/facts/Prices/yWQ8edfN">prices</a>, a dependence on <a href="/facts/Natural_resources/w9WXxMx3">natural resources</a>, lack of <a href="/facts/Final_good/a4c3onQ8">consumer goods</a>, little <a href="/facts/Foreign_trade/jB2m5TGX">foreign trade</a>, public ownership of industrial assets, <a href="/facts/Economic_stability/ksTbvCkk">macroeconomic stability</a>, low <a href="/facts/Unemployment/qGzDQbWt">unemployment</a> and high <a href="/facts/Job_security/4wRzIV6j">job security</a>.
Beginning <a href="/facts/1930_in_the_Soviet_Union/Jz0bDM66">in 1930</a>, the course of the economy of the <a href="/facts/Soviet_Union/m7wWsPto">Soviet Union</a> was guided by a series of <a href="/facts/Five-year_plans_of_the_Soviet_Union/Rd8C3g86">five-year plans</a>. By the 1950s, the Soviet Union had rapidly evolved from a mainly <a href="/facts/Agrarian_society/hW5Bwt9R">agrarian society</a> into a major industrial power. 
Its transformative capacity meant <a href="/facts/Communism/PkUwa9xK">communism</a> consistently appealed to the intellectuals of <a href="/facts/Developing_country/eTfS4kxl">developing countries</a> in Asia. In fact, Soviet economic authors like <a href="/facts/Lev_Gatovsky/Vu2F5eW5">Lev Gatovsky</a> (who participated in the elaboration of the <a href="/facts/First_five-year_plan_(Soviet_Union)/mGYlwU8I">first</a> and <a href="/facts/Five-year_plans_of_the_Soviet_Union/Rd8C3g86">second</a> five-year plans) frequently used their economic analysis of this period to praise the effectiveness of the <a href="/facts/October_Revolution/5q9GlMv9">October Revolution</a>. The impressive growth rates during the first three five-year plans (1928–1940) are particularly notable given that this period is nearly congruent with the <a href="/facts/Great_Depression/5K13wcg0">Great Depression</a>. During this period, the Soviet Union saw rapid industrial growth while other regions were suffering from crisis. 
The <a href="/facts/White_House/CJQc7dKF">White House</a> <a href="/facts/United_States_National_Security_Council/HYwSNFA6">National Security Council</a> of the <a href="/facts/United_States/P0sCdLe5">United States</a> described the continuing growth as a "proven ability to carry backward countries speedily through the crisis of modernization and industrialization", but the impoverished base upon which the five-year plans sought to build meant that at the commencement of <a href="/facts/Operation_Barbarossa/YKjYBQWn">Operation Barbarossa</a> on 22 June 1941 the country was still poor.
Even so, the Soviet Union had the second largest economy in the world from the end of World War II until the <a href="/facts/1985_in_the_Soviet_Union/4jRF3ovv">mid-1980s</a>. A major strength of the Soviet economy was its enormous supply of oil and gas, which became much more valuable as exports after the world <a href="/facts/Price_of_oil/hRnlD8Hn">price of oil</a> <a href="/facts/1970s_energy_crisis/aI5XG4gL">skyrocketed in the 1970s</a>. As <a href="/facts/Daniel_Yergin/5VkRDDtf">Daniel Yergin</a> notes, the Soviet economy in its final decades was "heavily dependent on vast natural resources–oil and gas in particular". World <a href="/facts/Price_of_oil/hRnlD8Hn">oil prices</a> collapsed in 1986, putting heavy pressure on the economy. 
After <a href="/facts/Mikhail_Gorbachev/tKxQRaeP">Mikhail Gorbachev</a> became the <a href="/facts/General_Secretary_of_the_Communist_Party_of_the_Soviet_Union/jJD3malu">General Secretary of the Communist Party of the Soviet Union</a> and came to power in March 1985, he began a process of <a href="/facts/Economic_liberalization/8KufLnlU">economic liberalization</a> by <a href="/facts/Perestroika/KvdmEalx">dismantling</a> the <a href="/facts/Command_economy/TCMJrC5M">command economy</a> and moving towards a <a href="/facts/Mixed_economy/M27dNu2U">mixed economy</a> modeled after Lenin's <a href="/facts/New_Economic_Policy/g9lYMSIr">New Economic Policy</a>. 
The <a href="/facts/Chernobyl_disaster/mNj9JHyf">Chernobyl disaster</a> beginning on 26 April 1986 was the <a href="/facts/List_of_disasters_by_cost/T9pYj6pa">costliest disaster in human history</a>. 
At its <a href="/facts/Dissolution_of_the_Soviet_Union/Fyn5jw3n">dissolution at the end of 1991</a>, the Soviet Union bequeathed its successor state, the <a href="/facts/Russian_Federation/jfkCwyxn">Russian Federation</a>, with a growing pile of $66 billion in external debt and barely a few billion dollars in net gold and <a href="/facts/Foreign_exchange_reserves/6fDTWn7l">foreign exchange reserves</a>.
The complex demands of the modern economy somewhat constrained the central planners. Data fiddling became common practice among the <a href="/facts/Government_of_the_Soviet_Union/TUzn71Pa">bureaucracy</a> by reporting fulfilled targets and quotas, thus entrenching the crisis. From the <a href="/facts/History_of_the_Soviet_Union_(1927%25E2%2580%259353)/gfHSYlgL">Stalin-era</a> to the early <a href="/facts/History_of_the_Soviet_Union_(1964%25E2%2580%259382)/UeMwdfPu">Brezhnev-era</a>, the Soviet economy grew slower than <a href="/facts/Economy_of_Japan/2KUW30va">Japan</a> and faster than the <a href="/facts/Economy_of_the_United_States/t6gWtMWv">United States</a>. GDP levels in 1950 (in billion 1990 dollars) were 510 (100%) in the Soviet Union, 161 (100%) in Japan and 1,456 (100%) in the United States. By 1965, the corresponding values were 1,011 (198%), 587 (365%) and 2,607 (179%). The Soviet Union maintained itself as the world's second largest economy in both nominal and purchasing power parity values throughout the <a href="/facts/Cold_War/spJdJQ3q">Cold War</a>, until 1990 when Japan's economy exceeded $3 trillion in nominal value.
The Soviet Union's relatively medium consumer sector accounted for just 60% of the country's GDP in 1990 while the industrial and agricultural sectors contributed 22% and 20% respectively in 1991. <a href="/facts/Agriculture_in_the_Soviet_Union/daRFM2v2">Agriculture</a> was the predominant occupation in the Soviet Union before the massive industrialization under Soviet general secretary <a href="/facts/Joseph_Stalin/SHtxGyQn">Joseph Stalin</a>. The <a href="/facts/Service_(economics)/B7L4tR8r">service</a> sector was of low importance in the Soviet Union, with the majority of the labor force employed in the <a href="/facts/Industrial_sector/X0sdl2dF">industrial sector</a>. The labor force totaled 152.3 million people. Though its GDP crossed $1 trillion in the 1970s and $2 trillion in the 1980s, the effects of <a href="/facts/Central_planning/TCMJrC5M">central planning</a> were progressively distorted due to the growth of the <a href="/facts/Black_market/HDL3tQDz">black market</a> <a href="/facts/Informal_economy/LVuy5rEJ">informal</a> <a href="/facts/Second_economy_in_the_Soviet_Union/o8v3UUD7">second economy in the Soviet Union</a>.

Economy of the Soviet Union open-in-new

Economy of the Soviet Union