Russian Reform and Economics: The Last Quarter of the 20th Century

Outline

Thesis: As the reformation of the USSR was becoming a reality, Russia\'s economy
was crumbling beneath it. Russia began its economic challenge of perestroika in
the 1980\'s. The Russian people wanted economic security and freedom, while the
government was trying to obtain democracy. The previous management styles
needed to be changed along with the way that most businesses in Russia operated.

I. Reformation of USSR
A. The change from communism to democracy.
B. The change in government has had a great effect on the Russian people
and workers.
C. The reformation left the Russian economy upside down. II. Post-Reform
economy versus Pre-Reform economy.
A. There were many steps in the reformation of the economy.
B. What are some of the effects of a reforming economy?
C. There are many changes that are still needed in order for the Russian
economy to grow. III. What will be the future of Russia\'s Economy?

Main Body

As the reformation of the USSR was becoming a reality, Russia\'s economy was
crumbling beneath it. Russia began its economic challenge of perestroika in the
1980\'s. The Russian people wanted economic security and freedom, while the
government was trying to obtain democracy. The previous management styles
needed to be changed along with the way that most businesses in Russia operated.
The Russian Federation consists of 17,075,400 square km, which is roughly
76.2 percent of the former USSR, and covers about 12 percent of the earth\'s land
surface. The Russian Federation\'s population in 1991 was 147.3 million (Smith,
A., 7).
During the 1980\'s the Russian government started a reformation process
called "perestroika," meaning restructuring (Aganbegyan, 1). Perestroika
signifies qualitative changes and transformation in the government and in the
economy. The four stages of perestroika are the "Preliminary stage (March 1985-
February 1986)," the "Stabilizing stage (March 1986 - January 1987)," the
"Expansive stage (January - November 1987)," and the "Regrouping stage (November
1987 onwards)" (Hill & Dellenbrant, 140). The government also identified two
other processes. "Glasnost," which means openness, supported the strong economic
reform (Aganbegyan, 1; Hill & Dellenbrant, 54). The acceleration of economic
reform was called "uskorenie" (Aganbegyan, 1).
Many changes took place during the years contained in each of the stages of
perestroika. This changes ranged from government policies and structure to
industrial production procedures to economic policies. The major change came in
1991 with the breakup of USSR. This freed the individual states and allowed
them to become independent countries. All of these new countries went through
radical government changes. Many of them, including Russia, chose to implement
democracy. This change from a central military based structure into democracy
effected all of the former soviet states\' centralized economic departments.
The assets were owned by the people and were distributed by the state
during the communist reign in Russia. All of the resources were also
distributed by the state for the betterment of the people. The government ran
all state budgeted enterprises. All of the private enterprises, that marketed
consumer goods, were taxed by the government and were also closely regulated.
Before the democratic government, Russian workers received the same pay
whether they worked hard or not, causing wages to be low and work conditions to
be very poor. Russian workers would steal from the government in order to
supplement their low wages. The Russian theory was that people were motivated by
their collective interests. This proved to be very wrong. The actual growth for
national income in 1987 was 1.6 percent less than what the government had
predicted (Hill & Dellenbrant, 106).
With all of the changes going on in each of the stages of perestroika there
was a lot of political, bureaucratic, managerial, and intellectual opposition to
what the leaders were establishing. This goes to show that people will always
resist change.
Perestroika identified many problems with the existing government,
economics, and living conditions of the people. The lack of overall government
regulations like unemployment insurance, a decent taxation system, and a
centralized market caused many of the conditions. Another problem was the lack
of legal infrastructure and protected property rights.
The old factories in Russia couldn\'t keep up with the new technology of the
Information Age. In 1987 Russia had less than 200,000 computers compared to the
United States\' 25,000,000 (Smith, H., 239). Innovation in Russia was looked at
as a disruption of the flow of production even though technological
modernization was needed badly. The idea of quantity overruled quality in most
of the factories. Many pieces of machinery were built but not the parts to
replace broken