Economy of the Soviet Union - wikipedia Economy of the Soviet Union Economy of the Soviet Union DniproHES hydro - electric power plant, one of the symbols of Soviet economic power, was completed in 1932. Currency Soviet ruble ( SUR ) Fiscal year 1 January -- 31 December ( calendar year ) Trade organisations Comecon, ESCAP and others Statistics GDP $820 billion in 1977 ( Nominal ; 2nd ) $1.212 trillion in 1980 ( Nominal ; 2nd ) $1.57 trillion in 1982 ( Nominal ; 2nd ) $2.2 trillion in 1985 ( Nominal ; 2nd ) $2.6595 trillion ( 1989 est. ) ( GNP ; 2nd ) GDP rank 3rd ( Nominal ) / 2nd ( ( ( GNP ) ) ) ( 1989 est. ) GDP per capita $5,800 ( 1982 est. ) ( Nominal ; 32nd ) $9,211 ( 1991 est. ) ( GNP ; 28th ) GDP by sector agriculture : ( 1 -- 2 %, 1991 ), industry : ( -- 2.4 %, 1991 ) ( 1991 est. ) Inflation ( CPI ) 14 % ( 43rd ) ( 1991 ) Gini coefficient 0.290 ( 1980 est. ), 0.275 ( 1989 est. ) Labour force 152.3 million ( 3rd ) ( 1989 est. ) Labour force by occupation 80 % in industry and other non-agricultural sectors ; 20 % in agriculture ; shortage of skilled labor ( 1989 est. ) Unemployment 1 -- 2 % Main industries petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, heavy industries, electronics, food processing, lumber, mining, and the defense ( 1989 est. ) External Exports $110.7 billion ( 9th ) ( 1989 est. ) Export goods petroleum and petroleum products, natural gas, metals, wood, agricultural products, and a wide variety of manufactured goods ( 1989 est. ) Main export partners Eastern Bloc 49 %, European Community 14 %, Cuba 5 %, US, Afghanistan ( 1988 ) Imports $114.7 billion ( 10th ) ( 1989 est. ) Import goods grain and other agricultural products, machinery and equipment, steel products ( including large - diameter pipe ), consumer manufactures Main import partners Eastern Bloc 54 %, European Community 11 %, Cuba, China, US ( 1988 est. ) Gross external debt $55 billion ( 11th ) ( 1989 est. ) $27.3 billion ( 1988 est. ) Public finances Revenues $422 billion ( 5th ) ( 1990 est. ) Expenses $510 billion ( 1989 est. ) 53 million ( 2nd, capital expenditures ) ( 1991 est. ) Economic aid $147.6 billion ( 1954 -- 88 ) All values, unless otherwise stated, are in US dollars. The economy of the Soviet Union ( Russian : экономика Советского Союза ) was based on a system of state ownership of the means of production, collective farming, industrial manufacturing and centralized administrative planning. The economy was characterised by state control of investment, public ownership of industrial assets, macroeconomic stability, negligible unemployment and high job security. Beginning in 1928, the entire course of the economy was guided by a series of Five - Year Plans. By the 1950s, the Soviet Union had, during the preceding few decades, evolved from a mainly agrarian society into a major industrial power. Its transformative capacity -- what the US National Security Council described as a `` proven ability to carry backward countries speedily through the crisis of modernization and industrialization '' -- meant communism consistently appealed to the intellectuals of developing countries in Asia. Impressive growth rates during the first three Five - Year Plans ( 1928 -- 40 ) are particularly notable given that this period is nearly congruent with the Great Depression. During this period the Soviet Union encountered a rapid industrial growth while other regions were suffering from crisis. Nevertheless, the impoverished base upon which the Five - Year Plans sought to build meant that, at the commencement of Operation Barbarossa, the country was still poor. The major strength of the Soviet economy was its enormous supply of oil and gas, which became much more valuable as exports after the world price of oil skyrocketed in the 1970s. As Daniel Yergin notes, the Soviet economy in its final decades was `` heavily dependent on vast natural resources -- oil and gas in particular. '' However, Yergin goes on, world oil prices collapsed in 1986, putting very heavy pressure on the economy. After Mikhail Gorbachev came to power in 1985, he began a process of economic liberalisation by dismantling the command economy and moving towards a mixed economy. At its dissolution at the end of 1991, the Soviet Union begat a Russian Federation with a growing pile of $66 billion in external debt, and with barely a few billion dollars in net gold and foreign exchange reserves. The complex demands of the modern economy and inflexible administration overwhelmed and constrained the central planners. Corruption and data fiddling became common practice among the bureaucracy by reporting fulfilled targets and quotas, thus entrenching the crisis. From the Stalin - era to the early Brezhnev - era, the Soviet economy grew much slower than Japan and slightly faster than the United States. GDP levels in 1950 ( in billion 1990 dollars ) were 510 ( 100 % ) in the USSR, 161 ( 100 % ) in Japan and 1456 ( 100 % ) in the US. By 1965 the corresponding values were 1011 ( 198 % ), 587 ( 365 % ), and 2607 ( 179 % ). The Soviet Union maintained itself as the second largest economy in both nominal and purchasing power parity values for much of the Cold War until 1988, when Japan 's economy exceeded $3 trillion in nominal value. The USSR 's relatively small consumer sector accounted for just under 60 % of the country 's GDP in 1990, while the industrial and agricultural sectors contributed 22 % and 20 % respectively in 1991. Agriculture was the predominant occupation in the USSR before the massive industrialization under Joseph Stalin. The service sector was of low importance in the USSR, with the majority of the labor force employed in the industrial sector. The labor force totaled 152.3 million people. Major industrial products included petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, lumber, mining, and defense industry. Though the GDP of the USSR crossed $1 trillion in the 1970s and $2 trillion in the 1980s, the effects of central planning were progressively distorted due to the rapid growth of the second economy in the Soviet Union. Contents 1 Planning 1.1 Drafting the five - year plans 1.1. 1 Time frame 1.1. 2 Guidelines for the plan 1.1. 3 Gosplan 1.1. 4 Planning ministries 1.1. 5 Enterprises 1.1. 6 Redrafting the plan 1.1. 7 Approval of the plan 1.1. 8 State budget 2 Agriculture 3 Foreign trade and currency 4 Forms of property 4.1 Individual property 4.2 Collective property 5 History 5.1 Early development 5.2 New Economic Policy ( 1921 -- 1929 ) 5.3 Stalinism 5.4 1930 -- 1970 5.5 1970 -- 1990 6 See also 7 References 7.1 Works cited 8 Further reading 8.1 In Russian 9 External links Planning This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. ( June 2015 ) See also : Analysis of Soviet - type economic planning Based on a system of state ownership, the Soviet economy was managed through Gosplan ( the State Planning Commission ), Gosbank ( the State Bank ) and the Gossnab ( State Commission for Materials and Equipment Supply ). Beginning in 1928, the economy was directed by a series of five - year plans, with a brief attempt at seven - year planning. For every enterprise, planning ministries ( also known as the `` fund holders '' or fondoderzhateli ) defined the mix of economic inputs ( e.g., labor and raw materials ), a schedule for completion, all wholesale prices and almost all retail prices. The planning process was based around material balances -- balancing economic inputs with planned output targets for the planning period. From 1930 until the late 1950s, the range of mathematics used to assist economic decision - making was, for ideological reasons, extremely restricted. Industry was long concentrated after 1928 on the production of capital goods through metallurgy, machine manufacture, and chemical industry. In Soviet terminology, goods were known as capital. This emphasis was based on the perceived necessity for a very fast industrialization and modernization of the Soviet Union. After the death of Stalin in 1953, consumer goods ( group B goods ) received somewhat more emphasis due to efforts of Malenkov. However, when Khrushchev consolidated his power by sacking Malenkov, one of the accusations against Malenkov was that he permitted `` theoretically incorrect and politically harmful opposition to the rate of development of heavy industry in favor of the rate of development of light and food industry ''. Therefore, since 1955 the priorities again were given to capital goods, which was expressed in the decisions of the 20th Congress of the CPSU ( 1956 ). For further details see consumer goods in the Soviet Union. Most information in the Soviet economy flowed from the top down. There were several mechanisms in place for producers and consumers to provide input and information that would help in the drafting of economic plans ( as detailed below ), but the political climate was such that few people ever provided negative input or criticism of the plan. Thus, Soviet planners had very little reliable feedback that they could use to determine the success of their plans. This meant that economic planning was often done based on faulty or outdated information, particularly in sectors with large numbers of consumers. As a result, some goods tended to be underproduced, leading to shortages, while other goods were overproduced and accumulated in storage. Low - level managers often did not report such problems to their superiors, relying instead on each other for support. Some factories developed a system of barter and either exchanged or shared raw materials and parts without the knowledge of the authorities and outside the parameters of the economic plan. Heavy industry was always the focus of the Soviet economy, even in its later years. The fact that it received special attention from the planners, combined with the fact that industrial production was relatively easy to plan even without minute feedback, led to significant growth in that sector. The Soviet Union became one of the leading industrial nations of the world. Industrial production was disproportionately high in the Soviet Union compared to Western economies. However, the production of consumer goods was disproportionately low. Economic planners made little effort to determine the wishes of household consumers, resulting in severe shortages of many consumer goods. Whenever these consumer goods would become available on the market, consumers routinely had to stand in long lines ( queues ) to buy them. A black market developed for goods, such as cigarettes, that were particularly sought after but constantly underproduced. Drafting the five - year plans Under Stalin 's tutelage, a complex system of planning arrangements had developed since the introduction of the first five - year plan in 1928. Until the late - 1980s and early - 1990s, when economic reforms backed by Soviet leader Mikhail Gorbachev introduced significant changes in the traditional system ( see Perestroika ), the allocation of resources was directed by a planning apparatus rather than through the interplay of market forces. Time frame From the Joseph Stalin era through the late 1980s, the five - year plan integrated short - range planning into a longer time frame. It delineated the chief thrust of the country 's economic development and specified the way the economy could meet the desired goals of the Communist Party. Although the five - year plan was enacted into law, it contained a series of guidelines rather than a set of direct orders. Periods covered by the five - year plans coincided with those covered by the gatherings of the CPSU Party Congress. At each CPSU Congress, the party leadership presented the targets for the next five - year plan. Thus, each plan had the approval of the most authoritative body of the country 's leading political institution. Guidelines for the plan The Central Committee of the CPSU and, more specifically, its Politburo, set basic guidelines for planning. The Politburo determined the general direction of the economy via control figures ( preliminary plan targets ), major investment projects ( capacity creation ), and general economic policies. These guidelines were submitted as a report of the Central Committee to the Congress of the CPSU to be approved there. After the approval at the congress, the list of priorities for the five - year plan was processed by the Council of Ministers, which constituted the government of the USSR. The Council of Ministers was composed of industrial ministers, chairmen of various state committees, and chairmen of agencies with ministerial status. This committee stood at the apex of the vast economic administration, including the state planning apparatus, the industrial ministries, the trusts ( the intermediate level between the ministries and the enterprises ), and finally, the state enterprises. The Council of Ministers elaborated on Politburo plan targets and sent them to Gosplan, which gathered data on plan fulfillment. Gosplan Main article : Gosplan Combining the broad goals laid out by the Council of Ministers with data supplied by lower administrative levels regarding the current state of the economy, Gosplan worked out, through trial and error, a set of preliminary plan targets. Among more than twenty state committees, Gosplan headed the government 's planning apparatus and was by far the most important agency in the economic administration. The task of planners was to balance resources and requirements to ensure that the necessary inputs were provided for the planned output. The planning apparatus alone was a vast organizational arrangement consisting of councils, commissions, governmental officials, specialists, etc. charged with executing and monitoring economic policy. The state planning agency was subdivided into its own industrial departments, such as coal, iron, and machine building. It also had summary departments such as finance, dealing with issues that crossed functional boundaries. With the exception of a brief experiment with regional planning during the Khrushchev era in the 1950s, Soviet planning was done on a sectoral basis rather than on a regional basis. The departments of the state planning agency aided the agency 's development of a full set of plan targets along with input requirements, a process involving bargaining between the ministries and their superiors. Planning ministries Economic ministries performed key roles in the Soviet organizational structure. When the planning goals had been established by Gosplan, economic ministries drafted plans within their jurisdictions and disseminated planning data to the subordinate enterprises. The planning data were sent downward through the planning hierarchy for progressively more detailed elaboration. The ministry received its control targets, which were then disaggregated by branches within the ministry, then by lower units, eventually until each enterprise received its own control figures ( production targets ). Enterprises Enterprises were called upon to develop in the final period of state planning in the late - 1980s and early - 1990s ( even though such participation was mostly limited to a rubber - stamping of prepared statements during huge pre-staged meetings ). The enterprises ' draft plans were then sent back up through the planning ministries for review. This process entailed intensive bargaining, with all parties seeking the target levels and input figures that best suited their interests. Redrafting the plan After this bargaining process, Gosplan received the revised estimates and re-aggregated them as it saw fit. Then, the redrafted plan was sent to the Council of Ministers and the Party 's Politburo and Central Committee Secretariat for approval. The Council of Ministers submitted the Plan to the Supreme Soviet of the Soviet Union and the Central Committee submitted the plan to the Party Congress, both for rubber stamp approval. By this time, the process had been completed and the plan became law. Approval of the plan The review, revision, and approval of the five - year plan were followed by another downward flow of information, this time with the amended and final plans containing the specific targets for each sector of the economy. Implementation began at this point, and was largely the responsibility of enterprise managers. State Budget The national state budget was prepared by the Ministry of Finance of the USSR by negotiating with its all - Union local organizations. If the state budget was accepted by the Soviet Union, it was then adopted. Agriculture Main article : Agriculture in the Soviet Union Agriculture was organized into a system of collective farms ( kolkhozes ) and state farms ( sovkhozes ). Organized on a large scale and highly mechanized, the Soviet Union was one of the world 's leading producers of cereals, although bad harvests ( as in 1972 and 1975 ) necessitated imports and slowed the economy. The 1976 - 1980 five - year plan shifted resources to agriculture, and 1978 saw a record harvest followed by another drop in overall production in 1979 and 1980 back to levels attained in 1975. Cotton, sugar beets, potatoes, and flax were also major crops. However, despite immense land resources, extensive machinery and chemical industries, and a large rural work force, Soviet agriculture was relatively unproductive, hampered in many areas by the climate ( only 10 percent of the Soviet Union 's land was arable ), and poor worker productivity since the collectivization in the 1930s. Lack of transport infrastructure also caused much waste. A view of poor performance of Soviet collective farms is provided by two historians, M. Heller and A. Nekrich ( `` Utopia in Power, History of the Soviet Union from 1917 to Present, '' Simon & Schuster, Inc., 1986 ). The authors report that in 1979, 28 % of the Soviet agricultural production was from small plots of private citizens, which represented less than 1 % of the cultivated land. So according to them, collective farms operated very inefficiently. Foreign trade and currency Main article : Foreign trade of the Soviet Union Largely self - sufficient, the Soviet Union traded little in comparison to its economic strength. However, trade with noncommunist countries increased in the 1970s as the government sought to compensate gaps in domestic production with imports. In general, fuels, metals, and timber were exported. Machinery, consumer goods, and sometimes grain were imported. In the 1980s trade with the Council for Mutual Economic Assistance ( COMECON ) member states accounted for about half the country 's volume of trade. The Soviet currency ( ruble ) was non-convertible after 1932 ( when trade in gold - convertible `` chervonets '', introduced by Lenin in NEP years, was suspended ) until the late eighties. It was impossible ( both for citizens and state - owned businesses ) to freely buy or sell foreign currency even though the `` exchange rate '' was set and published regularly. Buying or selling foreign currency on a black market was a serious crime until the late eighties. Individuals who were paid from abroad ( for example writers whose books were published abroad ) normally had to spend their currency in a foreign - currency - only chain of state - owned `` Beryozka '' ( `` Birch - tree '' ) stores. Once a free conversion of currency was allowed, the exchange rate plummeted from its official values by almost a factor of 10. Overall, the banking system was highly centralized and fully controlled by a single state - owned Gosbank, responsive to the fulfillment of the government 's economic plans. Soviet banks furnished short - term credit to state - owned enterprises. Forms of property There were two basic forms of property in the Soviet Union : individual property and collective property. These differed greatly in their content and legal status. According to communist theory, capital ( means of production ) should not be individually owned, with certain negligible exceptions. In particular, after the end of a short period of the New Economic Policy and with collectivization completed, all industrial property and virtually all land were collective. Land in rural areas was allotted for housing and some sustenance farming, and persons had certain rights to it, but it was not their property in full. In particular, in kolkhozes and sovkhozes there was a practice to rotate individual farming lots with collective lots. This resulted in situations where people would ameliorate, till and cultivate their lots carefully, adapting them to small - scale farming, and in 5 -- 7 years those lots would be swapped for kolkhoz ones, typically with exhausted soil due to intensive, large - scale agriculture. There was an extremely small number of remaining individual farmsteads ( khutors хутор ), located in isolated rural areas in the Baltic states, Ukraine, Siberia and cossack lands. Individual property To distinguish `` capitalist '' and `` socialist '' types of property ownership further, two different forms of individual property were recognized : private property ( частная собственность, chastnaya sobstvennost ) and personal property ( личная собственность, lichnaya sobstvennost ). The former encompassed capital ( means of production ), while the latter described everything else in a person 's possession. This distinction has been a source of confusion when interpreting phrases such as `` socialism ( communism ) abolished private property '' ; one might conclude that all individual property was abolished, when this was in fact not the case. Collective property There were several forms of collective ownership, the most significant being state property, kolkhoz property, and cooperative property. The most common forms of cooperative property were housing cooperatives ( жилищные кооперативы ) in urban areas, consumer cooperatives ( потребительская кооперация, потребкооперация ), and rural consumer societies ( сельские потребительские общества, сельпо ). History Early development Both the Russian Soviet Federative Socialist Republic and later, the Soviet Union, were countries in the process of industrialization. For both, this development occurred slowly and from a low initial starting - point. Because of World War I ( 1914 - 1918 ), the Russian Revolution of 1917 and the ensuing Russian Civil War ( 1917 - 1922 ), industrial production had only managed to barely recover its 1913 level by 1926. By this time about 18 % of the population lived in non-rural areas, although only about 7.5 % were employed in the non-agricultural sector. The remainder remained stuck in low - productivity agriculture. David A. Dyker sees the Soviet Union of ca. 1930 as in some ways a typical developing country, characterized by low capital - investment and with most of its population resident in the countryside. Part of the reason for low investment - rates lay in the inability to acquire capital from abroad. This in turn, resulted from the repudiation of the debts of the Russian Empire by the Bolsheviks in 1918, as well as from the worldwide financial troubles. Consequently, any kind of economic growth had to be financed by domestic savings. The economic problems in agriculture were further exacerbated by natural conditions, such as long cold winters across the country, droughts in the south and acidic soils in the north. However, according to Dyker, the Soviet economy did have `` extremely good '' potential in the area of raw materials and mineral extraction, for example in the oil fields in Transcaucasia, and this, along with a small but growing manufacturing base, helped the USSR avoid any kind of balance of payments problems. New economic policy ( 1921 -- 1929 ) Main article : New Economic Policy One of the several photographs ( ( 3 ), ( 4 ) ) intended to show the two major economic policy makers of the USSR together, Lenin ( left ) who created the NEP and Stalin ( right ) who created the planned economy. By early 1921 it became apparent to the Bolsheviks that forced requisitioning of grain had resulted in low agricultural production and widespread opposition. As a result, the decision was made by Lenin and the Politburo to try an alternative approach. The so - called New Economic Policy ( NEP ) was approved at the 10th Congress of the Russian Communist Party ( Bolsheviks ) Everything except `` the commanding heights '', as Lenin put it, of the economy would be privatized. `` The commanding heights '' included foreign trade, heavy industry, communication and transport among others. In practice this limited the private sector to artisan and agricultural production / trade. The NEP encountered strong resistance within the Bolshevik party. Lenin had to persuade communist skeptics that `` state capitalism '' was a necessary step in achieving communism, while he himself harbored suspicions that the policy could be abused by private businessmen ( `` NEPmen '' ). As novelist Andrei Platonov, among others, noted, the improvements were immediate. Rationing cards and queues, which had become hallmarks of war communism, had disappeared. However, due to prolonged war, low harvests, and several natural disasters the Soviet economy was still in trouble, particularly its agricultural sector. In 1921 widespread famine broke out in the Volga - Ural region. The Soviet government changed its previous course and allowed international relief to come in from abroad, and established a special committee chaired by prominent communists and non-communists alike. Despite this, an estimated five million people died in the famine. Stalinism Starting in 1928, the five - year plans began building a heavy industrial base at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing. The country now became industrialized at a hitherto unprecedented pace, surpassing Germany 's pace of industrialization in the 19th century and Japan 's earlier in the 20th century. After the reconstruction of the economy ( in the wake of the destruction caused by the Russian Civil War ) was completed, and after the initial plans of further industrialisation were fulfilled, the explosive growth slowed down until the period of Brezhnev stagnation in the 1970s and 1980s. Led by the creation of NAMI, and by the GAZ copy of the Ford Model A in 1929, industrialization came with the extension of medical services, which improved labor productivity. Campaigns were carried out against typhus, cholera, and malaria ; the number of physicians increased as rapidly as facilities and training would permit ; and death and infant mortality rates steadily decreased. Evolution of GNP in comparison with European powers ( in millions of dollars of 1960 ) Country 1890 1900 1913 1925 1938 Russia / USSR 21 180 32 000 52 420 32 600 75 964 Germany 26 454 35 800 49 760 45 002 77 178 Great Britain 29 441 36 273 44 074 43 700 56 103 France 19 758 23 500 27 401 36 262 39 284 1930 -- 1970 USSR GDP per capita The State Quality Mark of the USSR, introduced in 1967, was used to certify that goods met quality standards, and to improve the efficiency of production As weighed growth rates, economic planning performed very well during the early and mid-1930s, World War II - era mobilization, and for the first two decades of the postwar era. The Soviet Union became the world 's leading producer of oil, coal, iron ore, and cement ; manganese, gold, natural gas and other minerals were also of major importance. However, information about the Soviet famine of 1932 -- 1933 was suppressed by the Soviet authorities until perestroika. In 1933 workers ' real earnings sank to about one - tenth of the 1926 level. Common and political prisoners in labor camps were forced to do unpaid labor, and communists and Komsomol members were frequently `` mobilized '' for various construction projects. The German invasion of World War II inflicted punishing blows to the economy of the Soviet Union, with Soviet GDP falling 34 % between 1940 and 1942. Industrial output did not recover to its 1940 level for almost a decade. In 1961, a new redenominated Soviet ruble was issued. It maintained exchange parity with the Pound Sterling until the dissolution of the USSR in 1991. After a new leadership, headed by Leonid Brezhnev, had come to power, attempts were made to revitalize the economy through economic reform. Starting in 1965, enterprises and organizations were made to rely on economic methods of profitable production, rather than follow orders from the state administration. By 1970, the Soviet economy had reached its zenith and was estimated at about 60 percent of the size of the USA in terms of the estimated commodities ( like steel and coal ). In 1989, the official GDP of the Soviet Union was $2,500 Billion while the GDP of the United States was $4,862 Billion with per capita income figures as $8,700 and $19,800 respectively. 1970 -- 1990 Further information : Era of Stagnation, History of the Soviet Union ( 1964 -- 1982 ), and History of the Soviet Union ( 1982 -- 1991 ) GDP per capita of the USSR compared to similar countries The value of all consumer goods manufactured in 1972 in retail prices was about 118 billion rubles ( $530 billion ). The Era of Stagnation in the mid-1970s was triggered by the Nixon Shock and aggravated by the war in Afghanistan in 1979 and led to a period of economic standstill between 1979 and 1985. Soviet military buildup at the expense of domestic development kept the USSR 's GDP at the same level during the first half of the 1980s. The Soviet planned economy was not structured to respond adequately to the demands of the complex modern economy it had helped to forge. The massive quantities of goods produced often did not meet the needs or tastes of consumers. The volume of decisions facing planners in Moscow became overwhelming. The cumbersome procedures for bureaucratic administration foreclosed the free communication and flexible response required at the enterprise level for dealing with worker alienation, innovation, customers, and suppliers. During 1975 -- 85, corruption and data fiddling became common practice among bureaucracy to report satisfied targets and quotas thus entrenching the crisis. At the same time, the effects of the central planning were progressively distorted due to the rapid growth of the second economy in the Soviet Union. Soviet National Income 1928 - 1987 growth in %. Estimates of the official statistical agency of the SU ( TsSU ), the CIA and revised estimates by G.I. Khanin. While all modernized economies were rapidly moving to computerization after 1965, the USSR fell further and further behind. Moscow 's decision to copy the IBM 360 of 1965 proved a decisive mistake for it locked scientists into an antiquated system they were unable to improve. They had enormous difficulties in manufacturing the necessary chips reliably and in quantity, in programming workable and efficient programs, in coordinating entirely separate operations, and in providing support to computer users. One of the greatest strengths of Soviet economy was its vast supplies of oil and gas ; world oil prices quadrupled in the 1973 - 74, and rose again in 1979 - 1981, making the energy sector the chief driver of the Soviet economy, and was used to cover multiple weaknesses. During this period, USSR had the lowest per - capita incomes among the other socialist countries. At one point, Soviet Premier Alexei Kosygin told the head of oil and gas production, `` things are bad with bread. Give me 3 million tons ( of oil ) over the plan. '' Former prime minister Yegor Gaidar, an economist looking back three decades, in 2007 wrote : The hard currency from oil exports stopped the growing food supply crisis, increased the import of equipment and consumer goods, ensured a financial base for the arms race and the achievement of nuclear parity with the United States, and permitted the realization of such risky foreign - policy actions as the war in Afghanistan. Comparison between USSR and US economies ( 1989 ) according to 1990 CIA The World Factbook USSR US GDP ( GNP ) ( 1989 - millions $ ) 2,659,500 5,233,300 Population ( July 1990 ) 290,938,469 250,410,000 GDP Per Capita ( GNP ) ( $ ) 9,211 21,082 Labor force ( 1989 ) 152,300,000 125,557,000 Awareness of the growing crisis arose initially within the KGB which with its extensive network of informants in every region and institution had its finger on the pulse of the nation. Yuri Andropov, director of the KGB, created a secret department during the 1970s within the KGB devoted to economic analysis, and when he succeeded Brezhnev in 1982 sounded the alarm forcefully to the Soviet leadership. Andropov 's remedy of increased discipline, however, proved ineffective. It was only when Andropov 's protege Gorbachev assumed power that a determined, but ultimately unsuccessful, assault on the economic crisis was undertaken. The value of all consumer goods manufactured in 1990 in retail prices was about 459 billion rubles ( $2.1 trillion ). But, according to CIA estimates by 1989 the size of the Soviet economy was roughly half that in the United States of America. According to the European Comparison Program, administered by the U.N, the size of the Soviet Economy was 36 % of that in the United States in 1990. Sector ( Distribution of Soviet workforce ) 1940 1965 1970 1979 1984 Primary ( agriculture and forestry ) 54 % 31 % 25 % 21 % 20 % Secondary ( including construction, transport and communication ) 28 % 44 % 46 % 48 % 47 % Tertiary ( including trade, finance, health, education, science and administration 18 % 25 % 29 % 31 % 33 % Total 100 % 100 % 100 % 100 % 100 % See also General History of the Soviet Union Enterprises in the Soviet Union Eastern Bloc economies Material balance planning Soviet - type economic planning 1965 Soviet economic reform 1973 Soviet economic reform 1979 Soviet economic reform Organisations Five - Year Plans State Planning Committee Ministry of Finance Post-Soviet era Economy of post-Soviet Russia History of post-Soviet Russia Classifications of Soviet economy Administrative command economy Bureaucratic collectivism State capitalism State socialism References ^ Jump up to : Soviet Union Economy 1991. CIA Factbook. 1992. 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Jump up ^ Angus Maddison, The World Economy : A Millennial Perspective ( 2001 ) pp 274, 275, 298 Jump up ^ Japan 's IMF nominal GDP Data 1987 to 1989 ( October 2014 ) ^ Jump up to : Vladimir G. Treml and Michael V. Alexeev, `` THE SECOND ECONOMY AND THE DESTABILIZING EFFECT OF ITS GROWTH ON THE STATE ECONOMY IN THE SOVIET UNION : 1965 - 1989 '', BERKELEY - DUKE OCCASIONAL PAPERS ON THE SECOND ECONOMY IN THE USSR, Paper No. 36, December 1993 Jump up ^ Smolinski 1973, pp. 1189 -- 90 : `` The mathematical sophistication of the tools actually employed was limited to those that had been used in Das Kapital : the four arithmetical operations, percentages, and arithmetic ( but not geometric ) mean. '' Jump up ^ `` Георгий Маленков. 50 лет со дня отставки '', Radio Liberty Jump up ^ Пыжиков А. В. Хрущевская `` Оттепель '' : 1953 -- 1964, Olma - Press, 2002 ISBN 978 - 5224033560 Jump up ^ the IMF ( 1991 ). A Study of the Soviet economy. 1. International Monetary Fund ( IMF ). p. 287. ISBN 92 - 64 - 13468 - 9. Jump up ^ Dyker 1992, p. 2. ^ Jump up to : Dyker, David A. ( 1992 ). Restructuring the Soviet Economy. Routledge ( published 2002 ). p. 3. ISBN 9781134917464. Retrieved 2015 - 10 - 18. Repudiation of the international debts of the tsarist regime, coupled with the difficult economic conditions of the post-Wall Street crash period, ensured that any increase in the rate of accumulation would have to be internally financed. (... ) In some ways, then, the Soviet Union c. 1930 was a typical developing country, with a relatively low level of accumulation and substantial surplus agricultural population. But she could not count on large - scale capital transfer from abroad - for better or worse. Jump up ^ Rempel, Richard A. ; Haslam, Beryl, eds. ( 2000 ). Uncertain Paths to Freedom : Russia and China, 1919 - 22. Collected papers of Bertrand Russell. 15. Psychology Press. p. 529. ISBN 9780415094115. Retrieved 2015 - 10 - 18. French creditors were owed forty - three percent of the total Russian debt repudiated by the Bolsheviks on 28 January 1918. ^ Jump up to : Moss 2005, p. 228. Jump up ^ Hosking 1993, p. 119. Jump up ^ Carr, E.H. and Davies, R.W, ( 1988 ), Foundations of a Planned Economy, Vol. 1 Jump up ^ Moss 2005, p. 227. Jump up ^ Hosking 1993, p. 120. Jump up ^ G.N. Georgano Cars : Early and Vintage, 1886 - 1930. ( London : Grange - Universal, 1985 ) Jump up ^ Wikipedia, GAZ Jump up ^ `` Paul Bairoch ''. Jump up ^ Maddison, Angus ( 2006 ). The world economy ( PDF ). Paris, France : Development Centre of the Organisation for Economic Co-operation and Development ( OECD ). pp. 400 -- 600. ISBN 92 - 64 - 02261 - 9. Jump up ^ The decline and demise of the Comintern, The Australian National University Jump up ^ Harrison 1996, p. 124. Jump up ^ `` A Comparison of the US and Soviet Economies : Evaluating the Performance of the Soviet System '' ( PDF ). foia.cia.gov. October 1985. Retrieved 7 April 2015. Jump up ^ ( 1 ) Jump up ^ ( 2 ) Jump up ^ Maddison, Angus ( 2006 ). The world economy ( Updated with 2018 ( rgdpnapc ) data ) ( PDF ). Paris, France : Development Centre of the Organisation for Economic Co-operation and Development ( OECD ). pp. 400 -- 600. ISBN 92 - 64 - 02261 - 9. Jump up ^ Manufactured goods sector was worth 118 billion rubles in 1972 Jump up ^ Shane, Scott ( 1994 ). `` What Price Socialism ? An Economy Without Information ''. Dismantling Utopia : How Information Ended the Soviet Union. Chicago : Ivan R. Dee. pp. 75 to 98. ISBN 1 - 56663 - 048 - 7. It was not the gas pedal but the steering wheel that was failing Jump up ^ James W. Cortada, `` Public Policies and the Development of National Computer Industries in Britain, France, and the Soviet Union, 1940 -- 80. '' Journal of Contemporary History ( 2009 ) 44 # 3 pp : 493 - 512, especially page 509 - 10. Jump up ^ Frank Cain, `` Computers and the Cold War : United States restrictions on the export of computers to the Soviet Union and Communist China. '' Journal of Contemporary History ( 2005 ) 40 # 1 pp : 131 - 147. in JSTOR Jump up ^ Bruce Parrott ( 1985 ). Trade, Technology, and Soviet - American Relations. Indiana UP. pp. 10 -- 12. Jump up ^ Baten, Jörg ( 2016 ). A History of the Global Economy. From 1500 to the Present. Cambridge University Press. pp. 65 -- 66. ISBN 9781107507180. Jump up ^ Yergin, The Quest ( 2011 ) p 23 Jump up ^ Yegor Gaidar ( 2007 ). Collapse of an Empire : Lessons for Modern Russia. Brookings Institution Press. p. 102. Jump up ^ Shane, Scott ( 1994 ). `` The KGB, Father of Perestroika ''. Dismantling Utopia : How Information Ended the Soviet Union. Chicago : Ivan R. Dee. pp. 59, 60, 99 to 120. ISBN 1 - 56663 - 048 - 7. When he spoke to the leadership circle he said the country was faced with a question of survival Jump up ^ Manufactured goods sector was worth 459 billion rubles in 1990 Jump up ^ http://www.allbusiness.com/government/630097-1.html Jump up ^ Churchwood, L.G. ( 1987 ). Soviet Socialism : Social and Political Essays. London : Routledge. p. 30. Works cited Allen, Robert C. ( 2003 ). Farm to Factory : A Reinterpretation of the Soviet Industrial Revolution. Princeton, NJ : Princeton University Press. Boughton, James M. ( 2012 ). Tearing Down Walls : The International Monetary Fund, 1990 -- 1999. Washington, DC : IMF. ISBN 978 - 1 - 616 - 35084 - 0. Bradley, Mark Philip ( 2010 ). `` Decolonization, the global South, and the Cold War, 1919 -- 1962 ''. In Melvyn P. Leffler and Odd Arne Westad, eds., The Cambridge History of the Cold War, Volume 1 : Origins ( pp. 464 -- 485 ). Cambridge : Cambridge University Press. ISBN 978 - 0 - 521 - 83719 - 4. Davies, R.W. ( 1998 ). Soviet Economic Development from Lenin to Khrushchev. Cambridge : Cambridge University Press. Harrison, Mark ( 1996 ). Accounting for War : Soviet Production, Employment, and the Defense Burden, 1940 -- 1945. Cambridge : Cambridge University Press. Moss, Walter Gerald ( 2005 ). A History Of Russia, Volume 2 : Since 1855 ( 2nd ed. ). London : Anthem Press. Peck, James ( 2006 ). Washington 's China : The National Security World, the Cold War, and the Origins of Globalism. Amherst, MA : University of Massachusetts Press. Smolinski, Leon ( 1973 ). `` Karl Marx and Mathematical Economics ''. Journal of Political Economy. 81 ( 5 ) : 1189 -- 1204. doi : 10.1086 / 260113. JSTOR 1830645. Further reading Daniels, Robert Vince ( 1993 ). The End of the Communist Revolution. London : Routledge. Davies, R.W. ed. From Tsarism to the New Economic Policy : Continuity and Change in the Economy of the USSR ( London, 1990 ) Davies, R.W. ed. The Economic Transformation of the Soviet Union, 1913 -- 1945 ( Cambridge, 1994 ) Goldman, Marshall ( 1994 ). Lost Opportunity : Why Economic Reforms in Russia Have Not Worked. New York : W.W. Norton. Gregory, Paul ; Stuart, Robert ( 2001 ). Soviet and Post Soviet Economic Structure and Performance ( 7th ed. ). Boston : Addison Wesley. Harrison, Mark. `` The Soviet Union after 1945 : Economic Recovery and Political Repression, '' Past & Present ( 2011 Supplement 6 ) Vol. 210 Issue suppl_6, p103 - 120. Goldman, Marshall ( 1991 ). What Went Wrong With Perestroika. New York : W.W. Norton. Kennedy, Paul. The Rise and Fall of the Great Powers ( New York : Random House, 1987 ). Pravda, Alex ( 2010 ). `` The collapse of the Soviet Union, 1990 -- 1991 ''. In Leffler, Melvyn P. ; Westad, Odd Arne. The Cambridge History of the Cold War, Volume 3 : Findings. Cambridge : Cambridge University Press. pp. 356 -- 377. Rutland, Robert ( 1985 ). The Myth of the Plan : Lessons of Soviet Planning Experience. London : Hutchinson. In Russian Kara - Murza, Sergey ( 2004 ). Soviet Civilization : From 1917 to the Great Victory ( in Russian ) = Сергей Кара - Мурза. Советская цивилизация. От начала до Великой Победы. ISBN 5 - 699 - 07590 - 9. Kara - Murza, Sergey ( 2004 ). Soviet Civilization : From the Great Victory Till Our Time ( in Russian ) = Сергей Кара - Мурза. Советская цивилизация. От Великой Победы до наших дней. ISBN 5 - 699 - 07591 - 7. External links Andre Gunder Frank, `` What Went Wrong in the ' Socialist ' East ? 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Question: what type of economic system was utilized in the soviet union
Answer: communism; state ownership