Gorbachev’s Ambivalent Legacy in Russia

In the Bible (Daniele, 2:31-35) King Nebuchadnezzar dreamed of a colossal statue with a head made of gold, the chest and arms of silver, the stomach and hips of bronze, the legs of iron and the feet made partly of iron and partly of clay. A stone broke off the mountain and hit the statue’s feet, smashing them and making it collapse. According to the prophet the story is a metaphor for the succession of earthly kingdoms, destined sooner or later to collapse due to the weakness of the values on which they are founded.

The Soviet Union dissolved on December 26, 1991. At the start of that year it was the largest country on the planet, with a surface area equal to one-sixth of lands above sea level, 290 million inhabitants of 100 distinct nationalities, and a dominant military power thanks in part to its enormous nuclear arsenal. In twelve months, the Soviet Union of Socialist Republics (USSR) existed no more.

How was this possible? There were various contributing factors. When in 1985 Mikhail Gorbachev was appointed general secretary of the Communist Party of the Soviet Union (CPSU), he had two main internal goals: revive the anemic Soviet economy and streamline the state bureaucracy. To pursue these goals, he inaugurated a period of reforms, whose pillars were opening (glasnost) of the party to dialogue, and restructuring (perestroika) of the economy with the introduction of market mechanisms. The first had the goal of giving new life to Communist thinking, while the second aimed to stimulate the country’s development. It all took place too fast, though, and got out of control. More than the rebirth of Communist thought, glasnost made the state lose control of the public conversation, creating unexpected room for the democratic reform movements that had begun to take hold throughout the entire Soviet bloc. Perestroika ran up against resilient bureaucratic structures, that proved to be an extraordinary reactionary force in defense of vested rights and abuses of power.

Bureaucracy not only blocked the path, but produced data on the performance of the economy that did not reflect reality. Officially, the Soviet economy was the second-largest in the world after the United States, but the everyday experience of citizens told a different story. Rationing of consumer goods was the rule.

In the spring of 1990, I was a university exchange student at the Stockholm School of Economics. Sweden was neutral and thus it was easier to obtain a visa to visit the Soviet Union from there. The local student association proposed taking advantage of the situation to organize a trip to Leningrad (now St. Petersburg). What we found was a city whose in which only the glorious traces of the imperial past were still kept with care. On public transportation it was not rare to find broken windows, the water coming from faucets was red with rust, and department stores were empty. We noted that people were always in line in front of stores, that changed every day, though. The wait was long and it was still very cold. We approached the people and asked them what they were waiting in line for. “Ice cream,” they answered. As naive Western students we looked at each other perplexed: what intensity of passion for ice cream pushed these people to wait outside in line for hours in that cold weather? Then they explained how it works: it’s not like in our countries; here things are not purchased freely, but they are delivered directly by the state, with rigidly planned with times and procedures. Every day something is distributed. Today it’s ice cream; so even if it is not what you want, you can set it aside to exchange it in the future with something else you will need.

In the subsequent days these secular processions continued before our eyes. The day of fish came. It was in large blocks of ice that made them seem like frozen aquariums. When your turn came, the attendant violently struck one of the blocks with an ice-axe so as to break off a piece. The size of the piece was more or less the same for everyone, but what was inside depended on luck. You could end up with just a tail. That meant it didn’t go well this time, but you could set it aside. Someone would give you something in exchange even for a tail in the future.

It is estimated that at the time, the black market in the Soviet economy was equivalent to over 10 percent of national income. Perestroika had failed and the international economic situation had not helped. Bureaucratic inefficiencies and the difficulties encountered in increasing the productivity of manufacturing industries had made the country dependent on revenues from the sale of oil and gas abroad, of which Moscow was already one of the main global exporters. The collapse of the price of oil from 120 dollars a barrel in 1980 to only 24 dollars in 1986 had removed a fundamental prop from the teetering building of the Soviet economy. Gorbachev had to manage a stagnating and impoverished economy. Despite this, there were expenses they did not want to give up: military spending.

In the spring of 1983, then-U.S. President Ronald Reagan changed the approach to the management of the nuclear threat. Since the 1960s, it had been driven by the doctrine of MAD (mutual assured destruction). This doctrine was based on the theory of rational deterrence, inspired by the ideas of the American Nobel-prize winning mathematician John Nash (the one from the film A Beautiful Mind): the threat of using nuclear arms against the enemy made it irrational for the enemy to use those arms, because once armed to the teeth, neither of the rivals had any incentive to start a nuclear conflict or to disarm.

Reagan was not convinced that this armed balance was the best solution for American national security, and thought an alternative approach was possible, leveraging his country’s capacity for technological innovation to make nuclear weapons obsolete. In 1984, the Strategic Defense Initiative (SDI) was born, nicknamed “Star Wars” by its critics. The goal was the creation of a missile defense system aiming to protect the Untied States and its allies from potential intercontinental nuclear attacks. The reaction of the USSR was an escalation of military spending, already weighed down by the war in Afghanistan that had been going on since 1979 and would end with the withdrawal of the Red Army in 1989. It is estimated that for both reasons, in those years military spending absorbed between 10 and 20 percent of national income.

More than Reagan’s Star Wars, it was the withdrawal from Kabul that represented a breaking point of great symbolic importance. By virtue of glasnost, the last years of the Afghan war took place under the spotlight, provoking conflicting reactions in the fifteen Soviet Socialist Republics. The Baltic republics saw the invasion as an additional manifestation of the imperialism with which the Russians treated the other members of the USSR; the Asian republics realized that they were culturally and historically closer to Kabul than Moscow; and demonstrations against the war broke out in Ukraine. In short, there was a widespread feeling that the war in Afghanistan was only “Moscow’s war.” It had little to do with the interests of the other republics, forced to send their soldiers to die in vain. In Russia, the withdrawal was seen as a military humiliation that came on top of economic humiliation.

During that trip many years ago to Leningrad, we realized that Gorbachev is not loved at all. Under his leadership a dream was shattered for which the population had accepted enormous sacrifices, a dream of planetary success of the exceptional nature of the great Russian spirit. There seems to still be a lot of bitter pain for this shattered dream, not only in the aggressive rhetoric of Moscow, but also in the centrality of military spending in its economic policy.

This article is an extract from the book G. Ottaviano, Riglobalizzazione, Milan, Egea, 2022.

Gianmarco Ottaviano is a Professor of Political Economy at the Bocconi University, where he holds the Achille and Giulia Boroli Chair in European Studies. He writes for il Sole 24 Ore and lavoce.info. For Economia&Management he develops the comments and analyses written for those two publications.