RES: [lbo-talk] Reagan, Arms Race and Collapse of Soviet Union

Alexandre Fenelon afenelon at zaz.com.br
Sat Mar 13 15:04:31 PST 2004


I don't know what was rouble-dollar rate then, but 5 bn roubles a year spent on Afghan war don't appear large enough to destroy the fSU. It has been argued that the economic burden of consumer and housing subsidies and input subsidy to Soviet agriculture (collectives and state farms) was one of the important causes of the collapse of the fSU.

-You´re completely right about agricultural subsidies. However, regular military expenses were already a very heavy burden to USSR (10-15% GDP, an unsustainable level for any economy). I agree with you that the Afghan war didn´t represent significant additional expenses. The ruble/dollar rate was about 1:1. However, it must be considered that there were no economic collapse in the USSR until 1989, when it was decided to abandon the five year plan, which was a particularly stupid decision. Before this, the overall picture was one of stagnation (like Brazil in the 80´s-90´s or Japan in the 80´s) and there was even some modest growth in 1985-88 (about 1,5%-2,5%/year). I think that the status of superpower, with all those extra expenses and compromises made very difficult to the Soviets to make the adjustments necessary to improve their economy. If the USSR was not a superpower it would have been much easier to deal with the slowdown of the 70´s-80´s.

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