### Why did the Soviet Union Collapse?

 •GregS PF Addict Usergroup: Members Joined: Dec 09, 2010 Location: Perth Australia Total Topics: 33 Total Posts: 1522 ♂ #141 - Quote - Permalink Posted May 30, 2012 - 11:48 PM: My apologies ssu -- I missed your post and it is very very important. ssu wrote: This thread has moved on since I was here, but I'll just get back to one thing GregS said earlier in #62 (page 7): Perhaps you should elaborate what you mean because, but actually there was debt (if not the how much now countries have). And it did pay a crucial part. Later the problem was after the dissolution of the Union who would pay the debt. Finally Russia defaulted. This small news item LA TIMES from November 22nd 1991 tells the story: "Soviet Union Granted Billions in Debt Relief MOSCOW ��" In an effort to rescue the Soviet Union from an immediate financial collapse, the world's leading industrial nations agreed Thursday to lend the Soviets $1 billion immediately and to defer the repayment of more than$3.6 billion in debts. But the deputy finance ministers of the Group of Seven nations made further foreign assistance conditional on Soviet implementation of radical economic reforms under the supervision of the International Monetary Fund." For example to my country actually Russia paid the last Soviet era debt of 220 million euros in 2006, even if it could have paid it as late as 2020. Before that some of debt was paid for instance in a BUK-M1 mobile surface to air missile systems. One of the many reasons, which I believe to be truthful, was that Soviet oil production was hit severely, partly becaus of inefficiency, but also scarcity (with the existing technology and infrastructure). An interesting net article (likely from the 1990's) about it here:Soviet Economic Decline: Did an Oil Crisis Cause the Transition in the Soviet Union? For those who won't read the full article, here's a quote: "The Soviet system was not spectacularly inefficient and was an adequate, though far below average, system for running an economy. As long as there were plenty of resources, the Soviet economy could continue running. However, rather like a gas-guzzling car, the planned economies became spectacularly inefficient in the face of resource scarcity, particularly oil scarcity. A planned economy is not flexible enough to reallocate quickly scarce resources that suddenly decline in production. We believe it is no coincidence that Soviet oil production declined by 30% from 1988 to 1992, BP (1996), precisely during the time when the break up and capitalist transformation was occurring. Furthermore since 1992, Russian oil production has declined an additional 20% or more and during that time Russia's recession has worsened. Most analysts see cause and effect during the Soviet transition as being one of the transition of the economy causing the oil production decline. We however believe it is the opposite. It was the oil production decline that caused the final break down of the Soviet economy. The collapsing Soviet economy then caused the break up and political change of the Soviet System. Certainly, there were many factors that played a role in the fall of the Soviet Union. However, there is no bigger fly capable of breaking a camel's back than oil." And of course an important reason for the bankruptcy was the arms race. Sequence really counts and dates become very import --I was arguing that the top managerial class section was in a corner and was openly shopping for alternatives. The following is from wiki just for the dates. The increasing political unrest led the conservative establishment of the Soviet military and the Communist Party to attempt a coup d'état to oust Gorbachev and re-establish an authoritarian and strong central regime in August 1991. Although foiled by popular agitation led by Boris Yeltsin, then the president of the Russian SFSR, the coup attempt led to heightened fears that the reforms would be reversed, and most of the constituent republics began declaring outright independence. On December 22, 1991 the presidents of the Soviet republics of Russia, Ukraine and Belarus met secretly and agreed to dissolve the Soviet Union, replacing it with a loose, voluntary form of union known as the Commonwealth of Independent States. Increasingly powerless in the face of events, Gorbachev resigned from his office and the Soviet Union formally ended its existence on December 25, 1991. In international law, Russia was recognized as the successor state of the Soviet Union, and took complete possession of its arsenal of nuclear weapons. These political moves; a coup, a junta and then Yeltsin and $1 billion payoff to make the last thing happen. You have to go back to the period itself -- the USSR could not have a$3.6 billion debt, it might owe foreign interests amounts of money, but there was no internal debt mechanism in the USSR at all. while the theory that the adequate Soviet economy could keep running as long as fuel and resources came in, is a truism (though I agree that while never brilliant the economy was growing in its adequacy at least). But none of this translates into what happened and regardless of the amount of oil production (the fields were vast) the USSR was previously supplying allied countries with oil Cuba for one , the fall off in oil production would seem to reflect the changes in the world political stage, besides which the nexus is a thin one. So where did that $1 billion go I wonder, certainly not to service non-existent debts (the USSR imported very little, it is really hard to see where crushing debt could accumulate that the political leaders would just have the system absorb at the workers cost as they had done for some time). I think what you have found here is the cover story, like the loans to Egypt. I had assumed bribes, in fact it is the only thing that could explain some of the features. I just had not before seen the channel of their delivery. Remember this is the Reagan years, the evil empire -- which is given$1 billion dollars when ruled by a hardline Junta, and just a month before the drunk Yeltsin is placed on a tank top and proclaimed president. "For example to my country actually Russia paid the last Soviet era debt of 220 million euros in 2006" was there other inducements given and when. Seriously ssu, I am not having any go at you and there have been loans to the USSR for joint ventures, but the system there is not the same banking deficit treasury accounting where the Kremlin holds social debts against bank loans -- it just could never happen besides which the USSR was a dollar sink, trading resources in order to secure trading money (the ruble could not be traded without penalty by the West, it was devalued the USSR was under permanent economic siege), to take on loans in order to secure dollars does not make a lot of sense. Plus the USSR was not a technology importer of significance, so loans to buy equipment would not be large (it was one of the reasons the USSR was a dollar hole. I think the only window of opportunity for significant loans to the USSR (different from joint ventures) would have to have been during the Junta and Yeltsin -- I could be wrong Gorbachev may have been after loans for something, but it is unlikely -- I mean the USSR was not on the stock exchange it had a fixed currency internal currency linked to goods, and a severely devalued currency external to the bloc, it did not rate on capital imports, and there is no reason why it should not repudiate loans, except of course if they were not really development loans at all. My gut feeling is that the graph and the 1991 are covers, the oil production decline was not about internal use but barter (sugar from Cuba etc), on most things the USSR was self-sufficient for obvious geographical and historical reasons. I cannot see how outside the coup months that the USSR could have accumulated significant foreign debt that needed to be paid off before Yeltsin. Arguably Yetsins bandit capitalism, might have needed to tax the people to pay the bribes -- but the collapse was pretty dreadful, and with Putin paying up was a way of connecting Russia economically to the West. But why $1 billion at just that time is senseless unless it was a way of bribes for a job well done and the last part that needed doing. One way of looking at the bribe looks like it may have been$4.6 billion (which sounds more reasonable, $1 billion would not be very tempting to all those Generals, Party chiefs, and enterprise managers -- it would spread too thin, so maybe the$3.6 billion needs to be sniffed out the 1 billion sounds like the public announcement of the last payment. Thanks ssu, I know I have taken a very different interpretation, but really I just did not know they were that open about it. Its is like all those Iraqi generals who took their troops of the field in the defense of Baghdad money = guns even if it means putting back in the arsenal. Edited by GregS on May 31, 2012 - 1:37 AM. Reason: Put in full quote and reference/ •Mongrel PF Addict Usergroup: Sponsors Joined: Jul 06, 2011 Total Topics: 140 Total Posts: 5161 #142 - Quote - Permalink Posted May 31, 2012 - 12:12 AM: GregS wrote: A communist is known by how they align themselves, what they do, their generosity of spirit and faithfulness to everyday people. You have a global perspective that I respect. You're obviously one of the good guys. •GregS PF Addict Usergroup: Members Joined: Dec 09, 2010 Location: Perth Australia Total Topics: 33 Total Posts: 1522 ♂ #143 - Quote - Permalink Posted May 31, 2012 - 12:27 AM: Kelvin wrote: You have a global perspective that I respect. You're obviously one of the good guys. Kelvin one of the reasons that I will never besmirch the name communists is far less intellectual. As I said I was trained in the old CPA through party schools, but also associated with people (not always in the same party) but of the old left. I also knew people I did not trust like or admire in the same organizations. I can without reservation state that I have had the privilege of walking amongst saints of being treated by them with kindness, courtesy and intellectual honesty, but who have lived lives that books are written about. I am not amongst their number. Good guys abound everywhere and in the most unlikely places. I once met a Latin Professor in his office under the stairwell, his room was from a Dicken's novel and he looked like the most arch conservative imaginable and maybe he was -- but an issue of principle had sprung up and many academics had taken dishonorable cover. My God how appearances deceive. •ssu PF Addon Usergroup: Sponsors Joined: Jun 02, 2007 Location: Suomi Total Topics: 36 Total Posts: 1138 •ssu #144 - Quote - Permalink Posted May 31, 2012 - 3:27 AM: GregS wrote:the USSR could not have a3.6 billion debt, it might owe foreign interests amounts of money, but there was no internal debt mechanism in the USSR at all.It did have debts. And I assume that this debt became a major issue during the late Gorbachev era and in the Yeltsin era. I think the reason was that unlike in China, the reforms to the economy down drastically and hence the debts were needed to pay for instance on grain. Also I do agree that the crisis happened when the Soviet Union broke up, yes, but the seeds of the bankruptcy had been planted earlier. GregS wrote:"For example to my country actually Russia paid the last Soviet era debt of 220 million euros in 2006" was there other inducements given and when.Here my country was the exception: it was the only Western country that the Soviet Union didn't use hard currency but the barter trade as with the COMECON countries and China. And it was from the Western countries the second biggest trading partner with the Soviet Union after Germany. With other western countries the Soviet Union used hard currency for trade. Because the ruble was not freely convertible, the Soviet Union could only acquire hard currency by selling Soviet goods or gold on the world market for hard currency. Therefore, the volume of imports from countries using convertible currency depended on the amount of goods the Soviet Union exported for hard currency. Now, then have a collapse in the production of those goods, like oil, naturally happened when the reforms sent production down and finally when the Union falls apart. The role of oil is here important to understand. Just like with Russia now, the price of oil means extremely lot. For example, in 1988 about 90% of Soviet exports to my country consisted of oil. One major factor is the grain supplies. Now the trade between the US and the Soviet Union was small (roughly 1% of the total trade of the countries), but it was important as the majority of the US exports were agricultural products. Among to one site: The Soviet Union had turned to Canada and Western Europe for one-third of its grain supplies, as well as to Argentina, Eastern Europe, Australia, and China. United States government price subsidies helped to expand grain exports in 1987 and 1988. Now this made the payments crucial, as the Soviet Union couldn't use the ruble, but hard currency. Hence likely the debts to the US, like this one reported by the New York Times in June 1991: "BUSH BACKS LOANS FOR SOVIET FARMS WORTH $1.5 BILLION President Bush approved$1.5 billion in agricultural loan guarantees for the Soviet Union today, a major step toward helping President Mikhail S. Gorbachev bolster his country's economy. The loan guarantees, which Mr. Bush had recently indicated he would approve after extending $1 billion in similar credits last December, will be made available in three installments starting this month with$600 million, said Marlin Fitzwater, the White House spokesman. The guarantees will allow American banks to lend money to the Soviet Union to buy badly needed farm products, primarily feed grain, with the assurance that the Federal Government would repay the money if Moscow defaulted."Now all this might be the reason why so easily the Soviet Union (and then Russia) got into financial distress. After all, when Russian in the late 1990's defaulted on it's debt, the debt to GDP was as low as 20% I think! Now, the general view is that countries get into trouble when the debt to GDP raises over 90% to GDP. And one actually (incredible thing to me) is that when the Soviet Union had a trade deficit towards the Western countries, overall it had a trade surplus (thanks to military equipment sold to Third World countries). AND OF COURSE WE ARE TOTALLY FORGETTING ONE R E A L REASON FOR THE COLLAPSE OF THE SOVIET UNION: Gorbachev's anti-alcohol campaign of 1985-1986. No, seriously, when it comes to Russia this is important. Only once before in Russia a disasterous anti-vodka campaign had been launched, and then the end result was a revolution and overthrow of the tsarist regime. First, the income from alcohol was very important to the government and then of course the Russians could handle their system, when there was ample vodka. Take vodka away from Russians, and they become very angry. I remember one Finninsh academic making a book about Russians and alcohol and commenting this extensively. And it's not him only. A quote from a working paper made in Standford university: "Gorbachev actually began perestroika by attacking the troubled Soviet economy. But his first foray into economic reform – the anti-alcohol campaign of 1985-1986 --proved to have disastrous social effects from which his reputation within the Soviet Union never fully recovered. The intention of the reform was to decrease the availability of alcohol in an effort to attack the rampant alcoholism that had become a plague on the Soviet workforce. The problem, however, in executing the policy would be indicative of a recurring theme during Gorbachev’s rule – good intentions and unintended outcomes. The state’s sudden decreased production of alcohol meant that there was decreased revenue to the state budget at the same time that Gorbachev was attempting to increase investment in key sectors of the Soviet economy. Further, the policy had the unintended effect of causing a sugar shortage as some enterprising citizens turned to the production of bootleg alcohol made in private apartment stills. This caused a further public health risk since there was no way of regulating the quality or safety of bootleg alcohol. In the end, Gorbachev was forced to retreat from the policy, but incurred the wrath of planners, bureaucrats and the general public in the interim." Source: Domestic and International Influences on the Collapse of the Soviet Union (1991) and Russia’s Initial Transition to Democracy (1993)Just think if you'd take away drugs from the Americans. Edited by ssu on May 31, 2012 - 3:35 AM •GregS PF Addict Usergroup: Members Joined: Dec 09, 2010 Location: Perth Australia Total Topics: 33 Total Posts: 1522 ♂ #145 - Quote - Permalink Posted May 31, 2012 - 4:24 AM: ssu #144 I won't quote the posts for size problems. I am getting very intrigued I am still reading it from a different angle however. The Bush loan approved for $1.5 billion, the timing is really important in this, plus it would be really nice to get a loan history. Bush is in January 20, 1989 – January 20, 1993 which as window could be getting close. I know that USSR had precious few loans if any at all, now this will sound really silly but I am highly suspicious. First$1 billion extended from last December (89 or 90?) then three installments of 600 million = 3.2 billion perhaps the 3.6 billion mentioned in the earlier post, followed up by 1 billion during the Junta period. Now that means if the staging is correct December 1990 first payment, then three payments at 3 months apart (March, June, July 1991) sometime around November 1991, for purported seed gain? The coup was in August the month after the possible last payment and the next perhaps near December when the USSR is dissolved. Seed grain. Was there an unreported famine, a massive crop failure? Russia exported grain, it is strange indeed. The other is the rider suggesting that Moscow might default and the Federal would back the loan. If this was for feed grain, money would not be going to the USSR but grain, and that would incur a dollar debt. The thing is that knowing the USSRs trade currency problems -- how would it actually repay such debts except through a barter of some commodity. ssu I think this is all cover story, I know that upper echelons where exploring exit routes and you could hear them squeal about the reformers. If I get that feeling after just some casual meetings and I am nothing in the scheme of things, deals have to have gone. First there was no popular uprising, the people were disengaged. All the actions were made by top brass in the military and party, none of it was on the streets what few demonstrations there were were timid and small affairs and the Russian military would have dealt with within a blink (regardless of what side it supported. What I see is a shadow play, and none of these actors do the job without being paid. That the USSR was extremely weak politically is assumed, but there still was no bankruptcy which just does not fit with how the USSR economy worked (there is no real banking system at all, it is not hooked in, any shortage would be shoved back down on consumer restrictions, but it was a period of consumer improvement (by Soviet standards). That was how the national accounting system was designed, to make up shortfalls by reassigning resources quickly across the whole of production. So I have that major problem with the bankruptcy thesis -- the lack of liquidity in the economy to begin with. I am highly suspicious of these loans, their timing first and the purpose second. We also know that many of the main players ended up with a lot of US dollars from somewhere (some was definitely looted). And then what I did not know some fo these and other debts are being paid back in 2006 -- this is common feature in these invasions and sponsored "revolutions" in the end the people pay (Libya, Iraq). I don't know of any examples of genuine revolutions where the new state carried the debts and excess of the old -- that is very peculiar -- it seems closer to carpet bagging. By what you said about barter I am guess you might live in Finland or thereabouts. I only know this because in the old days when trade with the USSR was forbidden, everything came via Sweden and Finland (newspapers memorabilia etc). It is also where the "intelligence" trail led (Helsinki being a common meeting place). I am thinking putting two and two together and getting five that Finland might have been the loan staging post, and its reserves were what was transferred and the payoffs being in Switzerland. All speculation, but the old SPA here (the pro-Moscow party) had to exchange into Finnish exchanges, from there into rubles etc (back in the 70s). Not to deny that Russia might have had an old trade deficit with Finland, but that nexus of barter and currency exchange was not huge by world standards. I understand about the Vodoka campaign, having made friends of Russians over the years, but I don't think that would have done it, besides the apathy aspect has to be accounted. ssu the stuff you are digging up is great, I new of bribes from the west, but had no idea how that was achieved -- this does look like the clue to how it might have been done. My fundamental problem is that the Soviet system may do better and worse but in many ways it was proofed against bankruptcy, in fact making the people pay, just as JP k Morgan is now doing, was unbuilt into the system as it devolved from Stalin's policies (WWII was when serious stabilization occurred, desperate times). •ssu PF Addon Usergroup: Sponsors Joined: Jun 02, 2007 Location: Suomi Total Topics: 36 Total Posts: 1138 •ssu #146 - Quote - Permalink Posted Jun 2, 2012 - 4:33 AM: GregS wrote:Seed grain. Was there an unreported famine, a massive crop failure?Well, this graph shows the area of harvested grain in the Soviet Union (and in the former Soviet Union after 1991), 1950-93. It shows how stagnant the production came. "After peaking at 123 million hectares in 1977, the former Soviet Union's grain harvested area has diminished nearly every year since then, dropping to 99 million hectares in 1993 as the fast-eroding land was planted to soil-stabilizing forage crops or abandoned (USDA 1993a)." It wasn't a famine, but big shortages. Hence the importance of grain imports was important factor. I remember when I was in Moscow in 1991 and living for two weeks in the summer with a Muscovite family, the first bread shortages started then. Sure, other things were short of supply, but when it started to be bread in short of supply it hit the mother of the family. (But thanks to the Russian mentality were a guest is someone truly important, I ate extremely well during my time there. The family went even to a restaraunt with me: the second time they dined in a restaurant as a family.) Source hereThe reality is that the Soviet Union wasn't self sufficient in basic agricultural production and had to import foodstuffs. It may have exported grain yes, but it was a net importer. Or as Wikipedia puts it: "In the 1980s, 3% of the land was in private plots which produced more than a quarter of the total agricultural output, i.e., over ten times more per area than the rest which was in common ownership.[9] Soviet figures claimed that the productivity of a Soviet farmer was 20–25% of that of a U.S. farmer in the 1980s. This was despite the fact that the Soviet Union had invested enormously to agriculture. Production costs were very high, the Soviet Union had to import food, and it had widespread food shortages even though the country had a big share of the best agricultural soil in the world and a high land/population ratio."Now there might very well be bribes given alongside (or in with) these loans (after all, this is Russia what we are talking about), yet I do think the loans were in generally made to finance what it was said to be. Now I assume the problematic way the Soviet Union traded with the West, by hard currency, lead to problems when the economy collapsed and that hard cash from oil exports wasn't there anymore. It is like noticing that your out of cash in your pocket and you don't have a credit/debit card and it's sunday, even if you have money in the bank and you do have a job and income. As I agree, the debts of the Soviet Union compared to it's GDP were small. So the bankruptcy here was a bit different as the bankruptcy of let's say Greece today, where the government is totally incapable of paying back the debt and just acquires new debt to pay the old debt.But anyway, I have to find actually good article's about the monetary and finance side of the collapse before going on here. Edited by ssu on Jun 2, 2012 - 5:43 AM •GregS PF Addict Usergroup: Members Joined: Dec 09, 2010 Location: Perth Australia Total Topics: 33 Total Posts: 1522 ♂ #147 - Quote - Permalink Posted Jun 2, 2012 - 6:17 AM: ssu wrote: Now there might very well be bribes given alongside (or in with) these loans (after all, this is Russia what we are talking about), yet I do think the loans were in generally made to finance what it was said to be. Now I assume the problematic way the Soviet Union traded with the West, by hard currency, lead to problems when the economy collapsed and that hard cash from oil exports wasn't there anymore. It is like noticing that your out of cash in your pocket and you don't have a credit/debit card and it's Sunday, even if you have money in the bank and you do have a job and income. As I agree, the debts of the Soviet Union compared to it's GDP were small. So the bankruptcy here was a bit different as the bankruptcy of let's say Greece today, where the government is totally incapable of paying back the debt and just acquires new debt to pay the old debt. But anyway, I have to find actually good article's about the monetary and finance side of the collapse before going on here. Now before the generalities, political bribes and deals are known to have taken place, rumored but better still proved by the outcome -- the were a lot of soft landings especially of those behind the Junta after the "revolution" ostensibly to oust them. Now the loans you pointed out may well just be that loans for seed grain. But the timing is extremely suspicious and so is the source. These loans were from the US Government directly that is unusual as usually they are engineered through the World Bank and IMF. However, it is probably not the only exception and some of these may well have been benign. Next I agree that the USSR trade was always dollar short and on a knife edge, but where is the actual food crisis (there were always shortages including Vodka), but actual food shortages should have resulted in more obvious signs and I know of none during the period. I am unsure of the extent and kind of food that may have been imported. If you look at the French revolution standards of living was generally improving, the economy was a little better, but this increase led to more peasants being pushed off the land and glut of hapless people in the capital. The French revolution wanted bread, but only for the poorest of the poor (and they had been ignored anyhow). It was the political link between all the groups, the sheer frustration with the old regime. It was a political change. The Mayan had an economic collapse, there was starvation, cannibalism and civil war, vicious and exhausting -- the old rulers were simply disposed of. The Russian Civil war was intended to cause a collapse, and nearly did -- the siege economics of War Communism (not pleasant) was miraculous and that was a near run thing. In other words the nature of economic collapse, exhaustion and productive bankruptcy becomes desperately real, like the collapse of the German and much of Europe's economy in the immediate post-war. The motion is significant as it is similar to real catastrophe collapse. It is the timing that tells the story. In history the sequence of events is the discipline for while things may cause something but appear later, the connections between them have to be logical. My reading was that the Soviet economy was under siege for decades, was poor, uneven but robust. Reforms of the economy were in fact reforms of the political landscape itself, and before these could really bite, a coup occurred. All things being even, then the Junta would have kept things going, becoming more repressive. At this stage everything is more or less functioning as it did before. Then Republics which were known to have been receiving Western many declared impedance and within a few days Yeltsin ends the Soviet Union. Here is the part that is unbelievable -- the hardliners Junta which is mostly military does nothing and the smallish crowd outside the Parliament is not much of anything. These same hardliners then grab public assets, without popular or parliamentary opposition. It is coup, not a revolution and the historical question is the class hegemonic reasons it happened. I point to the similarities between the managerial class in the USSR and the Financial managerial class in west -- the same class, the same social function and the same traits. It is the historical analysis informed by economics that is the vantage point. On the figures Between 1955-80s a lot of marginal land was put under the plough and the results were predictable -- however, they were really pushing things, there were all sorts of dam projects and pushing the agriculture belt further and further north, much of this was export orientated and short-term as far as sustainable land usage. Shortages, were the way the bureaucracy dealt with uneven production (more of a problem than an overall shortage of foodstuffs. I know of the bread shortage, and that it was caused by selling too much grain overseas taking advantage of high prices. I have never seen any figures however showing the USSR in the later post-war period was in food deficit. The private plots had always been a mainstay of food production from Tsarist times, even then the big landowners went for earners rather than feeders. I cannot believe that even in the last period it would be a net importer, but that depends on what was made for export and what was needed for consumption. Hence it is not an easy sum to analyze. For instance, massive leanings towards dollar earning grain exports, balanced against resource bartering for other food products needed for consumption -- delivers almost the same on the plate, but while making dollars. It would appear as a net import, but the cycle of dollar accumulation has to be offset. The Soviets could be given their economic pariah status, sharp traders. As you probably have guess I believe in political economics, and have severe misgivings of academic economics which tends to be fragmented and distorted (though not inaccurate keeping these three things together). Remember I am not arguing that the USSR was anywhere near the picture they painted of themselves, but that the base infrastructure (inherited and built upon from Tsarist times was solid. Also you cannot make cross cultural agriculture comparisons the unsustainable expansion of commercial mega-farms in the US during the 80s showed dramatic productivity gains most because crops were pre-sold before being harvested, and there were many overseas markets it had to itself (Australian agriculture was squeeze by the market grab in that period). Hence the US figures whole being true may also be illusionary (that is true of other things, just not immediately true of thing being counted). The USSR was dollar starved and in world trade terms it was because of this in a permanent borderline deficit position, usually having just enough and sometime too few dollars for imports (regularly bulking up the shortfall with below cost barter item -- there was a series of traders around the world who acted as clearing houses, not because of the percentage on dollar deals, but because they could make killings on bartered goods). My point is that this sort of thing makes any statistical analysis difficult. As the product needed by a state under economic siege is by definition a unavoidable distortion, yet after the dust settles the overall effect may not be as much as the figures portray. The problem with doing any comparisons between two very different financial systems (note I do not make it a different economic system), is that the USSR was capital poor but labour and resource rich (and some very skilled labour). The USA was capital rich because of the USD trade especially but from the 1970s onward a declining skill and resource base (from the 1980s onwards despite many domestic resources - the USA was an importer of skilled labour and resources (except agriculture). I believe that any argument that depends on finally tuned statistical comparisons is likely to be whistful -- the same pressures did not exist and the means of making up deficits entirely different. The other thing is after the collapse there was no large capital or infrastructure building from outside, the agricultural, industrial base as developed since before 1917 was what led to the current revival. That to me is the proof in the pudding -- the distribution of products has changed, the bureaucracy internalized to the larger companies rather than centralized, but production remains the inherited core. The actual means of production, resources and skills of the work force is the reservoir of real capital, and my argument is despite the changes in system these remained recognizably the same (there is no enormous external source for them). My thesis was there could not be any financial collapse by the measures devised for western finance. This was soviet internal finance capital, which was continually balancing the books by shortages and splurges, it did not collapse by economic means -- it collapsed politically and it collapsed because the upper management defected. That is what can be read in the historical record itself, and seen step by step in events. You have been there and know how the people managed despite the economic figures, I met a few but never visited, I spent a long time trying to work out what was going on with soviet figures (they kept two sets of books -- the public political one which is like a company's annual report and about as reliable. And the actual accounts needed to keep things moving). IT took me a while to realize I was looking at Annual reports only and would never see the actual books -- so it was the physical aspects which told the story and in there way there had been a definite and prolonged improvement from the 1950s, many of the same old problems persisted in the 1980s (these cropped up in Moscow Times regularly) but in a very Soviet fashion the number and variety of goods was getting better, the shortages less absurd and prolonged -- these are the real measures, impressions, details, but far more reliable than the gigantic strides forward found in the annual reports, plus the influence of Soviet book-keeping, scheduling and even Object orientated production -- were being studied and copied into the west as ways of dealing with their own problems. None of this is a precursor to a collapse -- indeed the collapse was an obvious and clear result of socially sacking the system by the top managers and then their doppelganger the tough gangsters who followed. But lets forget all I have said what would a purely economic collapse look like in the USSR, how would it manifest itself? Its first effect would be on the people a dramatic loss of goods, services, food, transport infrastructure, movement of goods etc. Actually everything that did happen after the political dismemberment of the USSR. Gorbachev's reforms very plainly assaulted the upper management, they put forward market reforms, self-managed industries (under workers control) a centralized lending mechanism. It was a break up of huge corporate empires, the dissolution of the Soviet banksters who used power over products to gain control over entire sectors of industry. It was very different to the west and also very similar to it (maybe, arguably a little ahead of things). There was no popular uprising -- that is the missing feature, no falling of the Bastille, no slaughter of the Aristos, this was not a society as whole responding to an economic malaise. ssu to me the critical question is not economic statistics that really only illustrate the assumptions of their composition, (reflecting reality, but not necessarily in true way, not actually showing all the important aspects of the thing being counted). Political economy has the edge in taking into account the interrelations of the subject, but I am not claiming to have done that as I neither have the data nor the skills. But I have explored a little of the historical events as they occurred (now hazy on much of the detail) and it simply runs counter to the thesis of economic collapse as cause. As result of a financial collapse -- but finances in the Soviet Union lay in the control of the economy as a whole -- like the internal books of a gigantic corporation. Hang on; like JP Morgan which now has been insolvent for years (if not longer), and has broken every rule in the book, yet is so big that until it is politically taken down will consume first Europe and then its American homeland. The biggest bank in the world is an ongoing fraud -- but production goes on, and nothing is being done to deal with the problem. If we changed that, providing we did not allow looting (not quite possible in the way that the USSR was carpetbagged) then political action will be necessary for the west has been bankrupt for a good while now and still trades. When change does happen the question is by whom,. For whom and to what effect, the same I used in analyzing the fall of the USSR.