Product Overview

In August 1990, Mikhail Gorbachev, president of the Union of Soviet Socialist Republics (USSR) and general secretary of the Central Committee of the Communist Party, confronted one of the most difficult dilemmas of his career: how to improve the country's economic performance. This case set highlights Gorbachev's reform efforts from 1985 to 1990. Numerous measures of economic performance had declined, and the USSR faced serious crises of economics (declining productivity and financial insufficiency), federalism (challenges to the primacy of the Soviet Union), and separatism (ethnic and nationalist agitation). Three groups of advisers offered competing plans. One plan focused on economic revolution toward a market economy; one on reform of the existing centrally planned economy; and a third on economic retrenchment and reinforcement of socialist discipline that had prevailed over the previous 73 years. Students must evaluate the benefits and risks of each alternative and recommend a course of action.

Learning Objectives

(1) Exploring the link between national strategy and economic performance. The case set presents a stark comparison between a command economy that existed before 1985 and a transition to a market economy after 1985. (2) Exercising student skills in crisis resolution. Students can identify preexisting weaknesses that rendered an economy vulnerable, the economic shocks that accelerated worsening performance, and the dynamic interplay of politics and economics that shaped the civic response. The students must assess the pros and cons of shock therapy as a measure to reform an economy suffering from poor economic performance during a transition. The cases poses stark alternatives in economic philosophy: Marxism versus neoliberalism. (3) Considering institutional redesign in response to the three crises of federalism, separatism, and the economy. The history of the USSR from 1985 to 1990 is fundamentally a story about the framing of new economic, political, and civic institutions as it tries to transition from a unitary state to a true federation. The case set details the major institutional changes entailed in Gorbachev's reforms: replacement of central planning with market exchange; allowing prices to be determined by market forces; opening the political system to competitive elections; and increasing the accountability of elected officials.