AHC: Saving Soviet Socialism

With a POD on or after 1 January 1961 (the 10-for-1 currency reform date), prevent the economic decline of the USSR while maintaining State ownership of business at 1961 levels. All reforms except reintroduction of private enterprise are allowed/encouraged.

My thoughts:

1. Allow the ruble to trade on world currency markets. This will eliminate the need for separate foreign-currency stores and facilitate trade.

2. Eliminate/reduce the privileges that went with CPSU membership so as to eliminate/reduce the number of people with corrupt motives who join.

3. Planning from the bottom up instead of the top down. Enterprises would be allowed to set their own targets to meet demand for their products, and fail or succeed based on merit. (Some will say "that's capitalism", but I disagree, as long as the enterprises are State owned, it isn't capitalism.)

4. Civil liberties comparable to the West except where an obvious direct threat to the system of State ownership exists.

5. Multi-candidate elections with still one Party, or possible tolerance of other parties with a Constitutional guarantee that the CPSU gets a majority or 2/3 of the seats in all soviets. (IOW, other voices can be heard and considered but can't take power.)

6. Absurdities in prices to be abolished. For example, IOTL, bread was cheaper than the grain used to make it. Farmers would buy bread to feed their pigs. The authorities tried making it illegal but that didn't stop it. Raising the price of bread just enough to make it no longer profitable to feed it to pigs would have been a better solution. (Perhaps with a ration system that every human was entitled to just enough bread for him or her self at the lower price.)
 
2. Eliminate/reduce the privileges that went with CPSU membership so as to eliminate/reduce the number of people with corrupt motives who join.

3. Planning from the bottom up instead of the top down. Enterprises would be allowed to set their own targets to meet demand for their products, and fail or succeed based on merit. (Some will say "that's capitalism", but I disagree, as long as the enterprises are State owned, it isn't capitalism.)

5. Multi-candidate elections with still one Party, or possible tolerance of other parties with a Constitutional guarantee that the CPSU gets a majority or 2/3 of the seats in all soviets. (IOW, other voices can be heard and considered but can't take power.)

6. Absurdities in prices to be abolished. For example, IOTL, bread was cheaper than the grain used to make it. Farmers would buy bread to feed their pigs. The authorities tried making it illegal but that didn't stop it. Raising the price of bread just enough to make it no longer profitable to feed it to pigs would have been a better solution. (Perhaps with a ration system that every human was entitled to just enough bread for him or her self at the lower price.)

2. Agreed. I remember reading somewhere that by 1980, 6% of the USSR's GDP was spent on privileges for the "upper burocracy". Limiting the corruption( by, hum, maybe having someone in power who wasn't a complete kleptocrat like Brezhnev) Might help reduce the corruption. 5 or 6% more investment in the economy every year could bring some much needed progress in many areas.

3. I really don't understand how this would work, except if a State Bank(like IOTL's India) lent money to people who wanted to establish their one companies... but then again, how would this be encouraged? IMO one of the biggest flaws of the soviet economic planning was lack of motivation.
The one system I can think of is one where the State Bank(just a money printer, really) lent money for aspiring entrepreneurs, who would then set up cooperatives. The profit from the cooperatives would be split up in three ways; one part would be kept in a section of the State Bank in which the interest is used to cover the loss of value by inflation(as this system would have LOTS of inflation, if only in its first years), another would be used for investment and another one for the wages, which would be only marginally higher for the original creator of the company. The State Bank would demand no interest, as it is against communist philosophy, it only would ask for the pre-inflation values.

5. Agreed. Combining these two ideas means more perception of what is going on in the high spheres; more public perception means more transparency, which means less corruption. A debate with political adversaries would also help the most obvious examples of the absurdities of communism to come to light.

6. WOW, I never heard of this! That's really stupid.

As for the POD... maybe no Vietnam War, which means communism spreads across Southeast Asia but also means no decade of malaise in the US does not happen, and the rise of left wing groups and movements in the 1970s is avoided. As such, the Imperialist phase of the Brezhnev years(say, 1973-1979) is butterflied altogether, and maybe an earlier death of Brezhnev in the 1970s means a reformist comes to power, and, vying for reinforcing ties with Indira Gandhi, copies the State Bank system.

We would nowadays have a Soviet Union that is MUCH stronger economically, and, surviving into the 1990s(granted, with a few currency changes) would go head-on into the technological revolution, which would allow for the Kafkaesque burocracy and paperwork to be pretty much exterminated, meaning less government spending on bullshit and more spending on things that actually make people's lives better. I believe this USSR would at one point even outdo the US economically, though the reforms would no doubt be polemical and would cause some divisions in the Eastern Bloc, leaving the US politically dominant for a while.
 
1. Allow the ruble to trade on world currency markets. This will eliminate the need for separate foreign-currency stores and facilitate trade.

The problem is that the Soviets don't really make much stuff that other people want. Western consumer, industrial and high tech products are all superior. Except for resource extraction, arms, and a small set of industrial goods (likely to be of value to the Third World, not the West or Japan). The USSR won't earn a whole lot. The ruble plummets in value.

2. Eliminate/reduce the privileges that went with CPSU membership so as to eliminate/reduce the number of people with corrupt motives who join.

You have just eliminated one of the major ways the Communist Party is able to retain support among the elites. Without pay offs, people will begin moving into opposition. There are still some idealists in 1961, but most are slowly becoming disillusioned.

3. Planning from the bottom up instead of the top down. Enterprises would be allowed to set their own targets to meet demand for their products, and fail or succeed based on merit. (Some will say "that's capitalism", but I disagree, as long as the enterprises are State owned, it isn't capitalism.)

You have just ended central planning. Expect a huge backlash from hardliners. Unless the reformers have prepared for this move a lot, the old fashioned Stalinists might regain power (not necessarily implying a return to Stalin's cult of personality).

4. Civil liberties comparable to the West except where an obvious direct threat to the system of State ownership exists.

Most likely will prompt some kind of internal coup to reassert control. We saw what the Prague Spring brought about. Liberalization means people can begin openly complaining about the Soviet system - and there is lots to complain about. It is a very short trip from complaining about "acceptable" things that do not challenge the system to complains about the very system itself. A hard reaction is almost inevitable unless you want to bring 1989 forward by many years. Seriously, this might initiate civil war across the entire Warsaw Pact.

5. Multi-candidate elections with still one Party, or possible tolerance of other parties with a Constitutional guarantee that the CPSU gets a majority or 2/3 of the seats in all soviets. (IOW, other voices can be heard and considered but can't take power.)

Limited reforms of this nature is almost always a bad idea. It angers opponents of reforms, yet can only disappoint people who want true reform. This will either be an experiment that ends in disaster, or will quickly get out of hand and force through even quicker reforms.

6. Absurdities in prices to be abolished. For example, IOTL, bread was cheaper than the grain used to make it. Farmers would buy bread to feed their pigs. The authorities tried making it illegal but that didn't stop it. Raising the price of bread just enough to make it no longer profitable to feed it to pigs would have been a better solution. (Perhaps with a ration system that every human was entitled to just enough bread for him or her self at the lower price.)

You cannot eliminate aburdities in pricing unless you establish a free market where producers can set their own price. Such a move would entail a huge initial shock to the economy similar to what the USSR/Russia experienced in the early 1990s.

Attempts to selectively change pricing through central planning will always come too late and always be subject to political constraints as opposed to economic reality. Higher prices for food and consumer goods will produce discontent.


There are powerful forces of reaction that will do everything they can to stop this. Some of the economic reforms (as opposed to political) might be implemented slowly and in piece meal like how the Chinese did it. But China did that with having a major supporter of reform in power, and after Mao discredited the most extreme version of Communism. That political situation does not exist in the Soviet Union at this time.

The problem with economic reform of the Soviet Union is that it requires the government to admit they have failed and lied to their people. It requires them to say Communism cannot provide a better life than the capitalist countries. It undermines Soviet prestige abroad and alienates allies. The change in prices, etc. would create a huge reason for discontent while not providing any immediate benefit.
 
Blackfox's comments are generally good, but I wanted to take them up on the issue of pricing in particular.

You cannot eliminate aburdities in pricing unless you establish a free market where producers can set their own price. Such a move would entail a huge initial shock to the economy similar to what the USSR/Russia experienced in the early 1990s.

The simultaneous sale of social property to the nomenklatura, establishing them as a new bourgeois, combined with the dismantling of the welfare state which was run at the workplace level in the Soviet Union is also pertinent to the economic shock. Mass microeconomic shocks are just as causative as a macroeconomic shock. Consider, for example, the decline in US working class living standards after the air traffic controllers were defeated, ushering in widespread micro scale reforms.

Attempts to selectively change pricing through central planning will always come too late and always be subject to political constraints as opposed to economic reality. Higher prices for food and consumer goods will produce discontent.

You posit "economic reality" as market rationalism. As we both know, market rationalism is a theoretical model used to simplify instrumental calculations for individual agents, and (outside of extreme neoliberal positions) not an actual description of external reality.

Central planning is by definition political constraint, however, policy dictated pricing is not always inefficient. Consider the Fordist firm prior to neoliberalism which was a policy and politically driven command economy internally. (Some firms continue to operate largely on these bases today).

There is also the issue of cybernetic price planning: the Soviet Union had the economic tools to model multi-commodity plans, even with the microeconomic frictions expected, but lacked the political will to force plan based policy decisions over bureaucratic block based policy decisions. In contrast, for example, consider the working of the British economy during the 1940s, 1950s and 1960s. Most British economic agents, state or private, had political concerns and power. However, the direction of the national economy was broadly planned through macroeconomic wage, price and investment control by the state. In a circumstance where the elite (as in the UK) views its shared class interests as overriding their local bureaucratic power interests, central planning can synchronise prices effectively.

In Australia and New Zealand the same conditions applied, only more so, and only broke down under a concerted 10 year working class offensive, and the loss of the major export earnings partner respectively.

A Soviet Union where the elite makes a survival decision (as in the Purge or the GPW) to put their class interest ahead of their sectional interest (ie: the interests of the management of the 4th Urals Smelter Concern), it is possible that a responsive simulated multi commodity plan would functionally operate and in a responsive manner. Computerisation of the simulation and integration of communications would only improve this.

( Obviously the reason why this didn't occur was that the elite didn't place its class interests of continued rule ahead of its local interests. Kind of a ruling class version of the Yugoslavian self-payment political economic issue. )

And, of course, you didn't note the revolutionary response to a price crisis: the abolition of wage labour and the commodity. ( The obvious reason for not doing so, again, is that it is inconceivable in the Soviet Elite circa 1963 to do this. In my opinion the only way to get this to happen would be the success of Hungary '56 causing a '68 type revolution in the Soviet Union itself. )

yours,
Sam R.
 
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