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by unknown_apostle 3429 days ago
Gorbachev inherited 65 years of Soviet communism: a super fragile system, based on very tight, top-down command & control. On the surface these command & control societies appear more orderly than democratic societies, but they are very bad at dealing with complexity and at adapting to big changes. Gorbachev made the "mistake" of perturbing the system too much through his attempts at reform.

Also, economically, I don't think the Soviet Union was in such great shape as you say. A space shuttle is not the same as having an economy that creates surplus wealth in real terms. The war in Afghanistan and having to compete with a West bouncing back from 1970s stagflation were other factors not under Gorbachev's control.

The same will at some point happen to e.g. North Korea or Cuba. It has happened to some of these Arabic regimes: when the top echelons are removed or the repressive nature is relaxed, the entire order collapses, leaving a big void and a population which has less than before. In some cases, much less... (Hopefully, North Korea and Cuba will receive lots of support from their neighbours, so it won't be too bad.)

It may also happen with our financial system, the continuation of which comes with ever escalating costs, top-down intervention, bluff, guarantees and outright financial repression. Like Gorbachev, some politician or bank would accidentally upset the balance and would get the blame. E.g. "he raised the rates too fast". Or "too slow", depending on what actually happens. But in reality you should blame the historical fragility of the system itself. (I like the term Soviet monetarism.)

1 comments

The problem with your argument is the existence of China, to this day ruled by the Communist party of China. It's GDP grew by a factor of 25 since the fall of the Soviet Union.
China learned from Russia's experience and slowly loosened the reins on key industries before loosening the reins on other industries without completely relinquishing control.

The key problem with command and control economies in the 20th century was those economies were fundamentally limited by the command's ability to capture accurate market data, learn they key insights about that data and then execute smart decisions.

I'm not claiming China is capable of doing that today, but information technology has significantly improved the efficacy of the leadership's influence on economic activity. However, they were also wise enough to distribute the work of optimising markets by allowing business owners and capital investors to benefit from the efficiencies they introduce.

Simply put: The Communist Party of China has been using a very different playbook for the past 30 years and they've benefitted significantly and the effect of IT has had a profound impact on their efficacy.

I think you're over complicating this a bit. Simply put, they first gave their people economic freedoms (and then not all at once) and then started loosening up in terms of political freedoms. If it takes them 50-100 years, so be it. That actually strikes me as a much more viable approach. You can't really give people freedom if they don't know what to do with it. Not without repercussions at least.
If Russia's GDP per capita reaches China's, its total GDP will shrink 50%, ok?
Don’t really know much about China to be honest. They definitely managed to open up gradually, even if mainly in terms of allowing private investment decisions.

Let's see how the Chinese communist party handles a situation where the low hanging fruit of pedal-to-the-metal big percentage GDP growth has been picked.

Apples to oranges. China, while communist, does not have a centrally-planned economy like the USSR had. They began a series of extensive economic reforms in 1978, leading to privatization of industries, opening to foreign investment, allowances for entrepreneurship, etc.
Also, I think when China began its gradual reform, the country quite simply already had hit rock bottom, coming out of the utter chaos of the cultural revolution. Chaos is different from a fragile order. You can't burn down ashes.

But we seem to have strayed off course somewhat.