Communism
to Capitalism
Published by the National Geographic Society
Magazine
Washington D.C., March 1993
The economic evolution of the Former
Soviet Union (FSU)
In the wake of a democratic revolution, 15
independent states emerged from the ruins of the Soviet Union. Yet
the overthrow of communism may be remembered by these new nations as
child’s play, so daunting are the challenges now before them.
Politically they are at risk from within, as nationalist demagogues
threaten to sabotage the aspiring democracies. Economically they
reel from trial to error, since history offers no guides for the
excruciating process of dismantling a long- entrenched communist
complex.
Before Lenin and his Bolsheviks hijacked
Russia’s popular revolution in 1917, a dynamic industrial base had
been belatedly established in tsarist Russia, propelling it to fifth
place among world economies. During Lenin’s early leadership, an
economy crippled by civil war spurred him to adopt his New Economic
Policy, (NEP), a seven-year reprieve from state control for
traditional farming and some private industry. Four years after
Lenin’s death in 1924, the NEP was discarded by dictator Joseph
Stalin, whose Five-Year Plan began the total nationalization of the
economy. Within a generation this once agrarian land was transformed
into an industrial power second only to the
By the mid-1930s nothing of value, except small
agricultural holdings, remained in private hands. The entire economy
was managed through a vast hierarchy of committees, headed by the
State Planning Commission (Gosplan). It, in turn, took its orders
from the Communist Party through the government’s Council of
Ministers, which established production goals in a series of
five-year plans. These goals were determined not by market forces
but by bureaucratic analysis. In such a system, profit and loss were
vague concepts, efficiency was of secondary importance, and
money-losing enterprises were rarely shut down. Competition was
suppressed, and production became highly concentrated in certain
industries, such as the manufacture of automobiles and sewing
machines. Because prices were unrelated to supply and demand,
consumer items fell into chronic shortage, forcing customers to
stand in endless lines.
Prior to Stalin’s death in 1953, the forced
labor of political prisoners figured large in the growth of the
economy. Late, low productivity helped keep the demand for labor
high and unemployment near zero.
Agriculture, the Achilles’ heel of the economy,
was divided between collective and state farms. Both suffered from a
lack of incentive for workers and a shortage of expertise on the
part of planners in
By the early 1970s stagnation was setting in as
Stalin’s mighty creation began to malfunction from its own weight
and internal contradictions. At first planners papered over their
losses with oil and gas revenues, which rose spectacularly after the
creation of OPEC. At the same time, they began restructuring areas
of the economy around Terrible Production Complexes-regions
self-sufficient in energy, minerals, and labor.
Productivity, however, continued to lag. By
1986 the need for real economic reform, or perestroika, was obvious
to the new leadership under Mikhail Gorbachev. What he failed to see
was that his policy of Glasnost, of openness, would unleash a
whirlwind of pent-up longings that would bring the whole communist
structure crashing down, along with its empire.
Return to QuistSpeaks
Home from Communism
Everil Quist - President & CEO of QuistSpeaks, LLC
"Aside from teaching cooperative farmingtechniques, I have learned so much from working with the noble peoples of third world countries, and have many heartwarming and entertaining stories to tell.
By sharing these adventrues with my audiences, I am 'Creating Positive Change" - and I find that both heart-warming and immensely fulfilling."
"Everil Quist’s depth of knowledge about how business is run in this country, and around the world, makes him a unique public speaker. His stories of his adventures overseas are true and unusual. I do not hesitate to recommend him for any speaking event anywhere.”