ABSTRACT
Gorbachev: ‘The old system fell apart even before the new system began to work.’ Yegor Gaidar:
In 1985 the Soviet economic and political systems were becoming more and more sclerotic, stagnant and inertia-bound … The collapse of [the Soviet system] and the subsequent political crisis stemmed from the fact that political control began weakening at the same time oil prices started falling … After August 1991 the state was non-existent. A state presupposes a set of functions, including control over its territory and borders. Soviet laws were not being observed in the republics and the USSR was not in control of its money (fifteen republic central banks were operating at that time). A second characteristic of that period was that there was no functioning economy. The socialist system was based on supplanting markets with the command-based, targeted distribution of goods. But supplanting the market with in-kind distribution on the basis of targeted deliveries is possible only in a strictly regimented system. As soon as the threat of punishment is taken away, the system cannot operate … In 1992 the management teams in place at most enterprises were absolutely incapable of operating under market conditions.
