ABSTRACT
It has become somewhat of a modern cliché to insist that the collapse of Communism is one of the defining moments of twentieth-century political economy. Next to the Great Depression, the events of the late 1980s represent the political economy puzzle for us to solve. If the Great Depression shook a generation’s faith in the stability of the market economy, then the collapse of Communism smashed another generation’s hope that a socialist political and economic system offered a solution to capitalist ills that were at one and the same time more economically rational than the capitalist order and more consistent with the democratic values that progressive liberalism demanded. The reality of socialism prior to 1989 was long lines, lousy products, corrupt politics, a history of repression, and declining social system of provision in health and human services. The environmental degradation and increasing risk of major environmental disaster in the Soviet Union, for example, were evident even prior to Chernobyl. When Tatyana Zaslavskaya’s 1984 “Novosibirsk Report” was circulated among the ruling élite, nobody was really shocked by the content of her diagnosis of the existing system.1 Rather, it was the boldness with which she put forth the need for fundamental reform of that system that was shocking to the ruling élite. The Soviet system had so eroded the “surplus fund” that even a fortuitous oil shock could not have bailed out the system this time around, as it had in the 1970s.The system crumbled from within.2 The Soviet Union was but the most extreme form of this failed project in socialist political economy, and the rest of the Soviet Bloc followed suit. Ironically, the Soviet Union was actually the last to officially take the leap into the post-socialist era of political economy, but the reasons that this leap was necessary throughout the socialist world were strictly speaking Soviet ones.
