The government deficit and its relations with the dissolution of the Union of Soviet Socialist Republics

Abstract

Despite the initial intentions of former General Secretary Mikhail Gorbachev to “improve Soviet socialism”, the political-economic measures of his period - perestroika and glasnost - engendered a complex of contradictions that led to the disintegration of the USSR. In this sense, the objective of this research refers to the political-economic analysis of the Soviet government deficit within this context. The disconnected economic measures, especially in the second phase of perestroika (started in 1988), reduced the Union’s revenue and greatly increased the liquidity of the Soviet economy without a corresponding increase in the supply of goods and services; moreover, the withering of economic planning, the destruction of the party-state-based command structure and the political conflicts involving the republics were also fundamental to the liquidation of the Soviet Union's patrimony. Thus, such misconduct led by Gorbachev weakened the central government's control over the Union's macroeconomic policies, paving the way for the dissolution of the USSR.