Why Did the Soviet Union Collapse?

byJoshua Foust on 6/14/2007 7 comments Did the USSR really fail because Saudi Arabia ramped up oil production in 1985 (supposedly at President Reagans behest), thus collapsing oil prices and forcing Moscow into bankruptcy? Color me skeptical: As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive. $20 billion sounds like a lot, but for a country the size of the USSR, that really isnt ver y much money. While it is undoubtedly true the oil readjustment negated much of the oil revenue the Soviet Union had enjoyed since the OPEC embargo in 1973, I have a hard time believing that oil prices aloneeven as something of a tipping pointis what pushed the USSR over the brink. Furthermore, debt alone couldnt have collapsed the USSReven before its collapse in 1991, debt was only about 20% of GDP. In 2004, the U.S.s debt was 38% of GDP, which was still below the 40% debt incurred after World War II. Many other non-collapsing countries have debt ratios that are far worseJamaica, for example, is proud to have reduced its debt to 133% of GDP. Im afraid the unfortunately-named Gaidar has fallen for a common fallacy: assigning complex phenomena singular or simplistic causes. In reality, the reason the USSR collapsed (a topic worthy of a far more involved discussion elsewhere) was a combination of factors: debt, overstretch, bad policy & poor planning, corruption, and deep resentment. Since debt was covered above, lets just briefly look at the rest:

Overstretch: in the 80s, the Soviet Union was in the midst of the Afghan War. This was one of many proxy battles it fought with the U.S., and the combined impact likely depleted the government of resources and money that could have been used elsewhere to stimulate growth or encourage flexibility. Additionally, the game of brinksmanship played by President Reagan kept outside pressure on Moscow never to decrease defense spending, which surely had a further drag effect on the budget. Bad Policy & Poor Planning: Soviet planners made disastrous policy choicesfrom the Virgin Lands program, to the futility of supporting an entire society on slave labor in the gulags, to the sloppiness that resulted in the Chernobyl disaster, the USSR was replete with financially ruinous events that could have been prevented. The Communist system was fundamentally unsustainable. Corruption: this shouldnt need much expanding upon, but outside Moscow everyone from police to border guards to troops were reknown for their corruption and susceptibility to bribes. Despite my pseudo-ambivalence from the other day, corruption has a horrendous drag effect on an economy. Deep resentment: As all the above factors coalesced in the late 80s, the Soviets and their puppets in East Europe found it increasingly difficult to maintain the strict control of

society needed to maintain the communist system. Widespread resentment in Europe combined with deep dissatisfaction over the negative turn of events resulted in what was essentially a spontaneous mass bloodless revolution (this is a gross simplification, but my meaning is clear). The failure of one regime cascaded across the Eastern Bloc and into the USSR itself, until all the communist governments were evicted. I know Im glossing over very interesting details, and I probably left a few factors out of the list. This isnt meant to be an exhaustive list of factors that caused the USSRs collapse, but rather it is meant to show that you cannot point the blame to any one factor. The collapse of the Soviet Union was a complicated affair, the result of many otherwise recoverable malaises hitting the country all at once, along with some fundamental societal weaknesses no one on the outside could really seenot some petty squabble over oil prices and a few billion dollars. Nothing is Free June 15, 2007 at 1:10 am I dont think we should underestimate the oil factor. In the 70s, hard currency earned through oil sales allowed the Soviet Union to import Western goods on a large scale for the first time. No oil revenue, no hard currency, no Western goods (or grain for that matter the Soviet Union *never* recovered from collectivisation). But everyone has had a taste of the good life! Add to the mix the humble VCR a highly under-appreciated factor! Sprinkling of Glasnost. The nomenklatura was corrupted by materialism, but it is obvious that under the current system, a black Volga, first dibs on Western imports, a better apartment and dacha than the people one was meant to serve, were all that one could aspire to. So why not capitulate? Especially attractive to the elites at the republican level, which by then were largely composed of locals.Big fish, small pond > small fish, big pond. Nothing is Free June 15, 2007 at 6:13 am They werent a common item, no. They were *very* expensive, and mostly bought on the black market. However around 85-87 Gorbachov allowed small private eneterprise co-ops basically. So video salons sprang up all over the place. Every dingy apartment building basement, cafe, retired rail carriage became a mini-cinema running badlydubbed (on purpose, lest the authorities recognize the voices) Merkan cultural output. Aliens, Rambo, Terminator, etc.. I recall seeing Commando for the first time around 1987. I thought it was the best movie eva! (Sometimes its best not to revisit things you liked as a child. Ruins the memories. No retreat, no surrender did not live up to my initial impressions a mere 5 years later either.) So thats when I was indocrinated to love America. There are a lot more reasons for Soviet collapse. One has to say that Soviet economy was merely a catch-up economy, all industrial products were a bad copy of that in the west, and which would never get updated.

And yes there were VCRs in the Soviet Union, ironically they came from Afghanistan. Soviet military and medics exchanged their Kalashnikovs (and etc.) for VCRs and color tv sets. I think he makes a pretty good case that it was the spread of nationalist mobilization, which by a certain point could not be contained by the state, that really drove the collapse. Reza Zia-Ebrahimi is finishing an MSc in History of International Relations at the London School of Economics & Political Science (LSE). He plans to write a PhD thesis on Iranian nationalism. Empire, Nationalities, and the Collapse of the Soviet Union By Reza Zia-Ebrahimi Michael Doyle defines empires as follows: Empires are relationships of political control imposed by some political societies over the effective sovereignty of other political societies.[1] In both Tsarist Russia and the Soviet Union there existed a metropole or a core of Russian population and institutions molded in Russian culture and language with some participation of representatives of other cultures who helped maintain those Russian-centric institutions. This metropole maintained the type of imperial relationship described by Doyle to the non-Russian periphery territories and populations. This relationship was engineered to the general political and economic benefit of the metropole. The peripheral populations never enjoyed genuine sovereignty or political independence. However, at least in the case of the Soviet Union, which will be the focus of this paper, fluctuations did occur in the comparative level of the peripherys autonomy and their freedom to express their respective individual nationalities. In fact, these expressions were at times even encouraged. The Soviet leadership displayed a striking flexibility in defining the place of Russianness in the Unions identity and institutions. The prevalence of the identity, its status in education, its role in defining the nation and/or the state, and the stature of Russians in the Unions institutions all remained in a state of continual change as the leadership adapted itself to new challenges from both inside and outside the Union on the one hand, and its own priorities, whether economic centralization, the war effort or the continuous endeavor to gain and maintain legitimacy, on the other hand. Analyzing this vacillation in Soviet nationalities policy, the reasons behind it, and its role in the demise of the USSR, is the aim of this article. Early Nationalities Policy As early as the 1917 Revolution and the ensuing Civil War, a new nationalities policy and a campaign of de-Russification were launched.[2] Exhausted by the First World War, the Russian empire was on the verge of disintegration. Polish and Finnish nationalisms were long known sources of concern to Russian rulers and were still problematic.[3] However, Ukrainian, Byelorussian, and Azeri nationalisms to mention but a few were expressed with vigor for the first time. The Bolsheviks had to quickly formulate an effective policy to appease non-Russian nationalist impulses and avoid the fragmentation of Russian territory. Equally crucially, the main

remnant of the old rgime, the nationalist White Army, conducted some of its operations in nonRussian territories, and was absolutely uncompromising on the idea of a single and undivided Russia ruled by Russians.[4] The White Armys stance was particularly unappealing to non Russian nationalists, and if the Bolsheviks were to win the hearts and minds of non-Russians and prevail, they had to distinguish themselves from the White Armys imperialist ideology. Lenin initiated the first shift away from imperial policies. At the Eighth Party Congress in 1919, Lenin argued that the nascent socialist fatherland must radically distance itself from the imperialism of Tsarist Russia.[5] Lenin advocated recognition of the various peoples of the old empire as separate nationalities and argued that they should be granted significant concessions. This stirred ideological opposition among hardcore elements since Marxist theory defines nationalism as the foe of true socialism and a plot of the bourgeoisie to curtail the proletariat from reaching its universal aspirations. However, by using a degree of flexibility and acknowledging and accommodating peripheral national aspirations, Lenin suggested a very pragmatic move. In his mind, from a theoretical point of view, this was a temporary concession necessitated by political imperatives.[6] The supremacy of the proletariat would ultimately render nation-states and thus nationalism obsolete. The right to partial self-determination was thus formulated as a response to the increasing assertiveness of non-Russian nationalisms. Federalism and the co-option of non-Russians became a source of legitimacy to what was after all an emerging imperial state desperately seeking to consolidate its rule over the periphery. The national identity of the new Soviet state and its citizens was thus established on the universal ideology of communism and not ethnicity.[7] According to Hans Kohn, the Bolsheviks turned nationalism from an allcommanding absolute into the servant of a supranational idea.[8] Communism as an ideology was the foundation for the Soviet state-building process; it defined the Soviet Union as a federation of equal peoples inexorably advancing towards the communist ideal of unity.[9] It was to be radically different from Tsarist Russia and to be antidote to the social viruses which had plagued it (i.e. monarchy, reactionary aristocracy, capitalism, the Orthodox Church, and imperialism, officially defined as the cultural repression of the non-Russian periphery). The nationalities policy took the name of (korenizatsiia), which is often translated as indigenization, and its objective was to make Soviet power seem more indigenous to the non-Russian periphery. One of the primary manifestations ofkorenizatsiia was a wave of Moscow-sponsored nationbuilding efforts. The central authorities actively established separate republics and a myriad of national territories that were drawn up along ethnic lines. The central authorities supported local languages, educated and promoted local elites and thus built new loyalties to the socialist cause and the central state that was its main champion. As Ronald Suny put it, [r]ather than a melting pot, the Soviet Union became the incubator of new nations.[10] Each Soviet republic was flanked with an official culture, official folklore and national opera-house. Soviet authorities went as far as to develop written systems for local languages that had previously lacked them. Local languages were taught at schools and universities and used in local administration, provoking in some cases a decade-long adaptation process of a previously Russianized population.[11] In the 1920s, when almost all pupils in the Ukraine were taught in Ukrainian, a

Russian residing there also had to be educated in Ukrainian (and obviously to master it if he/she was to pursue a political career in the local administration).[12] While the central state accommodated and encouraged non-Russian expressions of nationhood, it was particularly suspicious of Russian chauvinism. Lenin stated that one must: distinguish between the nationalism of oppressor nations and the nationalism of small nations [I]n relation to the second nationalism, in almost all historical practice, we nationals of the large nations are guilty, because of an infinite amount of violence [committed].[13] In other words, nationalism of smaller nations in this context, the non-Russian periphery was a legitimate response to the chauvinism of larger oppressing nations. If this chauvinism were defeated, peripheral nationalisms would lose their raison-dtre. This mistrust of Russian nationalism involved a sustained effort to eradicate the Russian past, its cultural expressions, its rural roots and the institutions that embodied Russianness, especially the Orthodox Church and the Romanov dynasty. This culminated with the deportation of the Don and Kuban Cossacks, who were ethnic Russians who had supported the royalist White Army.[14] It is therefore fair to talk of this period as one of de-Russification. Korenizatsiia helped to prevent the disintegration of the fragile Bolshevik state and created a combination of direct and indirect rule.[15]Korenizatsiia was so efficiently carried out that one could argue, as author Terry Martin does, that the USSR was truly the first affirmative action empire in history.[16] De-Russification and Sovietization also had a cultural corollary in the short-lived movement of Proletkult (Proletarian Culture), an avant-garde artistic movement with the goal of creating a truly Soviet civilization, which would be purified of the old elitist Russian culture of the nineteenth century. Proletkultwas to become a revolutionary new culture transcending Russianness. It was to be internationalist, collectivist and proletarian.[17] Stalin and the About-Face in Korenizatsiia Policy In the late 1920s and early 1930s, Stalin slowed and eventually reversed the process of korenizatsiia. Several factors may explain this. First and foremost, korenizatsiia had generated a strong sense of national consciousness among the non-Russian populations, and Stalin grew increasingly mistrustful of them. Although he had earlier supported the institution of korenizatsiia and even helped develop its conceptual framework in his 1913 pamphlet Marxism and the National Question[18], he now believed that national consciousness posed a challenge to the metropole. Additionally, the state had by then the means of repression which it lacked in 1919 and priorities had shifted from consolidation and accommodation to development. Increasing economic centralization required Russian to be imposed as the predominant language of economics, development and education, and this logically favored an active incorporation of large numbers of educated Russians into the national enterprise.[19] The leadership also found itself confronted with a still strong chauvinism in the Russian masses. A more appeasing approach had to be adopted to avoid alienating Russians and help them identify with the goals set by the Kremlin; their loyalty was needed to carry out the governments ambitious political and economic development plans. In an endeavor of such a scale, the central

government had to make the best use of its resources, and needless to say, Russians stood at the core of the empire in terms of population numbers and education levels. Educated Russians were sent to help expand the economies of less-developed republics, creating one of the lasting consequences of this period: the large-scale migration of Russians, which in turn modified the ethnic composition of nearly all the republics.[20] Russianness was rehabilitated, and Russian patriotism was encouraged and often imposed from above. Many local political leaders in the Republics were physically eliminated in large-scale purges, while national treasures were devastated and cultural institutions shut down. Additionally, several autonomous republics and regions were abolished and entire populations deported from their homelands to politically quell what was seen as a dangerous and rising local nationalism.[21] By 1938, Russian was compulsory in all schools across the Union. In the mid-1930s, korenizatsiia institutions, which had previously represented minority interests were dismantled at an accelerated pace.[22] This re-Russification was amplified further during the Second World War as chauvinism was exploited to mobilize the specifically Russian masses for the battlefield. Concurrently, nineteenth century Russian literary and artistic classics were restored as models while Proletkult was set aside. [23] During the Second World War, the symbolism of the 1812 fight against Napoleon with its fervent nationalism was utilized to inject a patriotic dimension into the ongoing struggle against fascism. Alexander Nevsky, Kutuzov, and even Peter the Great were glorified as war heroes of the past and their aristocratic blood was forgiven. Famous filmmaker Sergei Eisenstein was commissioned by Stalin to adapt Nevskys valiant fight against the Teutonic knights. In another act supporting Russian nationalism, it was Mother Russia herself on propaganda posters all across the Union calling the citizens to the front. Pre-Soviet high culture was promoted by the Kremlin as an attempt to legitimize the state and promote national unity during unpredictable years.[24] Reaching a Balance The third shift in nationalities policy was much less abrupt and led to a more balanced situation. In the immediate aftermath of Stalins death, the nationalities question became crucial to the battle for his succession. The contenders had come to believe that once again, in order to gain support, they had to grant concessions to the non-Russian periphery. Once Khrushchev ascended to power, some economic-administrative competencies shifted from the metropole to the republics and many non-Russians gained offices in the central and local governments (although some of these transfers were reversed in the 1960s.)[25] At the root of this shift was the fact that the korenizatsiia policies followed during the 1920s had allowed the blossoming of strong national consciousness and, more importantly, of an experience of limited statehood. This consciousness was fuelled by the most powerful catalyst of identity, i.e. a national language, which in many cases korenizatsiia had helped to bring about. The national consciousness of non-Russians was even further strengthened with the widespread literacy and education achieved from the 1930s onwards. Undoubtedly, Stalins repression of

these identities in the 1930s and 40s and re-Russification created tremendous ethnic and political tensions in regions that had only recently tasted national freedom, at least in the cultural sphere of identity. Hence, in order to give new life to Soviet politics after Stalins death, the leadership had to once again recognize national elites and co-opt them in the broader power structure. National differences were officially recognized at the Twentieth Party Congress of 1956, and socialism was again positioned as the humanistic ideology that would allow national idiosyncrasies to flourish. From a pragmatic perspective, as mentioned previously, the promotion of federalism and of national differences had always been a strategic means of fostering the authority of the metropole over the periphery. Nonetheless, Khrushchev actively endeavored to devise a theoretical basis to his policies. He endorsed the paradigms of (sblizhenie, rapprochement) and (sliianie, merging) and developed them at the 1961 Party Congress.[26] These concepts, relying on previous Leninist ideology, essentially asserted that the march towards communism would merge national differences, leading to a fusion of nationalities into one Soviet people. There was therefore no need to repress expressions of difference that would disappear over time. However, Khrushchevs nationalities policy would not be a complete return to the situation of the 1920s, and on one particular aspect he would remain intractable: Russian remained the Soviet , (yazykmezhnatsionalnogoobshcheniya, the language of internationality communication) and of the cooperation of all peoples of the USSR.[27] Higher educational institutions and an ever-growing number of high schools operated exclusively in Russian, especially after the education reforms of the late 1950s.[28] The predominance of Russian was the major difference between this third period where national differences were accommodated and the first period analyzed in this article, the nation-building craze of the 1920s (korenizatsiia). One of the reasons for this discrepancy was that the national goal of economic development was a priority now more than ever, and a unifying idiom was necessary to carry it out efficiently. It was a premeditated choice, and Khrushchev most probably was aware of its political cost. When he clearly expressed his determination to foster the position of Russian as the dominant language in the late 1950s, he essentially signaled an end to his systematic policy of concessions and in the process destroyed the support that he had enjoyed in the non-Russian republics. Although this language policy was extremely unpopular among non-Russians, it remained unchanged up until the collapse of the Soviet system in 1991. It would be an exaggeration to state that the USSR between Stalins death and 1991 was fully a Russian empire, but it must be stressed that the Russian-centric metropole and the Russian language dominated. However, indirect rule was more firmly established, and in large parts of the Union, especially in Transcaucasia and Central Asia, local leaders enjoyed a considerable degree of autonomy. Nationalism and Collapse To what extent did the fluctuations in nationalities policy play a role in the collapse of the system as a whole? The situation in the 1980s reveals the crucial role played by nationalism, both

Russian and non-Russian, in the last years of Soviet history. Increasingly, during Brezhnevs rule and later, nationalism became a catalyst of discontent. Brezhnevs era was characterized by permissiveness vis--vis many expressions of nationalism, and this passivity allowed the development of dissident movements under the guise of nationalism. Nationalism was also used to express dissent in Gorbachevs time,[29] especially when economic reform failed and after glasnosts revelations about Soviet repression wiped out the states legitimacy almost overnight.[30] According to Dominic Lieven, in the emerging re-construction of their own history, the nationalists identified the Soviet experiment as the enemy of essential, authentic, natural national aspirations,[31] despite the fact that the Soviet policies had nurtured and even shaped some of these nations. In confronting these national movements and their demands for sovereignty or independence, Gorbachev, committed to democratic reform, could not use the convenient instrument of force that had been used so often to hold the USSR together. Nationalism, stimulated by the fluctuation between the experience of statehood and forced Russification, thwarted the reform envisioned by Gorbachev and led the country towards radicalism and ultimately implosion and an interesting type of decolonization. There were many other reasons behind the fall of the Soviet Union, of course, but nationalism was one among the major ingredients. As Gorbachevs decentralization policies further eroded an already weakening central authority, declarations of independence mushroomed in the republics. Russian nationalism and resentment was an equally crucial element in this process. Many Russians did not have the impression of belonging to a metropole. In most Russian regions, the perception was that the metropole was concentrated in Moscow alone. Indeed, Russian regions from Vladivostok to Leningrad were as tightly controlled as non-Russian republics, perhaps more so. Everything from their school curricula to their crop acreage to the types of goods they sold in their stores was determined in Moscow.[32] There was an equally strong resentment against smaller republics having superior autonomy, representation and lobbying power than larger and more-developed Russian regions within the RSFSR. Boris Yeltsin played partly on these resentments when he conveyed the populist message that for too long Russians had been dominated by what he called The Center, i. e., the Moscow central institutions. As the progeny of the Soviet system, Gorbachev was in no position to challenge Yeltsins appeal to the dormant but still powerful nationalism of the Russian masses. Thus Yeltsin, enjoying a strong base of support among Russian nationalists, became chair of the RSFSR Supreme Soviet, and declared Russia a sovereign state. After a series of uprisings, hasty decisions, misreading of actual events and a missed coup, the USSR ultimately collapsed. The status of the Soviet Union as an identity marker however, has not collapsed. It is interesting to notice that the merger of Russian and purely Soviet symbols, in addition to the victory of 1945, gave reality to the abstract notion of Soviet patriotism.[33] For some time, Russia and the Soviet Union became indistinguishable. It is not the existence of this Soviet patriotism but its resilience that is remarkable. In Russia itself, many Soviet patriotic elements have been restored

by Vladimir Putin into the national symbols of the Russian Federation, including the music (though not lyrics) of the Soviet national anthem. A Russian military parade today is an interesting blend of Soviet and Russian components that shows how confused Russian identity itself has become after 70 years of Soviet infiltration.[34] Also, many in Russia today feel a strong Soviet nostalgia and do not see the break between Russia and the USSR as a clear one. Conclusions The extent of the Russian character of the USSR was more clearly defined in the two periods that followed the 1917 Revolution, i.e. korenizatsiia between the Civil War and the early 1930s, and re-Russification until Stalins death in 1953. In the first period the USSR was not a Russian empire, as policies were not intended to inequitably favor the imperial core over the periphery. Duringkorenizatsiia, the USSR was an incubator of new nationalities, replacing earlier local, religious or tribal solidarities with a sense of belonging to various nation-states comprising the broader Union.[35] Russianness was repressed. However, this statement must be tempered by the fact that despite the official recognition of non-Russian nationalities, real political power and economic decision-making were still concentrated in Moscow. An absurd situation was created in which nationalisms with all their flags, lexicons and national clothing were promoted, but true national political expression was lacking. Subsequently, during the second period, when Russianness was restored as the overarching identity of the union, these new national consciousnesses, still freshly promoted or created, were ruthlessly repressed, and therefore paradoxically consolidated. From that time, Russianness was deeply resented by non-Russian nationalists as the nemesis. Indeed, it was not only Tchaikovsky and Pushkin who were back on the pedestal, but an imperialist metropole, imposing an inequitable relationship upon the periphery. This left an indelible perception among non-Russians. The assimilation of the Soviet system with Russian imperialism, led the non-Russian nationalists at a later stage to define themselves against both the Soviet system and the perceived Russian imperialism for which it seemed to stand. The post-Stalinist period was again more permissive and more tolerant toward expressions of non-Russian nationalism. Many of the nationalist movements, which were allowed to express themselves in the republics during Brezhnevs reign, would later fuel the mass movements of the Gorbachev period.[36] The USSR was not a Russian empire as such, but there was a predominance of Russians, although this was never absolute. The ultimate irony of Soviet history is that its proclaimed initial objective of unifying the Soviet people an honorable goal which might have overcome divisions created by nationalism was frustrated by a pragmatic policy of cultivating non-Russian national consciousnesses, believing that the march towards socialism would one day render nations obsolete. This never happened. In fact, the very national experiences that korenizatsiia had engendered, consolidated by later repression, provided a social and cultural base for discreet resistance to rule by the metropole and ultimately radical nationalist uprisings in the 1980s.[37] In fact, the republics had been brought into the Union by force and were kept there by force during Stalins reign.[38] Force, or the memory of force, helped hold the Union together for 74 years, until Gorbachev liberalized some aspects of Soviet political life and, in the process, unleashed the inherent vulnerability of Soviet federalism: the right of the republics, embodied in the Soviet constitution, to secede. Nationalism

was a time bomb that exploded in the void left by the de-legitimized Soviet ideology in a period when the leadership was reluctant to use force to hold the empire together. In the last days, the USSR was perceived as a Russian empire by the republics aspiring to selfdetermination. In Russia itself, the USSR was perceived as an over-centralized Moscow empire. The convergence of these two perceptions played a role of great consequence in the disintegration of the imperial territory into fifteen independent states. Footnotes [1] Michael W. Doyle, Empire, Cornell University Press, 1986, p.19. [2] Terry Martin, The Affirmative Action Empire, Cornell University Press, 2001, pp. 11 12. [3] Ibid, p. 2. [4] Gerhard Simon, Nationalism and Policy Toward the Nationalities in the Soviet Union. From Totalitarian Dictatorship to Post-Stalinist Society, Westview, 1991, p.21. [5] Lenin had already developed these ideas in a brochure written in April 1917, Zadachiproletariata v nasheirevoliutsii (Proektplatformyproletarskoipartii). [6] Ronald GrigorSuny, The Revenge of the Past; Nationalism, Revolution, and the Collapse of the Soviet Union, Stanford University Press, 1993, p. 87. [7] Interestingly, for all its apparent modernity and progressiveness, this move was reminiscent of more ancient empires where ethnicity was also not a defining element of citizen identity. For instance, most Roman emperors were not ethnic Italians, as Latin high culture was considered the actual determinate of Roman identity and had precedence over ethnic origin. [8] Hans Kohn, Der Nationalismus in der Sowjetunion, Societts-Verlag, Frankfurt-am-Main, 1932, pp. 94 96, quoted in Simon, Nationalism and Policy, p. 7. [9] Dominic Lieven, Empire, the Russian Empire and its Rivals from the Sixteenth Century to the Present, John Murray, London, 2000, p. 291. According to the constitution of the USSR, the Soviet republics had the right to secede. [10] Idem. [11] Ibid., p. 102-103. [12] Ibid., p. 292. [13] Lenin, K voprosu o natsionalnostiakh, 359, quoted by Martin in The Affirmative Action Empire, p. 7.

[14] Lieven, Empire, p. 303. [15] Simon, Nationalism and Policy, p. 1. [16] Terry Martin, The Affirmative Action Empire, Cornell University Press, 2001. [17] Orlando Figes, Natashas Dance, A Cultural History of Russia, New York, 2002, p. 450. [18] Joseph V. Stalin, Marxism and the National Question, in Prosveshcheniye, Nos. 3-5, March-May 1913. [19] Lieven, Empire, p. 292. [20] Simon, Nationalism and Policy, p. 2. [21] Suny, The Revenge of the Past, p. 108. [22] Ibid., p. 108. [23] Figes, Natashas Dance, p. 480 481. [24] Lieven, Empire, p. 305 306. [25] Simon, Nationalism and Policy, p. 234 258. [26] Khrushchev, N.S. "Report on the Program of the Communist Party of the Soviet Union." Documents of the 22nd Congress of the CPSU. New York: Crosscurrents Press, 1961, 2 vols. [27] Ibid. [28] Suny, The Revenge of the Past, p. 108-110. [29] Suny, The Revenge of the Past, p. 125 126. [30] Lieven, Empire, p. 335. [31] Ibid., p. 139 140. [32] J. Hough, Democratisation and Revolution in the USSR 1985-1991, Brookings Institution Press, 1997, p. 57. [33] Simon, Nationalism and Policy, p. 149. [34] Dominic Lieven, The Soviet Union: an anti-capitalist empire?, lecture in Empire, Colonialism and Globalization, London School of Economics and Political Science (LSE), London, March 2006.

[35] Suny, The Revenge of the Past, p. 110. [36] Ibid., p.124. [37] Suny, The Revenge of the Past, p. 126. [38] Lieven, Empire, p. 326. References Michael W. Doyle, Empire, Cornell University Press, 1986. Orlando Figes, Natashas Dance, A Cultural History of Russia, Metropolitan Books, New York, 2002. J. Hough, Democratisation and Revolution in the USSR 1985-1991, Brookings Institution Press, 1997. Khrushchev, N.S. "Report on the Program of the Communist Party of the Soviet Union." Documents of the 22nd Congress of the CPSU. New York: Crosscurrents Press, 1961, 2 vols. Hans Kohn, Der Nationalismus in der Sowjetunion, Societts-Verlag, Frankfurt-am-Main, 1932. The Changing Status of Russian in the Soviet Union, ed. By Isabelle Kreindler (International Journal of the Sociology of Language, 33.) The Hague: Mouton, 1982. Pp. 141. Dominic Lieven, Empire, the Russian Empire and its Rivals from the Sixteenth Century to the Present, John Murray, London, 2000. Terry Martin, The Affirmative Action Empire, Cornell University Press, 2001. Gerhard Simon, Nationalism and Policy Toward the Nationalities in the Soviet Union. From Totalitarian Dictatorship to Post-Stalinist Society, Westview Special Studies on the Soviet Union and Eastern Europe, 1991. Joseph V. Stalin, Marxism and the National Question, in Prosveshcheniye, Nos. 3-5, MarchMay 1913. Ronald GrigorSuny, The Revenge of the Past; Nationalism, Revolution, and the Collapse of the Soviet Union, Stanford University Press, 1993.

Peak oil and the fall of the Soviet Union: lessons on the 20th anniversary of the collapse
by Douglas B. Reynolds

This is a guest post by Douglas B. Reynolds, Professor of Energy Economics at the University of Alaska, Fairbanks, Department of Economics, SOM - TOD editor Luis de Sousa Synopsis: The causes of the fall of the Soviet Union are thought to be inefficiency and the Soviet response to the Reagan Administrations military buildup of the early 1980s. However, a more plausible explanation is the decline in Soviet oil production caused by peak oil. This gives the world an example of a modern economy confronted by peak oil and what lessons we can learn from it. Neo-Classical Economics In the West we have great economic Nobel Laureates, such as Hayek, Solow, Freidman and Samuelson, who extol the virtues of markets for organizing an economy. Yet their theories for how great markets are for organizing an economy contrast sharply with the planned economies of the Union of Socialist Soviet Republics (USSR) and the Soviet East. The odd thing is, the Soviet Union, even with a planned communist economy, managed to become a super-power with a military prowess that scared the West. Remember the Cuban missile crisis, or Khrushchev pounding the table at the United Nations with his shoe saying, We will bury the West, or the Sputnik panic? Well, Kennedy (1987) shows quite profoundly that you cant have that degree of military prowess and be a world super-power unless you also have a strong and vibrant economy to back it up which, against all doctrines of conventional neo-classical economics, the Soviet Union had. It produced over 2 million motor vehicles a year, over 100 million tons of steel a year, and hundreds of advanced MIG jet fighters every year. So either the Nobel Laureates are wrong about their emphasis on markets or we dont have a correct picture of the Soviet Union and its economy at all. However, we know that free markets do work, and upon close inspection, the Soviets actually did use markets: managers of communist enterprises had to engage in trades and internal political markets to obtain scarce resources for production; people created their own private little gardens, dachas, that produced fruits and vegetables sold on farmers markets; workers were given bonuses as incentives to work hard; and the authorities allowed certain black markets to ease other Soviet planned inefficiencies. So in fact the Soviet Union was market oriented after all. Nobody has to give back their Nobel prizes just yet. Still, Robert Solow (1956) suggests that technical progress is the cause of four fifths of the US output per worker, which suggests that it should also cause four fifths or so of increases in Soviet output per worker. However, neo-classical economists emphasize that free markets give the incentives necessary for such innovations, which makes you wonder, why was the Soviet planned economy able to essentially keep up with America when it was not be able to give as many incentives as the US could and therefore could not induce innovations as well as the US could? One reason is that the Solow neo-classical growth theory is incomplete. Yes, labor, capital and technological innovation are important inputs into economic growth, but what Cleveland et. al. (1984), Cleveland et. al. (2000), Smil (1991, 1994, 2005) and Reynolds (2002) make so clear is that energy is a vital ingredient to growth and technology. If you take away

energy, the labor, the capital and the technology inputs cannot do a thing. As one physicist friend said to me once, I bet (those economists) cant even change a tire. So what all of the Nobel Laureates, and indeed the Nobel committee for the economics prize itself, and indeed most economists are missing is the essential role of energy as an input into economic growth. Energy must be separated as an input into growth and analyzed and econometrically modeled. If that were done consistently, then energy analysis would be one of the most central themes in the American celebration of the global economic rise as well as a central theme in our understanding of the Soviet economy. The American and Western economies rose not just because of technology alone, but because of the use of high quality energy, and lots of it, and similarly the Soviet Union rose due to energy too. The Importance of Energy for an Economic System If we acknowledge that the Soviet Union had a powerful economy, which it did, and acknowledge that its economy was based on the same abundant, high quality energy that the US depended on, oil, then the reason for the fall is clearpeak oil. The fall of the Soviet Union is a peak oil event and if we treat it as such, then we can begin to understand what is in store for our own economy. Indeed, the fall of the Soviet Union is a perfect economic experiment for what will happen to our own world economy as peak oil continues. According to the Economist (2010) the world is experiencing a rising cost for extracting energy because the energy needed to extract energy is rising, i.e. this is the concept of a falling Energy Return on Energy Investment (EROI). See Cleveland et. al. (1984), Hall et. al. (1986) and Hall (2008). What is more the Economist finally says what so many others, like Hamilton (1983), have been saying for years, that energy costs are affecting the economy. A decreasing EROI is in turn a general way to explain peak oil as it implies you can no longer find high EROI energy, e.g. conventional oil in large reservoirs but are instead finding low EROI oil, such as oil in small reservoirs. The decreasing EROI also implies another problem for the economy because the substitution away from high EROI oil is increasingly inelastic (Reynolds 1999c) and creates a loss of the Entropy Subsidy (Reynolds 1998). In other words, peak oil will cause economic decline. However, if peak oil is affecting the world, than why would it not have affected the Soviet Union too? Clearly it did. No one has studied closely the Soviet Unions EROI to see, like our current world economies, if EROI was declining within the Soviet system and therefore affecting the Soviet economy. Nevertheless, one way to analyze the fall of the Soviet Union is to simply analyze its conventional oil use, which has been studied, see Reynolds and Kolodziej (2007 and 2008) and Reynolds (2009, 2001, and 1999a). Nevertheless, before we can look at a peak oil theory for the fall, it would be good to look at the alternative Soviet collapse theories that abound. Alternative Soviet Collapse Theories The Economist (2009), for its part, claims that it was a decline in total factor productivity (TFP) that may have caused the fall of the Soviet Union. However, upon a close inspection of Beare (2006) and Easterly and Fischer (1995), articles which surely would have been referred to in a

TFP analysis, it is shown that in fact TFP was always growing, although at a declining rate, but growing nonetheless. Thus, a slow growth in TFP can only cause an economy to grow more slowly, not collapse. The upshot is that the Soviet TFP was not declining for 30 years as the Economist claims, but its rate of growth of TFP was declining. Still a poor TFP performance cannot have been the cause of the Soviet demise as even China had a poor TFP performance before its embrace of free markets and the Chinese Communist party is still going strong. Another hypothesis for the fall is the Reagan Doctrine hypothesis, where the US Presidential Administration of Ronald Reagan increased military spending and support of Soviet opposition in Poland and Afghanistan, which may have also caused the fall. But economists have yet to falsify that hypothesis although more than that, it doesnt make sense. Reagan came into office after the USSRs 11th Five Year Plan (1981) was already in place. With a Soviet Union as inefficient as it is said to have been, the Soviets would have needed time to react to Reagans military spending and then plan what to do. In fact, it would have been too difficult to start reacting to Reagan within the 11th Five Year plan without rewriting and reorganizing the whole plan, a feat that would have taken years. Better to change the 12th Five Year Plan (starting in 1986) instead and begin to react against Reagans policies then. However, the 12th Five Year Plan does not show any evidence of a huge change in defense spending, nor was there any recorded change in defense spending until about 1988, nor are there any other signs of change before then such as a radical increase in the number of missiles. That means the hypothesis, which depends on the idea that defense and internal communist police spending were taking away investment into new productive capital, would require many years after 1988 before an effect on the overall Soviet economy should have been observed, yet the fall started to happen in that very year of 1988 as that is when Eastern Europe, part of the Soviet Empire, started to have problems. Also, the propaganda surrounding the 12th Five Year Plan was one of openness (glasnost) and development (uskoreniye) not one of military spending increases or the need to more adequately defend the Soviet homeland. It seems highly unlikely that it was the 12th Five Year Plan that could have caused a precipitous fall in the Soviet Union that actually started in 1988 only two years after the beginning of the plan. So what is needed is to take a different analytical tack in assessing the collapse of the Soviet Union, away from the political, economic and military propaganda, and consider the USSR as an energy system. Clearly it used the same high quality energy resources that the US and the rest of the world did, see Table 1, so that means that not only did the Soviet Union use some free market principles, parallel to the West, but it used almost the same energy systems as well. If we analyze the Soviet Union as an energy system therefore, rather than as a political or even economic system, then we can start to understand both its great economic output in spite of its inefficient planning and its great fall in spite of its internal (albeit black) market system.

Table 1. Conventional Energy Production Energy Source USSR 1988 USA 1988 World 2010

Oil (million barrels per day, MBD) Natural Gas (trillions of cubic feet per annum, TCFA) Coal (million tons per annum, MTA) Hydropower (gigawatts of installed capacity, GW) Nuclear (gigawatts of installed capacity GW)

12.5 MBD

9.7 MBD

85 MBD

27 TCFA

17 TCFA

137 TCFA

850 MTA

950 MTA

7240 MTA

64 GW

74GW

777 GW

20 GW

100 GW

366 GW

The energy cost effects on the Soviet economy To start with, it must be understood that as Reynolds (1994, 2002) points out, conventional crude oil is the most valuable of all energy resources, because it is a liquid (state grade). This is why for example oil sells currently for about 10 per Gigajoule ($14/mmBtu) while coal sells for about 2 per gigajoule ($3 per mmBtu). Also oil has 20,000 Btus per pound (weight grade), 1 million Btus per cubic foot (volume grade) and 500 billion Btus per acre in-situ (area grade). See also Smils (1991) concept of power density. In aggregate, as a sort of energy theory of value, oil has the highest energy grade of any energy resource. It also has the highest energy return on investment (EROI) than any other energy when considering large conventional oil fields. See for example Hall (2008). So looking at the value of oil, it is clear why the Soviet Union rose to prominence as it was able to produce so much cheap oil upon which to base its economy. Oil smoothed out Soviet inefficiency. However, the Soviet Union fell when its oil production fell and it no longer had cheap, high quality energy. In fact, isnt it the case that oil is the real reason that the US economy grew so rapidly during the early 20th century too, and then so slowly after 1973, the year of the first oil shock, as Cleveland et. al. (2000) show? Thus the Soviet Union and the US both had vast resources of oil and both grew powerful because they both exploited oil so much. Both economies extracted oil quickly, although the so called inefficient Soviet Union managed to exploit its oil resources even faster than the so called efficient USA: a 10% rate of growth in oil production for the USSR in its early years and a 7% rate of growth in oil production for America in its early years. However, both the Soviet Union and America saw peaks in their oil production, the US in 1970, as M. King Hubbert (1956) and many others (see Brandt 2010) predicted; the Soviet Union in 1988. See Figures 1 and 2. Thus the US shows that no matter how advanced or efficient an economy is

and the US is one of the bestyou will eventually endure peak oil, and that an oil shock caused by oil scarcity can affect your economy adversely.

Figure 1

Figure 2 The Chicken or the Egg? Being a closed economic system, the USSR and the Soviet East had very little trade with the West and so that system had to depend completely on its own oil production. When Soviet oil production declined, so did its economy. You could argue that a lack of markets, Soviet inefficiency or the political chaos in the 1980s caused the production to fall, but as spelled out in Reynolds (2000) and Reynolds and Kolodzej (2007, 2008) the only thing that makes sense is that scarcity caused the decline in oil production first and that the decline in oil production caused the collapse of the Soviet East afterward. After all, why did only Soviet oil production decline but not Soviet natural gas production, two industries that are very similar, if inefficiency was so rampant? Why did Soviet oil production increase before 1980 without much Western technology only to suddenly start declining after 1980 even when the Soviets had access to Western technology? And why did a period of glasnost cause the Soviet Union and the Soviet oil dependent Eastern Europe to collapse, but a similar glasnost caused China to rise and stay communist? The only explanation that works is the dependency on internal cheap oil and the peak oil hypothesis. If you look closely at the news prior to the collapse of the Soviet Union, you see that first Eastern Europe went through economic chaos starting in 1988, the year of Soviet peak oil, followed by Russia in 1990 and beyond. Interestingly, once the Soviets saw their peak in oil in 1988, they

forced all the Council of Mutual Economic Assistance (CMEA) countries to pay for their Russian derived oil in hard currency and at Western oil prices. But the Eastern European countries had no such currency to pay for oil and so they had to curtail their use of oil. Well, without any (almost free) oil available, you cannot run a modern economy no matter how efficient it is let alone an inefficient communist one. This caused the Eastern European economies to collapse and revolutions in Eastern Europe to erupt starting in 1988. Basically there were about 20 French Revolutions in the span of four years as communist government after communist government fell. Clearly, then 1988 is the initial point of the overarching fall of the Soviet Union when you include its regional influence in Eastern Europe. But as Soviet oil production continued to decline after 1988, peak oil affected the Soviet economy as well, causing its collapse. The Soviets eventually endured their first stagflationary shock in October of 1989 when their currency was devalued by 90%. Eventually, as the Soviet economy fell each of the Soviet Republics from Lithuania to Kazakstan left the Union. And during that whole time Soviet and post-Soviet oil production fell from a high of about 12 million barrels of oil produced per day to a low of about 7 million barrels a day, a 40% decline. So the real reason for the fall of the Soviet Union was an oil crisis. It was the third major oil crisis of the 20th century after the 1973 and 1979 oil crises, but you never hear of it. The Post-Soviet Oil Rise You might ask, if there was peak oil in the Soviet Union during the fall, then why did former Soviet oil production rise again after 1996? Doesnt this mean that there was plenty of oil and that it was their own inefficiency that caused the collapse in oil production? To answer this question consider a parallel question. Why did the ancient Babylonians of Mesopotamia fall? After all, if the ancient Babylonians had modern 21st century technology, they would not have fallen. Well, they did not have that technology, but then neither did the Soviets have a lot of Western technology, not because the Soviets did not buy much new oil technology from the West, but because their system was not set up to use that technology. The main reason for the rise in Post-Soviet oil production was that there was a change in relative prices between energy and labor, a change in property rights and a change in the over-arching market structure behind the use of such technology. See Dienes (2004) for the complete analysis. During the Soviet era, the oil production enterprises used simple primary and secondary oil production techniques to produce the massive oil that existed. However, the enterprises depended on Soviet technology, Soviet supply lines and above all were under Soviet government dictums. This is where we must also use conventional neo-classical economics to understand events. Remember, oil was basically given away at a low cost, but there was an initial government plan and investment to get it, i.e. a cost within the planned economic structure. Nevertheless, there was little incentive within the system to upgrade the necessary technology and invest heavily in new techniques because the price was set so low, although much investment did occur within the confines of the system. The one thing that Soviet oil enterprises could not do was to manage the oil resources to maximize the value of oil over the long term. Better to produce quickly now, and ruin a field or

waste oil, then to produce more slowly to maximize total value. Nevertheless, such waste does not imply a lack of technology caused the fall, it implies a lack of oil caused the fall and that the lack of technical efficiency did not help matters. After all, if the Soviets had had ten more Western Siberias of oil, or even 100 more, then their oil production would not have fallenthey would not have had peak oilbecause more cheap oil would have been available. Still whether you have an efficient car or an inefficient car, it cannot run without any fuel. After the fall, once property rights changed, and the price of oil relative to other economic inputs, especially labor, was raised, it was relatively easy not just to bring in massive amounts of new technology to reinvigorate ruined fields, but also it was easy to manage the pace of production to maximize the fields long term value. Nevertheless, the fact remains that under a closed and bureaucratic system that was unable to change, oil became scarce within the confines of that system. Indeed oil production declined in Americas own oil sector under Americas so called advanced market based system. Thus, with a closed and relatively less efficient system, it could not have been lower levels of technology, lower levels of investment and lower levels of management that caused a Soviet peak and decline in oil since Soviet technology and managementthough inefficientwas always improving. Rather it was oil scarcity, i.e. the lack of more large oil fields available, that caused the oil production decline. Indeed, Soviet investments into the oil sector were increasing as Gustafson (1989) makes clear. More investment, better technology, and more openness toward the end of the Soviet Union cannot cause a peak oil event, only scarcity can do that. Will the World Follow a Soviet Style Peak? The Soviet Union endured a peak in oil production within its particular system. Once the system changed, there was indeed a renewal of oil production, but even under the new system today there is again peak oil as figure 1 shows. However, just because a system can change, does not mean that the old system did not endure peak oil, it did. Logic dictates cause and effect in time and context. Thus while the Soviet Unions region does not change from 1988 to 2010, its economic system did. Still, even if a more efficient system was put in place in that region and caused oil production to increase, that still does not imply that the fall of the Soviet Union was not caused by peak oil. The crux of the issue is, can the world also endure the same oil crisis event that the Soviet East endured? Yes it can. Seeing as the world is a closed system with a certain level of technology then it too is subject to peak oil and the economic consequences of that peak. We will surely endure the same crisis that the Soviets endured and indeed we already are, as the Economist (2010) tacitly, though unknowingly, admits. See Figure 3 to view where peak oil stands for the world.

Figure 3 Many of those who look at peak oil consider the worlds peak oil, as shown in Reynolds (1999b and 2009), to be a short run phenomenon and that, rather like the Soviet Union, oil production will soon increase again possibly because of the Iraqis newly revitalized oil sector. However, a close comparison of the Soviet Union and the world suggests that the world will not suddenly have an increase in oil production as the Soviet Union did. Consider these points: First the Soviet Union had a huge increase in technology after 1996 and especially after its currency crisis in 1998. Second the whole of the region of the Soviet Union, not just one little oblast, was changed. Finally, most of the Soviet oil reserves shifted from state ownership to being privately held. If we were to compare the world to the Soviet Union, none of these conditions are present, and therefore the world in total cannot possibly have a new round of oil production increases the way the post Soviet Union did. However, all of the oil producing countries of the world currently have the latest and greatest oil production technologies and access to any and all innovations. So unlike the Soviet Union, there can be no technological revolution for the world. Next, the world already has relatively free markets even in Russia and the Middle Eastern countries. These free markets allow capital and labor to move relatively easily and quickly to wherever they are needed, and so an increase in free markets is not possible, they already exist. Finally, as far as property rights are concerned, most oil producing countries are not about to turn over their vast oil reservoirs to private control

as the former Soviet Union did. State ownership for most oil reservoirs will continue, and so a Soviet style increase in oil production for the entire world should not be expected. Thus in order for the world to increase its oil production on the same magnitude and relative scale as the former Soviets managed, you would need a worldwide revolution in technology, institutions and markets, not just a change in one relatively small oil producer of Iraq, and that is just not going to happen. The Soviet Unions Peak Oil as an Economic Experiment What so many Sovietologists and economists fail to consider about the Soviet Union is that the Soviets knew about peak oil, seeing as they had one of the most technically well-educated workforces in the world with top mathematicians, physicists and oil geologists. Indeed, the Soviets were actively trying to find solutions for peak oil with new energy technology. The Soviets clearly researched alternative energy technology previous to the fall, such as solar energy, oil shale energy and nuclear power, (CIA 1985). Those same top people undoubtedly warned the Soviet brass about the problem of peak oil and there was indeed a tremendous increase in energy research and oil investment in the USSR. This bodes badly for our own predicament, for even though we have also conducted much alternative energy research and oil investment, the Soviets, and our own 1970s energy investments show that alternative energy has never been able to help an oil crisis. So knowing the world rate of oil production has already peaked, then what can we expect? The Soviet Unions collapse offers a preview. We can expect a great stagflation, where you simultaneously see a declining economy and hyperinflation. We can expect to see high unemployment and a collapse in the world economy. We can expect to see governments without any money to pay for things like health care, pensions, environmental problems, prisons, education or defense. We can expect to see infrastructure decay. We can even expect to see a decline in population. Finally, similar to the post Soviet Union, we can expect to see protests, political turmoil and revolution. The Origins of the Financial Crisis is from the Oil Crises of the Past So, what the Soviet Union endured is exactly what we are seeing now. Indeed the entire financial crisis and its own resulting political turmoil is not about finance at all, but about peak oil. If you go back to the US administration of Ronald Reagan and even before, the so called free market economic revolution that he inspired was really only a set of policies in reaction to the oil crises of the 1970s. To some degree these policies worked, such as deregulating airlines, but to some degree these policies did not work such as deregulating banks. This culminated in the 1990s with the Dot Com bubble and the currency crises of Asia and the developing world, and continued in the early 2000s with government policies to help the housing and construction industries grow beyond sensible levels. However the culmination of the housing bubble occurred when all these people living on the edge of their limited weekly pay, could not simultaneously pay for gasoline, due to high oil prices, and their mortgages and had to choose to foreclose. Now that these bubbles have burst, there is nowhere left to hide. No more growth is possible without more cheap energy.

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