The background to the event
The 1968 Polish political crisis caused even more chaos as that nation started to fall apart. The effects of the Arab 1973-74 oil crisis produced an inflationary surge followed by a recession in the West, which resulted in a sharp increase in the price of imported consumer goods, coupled with a decline in demand for Polish exports, particularly coal. Poland's foreign debt rose from US$100 million in 1971 to US$6 billion in 1975, and continued to rise rapidly.
The economic event
It could have been caused by the increased military expenditure over consumer goods and other economic spheres, but this is debatable since it was 17% of GNP in 1950 and had increased on par with economic growth without previously destabilising the economy.
The 1965 Soviet economic reforms proposed by Alexei Kosygin, sometimes called the Kosygin reform or Lieberman reform, were a set of planned changes in the economy of the Soviet Union (USSR). It alowed for profitability and sales as the key indicators of enterprise success. There was to be no stigma in plowing some money back in to firms. Workers would also be allowed corporate rewords like pay rises and free lodgings. It was stopped and mostly undone by 1973 since the ruling party gerontocracy thought it would go to far as in the Socialist Republic of Czechoslovakia and the previous reform attempts in Socialist Republic of Hungary.
During the 1973-74 oil crisis destroyed the world economy for about 5 years, especially for the established economy of Japan and the emergent Polish economy, but the Soviet hard currency earnings grew as a result of their oil exports to parts of the West, some neutral states and Poland. Latin America also gained slightly as they exported more oil to the USA for a while because the USA was losing faith in the Arabs after they had turned on Europe and Israel.
% Annual GNP growth (CIA).
% Annual NMP growth (Grigorii Khanin).
% Annual NMP growth (USSR's government).
Whilst Soviet forces were awesome on paper a sharp economic decline, shortages in key industries, endemic political corruption and bureaucratic inefficacy had devastated their battle readiness by the late 1970s. The navy was in sharp decline as fuel was in very low supply, pay was crap, spares were running out and food was also getting low. Many had also started to doubt the value of life under communism. This lead to much secret and ex-pat political humour against President Leonid Brezhnev.
The Bydgoszcz events of March 1981 showed Poland was a troubled land. Trade with the Western bloc also began to grow, especially from Poland, the GDR and Czechoslovakia. Yuri Andropov had given up all hope of a non-military solution to the crisis and Konstantin Chernenko knew that the Soviet economy was doomed with out at least some economic co-operation with the West. Gorbachov ("Gorbie"/"Gorba") tried to do this and he failed miserably.
The economic policy was so brain dead even Laurel and Hardy could have don better. It is little wonder why the Soviets and Poles hated living in their countries and wanted out.
- Exercise Zapad-81
- Red Army racism and shortages!
- The "plain"/"secret"/"dark"/"drab" doors
- Life under communism
- Soviet Social Apparatus
- Russian and Soviet Leaders since 1917