What Were Gorbachev's Economic Reforms?

As the last leader of the Soviet Union, Gorbachev came to rule during a tumultuous time for his country. Immediately upon coming to rule, Gorbachev issued a number of different reforms in an attempt to revive and stabilize his country’s economy, as well as improve the world’s image of Soviet Union.

Gorbachev issued a price reform throughout the country because the pricing in the country did not accurately reflect a product’s actual values. Prices were changed to more realistically reflect the supply and demand, and the production costs for products.

A new joint venture law was passed on January 13 in 1987. This law opened up the Soviet economy to some foreign influence. In particular, it allowed foreign countries and industrial leaders to participate in Soviet manufacturing. The Soviet Union hoped to learn from these experts of various industries.

Gorbachev also opened up the country to imports. In previous years, the Soviet Union was reluctant to import too many products, and instead they believed in supporting domestic products. However, Gorbachev allowed more imports into the country.

The exports were also more carefully observed under Gorbachev because he believed that the amount of exports in the country was a good way of gauging how the world viewed the quality of Soviet products.

Perhaps the most significant economic reform was the Law of Cooperatives. The Law of Cooperatives allowed some private ownership of business in the Soviet Union in areas of manufacturing, service, and foreign trade sectors. This was a major shift in Soviet policy because all businesses were previously under control of the Communist Party.

However, the law attempted to restrict too much private ownership by issuing high taxes and strict restrictions. 

Gorbachev’s Other Reforms

Gorbachev instituted other reforms as well. In addition to attempting to revitalize the economy, and in an attempt to fight the problem of alcoholism in the country, the prices of liquor were raised in the Soviet Union.

However, this resulted in a severe blow to a substantial part of the economy. Furthermore, citizens of the Soviet Union began to produce their own liquor. Often this liquor was unsafe and produced in unsanitary conditions. It resulted in many deaths in the Soviet Union.

Gorbachev also issued a series of reforms to increase freedoms in the country. Under Gorbachev’s policy of “glasnost,” Gorbachev increased the freedom of speech for citizens. The newspapers were allowed much more free reign with criticizing the government and the Communist Party.

Gorbachev's Leadership History

Gorbachev became the General Secretary of the Communist Party on March 11, 1985 and he served as the leader of his country until 1991. Gorbachev was the first leader of the Communist Party in Russia who was born after the Russian Revolution. He announced his ideas for reform at the twenty seventh Congress of the Communist Party of the Soviet Union in 1986. 

Problems Facing the Soviet Union

The Soviet Union was facing a myriad of problems by the mid 1980s. Exports were down in the Soviet Union because the Soviet Union factories were producing poor quality goods. Due to the high prices of oil and the country’s requirement for it, the Soviet Union was losing billions of dollars each year.

To make up for the bleeding economy, the leaders of the country had to cut money from certain parts of industry. This turned some of the industrial leaders against the government. The Soviet Union began to borrow money internationally; however it did not appear that the country could pay back the loans.

This country in disarray was what Gorbachev inherited when he became President of Russia in 1991.