
The 2 Simple Reasons the Soviet Union Was Doomed to Fail - tvorryn
http://www.aei.org/issue/25991
======
elblanco
A fun bit of history I learned from a retired Soviet Analyst...My analyst
friend learned of this years later from his Russian counterpart, after finally
being allowed to visit the country he had studied for so long so I'm guessing
it's pretty accurate.

Sometime in the 80's, the Soviets brought in some Japanese industrial
consultants as part of a modernization push for Soviet factories -- they had
started to become aware that the sophistication of their industrial
capabilities had more or less stagnated somewhere in the 1940's or 50's.
Feeling pressure from an increasingly sophisticated U.S. and Europe, they
wanted to know what it would take to catch up with the Japanese, then widely
considered to have the best, most sophisticated manufacturing processes in the
world.

The consultants came and toured some of the major manufacturing cities and
facilities, taking notes, interviewing workers and managers, testing final
output and raw materials quality, crunching numbers, analyzing the supply
chain, that sort of thing. Finally they met with the Soviet leadership in
Sverdlovsk (now Yekaterinburg), home of some of the major industrial capacity
of the Union.

After reviewing the findings for several hours, one of the Soviets, impatient
with all the details finally spoke up, "yes yes yes...we know all this...what
we want to know is, how long will it take, if we put all of our national
resources behind it (meaning, a space race level effort), for us to catch up
with the Japanese?"

Their reply?

"Forever"

Their analysis revealed that the systemic and social issues in the Soviet
Union (as well as a combination of material resources and other odds and ends)
were so bad, that no matter how much effort the Soviets put into upgrading
their manufacturing processes, and no matter how long they put that effort
forward, the Japanese would always be ahead.

The consultants were quickly rushed out of the country and the study was never
spoken of again.

Within the decade, the Union had fallen and it was all a moot point anyway.

~~~
chopsueyar
That reminds me of the book written by W. Edwards Deming, _Out of the Crisis_
, where he is consulting with a US auto manufacturer, and the manufacturer
asks a similar question, "When will we catch up with Japan?" (paraphrased).

Because of Japanese continuous improvement, or Kaizen, it is difficult, if not
impossible to do.

As long as one is constantly improving, the others cannot catch up.

<http://en.wikipedia.org/wiki/W._Edwards_Deming>

~~~
elblanco
> Because of Japanese continuous improvement, or Kaizen, it is difficult, if
> not impossible to do.

Oh great point! Yeah, the problem I think in most of these type of large
systems migration choices is that they view only two discrete states, the
present state and the target state -- and then try and build and plan for all
contingencies. Some of the smarter ones try and define the target state primed
to become the next present state with an eye towards a new target state, but
in practice I don't think this style of thinking works very well.

In the Soviet example, they were looking at the present state of Japanese
manufacturing capability and shooting for _that_ as a target, while the
Japanese were improving it every minute of every day. There is no goal in
Kaizen, all that matters is the process of improvement. It's a very Zen way of
looking at the world that I think thankfully is finding it's way into more
modern principles of iterative development (it's amazing how ever-present
Kaizen is in Western management training -- but I never got the impression
that any of the texts really "got it", instead it's lots of discussion of
studying it and trying to figure out how to adapt these two state processes to
Kaizen principles without ever understanding the continuous nature of it).

~~~
Hoff
A variation can be encountered during product management involved features and
prices.

In more than a few cases, the product specifications for an update or a new
product can indicate near feature parity with a current competitive product,
usually with a small increment past that current product.

Not what the competitive products would offer at the completion of the
development cycle you're launching; not where the competing product would be
in six or eighteen months; after however long it takes to get your new product
to market.

Leading a moving target by an appropriate amount is a regular challenge of
product development.

And you can win against Kaizen by going asymmetric. By allowing your
competitor to optimize what you cause to be the wrong problem.

~~~
jonnathanson
+1

Kaizen isn't a perpetual advantage. Just look at what demographics are doing
to the Japanese economy and manufacturing base. Korea is the new Japan in many
ways, and any honest Japanese manager will willingly tell you as much. Korea
came from literally _nowhere_ to catch up to Japan, despite kaizen.

Disruption, rising costs, aging demographics, etc., can easily shift
industrial edge from one country or region to another.

I'm not denigrating kaizen, mind you. It's still a valuable principle, and one
that will continue to confer many advantages to the Japanese industrial base.
But it's not a sufficient advantage in perpetuity.

------
forinti
I'm not advocating communism, but if you look at the Soviet Union as a
process, it did manage to turn an agrarian society (feudal, actually) into an
industrialized one in 70 years. It's quite a feat, even more so if you
consider the destruction they suffered in WWII.

~~~
Symmetry
Two responses to that.

First, I'm not quite sure you appreciate the cost of that industrialization.
The USSR achieved fast extensive growth in its early years by forcing a very
high savings rate. What does that mean? They exported lots of grain to buy
machinery. Where did the grain come from? The peasants. What did the peasants
do after their grain was taken? They starved. The general attitude during this
time (which helped the Party consolidate power) was not so much of withholding
food from dissidents, but rather withholding food from anyone who couldn't
make a convincing case for how they were benefiting the party or the state. So
most of the progress in bring up the USSR industrial capacity per person was
due to increasing industrial capacity, but a notable part of it was due to
decreasing the number of people as well.

Second, forced savings is a good strategy for playing catchup industrially
when there are lots of obvious ways you can invest the savings (called
extensive growth). Its possible to mess this up (see the Great Leap Forward)
but if the beaurocrats are competent its possible. But when you've urbanized
and need to start specializing more to keep growing the economy finding
efficient ways to do so becomes harder (you're in intensive growth). Its here
that government directed industrial policies tend to fail (or at least work
more slowly than less directed solutions) due to coordination problems.

~~~
rdtsc
Also let's not forget labor camps. Some big industrial projects (especially in
Siberia) such as dams, the Trans-Siberian railroad, factories, power lines
etc., were built with slave labor.

I am not sure of the %, I imagine it is not terribly large, but it is still
there.

Other projects were built with student labor. University students were
encouraged to provide volunteer work on such projects. They got on a train and
traveled some place wherever help was needed. My father said it was quite fun.
He spent a summer in Khazakstan, then another in Siberia.

~~~
face
Can you back your claims up? In particular, say, the Trans-Siberian railroad?
Its construction began in 1891, two decades before the formation of the USSR
[1].

While certainly prisoners were used in its construction, saying that it was
"built with slave labor" is somewhat disingenuous. Perhaps you are saying that
parts of it were built using prisoners, who were not paid for their services?
If so, that is certainly the case.

1\. [http://en.wikipedia.org/wiki/Trans-
Siberian_Railway#Construc...](http://en.wikipedia.org/wiki/Trans-
Siberian_Railway#Construction)

~~~
mml
i have personally heard anecdotes (and seen snapshots) from people in school
in the late 80s, early 90s, who were regularly herded into the fields to
harvest potatoes (czech republic). they too considered it rather fun for
whatever reason.

~~~
face
In the 80s, I went on field trips to learn how to plant vegetables. This was
hardly slave labor.

In the 90s in the US, I had to spend 40 hours "campaigning" for candidates, if
I wanted to graduate highschool. I wouldn't really call that slave labor, but,
I certainly learned a lot more by planting sprouts.

------
iwr
The inevitable failure happened not because of particular details that the
central planners disregarded, but because there WERE planners in the first
place. The market has a network-optimality aspect to it that a monolithic
institution cannot replicate.

Read more: <http://en.wikipedia.org/wiki/Economic_calculation_problem>

~~~
arethuza
One thing I've wondered about is that when viewed from the inside, large
organizations look like centrally planned economies - capital is allocated
centrally and there is often quite strong command and control structures.

So why do large companies manage to run centrally planned systems whereas
centrally planned states seemed doomed to fail?

~~~
cstross
Part of the mythology of western capitalism (as it is practiced) is that it's
100% market based. But as you've noticed, it's actually a whole bunch of
centrally planned hierarchical petty dictatorships bumping and grinding like
boulders in a sea of small businesses like sand grains. Sometimes one of the
small businesses will swell up and become a boulder, and sometimes a boulder
will crumble.

The main advantages of the market seems to be that failure is usually
localized and containable -- although we came frighteningly close to a
widespread meltdown in 2008 -- and, arguably, markets are better at promoting
information flow and responding to new demands (although I suspect the growth
of IP law and the existence of trade secrets counteract this to some extent).

But it's worth noting that the mean life expectancy of a publicly quoted
corporation is around 30 years -- and the USSR made it through just over seven
decades.

~~~
ramanujan
But cstross, the Soviet Union shot you and your family in the back of the head
if you tried to leave! And there were entire agencies devoted to getting
persecuted minorities out of the USSR, including Sergey Brin's parents. It is
not exactly comparable to what happens when you leave a company (the
occasional Ballmer chair throwing fit notwithstanding).

~~~
abalashov
As a Soviet immigrant, I take issue with the realism of your claim.

Yes, the country effectively had closed borders, and yes, it was downright
impossible for most people to leave. A trickle of emigrants who were
begrudingly permitted to leave officially began in the 1970s owing to
international Jewish repatriation policies and so on, but that was not an
option for most people.

Nevertheless, to suggest that people were simply shot for attempting to leave
is an absurd level of hyperbole. They weren't shot, they were just prevented
from doing so via the usual bureaucratic means.

There is the small number of people who attempted a beeline across the border
- similarly to the Berlin Wall climbers - past the spotlights and the guards
and all. Thankfully, there were not many of them, as this is a very stupid
approach to crossing any national border anywhere. The American-Mexican border
may prove to be an unusual exception.

~~~
berntb
So like a prison with life sentences! You could theoretically get out by a
pardon -- but the only realistic way was to sneak out while hoping the guards
missed, if they saw you...

~~~
abalashov
The constant comparisons to a prison reflect the theoretical reality of
leaving the country accurately, but poorly reflect the psychological
perception of the issue by most citizens. The USSR was a vast, vast country,
spanning 11 timezones horizontally as the Russian Federation does now. It
contained 15 ethnically and culturally diverse republics, practically every
far-northern, tundra, sub-tropical and tropical climactic region imaginable,
and manifold examples of every kind of landscape and topography. In addition,
travel to the Eastern European socialist republics was quite possible and
routine for many people.

My point is, there was a lot to see inside the country. Were we technically
"trapped" there? Absolutely. But to grok the actual significance of this,
consider the single-digit percentage of Americans that hold foreign passports.
Vanishingly few Americans have ever traveled outside the country, and a non-
trivial number have never left their state or been beyond a neighbouring one.

So, while the fact that the borders were closed is important, and if that's
your sole point, well, sure, but if you're likening it _experientially_ to a
prison, I think that's a little over the top. There were certain people who
really wanted to leave and for whom that was undoubtably true. But as with
most Americans, most Soviets were somewhere in the middle on that.

This is not an apologia or a whitewashing of the fact that our borders were
closed, but an attempt to convey the human factor in a more nuanced,
perceptive way.

~~~
berntb
I get the human factors (i.e. the jail was big).

>>The constant comparisons to a prison reflect the theoretical reality of
leaving the country accurately, but poorly reflect the psychological
perception of the issue by most citizens.

Of course, with information control from the cradle...

>>Vanishingly few Americans have ever traveled outside the country, and a non-
trivial number have never left their state or been beyond a neighbouring one.

I thought Soviet didn't allow people to move to the place they wanted? Or was
that just the big cities?

But sure, people traveled in the military service...? :-)

------
ThomPete
There is a theory (can't remember where I head or read it) that one of the
main reasons the soviet union fell apart was that the number of phones
installed in private homes increased to a point where it was impossible for
the KGB to monitor and therefore to suppress with propaganda.

I have tried to see if I could find any numbers on phone installations up to
the fall but haven't found any.

Also according to one of the main KGB execs the SDI program was when they
realized that they weren't able to compete with the US anymore.

Ironically the SDI project besides from it being impossible to implement, had
it been fully implemented, it would have cribbled the US economy too.

There is also a nice quite from Arthur C. Clarke about the SDI project in
which he observed that any system as powerful as the vision of the SDI project
would be more dangerous in itself than the dangers it was supposed to protect
against.

~~~
abalashov
I don't know Americans are so deeply fond of gross oversimplifications and
naive, childlike formulations like this.

~~~
ThomPete
I don't know why (non?) Americans are so deeply fond of gross oversimplified
interpretations of what is written like this.

------
arethuza
Richard Rhodes book "The Arsenals of Folly" covers the lead up to the fall of
the Soviet Union from the perspective of the leaders negotiating to reduce
levels of nuclear weapons. It also covers some of the fundamental economic
problems the Soviets had:

[http://www.amazon.com/Arsenals-Folly-Making-Nuclear-
Vintage/...](http://www.amazon.com/Arsenals-Folly-Making-Nuclear-
Vintage/dp/0375713948)

------
lionhearted
Good article, misleading title. Lots of interesting information.

The article is fairly serious, but has some dry humor mixed in. This line was
the funniest:

> In the 1970s and early 1980s, the Soviet leadership, however, was not
> intellectually prepared to heed lessons from the School of Salamanca. The
> shortest quotation about the intellectual capacity of the Soviet leadership
> came from the Politburo minutes: "Mr. Zasiadko has stopped binge drinking.
> Resolution: nominate Mr. Zasiadko as a minister to Ukraine."

~~~
iuguy
Russian humour has always been very dry. My favourite type of Russian humour
is called _anekdoty_ , one of my favourite Russian jokes:

A night watch spots a shadow trying to sneak by. "Stop! Who goes there?
Documents!" The frightened person chaotically shuffles through his pockets and
drops a paper. A soldier picks it up and reads slowly, with difficulty:
"U.ri.ne A.na.ly.sis"... "Hmm... a foreigner, sounds like..." "A spy, looks
like.... Let's shoot him on the spot!" Then reads further: "'Proteins: none,
Sugars: none, Fats: none...' You are free to go, proletarian comrade! Long
live the World revolution!"

------
protomyth
One of the lessons of the USSR, your leader saying something is so and
shooting / exiling everyone who says different does not make for a prosperous,
sustainable government.

~~~
natnat
Counterpoint: China

While China today isn't nearly as bad as the USSR was, their authoritarian
government that still jails and executes political opponents hasn't stopped
their political stability and economic success.

~~~
protomyth
It was the ignore reality part that USSR did so wrong (with shooting/jailing
being a result). China doesn't seem to have a problem with ignoring reality.

~~~
face
The US jails far more people today than the USSR ever managed to. It seems to
be working out okay for us.

~~~
anamax
> The US jails far more people today than the USSR ever managed to. It seems
> to be working out okay for us.

Who you jail and the effect that said jailing has on other people also
matters.

~~~
face
So, it's fine to jail millions, as long as they're people who sell or smoke
pot and not people who you consider important?

~~~
anamax
I didn't say that either jailing system was good. I said that they had
different properties.

But, now that you've brought it up, do you think that they're equally bad?
(Note - "both bad" doesn't imply "equal".)

------
johngalt
1\. Socialism 2\. Totalitarianism

~~~
face
Totalitarian societies have existed for thousands of years in Europe.
Socialism seems to be pretty popular in the US (Medicare, SS) and seems to be
working out okay in EU.

~~~
johngalt
The article basically says that the Soviet economy was broken by bad bets on
two commodities. Very hard to bet the whole country if you don't have a
command economy.

------
listic
Yegor Gaidar's book is on Amazon:

"Collapse of an Empire: Lessons for Modern Russia"
[http://www.amazon.com/Collapse-Empire-Lessons-Modern-
Russia/...](http://www.amazon.com/Collapse-Empire-Lessons-Modern-
Russia/dp/0815731140/ref=cm_cr_pr_product_top)

The description and reviews are very comprehensive.

------
petercooper
Fixed prices and a layer of red tape that caused resources not to be managed
efficiently.

