Features of the Soviet military economy

Before conversion became a real process, that is, until 1989, some Soviet economists expressed the hope that the centralized nature of the Soviet economy would facilitate the massive transfer of resources from military to civilian sectors. Their arguments were as follows: since the Soviet economy is planned, its military sector is easier to transfer to the production of civilian goods by voluntary decision. In addition, a significant part of the production of military factories (about 40%) is intended for civilian purposes. No problems should arise with the provision of work for those dismissed from military enterprises, since in the USSR there is always a shortage of labor.

It is theoretically true that a centrally managed economic system is reasonably well adapted to implement large-scale economic programs. (The historical experience of mobilizing resources in the Soviet Union in wartime is one of the proofs of this.) But when it comes to transforming modern military production, it is unlikely that the plan will work better than the market. First, the Soviet military economy is equipped today with much more sophisticated equipment compared to the past. Therefore, its transfer to civilian footing is a difficult task, the solution of which requires subtle approaches, and not ordinary administration. Secondly, unlike military enterprises in the West, which are usually closely connected with the civilian sector, Soviet military production is still fenced off from the rest of the economy by high barriers to its special supply chain, secrecy, etc. In the past, the internal iron curtain prevented the introduction of into the civilian sector of advanced technologies used in the military sectors, and is now an important obstacle to conversion2. Finally, the conversion process in the Soviet Union is complicated by the enormous scope of military production. At the macroeconomic level, it is expressed in the fact that the share of military expenditures in the GNP of the USSR is 2–5 times higher than the corresponding indicators of other industrialized countries, and at the microeconomic level, that many enterprises are completely or almost completely dependent on military orders and, thus excluded from the scope of the civilian economy. (The situation is different for most military contractors in the United States and other Western countries, where 5-10% or less of production capacity is allocated for military orders. This means that military spending can be reduced with much less losses.)

In general, it can be said that the almost complete dependence of the Soviet defense industries on military orders, their strict centralization and relative isolation from the civilian economy make the conversion process in the USSR much more complicated than in countries with market economies. https://bestcasinocanadaonline.com/