Consumer Goods in The Soviet Union - The Consumer Industry and Soviet Economic Development

The Consumer Industry and Soviet Economic Development

Following the October Revolution of 1917, the economy of the Soviet Union, previously largely agrarian, was rapidly industrialized. From 1928 to 1991 the entire course of the economy was guided by a series of ambitious five-year plans. (see Economic planning in the Soviet Union) The nation was among the world's three top manufacturers of a large number of basic and heavy industrial products, but—as a result of historical factors that made emphasis on consumer industries a development only roughly since the 1960s—it tended to lag behind in the output of light industrial production and consumer durables. One result of this was that consumer demand was only partially satisfied.

Although there was an effort to emphasize public consumption over private consumption in the Soviet Union, nevertheless households earned incomes that they could use for the purchase of consumer goods or for savings. If households were unable to convert income into goods, a variety of incentives could arise. For example, in the event of excess demand for consumer goods, one would expect households to react by working less and/or accumulating savings. From the planners' viewpoint, it was necessary to balance the output of consumer goods and services with the flow of income to the population.

Soviet planners fought a constant battle for the consumer goods balance throughout the Soviet era. In the early years, wages were rising and priorities were shifting from consumer to producer goods. The result was both open and repressed inflation. After World War II, Soviet planners kept wages under better control, and increased the output of consumer goods. By the end of the Soviet era, however, Soviet planners were plagued by what they perceived as a substantial and growing monetary overhang, which took the form of supply shortages.

After the industrial stagnation in the 1970s and early 1980s (see Soviet economic development), planners expected that consumer industries would assume a more prominent role in Soviet production beginning with the Twelfth Five-Year Plan. But despite a greater emphasis on light industry and efforts to restructure the entire planning and production systems, very little upturn was visible in any sector of industry in 1989. High production quotas, particularly for some heavy industries, appeared increasingly unrealistic by the end of that plan. Although most Soviet officials agreed that perestroika was necessary and overdue, reforming the intricate industrial system had proved difficult.