Veaceslav Ioniță: Soviet economic system collapsed because it was hypercentralized

“The very large information costs when everything was hypercentralized are the clearest explanation for the economic and organizational collapse of the USSR. A joke says in the Soviet Union there was only a ministry of forward railways and a ministry of backward railways. They tried to control everything. Take the Soviet Union’s strategy of 1986 and will see what is written there for 2020 – how much butter a person will eat and how many nails will be bought and this wasn’t a joke. They coordinated everything. They believed that human conscience can be deciphered to the smallest details,” Veaceslav Ioniță, economic expert of the Institute for Development and Social Initiatives “Viitorul”, said in a debate hosted by IPN. “The man cannot be programmed and when the whole Soviet Union worked to build a common system, the information costs, the costs related to decision-making, the costs associated with non-taking of decisions were so large that the system collapsed.”

According to Veaceslav Ioniță, 30 years later we can ascertain that the agricultural production during the Soviet period increased three times during 30 years. Homebuilding also grew. “That progress should be recognized, but all these things formed part of a system that initially astounded everyone and ultimately shocked everyone when it collapsed. That system turned out to be a failed one against the rest (capitalist system, e.n). The man cannot be turned into a robot as it is a human being with emotions. As long as things went well, the salaries and pensions grew and the Soviet people were ready to pay the cost of not having freedom as they felt they didn’t have freedom. After 1985-1986, when store shelves were empty, the people started to wonder: why should we endure this? And the collapse followed,” said the expert.

He said the older people who were them young are now very nostalgic for the USSR. They remember the social protection existing then. Moldova reached the size of the pension paid in the Soviets Union only now, but then the people enjoyed a different protection level.  The pensioners in the Soviets period had a much higher social status than now. “The average pension represented 50-60% of the average salary in the Soviet Union and the older people lived in dignity. The World Health Organization says the man should live the old age in dignity and needs at least 40% of the missed revenue for the purpose. We are now under 30% and were earlier under 20-28%. The pensioners are not only poor. They are also marginalized against the rest of the members, being pushed to the periphery of society,” stated Veaceslav Ioniță.

He noted that during 30 years of Independence, the Moldovan authorities thought about the pensioners only three times: in 2001, when the pension was raised substantially, in 2009 and now, in 2021. “Once in ten years we turn out attention to pensioners. If the minimum pension hadn’t been raised to 2,000 lei, we would have reached the level of 1985 in 2022 or 2023. This rise in welfare is due to an enormous effort made by the government. Against the rest of society, the pensioners remain marginalized yet. In the best case, if Moldova undertakes to implement the World Labor Convention as regards 40% of the missed revenue - to ensure decent living for pensioners – in about 15 years we can reach the wanted level. Now the Republic of Moldova does not even want to discuss this commitment. This is a source that fuels nostalgia for the USSR,” said Veaceslav Ioniță.

The public debate “Thirty years without the USSR:  Why did it disappear, why is it still alive?“ is the 216th of the series of debates “Developing Political Culture through Public Debates”. IPN’s project is supported by the Hanns Seidel Foundation.

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