Union of Soviet Socialist Republics (U.S.S.R.). Economy

Economy. The Soviet Union developed the world's largest centrally planned economy. Until the mid-1980's, the Soviet Union ranked second after the United States in production of goods and services. The government owned the country's banks, factories, land, mines, and transportation systems. It planned and controlled the production, distribution, and pricing of all important goods.

Beginning in 1928, the Soviet economy grew rapidly under a series of plans emphasizing industrialization. But improvements in living conditions lagged behind the growth of the economy. The country's participation in World War II (1939-1945) caused a major economic setback. The standard of living rose rapidly between 1953 and 1975. But it then stopped improving and remained stalled far below that of the United States.

In the late 1980's, the Soviet leadership began a major reform of the economy called perestroika (pronounced PEHRuh STROYkuh) in an attempt to promote* innovation, to increase efficiency, and to respond to consumer wants. The reform called for state enterprises to be more independent from central control and authorized private cooperative businesses run by individuals and families. Perestroika also included plans for the Soviet Union to become more competitive in international trade. In spite of these efforts, economic problems continued until the Soviet Union was dissolved.

Manufacturing. During the 1920's, the U.S.S.R. was mainly a farming country. But it had been developing its industry since the late 1800's, and under Communism it became an industrial giant. Only the United States outranked the Soviet Union in the value of manufactured products.

In 1928, the Soviet Communist leaders began the first of a series of five-year plans to promote industry. Each plan set up investment programs and production goals for a five-year period. At first, the government chiefly developed factories that produced heavy-industry products, including chemicals, construction materials, machine tools, and steel. Heavy industry, especially steelmaking, expanded rapidly. But housing construction and the production of consumer goods lagged seriously right to the end.

The Soviet government had widespread control over the operation of individual factories. Government agencies told factory managers which products to make, how many items of each to produce, and where to sell them. The government took about three-fifths of the factories' profits in taxes. The factories used the remaining profits to improve production and for bonuses to managers and workers.

Heavy industry, such as steelmaking, above, helped the U.S.S.R. become an industrial giant. In the late 1980's, the Soviet Union produced more steel than any other nation

Agriculture. The U.S.S.R. had more farmland than any other country in the world. Its farmland covered more than 2 ¼ million square miles (5.8 million square kilometers), over a fourth of the entire country. The Soviet Union was one of the world's two leading crop- producing countries. The United States was the other leader.

The U.S.S.R. had more than twice as much farmland as the United States, but U.S. farmland is generally more fertile. In addition, much of the farmland in what was the Soviet Union lies near the Arctic Circle, where growing seasons are short, or in regions of light rainfall. Many Soviet government farm production plans were impractical and interfered with the farm manager's job of making the best use of the land and workers.

The leading farmworkers on a state farm received an award for a good harvest from the Communist Party. The Soviet government owned and operated huge state farms, and it paid wages to the people who worked on these farms

In the 1980's, about two-thirds of the farmland in the U.S.S.R. consisted of some 22,000 sovkhozy (state farms). These huge farms averaged about 42,000 acres (17,000 hectares) in size. The state farms were operated like government factories, and the farmworkers received wages.

About a third of the farmland in the U.S.S.R. consisted of some 26,000 kolkhozy (collective farms), which were controlled by the government but managed in part by the farmers. These farms averaged about 16,000 acres (6,500 hectares). In general, a collective farm supported about 500 households. The collective farmers were paid wages and a share of the production and profits. Families on collective farms could farm small plots for themselves and sell their products privately.

Foreign trade played only a small part in the Soviet economy because the country's policy was to be self-sufficient. The Soviet Union's enormous natural resources provided almost all the important raw materials needed. No other country had so much farmland, so many mineral deposits or forests, or so many possible sources of hydroelectric power as the Soviet Union had.

The country's major exports were lumber and wood products, machinery, natural gas, petroleum, and steel. Its main imports were consumer goods—including grain—and industrial equipment Most of the Soviet Union's trade was with the countries of Eastern Europe, including Bulgaria, Czechoslovakia, Hungary, and Poland. The Soviet Union's chief trading partners outside of Eastern Europe were Cuba, Finland, France, Germany, Italy, and Japan.