While Gorbachev had instituted these reforms to jumpstart the sluggish Soviet economy, many of them had the opposite effect. But he again reversed course when faced with pressure from hardliners after a massive strike by 300,000 miners in 1991. He also showed initial restraint when laborers began to push for increased protections and rights, with thousands protesting the wild inefficiencies of the Soviet coal industry. He encouraged Western investment, although he later reversed his original policy, which called for these new business ventures to be majority Russian-owned and operated. Gorbachev also peeled back restrictions on foreign trade, streamlining processes to allow manufacturers and local government agencies to bypass the previously stifling bureaucratic system of the central government. Many of these new co-ops became the basis of the oligarchical system that continues to control power in Russia today. In fact, the term “private property” was never even used. As William Taubman, historian and author of Gorbachev: His Life and Times, notes, “This was a way of introducing private enterprise without calling it that.” Not since the short-lived New Economic Policy of Vladimir Lenin, instituted in 1922 after the Russian civil war, had aspects of free-market capitalism been permitted in the U.S.S.R.īut even here, Gorbachev tread lightly. In May 1988, Gorbachev introduced a new policy that allowed for the creation of limited co-operative businesses within the Soviet Union, which led to the rise of privately owned stores, restaurants and manufacturers. It was a move that rankled many high-ranking officials who had previously headed these powerful central committees. This incentivized them to aim for profits, but it also went against the strict price controls that had been the bedrock of Soviet economic policies.
Gorbachev’s perestroika program loosened centralized control of many businesses, allowing some farmers and manufacturers to decide for themselves which products to make, how many to produce, and what to charge for them.
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