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The USSR's mobilization economy

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Post 11 May 2018, 03:03
Back into the Future, Or Cold War Lessons for Russia

By Vitaly Shlykov, GRU agent who was the handler or Dieter Gerhardt and later economist and statesman. Basically argues that the USSR's war economy was more efficient than that of Germany and perhaps even the US, but that it never wound down after the war, or even after Soviet collapse. Notes that liberal reformer Gaidar didn't understand it and because of that didn't reform it as he thought it was crucial to the strategic well-being of the state.

Overall an interesting perspective because of Shlykov's background in the Soviet military although I don't really like his idea of conversion as it is based on the idea of temporary autarky, but Russia's internal market is only 2% of world's population and even with a cash infusion would not make sense.

The most interesting argument is that the USSR overproduced raw materials such as metals, hydrocarbons as part of military preparedness and that the cash surpluses Russia had after Soviet collapse in the form of 10% of GDP annual trade surpluses are simply a Soviet reserves being exported. He considers this a crisis of overproduction of money, which economic structure prevents from being spent.

There is also a longer Russian version of the article but the English language one has better editing.

It is also an interesting contradiction: Russian monetarists, followers of Yegor Gaidar, want to reform the economy but don't understand the role the military plays in it and have little interest in tackling these issues while Russian structuralists, followers of Yury Yaryomenko, understand how the mobilization economy works but generally don't consider capitalism to be superior to socialism economically (but have issues with the USSR's political system) and are not really involved in reforms. Those are handled by the liberal Medvedev government, and include the military (defense minister Shoigu is a former Yeltsin ally and devout liberal despite hawkish stance) but are counter-balanced by the National Security Council and Federation Council, where structuralist economists have much more influence. (Russia's system of government, where there are not only checks and balances but also overlaps is a bit hard to understand but those are the three bodies most influential on economic and defense policy.)
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