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The perestroika program
During the initial period (1985-1987) of Mikhail Gorbachev's time in power, he talked about modifying central planning, but did not make any truly fundamental changes. Gorbachev and his team of economic advisers then introduced more fundamental reforms, which became known as perestroika (economic restructuring).
At the June 1987 plenary session of the Central Committee of the Communist Party of the Soviet Union (CPSU), Gorbachev presented his "basic theses," which laid the political foundation of economic reform for the remainder of the existence of the Soviet Union.
In July 1987, the Supreme Soviet passed the Law on State Enterprise. The law stipulated that state enterprises were free to determine output levels based on demand from consumers and other enterprises. Enterprises had to fulfill state orders, but they could dispose of the remaining output as they saw fit. Enterprises bought inputs from suppliers at negotiated contract prices. Under the law, enterprises became self-financing; that is, they had to cover expenses (wages, taxes, supplies, and debt service) through revenues. No longer was the government to rescue unprofitable enterprises that could face bankruptcy. Finally, the law shifted control over the enterprise operations from ministries to elected workers' collectives.
The Law on Cooperatives, enacted in May 1988, was perhaps the most radical of the economic reforms during the early part of the Gorbachev regime. For the first time, the law permitted private ownership of businesses in the services, manufacturing, and foreign-trade sectors. The law initially imposed high taxes and employment restrictions, but it later revised these to avoid discouraging private-sector activity. Under this provision, cooperative restaurants, shops, and manufacturers became part of the Soviet scene.
Gorbachev brought perestroika to the Soviet Union's foreign economic sector with measures that Soviet economists considered bold at that time. His program virtually eliminated the monopoly that the Ministry of Foreign Trade had once held on most trade operations. It permitted the ministries of the various industrial and agricultural branches to conduct foreign trade in sectors under their responsibility rather than having to operate indirectly through the bureaucracy of trade ministry organizations. In addition, regional and local organizations and individual state enterprises were permitted to conduct foreign trade. This change was an attempt to redress a major imperfection in the Soviet foreign trade regime: the lack of contact between Soviet end users and suppliers and their foreign partners.
The most significant of Gorbachev's reforms in the foreign economic sector allowed foreigners to invest in the Soviet Union in the form of joint ventures with Soviet ministries, state enterprises, and cooperatives. The foreign partner supplied capital, technology, entrepreneurial expertise, and, in many cases, products and services of world competitive quality.
By 1990 the government had virtually lost control over economic conditions. Government spending increased sharply as an increasing number of unprofitable enterprises required state support and consumer price subsidies continued. Tax revenues declined because revenues from the sales of vodka plummeted during the anti-alcohol campaign and because republic and local governments withheld tax revenues from the central government under the growing spirit of regional autonomy.
Revolution has been a very frequently used term since the 17th century at least. But what does it imply as a notion? The generalized definition as given in the Encyclopaedia Britannica carries that a revolution is "a major, sudden, and hence typically violent alteration in government and in related associations and structures." As far as economic sphere is concerned the same term is used in expressions such as Industrial Revolution, Cultural Revolution, for these terms refer to a radical and profound change in economic and cultural relationships as well as advance in technology and science.
As is known the very word revolution comes from the Latin word revolutio and its original meaning implies the idea of changing or turning something. The idea of revolution in modern understanding of the word has its roots in the Aristotelian notion of cyclical alterations in the forms of government but now it carries the idea of radical departure from any previous historical pattern. Revolution is held to challenge not only the established political order but also the economic system, social structure and cultural values of those societies as was proved by the greatest revolutions of European history which happened in England, France and Russia. From ancient Greece to the Middle Ages revolution was considered a very destructive force. The ancient Greeks found revolution possible only after the decay of the fundamental moral and religious tenets of society. Plato, for instance, believed that society where existed a firmly established code of beliefs could hinder the revolution. Another philosopher who influenced Western European philosophical thought more than anybody else, namely Aristotle, also favored the idea that a society is vulnerable to revolution if its basic value system is flimsy or tenuous.
Throughout many centuries the idea of revolution was being developed and elaborated. Many philosophers and historians contributed to the analysis of processes which could provide the ground for a revolutionary upheaval and the aftermath society had to face afterwards. Attitude to the idea of revolution changed in the course of time. During the Middle Ages the maintenance of the established beliefs and the existing order remained top priority. Great efforts were undertaken to find means of opposing revolution and stifling any changes in society. Religious authority was so strong and its belief in the maintenance of order so fundamental that the church required that people should accept the inequities of power, instead of upsetting the stability of society.
Only after the emergence of secular humanism during the Renaissance did this concept of revolution begin to acquire a more modern meaning. In the 16th century the Italian philosopher and writer Niccolo Machiavelli admitted the importance of creating a state that could endure the threat of revolution. But he stated that a necessary stipulation for it should be the introduction of certain necessary changes in the structure of government. The only thing Machiavelli was primarily concerned with was the creation of a truly stable state. It should be mentioned that he never used the term "revolution" itself but the very acceptance of the idea of change placed him at the forefront of modern revolutionary thought.
The 17th century English poet Milton was the first to believe that revolutionary processes or upheavals were just society's inherent ability to realize its potential. He believed in revolution as the right of society to protect itself from abusive tyrants, thus securing freedom from oppressive leadership and creating a new order that reflected the needs of the people.
Immanuel Kant added another facet to the understanding of the idea of revolution. He called it a force for the advancement of mankind. Kant believed that revolution was a natural step for a higher ethical foundation for society. This particular idea served as a basis for the American and French revolutions.
It was Hegel who served a crucial catalyst in the formation of 20th century revolutionary thought. For him revolution was the accomplishment of human destiny. As for revolutionary leaders Hegel believed them capable not only of instigating society but also of implementing reforms. Karl Marx took Hegel's ideas as a basis for his doctrine of class struggle focused on subsequent control over the economic processes in society. His ideals of freedom and a classless society (that acme of revolutionary endeavor) could be achieved if the working class or the proletariat managed to take over the means of production. He considered it the culmination of the endeavor of proletariat after which there would be no need for further political changes.
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