Li Yinan: An Inquiry into the Living Standards of the Soviet People in the 1970s and 1980s

Regarding the causes of the Soviet collapse, a certain viewpoint persists in academic circles: that the Soviet Union never broke through the highly centralized planned economic system established during the Stalin period in its model of economic development. It is argued that the state long prioritized heavy industry while neglecting the development of agriculture and light industry, pouring vast resources into the "bottomless pit" of the arms race during the Cold War. Consequently, the living standards of the people allegedly failed to improve over the long term, and the fact that these standards fell far short of those in Western developed countries is cited as one of the reasons for the Soviet collapse. However, the various scholarly works holding this view have not provided a detailed substantiation of the assertion that "living standards were low before the collapse." Even those scholars who have attempted such demonstrations have relied on two very simplistic methods: one is to generalize the phenomena of high accumulation and under-consumption from the Stalin era across the entire history of the Soviet Union; the other is to make simple comparisons between Western countries and certain macro or abstract economic indicators from the 1980s, such as per capita national income, nominal wages, or the Engel coefficient.

The long-term imbalance between heavy industry, light industry, and agriculture in the development of the Soviet national economy, as well as the stagnation of economic growth rates in the 1980s, goes without saying. However, can we conclude from this that the living standards of the Soviet people did not improve during the 1970s and 80s, or that they lagged behind Western developed capitalist countries by an unbridgeable margin? This article attempts to analyze this viewpoint and explore the correlation between living standard factors and the collapse of the Soviet Union.

I. A Comparison of Living Standards Between the Soviet Union and Major Developed Capitalist Countries in the 1970s and 1980s

In a general sense, per capita household disposable income can be regarded as one of the important indicators of living standards—perhaps even the most important and most intuitive one. By comparing the household incomes and average wages of the Soviet Union and Western developed capitalist countries, it is easy to find that the Soviet Union was far inferior to Western countries in this regard. For example, in 1970, the average monthly wage for workers in the Soviet industrial sector was 133.3 rubles, while the weekly wage for American manufacturing workers was $133.33. Calculated at the official exchange rate of the time, the annual income of the latter was 3.9 times that of the former. In the same year, 94% of Soviet worker households had an annual income of less than 1,500 rubles, while 84.2% of American households had an annual income of over $3,000. This implies that, by American standards, almost all Soviet households would be classified as poor. To take another example, in 1984, the average monthly wage for Soviet industrial workers was 205 rubles. In the same year, average wages for manufacturing workers in several capitalist countries were: $9.18/hour in the US, 292,255 yen/month in Japan, 35.67 francs/hour in France, and 465.64 Canadian dollars/week in Canada. Converted into US dollars based on the exchange rates at the end of that year and average weekly working hours, the average annual income of workers in these countries can be calculated as follows: Soviet Union—$2,894; US—$19,429; Japan—$13,967; France—$7,485; Canada—$18,343. In other words, the income of workers in developed capitalist countries was 5 to 7 times that of Soviet workers. From this perspective, the gap in monetary income between workers in the Soviet Union and the US appeared even larger in the 1980s than in the 70s.

The gap in monetary income would naturally be expected to project onto consumer spending. Theoretically, given such a vast disparity in nominal wages compared to the West, the Soviet people might have been expected to be "poorly fed and clothed." Surprisingly, however, the gap between the Soviet Union and Western countries in terms of food, clothing, and durable consumer goods was much smaller than the gap in nominal wages. By the late 1970s, the per capita daily calorie intake in the Soviet Union had caught up with that of the United Kingdom, France, and West Germany, and exceeded that of Japan. Protein intake was essentially on par with the United States, and animal fat intake approached that of Italy. Overall, from the perspective of nutritional intake, the Soviet level of food consumption had approached the average level of developed countries by the end of the 1970s.

A longitudinal comparison between 1970 and 1985 shows that Soviet per capita annual bread consumption decreased from 143 kg to 133 kg, and potato consumption decreased from 124 kg to 104 kg. Meanwhile, consumption of meat and meat products increased from 48 kg to 62 kg, fish from 15.4 kg to 18 kg, eggs from 159 units to 260 units, milk and dairy products from 307 kg to 325 kg, vegetables from 82 kg to 102 kg, and fruit from 35 kg to 48 kg. Generally speaking, excluding a few exceptional years, the per capita consumption of high-protein foods in the Soviet Union showed a year-on-year upward trend, while the proportion of starchy foods in total consumption continued to decline. It is particularly worth noting that although the Soviet Union suffered four consecutive years of poor harvests from 1979 to 1982, and faced a significant shortage of livestock feed due to the concurrent US grain embargo ^[1], its consumption of animal-based foods remained stable. In contrast, food consumption levels in developed capitalist countries showed little change. For example, from 1975 to 1983, average annual meat consumption in the US decreased by 0.4 kg and egg consumption decreased from 16 kg to 15 kg. During the same period, average annual meat consumption in Japan increased from 23.4 kg to 25.9 kg—an increase of only 2.5 kg—while fish and egg consumption declined slightly. Therefore, although Soviet meat consumption remained lower than that of the US, the gap was narrowing—rising from 40% of the US level in 1960 to 55% in 1983. Even the CIA's experts on the Soviet Union, in classified reports on Soviet economic development, had to admit: "Perhaps the most striking result of the comparisons of living standards is in the area of food... In 1981, the daily Soviet per capita caloric intake nearly equaled that of the United States. The Soviet diet contains more grain and potatoes than the American diet, but the gap is narrowing... Moreover, poultry products have become more common... Soviet per capita protein intake is now nearly comparable to that of the US... The daily Soviet per capita caloric intake is above the level recommended for US adults."

In May 1982, General Secretary of the CPSU Central Committee Leonid Brezhnev presented a report to the Plenary Session of the CPSU Central Committee titled "On the Food Program of the USSR for the Period up to 1990 and Measures for its Implementation." He set the task that by 1990, the average annual per capita food consumption in the Soviet Union should reach: 70 kg of meat, 19 kg of fish, 330–340 kg of milk, 260–266 eggs, 45.5 kg of sugar, 126–135 kg of vegetables and melons, and 66–70 kg of fruit. Although this plan was ultimately not fully realized due to various complex reasons, according to comparative estimates by Western scholars, by 1990, the average annual meat consumption of residents in the Russian Soviet Federative Socialist Republic (RSFSR) had caught up with that of Switzerland—even though Switzerland's per capita GDP was nearly three times higher. The average annual meat consumption of residents in the Ukrainian Soviet Socialist Republic was roughly equivalent to that of the United Kingdom, Finland, and Iceland, despite its per capita GNP being only 40% of theirs. Meanwhile, in Brazil and Venezuela, where per capita GDP slightly exceeded that of Ukraine, meat consumption was only about 60% of the Ukrainian level. Such achievements are undoubtedly quite remarkable.

Given the widening gap in monetary income between the Soviet Union and Western countries, how did per capita food consumption continue to approach Western levels? We can attempt to explain this from the perspective of prices and purchasing power. During the Cold War, the Comecon ^[2] countries maintained an independent economic system based on the transferable ruble, with a low degree of dependence on the Western world. Abundant natural resources and the "internal circulation" ^[3] of the socialist family allowed the Soviet Union to achieve self-sufficiency in basic consumer goods, and domestic prices did not fluctuate with the world market. For example, from 1971 to 1982, the average annual increase in consumer prices in the Soviet Union was only 0.4%, while it was 7.9% in the US, 13.1% in the UK, and nearly 15% in Italy. It can be seen that, except for rice (for which Soviet production and demand were both relatively low), prices for other food items were lower than in the US, Japan, and Germany—especially for meat. That is to say, when purchasing power factors are considered, the gap between Soviet and Western real wages was much smaller than the nominal gap. In 1970, the average monthly wage for Soviet workers was 122 rubles, which increased to 169 rubles by 1980—an increase of approximately 30%. Since consumer prices remained virtually unchanged throughout the 1970s, the increase in nominal wages effectively represented the increase in real wages. In Western countries, not only was the increase in the consumer price index far higher than in the Soviet Union, but wage and price growth were also essentially synchronized. This was one reason the Soviet Union rapidly caught up with Western countries in the consumption of meat, eggs, and milk.

The comparison of per capita income, food consumption, and prices leads to another question: although the monetary amount spent on a fixed quantity of food in the Soviet Union was lower than in the US, the ruble's advantage in food purchasing power was not enough to offset the absolute gap between the Soviet average wage and the American one. Since Soviet per capita food consumption was approaching that of the US, does this mean the Soviet Engel coefficient was much higher than that of the US—implying that consumption of goods other than food was far lower?

In the 1970s and 80s, the proportion of total household expenditure spent on food was indeed lower for American households than for Soviet worker households. However, if we exclude necessary expenditures such as food, housing, transportation, medical care, social security, and taxes, "other" material consumption (purchasing high-end durable goods, etc.), cultural consumption (going to movies and theater, etc.), and savings (often used for international travel) accounted for only 16.5% of total American household expenditure in 1981. During the same period, in the Soviet Union, this figure was as high as 43.2% and showed a year-on-year upward trend, while the opposite was true for the US. In other words, the proportion of expenditure on lifestyle services and social security in the Soviet Union was far lower than in the US ^[4], allowing the Soviet people to use a larger proportion of their household income to purchase durable consumer goods, and thereby catch up with Western countries in this area.

Regarding clothing—if we ignore fashion styles and simply calculate fabric consumption—by the early 1970s, the Soviet Union had already caught up with or even exceeded developed capitalist countries. In 1973, Soviet per capita cotton fabric consumption was 22.4 square meters, compared to 27 for the US, 14.3 for the UK, and 13.6 for West Germany. Wool fabric consumption was as follows: Soviet Union 2.9, US 0.8, UK 3.1, and West Germany 2.9 (all in square meters). Furthermore, during the same period, Soviet per capita leather shoe consumption was close to that of the UK and US.

In the area of durable goods, the Soviet Union once lagged significantly behind Western countries, but after the 1970s, ownership rates grew rapidly. Even according to American statistical methods of the time, from 1970 to 1975, the average annual growth rate of Soviet per capita consumption of durable goods was as high as 10%; from 1975 to 1980, it saw a significant decline but remained at 5.3%. Consequently, in the 1970s and 80s, per capita ownership of durable goods in the Soviet Union was steadily approaching that of Western developed countries. For example, the gap in television sets per thousand people between the US and the USSR narrowed from 2.9 times in 1970 to 2.1 times in 1981. From 1970 to 1979, the number of private cars per hundred Soviet households increased from 2 to 8, televisions from 51 to 83, refrigerators from 32 to 82, washing machines from 52 to 70, and vacuum cleaners from 12 to 26. By 1990, these indicators increased further: 19 cars, 107 televisions, 92 refrigerators, 75 washing machines, and 48 vacuum cleaners per hundred households. The penetration rates of various household appliances had caught up with Japan and the United Kingdom.

Undeniably, while considerable progress had been made, the penetration rate of passenger cars and certain avant-garde high-end durable goods (such as video cassette recorders) in the Soviet Union at the end of the 1980s still exhibited a significant gap compared to developed countries. Aside from insufficient domestic production capacity, the more fundamental reason lay in the fact that—as in all other socialist countries—the root objective of developing a socialist economy in the Soviet Union was to ensure the comprehensive development of all people and to minimize the gap between the rich and the poor as much as possible. In the Soviet Union, prices for basic living services such as food, housing, transportation, medical care, and education, as well as cultural services like books, newspapers, cinema, and theater, were kept far below cost. Conversely, high-end consumer goods like VCRs and cars were, to a certain extent, regarded as non-essential "luxury goods"; the state sold these at high prices and used the resulting profits to subsidize basic consumer necessities. For example, in the 1960s, a GAZ-21 Volga car cost 1,900 rubles to produce but was sold for 5,500 rubles; in the early 1970s, the production cost of a VAZ-2101 Zhiguli was less than 1,000 rubles, yet its sale price was 5,500 rubles. Soviet officials were quite forthright about this: the subsidy funds for food, medicine, fuel, rent, public utilities, and urban transport fares were derived not only from the profits of state-owned enterprises but also from "another source: the profits from tobacco, alcohol, diamonds, and other high-end artisanal goods, because the prices of these commodities are set intentionally high."

A similar contrast was reflected in the sphere of cultural services. To capitalist countries, cultural services belong to private industry and possess a capital-driven, profit-seeking nature; to the Soviet Union, however, cultural services were public undertakings aimed at satisfying the needs of the people's spiritual life and individual development. For instance, according to the records of the famous writer Wang Meng ^[5], who visited both the Soviet Union and the United States successively during that period, the price of a ticket for an opera at the Bolshoi Theatre in Moscow in 1984 was 3 rubles, whereas a performance of similar caliber on Broadway in New York at that time cost 50 dollars. Furthermore, although the penetration of televisions as a cultural medium was not as high in the Soviet Union as in the United States, the average annual number of cinema visits per person and the number of cinema seats per thousand people in the Soviet Union far exceeded those of all developed capitalist countries. In 1981, these two indicators in the Soviet Union were respectively 3.5 and 4.4 times those of the US, 10.6 and 11.9 times those of the UK, and 4.5 and 5.6 times those of France. In other words, the Soviet Union shifted cultural services from the private to the public sphere. Like the policy of low wages coupled with high welfare, and the subsidization of basic goods alongside heavy taxation on high-end goods, this reflected a governance philosophy and value pursuit of a socialist state that was radically different from capitalism and aimed at benefiting the entire working people.

Because capitalist countries pursue the maximization of the economic interests of the ruling bourgeoisie, they remain indifferent to the widening gap between the rich and the poor. In the 1970s, the distribution of various income strata in the United States was highly fragmented, with no so-called "middle class" holding a numerical advantage; in contrast, income levels in Soviet society were relatively egalitarian. Regarding income fairness, another of the Soviet Union’s striking achievements was that by the 1980s, it had basically eliminated the urban-rural divide. In 1980, the per capita monetary income of collective farm ^[6] households was equivalent to 75% of that of worker and employee households, and by 1985, it had further reached 81%. Considering that the former could obtain free agricultural products through collective distribution and private plots ^[7], their actual income was likely even higher.

The result of the vast income disparity between classes in capitalist countries, as reflected in the possession of consumer goods, was that high-end commodities were concentrated in the hands of a wealthy minority (who often possessed quantities far exceeding their actual needs). While a considerable portion of the population at the bottom lived in abject poverty, the average ownership per thousand residents or per hundred households—expressed in absolute numbers—mostly exceeded that of the Soviet Union. For example, in 1974, white American households owning color televisions accounted for 64.2% of the total, while black households with generally lower income levels had a color TV ownership rate of only 37.8%. Yet, due to the demographic weight of white citizens, the national penetration rate was as high as 61.3%. In the same year, 48.8% of American households owned one car, and 32.7% owned two or more. Consequently, the data expressed as ownership per hundred households (or per thousand residents) was quite impressive—at least 115 cars per hundred households, suggesting an average of more than one car per family—whereas, in reality, nearly 20% of households nationwide did not own a private car. Similarly, in 1988, 45% of British households owned one car, 17.5% owned two, and 3.6% owned three or more. On average, there were about 91 cars per hundred households, but in fact, 34% of British households at that time did not own a single car. In contrast to capitalist countries, because there was no severe polarization, the average ownership of high-end goods in the Soviet Union was more balanced. From this perspective, the gap between the Soviet Union and developed capitalist countries in the penetration rate of durable goods was smaller than it appeared on paper.

In terms of social welfare such as healthcare, housing, and education, the superiority of Soviet socialism was even more evident. Taking healthcare as an example, as early as 1969, the Soviet Union institutionalized the "universality, free nature, and high quality" of medical services provided to Soviet citizens through legislation by the highest organ of state power. The number of people served per doctor in the Soviet Union in the 1970s was much lower than in Western developed countries during the same period. In 1985, the average number of doctors per 10,000 people in the Soviet Union was 42, nearly double that of the United States (23.3); the number of hospital beds per 10,000 people in the Soviet Union also led the world at 130, more than double that of the United States (56.5). It can be concluded that the medical resources enjoyed by the Soviet people were not only completely free but also far more abundant than those in capitalist countries.

In housing, the Soviet Union implemented a system of free distribution for all citizens, and rent standards had remained unchanged since they were set in 1928. Due to the continuous growth of nominal wages, by the 1970s and 80s, rent had become an entirely symbolic charge. By the beginning of 1987, the per capita living space in the Soviet Union reached 14.9 square meters; although this was only equivalent to the levels of the 1960s in the US and Europe, it had basically reached the standard of one room per person. Furthermore, this figure did not include the area of suburban dachas ^[8]. In the 1980s, 8.3 million urban Soviet households owned summer villas with yards in the suburbs; the land they occupied was likewise provided by the state entirely free of charge.

The proportion of total household expenditure that Soviet people spent on life's necessities was far lower than in the United States, primarily due to social welfare factors. In the Soviet Union, costs for rent, heating, and public transportation were almost negligible in daily expenditures. Aside from preschool education and summer camps, compulsory and higher education were completely free. For example, in the early 1980s, the average monthly cost of housing per square meter in the Soviet Union was 0.14 rubles, the price of natural gas per cubic meter was 0.02 rubles, and the fare for subways and buses was 0.05 rubles. The corresponding prices in the United States were 4.5 dollars, 0.12 dollars, and 0.6 dollars respectively; annual tuition for higher education was 5,000 to 9,000 dollars, and daily hospital stays cost 175 dollars.

It is noteworthy that the "hidden income" from social welfare was not reflected in the nominal wages of workers on paper. According to official Soviet statistics, the average monthly monetary wage of Soviet workers in 1975 was 146 rubles; however, if various benefits provided by the social consumption funds ^[9]—including free education, free medical care, scholarships, sanatorium discounts, and nursery fees—were included, the average wage reached 199 rubles. In 1985, these two indicators were 190 and 268 rubles respectively. It goes without saying that the Soviet Union calculated the above data based only on the cost price of various social security services. However, in a capitalist country, if housing, medical care, childcare, and education could be provided for free, the hidden income they generated would greatly exceed nominal wages. Consider the following hypothesis: in 1985, a dual-income family of four in Moscow, where both spouses earned the average wage, received a free three-bedroom, 60-square-meter apartment after 7.5 years on a waiting list (the average waiting time for Soviet families to obtain new housing in the latter half of the 1980s was 7 to 8 years). At that time, an apartment of the same size in New York City was worth 160,000 dollars (New York housing prices in the 80s were around 250 dollars per square foot). This was equivalent to the state giving this Moscow couple a "gift" of 160,000 dollars. Amortizing this sum over 7.5 years means they received a "hidden income" of 1,800 dollars per month just in free housing. Similarly, if the cost of higher education were converted according to American standards, the exemption from college tuition for just two children would have saved the Soviet couple at least 200 dollars a month before the children reached adulthood. That is to say, calculated at market prices, the "hidden income" brought to the working people by the Soviet Union’s provision of free housing and free education alone far exceeded their nominal wages. If this "hidden income" is ignored, the Soviet Union's Engel coefficient ^[10] naturally appears high.

Ultimately, comparing nominal wages and Engel coefficients in isolation from specific social systems and living environments is meaningless. In the early 1980s, Nikolai Tikhonov, Chairman of the Council of Ministers of the USSR, pointed out incisively: "To compare the living standards of the Soviet Union and capitalist countries based on the cash income of residents is fundamentally wrong (and comparing wages is even more so!)... As the saying goes, one cannot measure the living standards of two societies with diametrically opposed systems by the same yardstick." He concluded: "In short, a mechanical comparison of the cash income and expenditure structures of Soviet and Western families distorts the truth."

II. The Impact of Living Standard Factors on the Political and Economic Development of the Soviet Union

The CPSU ^[11] regarded accelerating the improvement of the people's welfare and more fully satisfying the material and cultural needs of all Soviet people as its most important task, the supreme goal of its economic policy, and the line it consistently followed. This was explicitly written into the reports and documents of every Party Congress after the 1960s. The CPSU believed that only by continuously improving the people's material and cultural standards of living could the best conditions be created for the comprehensive development of human personality and for the realization of communism. Brezhnev stated clearly in his report to the 23rd Congress of the CPSU: "The Communist Party will lead the people and, together with them, make every effort to make the lives of Soviet people better, more prosperous, and more civilized year by year. We regard this as our supreme duty, and for this purpose, we are building communism"; "'Everything for the sake of man, everything for the benefit of man'—this is the programmatic principle of the Party."

Furthermore, several large-scale political movements that occurred in East European socialist countries after World War II (the 1953 East Berlin incident, the 1956 Poznań protests, and the 1980 Polish crisis) were initially triggered directly by livelihood issues such as falling wages or rising prices for consumer goods. The 1956 Hungarian Uprising was also partly caused by declining wages and consumption levels. Taking these as a warning, the CMEA ^[12] countries, led by the Soviet Union, did their utmost to avoid actions such as raising prices that might have a negative impact on the people's standard of living.

To maintain a high standard of living for the people, the Soviet government had to ensure an adequate supply of consumer goods, stable prices, and continuously increasing wages. However, from the mid-1970s onward, as the growth rate of Soviet labor productivity slowed down, these policies gave rise to several problems that cannot be ignored.

First, regarding the grain issue: because a significant gap consistently existed in the fodder grain required for meat production (as most Soviet territory is situated in high-latitude regions with a cold climate, producing the same weight of meat required double or triple the fodder grain used in Central European countries), the Soviet Union was forced to import from Western countries when internal coordination within the CMEA ^[13] failed to meet demand. In disaster years when grain output plummeted, imports had to be further increased. For example, the Soviet Union imported approximately 15 million tons of grain annually in the early 1970s; in 1979, following successive poor harvests, imports rose to about 30 million tons, and in 1984, they exceeded 50 million tons. Even in normal years, the scale of these imports tended to expand continuously due to the growth in public demand for meat; for instance, grain imports were 27.56 million tons in 1986, 31.35 million tons in 1987, and 35.84 million tons in 1988. Correspondingly, Soviet expenditures on imported agricultural products rose steadily: from $15.5 billion in 1986 to $16.5 billion in 1987, reaching $17.9 billion in 1988. In cases where commodity exports to Western countries were insufficient to offset grain imports, the state was sometimes forced to spend precious foreign exchange and gold reserves. Beyond primary agricultural products, the Soviet Union directly imported large quantities of finished food products to compensate for domestic supply shortages, with the volume increasing annually: in 1970, food imports accounted for 29.9% of total consumer good imports and 3.9% of retail food sales; by 1980, these proportions had increased to 38.2% and 10.1%, respectively.

Second, regarding price stability: because the state continuously raised the procurement prices for major agricultural products while maintaining retail prices that were already below cost, subsidies for consumer prices became a heavy and growing burden on the Soviet treasury. This was further exacerbated by rising raw material prices on the international market and the continuous increase in workers’ nominal income. For example, during the Soviet Union's Eighth Five-Year Plan ^[14], subsidies for products such as meat, milk, and potatoes totaled 38.55 billion rubles, accounting for 6% of state budget expenditures. During the Ninth Five-Year Plan, subsidies reached 86.8 billion rubles—a 1.25-fold increase over the eighth period—accounting for over 9% of budget expenditures. During the Tenth Five-Year Plan, subsidies for meat and milk alone reached 100 billion rubles, averaging 20 billion rubles per year—more than the officially announced defense budget—whereas in 1976, the first year of the Tenth Five-Year Plan, total Soviet fiscal expenditure was only 226.7 billion rubles. After 1985, as international oil prices fell, the issue of price subsidies became even more prominent. A report from a meeting of the Politburo of the CPSU Central Committee in April 1987 pointed out: "Since 1982, growth in actual national income has ceased... butter sells for 3 rubles 40 kopeks in shops, while its cost price is 8 rubles 20 kopeks; beef sells for 1 ruble 50 kopeks, while the production cost is 5 rubles. If everything remains as it is, price subsidies for food alone will rise to 100 billion rubles [annually]." Aside from the heavy item of agricultural subsidies (which accounted for about 12% of annual state expenditure), other Soviet consumer and social security subsidies were also staggering; for instance, in the 1970s, annual rent subsidies were 5 billion rubles and public transport subsidies exceeded 2 billion rubles. By the mid-1980s, various annual fiscal subsidies had reached 15%–18% of state budget expenditures.

Third, after the growth rate of Soviet national income gradually slowed in the late 1970s, residents' nominal wages and consumption continued to grow at a considerable pace, even leading to a phenomenon where wage growth outstripped the growth of labor productivity and national income. For example, throughout the 1970s, the wage fund grew at an average annual rate of 5.1%, while social labor productivity grew by only 3.6%. In 1982, even as labor productivity growth fell to 2.6%, wage growth remained at 3.5%. This trend intensified after Gorbachev took office: in 1986, average wages for Soviet workers grew by 3.2% while national income grew by only 2.3%; in 1987, average wages grew by 3.6% while national income grew by a mere 1.6%. Furthermore, from the 1970s onward, a problem emerged where wage growth exceeded the growth of consumer goods production and retail sales. At a plenary session of the CPSU Central Committee in 1987, Gorbachev publicly admitted that between 1971 and 1985, the money supply in the Soviet Union had grown 2.1 times, while consumer goods production had increased only 1-fold. In the long run, these issues clearly led to the following direct consequences: increased foreign debt, reduced foreign exchange reserves, a decline in the accumulation rate, a continuous increase in interest payments on household savings, an imbalance between supply and demand, and intensified inflation.

To maintain a standard of living that outpaced the development of the productive forces, the Soviet Union could only continuously expand the proportion of national income used for household consumption. This caused the accumulation rate in the 1980s to generally decline compared to the 1970s. The reduction in accumulation funds used for expanded reproduction ^[15] clearly impacted the sustained development of the national economy, which in turn hindered the improvement of living standards. Because the growth rate of the national economy could not be significantly raised in a short period, the only way to alleviate the contradiction was to compress household consumption and reduce social welfare. However, this ran contrary to the essence and practical requirements of a socialist state to improve the people's standard of living. Moreover, since people had long been accustomed to viewing the "freezing" of food prices as an important guarantee of social stability and saw price increases as "anti-people" measures, it was unrealistic—and even dangerous—to attempt to resolve the disconnect between living standards and economic development by compressing consumption or cutting welfare.

As is well known, the third Polish crisis of 1980–1981 was triggered precisely in this manner: the state had ensured household consumption at all costs for years, leading to perennial fiscal deficits and high foreign debt. Consequently, Poland was forced to reduce subsidies for basic consumer goods, a measure that sparked discontent among a population accustomed to long-term low prices. The vicious cycle of "long-term low prices — state fiscal difficulty — price hikes — workers' strikes — production decline — further fiscal difficulty — falling living standards — more strikes" eventually led to persistent social unrest in Poland. In fact, many CMEA countries experienced economic development problems related to living standards to varying degrees; Poland simply presented this in the form of a total explosion of contradictions.

If, then, the Soviet economy in the 1980s similarly experienced contradictions between high consumption/welfare and low growth, did these contradictions lead to a regression in living standards, which then triggered popular discontent that escalated into political turmoil? To answer this, we must first trace and clarify when the living standards of the Soviet people actually began to decline. Two representative indicators may provide the answer: life expectancy in the Russian Soviet Federative Socialist Republic peaked during the entire second half of the 20th century in 1987 and 1988 (at 69.6 years) and only began a continuous decline in 1989. The per capita consumption of various foods—including poultry, eggs, fish, sugar, vegetables, and fruit—also only began to decrease in 1989; growth in meat consumption stagnated starting that same year. In 1989, due to a comprehensive market shortage, the Soviet government implemented commodity rationing for the first time. In June 1989, the All-Union Central Council of Trade Unions determined and announced a poverty line for the first time; based on the standard at that time—78 rubles per month—approximately 14% of the population was defined as poor. By September 1990, according to an updated poverty line, this proportion reached nearly 40%. According to analysis by the U.S. Central Intelligence Agency, by early 1991, the social welfare system long maintained by the Soviet Union—including free medical care, job security, low rents, and stable, low prices—had begun to collapse.

How can the above phenomena be explained? Statistical data shows that Soviet domestic production of food and consumer goods continued to grow until 1990, and the volume of food and consumer goods imports did not see major fluctuations between 1985 and 1990. In other words, the root of the commodity shortage lay in the links of circulation and distribution, not production. The problems in circulation and distribution can be traced back to Gorbachev’s reforms. In June 1988, at the 19th All-Union Conference of the CPSU, Gorbachev announced the implementation of "fundamental reform" of the political system and the construction of a "humane, democratic socialism," at which point Soviet reform moved deeply into the political sphere. Fueled by radical political reform, Soviet ethnic separatism intensified: in May 1989, the Supreme Soviet of Lithuania amended its constitution to establish the supremacy of national law over the Soviet Constitution; in December 1989, the Communist Party of Lithuania announced its separation from the leadership of the CPSU; and in March 1990, Lithuania declared independence. Beginning with the three Baltic states led by Lithuania, the Soviet Union, as a unified multinational state, gradually disintegrated. For the Soviet Union, which practiced a high degree of division of labor in production among its constituent republics, the disintegration of the "socialist family" meant the loss of considerable sources of raw materials and sales markets. The "penetration crisis" ^[16] brought by strengthened ethnic centrifugal forces weakened internal economic ties and affected production coordination and material allocation across regions. According to data released by the Soviet State Planning Committee in government reports, the direct economic losses caused by ethnic conflicts and strikes in 1989 and 1990 reached as high as 2 billion rubles. Therefore, the negative economic growth and the regression in actual living standards that first appeared in the Soviet Union in 1989–1990 were primarily caused by the political crisis. It was precisely the dissolution of Party organizations and government functional departments at all levels amidst political turmoil and ethnic division that led to difficulties in commodity circulation and distribution. Without a doubt, the failure of Gorbachev's reforms preceded the decline in the living standards of the Soviet people.

III. The Relationship Between Living Standards and the Disintegration of the Soviet Union

Regardless of when Soviet macroeconomic development slowed, stagnated, or to what extent it deteriorated in the 1970s and 1980s, the following facts are undeniable: the living standards of the Soviet people continued to improve without interruption until the end of the 1980s; there were no widespread commodity shortages in society; and there were no large-scale riots protesting Soviet power due to dissatisfaction with living conditions. Moreover, whether compared vertically with the Stalinist era and the immediate post-war period, or horizontally with the developed capitalist countries of the same period, the improvement in the living standards of the Soviet people was highly significant. By the mid-1980s, the average Soviet citizen consumed half a jin ^[17] of meat, eggs, and fish per day and nearly one liter of milk; every household had a radio, television, refrigerator, and washing machine. Although at this time their per capita monetary income on paper remained far below that of developed Western countries, the Soviet Union ensured high standards for the basic needs of the vast majority of the people—such as food, clothing, housing, and transportation. Some indicators of living standards even caught up with Western European countries and the United States, and in terms of various social welfare benefits, it reached heights that Western countries simply could not match.

Of course, the highly developed and continuously improving living standards in the Soviet Union at that time had surpassed the development level of its national economy. It can be argued that by the mid-1980s, the Soviet Union achieved a standard of living roughly equal to that of Italy, on a base of per capita GDP slightly lower than that of Mexico. Against a background of slowing growth in total industrial and agricultural output and labor productivity, the state paid a huge price to maintain and further improve the high standard of living of the people. It was forced to expand consumer imports and provide massive fiscal subsidies for various consumer goods and social security, which naturally had a negative impact on economic development. However, because the contradiction between low-speed economic development and high-speed consumption growth lasted a relatively short time, it did not reach a boiling point before the disintegration of the Soviet Union. The substantive decline in the living standards of the Soviet people began during the process of the Soviet Union's disintegration. The decline in living standards was a result of the collapse, not the cause. The view that low living standards caused popular discontent, which in turn led to the disintegration of the Soviet Union, is untenable.

Despite the various flaws and problems in the process of Soviet socialist construction, we cannot deny the fact that in the 1970s and 1980s, the CPSU and the Soviet government, under the conditions of the time, did their utmost to guarantee and improve the lives of the people and bring them to a considerably high level. Even more so, we cannot erase the great efforts and achievements of the Soviet Union in eliminating polarization and the urban-rural gap, and in establishing a world-leading social security system characterized by universality and fairness. This achievement is not only an accomplishment of the Soviet Union or its various nationalities but is a monument in the history of socialist development.

It is a matter of common knowledge that the national economies and living standards of the formerly Soviet republics, such as Russia and Ukraine, suffered a catastrophic and precipitous decline following independence. Taking life expectancy as an example, while it was previously mentioned that life expectancy in the Soviet Union reached its historical peak between 1987 and 1988, this indicator plummeted in the former republics after the dissolution of the Soviet Union. Russia and Ukraine did not recover or surpass their 1988 levels until 2011; Belarus reached its Soviet-era peak in life expectancy only in 2012; even Estonia—which possessed a relatively strong economic base and actively integrated into the West after independence—did not break its Soviet-era historical peak in life expectancy until 2002. By 2007, Russia had moved past the acute pain ^[18] brought about by large-scale privatization, achieving rapid economic growth for ten consecutive years, and its relationship with Western countries was at perhaps its best point in history. However, in that same year, Yuli Kvitsinsky, the former First Deputy Minister of Foreign Affairs of the USSR, gave an interview containing a passage that is deeply thought-provoking: "When our social welfare reached a considerably high level—this was in the mid-1980s—a certain weariness appeared… At that time, we believed the Western model would make everything the Soviet Union had already acquired even better, like adding flowers to brocade ^[19], but the reality was otherwise. Now, while the shops are full of sparkling goods, we have discovered that the problem is not what is sitting on the shelves, but that there is no money to buy these goods. We used to think that free medical services were a matter of course and would exist forever, but we know now that it is not that way at all. We used to think that everyone, as a matter of course, could afford the medicine necessary to protect their health, but now we also understand that it is not that way at all—you either spend all your money on medicine in your old age, or you can only wait quietly for death."

(Author Profile: Li Yinan is a visiting scholar at the Shanghai Academy of Global Governance and Area Studies at Shanghai International Studies University and a doctoral candidate at the Higher School of Economics in Russia.) Web Editor: Tong Xin Source: World Socialism Studies (世界社会主义研究), Issue 4, 2024.