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Duke Economics Working Paper #95-54

Why did the Soviet Economic System Collapse: Two Schools of Thought

Vladimir G. Treml


Abstract: The paper examines two prevalent schools of thought explaining the deterioration of the economy and the ultimate collapse of the Soviet system. The first explanation places the blame on Gorbachev's poorly designed perestroika which destroyed the well functioning central planning system without creating a workable alternative. The second school of thought maintains that the Soviet variety of Marxian socialism has never been a viable system and carried its own seeds of destruction. According to this view the collapse of the Soviet Union would have happened sooner or later with or without Gorbachev because of the cumulative effect of allocative errors of the planning system.

JEL P21 P27 P39

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