Mikhail Gorbachev’s programme of economic and political restructuring launched in 1987, which attempted to reform the Soviet command economy and political system while preserving the Communist Party’s leading role. Combined with glasnost, it unleashed forces that led to the Soviet Union’s dissolution in 1991.
Perestroika — the Russian word for restructuring — was Gorbachev’s response to the Soviet economy’s stagnation under Brezhnev and his successors. The Soviet Union’s rate of economic growth had slowed dramatically through the 1970s; the military budget was consuming an unsustainable share of national output; technological innovation had fallen behind the West; and the shadow economy of bribery, unofficial trade, and falsified statistics was becoming the real economy. Perestroika’s economic measures permitted limited private enterprise, decentralised some decision-making from central ministries to enterprises, and attempted to inject market signals into a planning system that had become dysfunctional. The political measures — the creation of a Congress of People’s Deputies, competitive elections within a single-party framework, the weakening of party authority over state functions — were intended to generate a constituency for reform by empowering reformers. Both sets of measures produced unintended consequences: the economic reforms created shortages and uncertainty without generating the efficiency improvements their designers expected; the political reforms unleashed popular demands for genuine multi-party democracy, national self-determination, and the repudiation of Communist Party authority that the framework could not accommodate. Gorbachev intended to save the Soviet Union through reform; instead he created the conditions for its dissolution.
Perestroika’s failure raises a question that remains unresolved in development economics and political science: is it possible to reform a command economy without dismantling the political structure that sustains it? Gorbachev believed it was — that a reformed, democratised Communist Party could manage a transition to a more efficient economic system while preserving the Soviet state. His failure suggests not. The Soviet command economy was not merely an economic system; it was the material basis of party authority. Factory managers, enterprise workers, party officials, and regional governments all had interests built around the existing system; reform threatened those interests while the political liberalisation gave them new tools to resist. The lesson many drew from the Soviet collapse — especially in China — was that economic reform required tight political control to succeed; the Chinese model of market economics without political liberalisation is, in a sense, the anti-Gorbachev. Whether that model is sustainable long-term is the central question of twenty-first-century political economy.
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