Factories could meet official targets without making enough reliable goods that people wanted. Shortages and disappointing living standards then increased demands for change.
The Soviet command economy used central government decisions to allocate resources, set prices and direct production. It had achieved major industrial and scientific advances, but a complex economy was difficult to manage through detailed instructions from above. Enterprises, such as factories, were rewarded for meeting output targets. This shaped their incentives, the rewards or penalties influencing their choices. A manager might focus on the number of items produced rather than their quality, or seek an easy target instead of risking a new method.
Productivity means output from a given amount of work and resources. Slow productivity growth and shortages made it hard to improve everyday living standards. Priority for heavy industry, such as steel and machinery, and for defence left fewer resources for household goods and services. Awareness of better living standards in the West weakened confidence in official promises. These problems did not make collapse inevitable, but they created pressure for reform and made costly military commitments harder to sustain.
Worked example: A factory target and a family's needs
Imagine a shoe factory rewarded mainly for the number of pairs it produces. This illustrates an incentive problem rather than describing one particular factory.
- Managers have a reason to produce more pairs quickly, because the target measures quantity.
- If the shoes wear out quickly or come in the wrong sizes, the factory can meet its target while families still struggle to find useful shoes.
- Better output figures therefore need not mean better daily life. Weak attention to quality and demand helps explain why economic claims could coexist with shortages and frustration.
Watch out for this
A command economy could never produce anything successfully.
The USSR had substantial industrial and scientific achievements. Explain its later structural difficulties without erasing those achievements.
Check your understanding
Why might an official production target fail to improve daily life?
- It could reward a high quantity while neglecting whether the goods were reliable or met people's needs.
- Meeting the target demonstrated that the goods were the sizes and quality consumers wanted.
- The existence of shortages showed that Soviet industry had never achieved significant results.