The Soviet Economy

The economic system which was to fail so drastically in the late 1980s was based on the centrally planned economy, known sometimes as the command economy. All factories and farms belonged to the state, and economic activity was governed from above. A series of planning agencies, the chief of which was the State Planning Commission, gosplan, set production targets for each section of industry or agriculture, while at lower levels individual targets were set for factories and farms. Prices of consumer goods were also set by the planning agencies and the movement of materials and goods between enterprises were all subject to planning rather than buying and selling. Agriculture was organised into collective farms, kolkhozy and state farms, sovkhozy, which operated along much the same lines as industrial enterprises, although kolkhozy were allowed to make some profit from produce which exceeded the set targets and could be sold on the market. Employment and wages were also subjected to state control.