Sarah Paine

The higher up the food chain you aggregate these things, the worse the data is, so that...

The Soviet government has no idea what the actual value of capital or labor are, no idea what actual productivity is, and no one has any idea what consumer preferences are.

You're not using markets and prices.

So that the misallocation of capital and labor

goes unnoticed until it metastasizes, has already metastasized into a catastrophe.

And to give you a sense of these misallocations, the Soviet Union was rotting from 20 to 40% of its crops.

Well, it's using scarce hard currency for agricultural imports to make up for those crops.

Total mess.

And so you can look at what happens to the economy with oil prices down, we're into a spiraling mess, so that from when Gorbachev comes in at 85 to when it hits a trough in Russia in 1998, you see this crashing share of world GDP of the Eastern Bloc.

as a result of all this.

If you look at Soviet statistics on deficits, trade balances, debt, they're just soaring.

And then GDP growth goes double-digit negative.

That's called shrinkage.

It's not the normal thing.

So, Marshal Yazov, here's his take.

We simply lack the power of all these wealthy NATO nations.

We had to find an alternative to the arms race.

So, and here's a foreign service officer, Anatoly Anamyshin.

He said, look, our problems began with the departure from isolation.

There are main reasons for collapse were internal, not external reasons.