‘New Thinking’ and its Practicalities (AQA A-Level History): Revision Notes
'New Thinking' and its Practicalities
Soviet economic crisis by the mid-1980s
By the time Gorbachev came to power in 1985, the Soviet economy faced systemic problems rooted in decades of rigid central planning. The economic system operated through GOSPLAN (the Soviet agency responsible for central economic planning), which determined output targets and rejected innovation. Management focused on meeting centrally-set quotas rather than responding to market demands or introducing new ideas to improve productivity.
Several interconnected problems had undermined Soviet economic performance:
Alcoholism represented a pervasive social problem that directly harmed economic output. Widespread alcohol consumption led to worker absenteeism, reduced productivity, and frequent workplace injuries. The state struggled to address this issue given the social and cultural entrenchment of drinking.
Closed economy and lack of foreign investment meant the USSR remained isolated from international business innovation. The state maintained an absolute monopoly over economic activity, preventing foreign capital from entering the country and stifling the introduction of new technologies or business practices from abroad.
State-controlled businesses operated under the monopoly of centralised planning. Without competition or recognition of consumer demand, managers had no incentive to improve efficiency or quality. The system prioritised control over performance.
Inflation and worker unrest created a damaging cycle. Workers' wages rarely kept pace with rising prices, producing discontent that manifested in strikes and industrial action. This unrest further undermined productivity, worsening the economic situation.
Gorbachev himself recognised these problems. In his 1987 book Perestroika: New Thinking for our Country and the World, he acknowledged that by the latter half of the 1970s, economic failures became more frequent, difficulties accumulated, and unresolved problems multiplied. National income growth rates had declined by more than half by the beginning of the 1980s, falling to a level close to economic stagnation. The gap between the USSR and advanced Western nations in production efficiency, technology, and scientific development continued to widen.
The concept of 'New Thinking'
Gorbachev's 'New Thinking' represented a fundamental reassessment of Soviet ideology and practice. At the 27th Party Congress in February 1986, he outlined his desire to change economic programming, stating that reform required rejecting old stereotypes of thought and action. He emphasised the need for economic personnel and administrators to support Party initiatives, criticising those who followed a 'wait and see' policy or avoided implementing change. Gorbachev made clear there would be "no reconciliation" with functionaries who resisted reform, declaring "That will not happen, comrades!"
This new approach marked a deliberate break from the ideological rigidity that had characterised successive Soviet regimes. Rather than viewing all economic problems through the lens of Marxist-Leninist orthodoxy, Gorbachev acknowledged that the inflexible ideological stance maintained by previous leaders had produced many of the weaknesses now threatening the Soviet system.
Perestroika: restructuring the economy
Perestroika means 'restructuring', referring to major social, political and economic reforms designed to improve the performance of the Soviet economy. This represented Gorbachev's approach to amending the existing economic and production systems rather than dismantling them completely.
Core principles of perestroika
Planning was to be decentralised, allowing some degree of self-management without the loss of state ownership of factories and business enterprises. Managers would be permitted to implement economic changes without waiting for GOSPLAN to make decisions at a central level. This devolution of authority aimed to make the economy more responsive and efficient while maintaining the fundamental structure of state socialism.
Another component involved ending state price controls. Gorbachev and his advisers understood this would lead to price increases and a lower standard of living, at least initially. Until this policy took effect, Soviet citizens benefited from a system allowing them to purchase most necessities below their actual cost due to government subsidies. The shift towards market pricing represented a calculated risk that short-term hardship would yield long-term economic improvement.
New economic laws
The Law on Joint Ventures allowed foreign ownership of no more than 49% of businesses, though this had been extended to 100% by 1990. This marked a dramatic reversal of the USSR's previous isolation from international investment, opening the door to foreign capital and expertise.
The 1988 Law on State Enterprises aimed to decentralise authority and devolve decision-making down to businesses and enterprises themselves. State-owned enterprises, regardless of size, would receive their budget allocation and could use it as managers saw fit. Businesses would be forced to function as profit-making organisations selling within wholesale markets. However, enterprises would remain state-owned with no suggestion of privatisation being introduced. This represented restructuring rather than dismantling the economic system, an attempt to maintain a command system within a market economy framework.
First major reform: tackling alcoholism
Gorbachev's first reform targeted alcohol consumption. He sought to improve individual productivity and reduce absenteeism alongside addressing the social problem of alcoholism. Prices were raised on wine, beer and vodka, places and times for selling alcohol were restricted, and authorities made arrests for public drunkenness and intoxication at work. This campaign demonstrated Gorbachev's willingness to confront deeply embedded social practices that harmed economic performance.
Foreign policy implications of perestroika
Perestroika reinforced Gorbachev's 'New Thinking' in foreign policy by enabling him to open the Soviet Union up to foreign investment. This economic opening both required and facilitated better relations with Western capitalist nations, creating a practical link between domestic reform and international détente.
Glasnost: political openness and transparency
Glasnost means 'openness', referring to Soviet government policy allowing citizens more freedom to discuss political problems and criticise government actions. This represented a dramatic departure from the secrecy and censorship that had characterised Soviet governance since the Revolution.
The Chernobyl catalyst
In April 1986, the Chernobyl nuclear disaster made the necessity of reform apparent. The explosion at the nuclear reactor initially received suppression according to traditional Soviet censorship policies. However, the scale of the disaster, combined with Swedish reports of high radiation levels coming from Ukraine, forced the Soviets to make the accident public.
Although the accuracy of reports from the Soviet news agency TASS could be questioned, the government began releasing regular reports on the disaster's course and the outcome of official investigation. Upon his release from internal exile, physicist Andrei Sakharov travelled throughout the USSR and internationally, presenting information on the repression of Soviet citizens and conditions in Soviet prison camps. These two events led to widespread criticism of government actions, both past and present, and how they had been officially portrayed within the USSR.
Official adoption of glasnost
The official recognition and acceptance of openness came in 1988, when Gorbachev announced glasnost. This policy led to a re-examination of Soviet history and open debate on past government actions, including forced collectivisation and Party purges. Former enemies of the state, especially those persecuted by Stalin, were rehabilitated during this period. Gorbachev's government was free to pursue this because most participants in and supporters of Stalinist policies were now dead, meaning the criticisms would not cause serious division within the Communist Party leadership.
The purpose and risks of glasnost
In February 1988, Gorbachev explained to Soviet poets, writers and journalists that glasnost served perestroika: "If we give up the further development of the process of glasnost, criticism, self-criticism and democracy, it will be the end to our perestroika." He argued that past mistakes stemmed from excluding people from public life and decision-making. The solution required drawing people into this process through political democracy, the press, and public organisations, with the press given freedom rather than being controlled by any single group.
Gorbachev stated plainly that if critical material in the press made people uncomfortable, "he is going to have to swallow whatever the press says – if it is true." The Party would remain alive only if it engaged with genuine public concerns rather than suppressing them. This approach represented a calculated gamble that controlled openness would strengthen rather than undermine the Soviet system.
Economic pressures driving reform
The arms race and military spending
The nuclear arms race with the USA proved particularly debilitating for the USSR. After the promise of détente in the 1970s, the Soviet invasion of Afghanistan in 1979 renewed the Cold War and threatened the wellbeing of the Soviet population. US President Jimmy Carter's imposition of economic sanctions and embargoes, combined with the US boycott of the 1980 Moscow Olympics, furthered Soviet economic deterioration.
The election of avowed anti-communist Ronald Reagan in 1980 intensified these pressures. Reagan not only increased American military spending but announced a Strategic Defence Initiative (SDI) in 1983, filling the Soviet leadership with fear that nuclear armament was once again accelerating. The technological demands of matching SDI would place enormous strain on an already struggling economy.
Supporting satellite states
The material support the Soviet Union provided to satellite states was too costly and unsustainable by the 1980s, something Party leadership recognised even before Gorbachev came to power. The Soviet Union had made clear that cheap exports of fuel and raw materials to Eastern Europe could not continue due to deepening domestic economic crisis.
This situation only served to alienate Eastern European states and push them closer to the Western capitalist economic system. In 1985, the Secretary-General of Comecon, Vyacheslav Sychov, contacted the president of the European Commission suggesting mutual diplomatic recognition. The process ultimately concluded in June 1988 when the European Commission was able to set up trade and cooperation agreements with individual Comecon members, starting with Hungary. This allowed countries in the Soviet orbit the ability to make their own trade agreements, contributing to the obsolescence of Comecon and making trade with the Soviet Union less likely.
Dependence on foreign grain
Another persistent problem arose in the 1970s and continued into the Gorbachev era: dependence on foreign grain. Although grain production in the Soviet Union increased during the 1970s and 1980s, demand for grain from cities rose at a faster level due to increased population growth. Reagan's administration did not impose embargoes on grain exports and allowed the continuation of trade with American businesses. Gorbachev encouraged foreign investment, hoping it would stimulate the struggling economy.
The Afghanistan War
The conflict in Afghanistan made the war extremely costly on both economic and social levels. The necessity of withdrawing from that country became clear, as did ending subsidies for Comecon countries. The USSR could not afford the war any longer, creating urgent pressure for a fundamental reorientation of foreign policy.
Oil price collapse
The economy relied heavily on oil exports. For 70 years of communism, the Soviet Union had enjoyed sporadic, unsustained periods of growth, usually due to exportation of oil. When oil prices dropped in the 1980s due to OPEC policies, the USSR felt it strongly. The USSR's only other major export was armaments, and the Soviets continued to benefit from this trade, but it could not compensate for lost oil revenue.
OPEC (the Organisation of Petroleum Exporting Countries) was established in 1960 in Iran, Iraq, Kuwait, Saudi Arabia and Venezuela to allow oil-producing and exporting countries to reach common agreements on prices and pursue common policies. While it does not include all oil-producing countries, OPEC controls at least two-thirds of known oil reserves.
Linking foreign policy to domestic priorities
Gorbachev recognised that Soviet diplomacy had to 'contribute to the domestic development of the country'. Maintaining peace with other states was a necessity if domestic economic progress was to be made. This focus on linking the Soviet Union's domestic priorities with its external relations represented a dramatic shift in thinking.
Previous leaders had focused on the traditional notion of the USSR acting as the leader of global communism, irrespective of the costs of the military machine necessary to promote this objective. Historian Don Oberdorfer commented that "The change meant that to a far greater degree than in the past, the Soviet Union would define its interests in much the same way as other nations, without the distorting prism of Marxist ideology."
This reorientation placed economic necessity above ideological commitment, acknowledging that the Soviet Union could no longer afford to subordinate domestic wellbeing to the pursuit of international communist revolution. The costs of Cold War competition and support for socialist allies worldwide had become unsustainable, forcing a fundamental reassessment of Soviet foreign policy priorities.
Remember!
Key Points to Remember:
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Soviet economic crisis by the mid-1980s stemmed from rigid central planning, lack of foreign investment, alcoholism, state monopolies, and wage-price imbalances that created systemic stagnation.
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Perestroika aimed to restructure the economy through limited decentralisation and market mechanisms while maintaining state ownership; new laws allowed foreign investment (up to 100% by 1990) and gave enterprises budget autonomy, but stopped short of privatisation.
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Glasnost emerged partly from the Chernobyl disaster (1986), which exposed the failures of Soviet secrecy; official adoption in 1988 permitted re-examination of Soviet history, rehabilitation of Stalin's victims, and public criticism through press freedom.
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Multiple economic pressures drove reform: the arms race (especially Reagan's SDI from 1983), costly support for satellite states, dependence on foreign grain, the Afghanistan War (from 1979), and collapsing oil prices in the 1980s made the Soviet system unsustainable.
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Gorbachev's 'New Thinking' fundamentally shifted Soviet foreign policy from ideological leadership of global communism to prioritising domestic economic development, recognising that peace and international cooperation were necessary for internal progress.