[38] Until the late 1980s and early 1990s, when economic reforms backed by Soviet leader Mikhail Gorbachev introduced significant changes in the traditional system (see perestroika), the allocation of resources was directed by a planning apparatus rather than through the interplay of market forces.

It delineated the chief thrust of the country's economic development and specified the way the economy could meet the desired goals of the Communist Party of the Soviet Union.

[39] Combining the broad goals laid out by the Council of Ministers with data supplied by lower administrative levels regarding the current state of the economy, Gosplan worked out through trial and error a set of preliminary plan targets.

The planning apparatus alone was a vast organizational arrangement consisting of councils, commissions, governmental officials, specialists and so on charged with executing and monitoring economic policy.

[40] Enterprises were called upon to develop in the final period of state planning in the late 1980s and early 1990s (even though such participation was mostly limited to a rubber-stamping of prepared statements during huge pre-staged meetings).

[41] According to a number of scholars both inside and outside of USSR, it was specifically Soviet-type economic planning combined with political dogmatism which led to gradual degradation of Soviet economy and its collapse.

[50] Leon Trotsky and the Opposition bloc had advocated a programme of industrialization which also proposed agricultural cooperatives and the formation of collective farms on a voluntary basis.

[51] Several scholars have argued that the economic programme of Trotsky differed from the forced policy of collectivisation implemented by Stalin after 1928 due to the levels of brutality associated with its enforcement.

When harvests fell short of production quotas due to a sudden frost or long drought, Soviet output could not make up the difference.

Similarly, Soviet farms could specialize in the crop which was best suited for growing in their region, and surplus could be transported throughout the USSR to satisfy quotas and distribute to people who needed the food.

[48] These issues prevented the Soviet Union from producing enough food, as a lack of administration and management led to the mismanagement of farms and reduced worker productivity.

[56] The root of this expense can be identified in the inefficiencies of the Soviet agricultural sector, such as the shortage of workers, lag in technology, or natural factors such as drought or frosts.

Soviet agriculture had the inability to meet basic consumer demands and expectations, requiring policy change culminating in the dissolution of the USSR in 1991.

It was impossible (both for citizens and state-owned businesses) to freely buy or sell foreign currency even though the "exchange rate" was set and published regularly.

[citation needed] There was an extremely small number of remaining individual farmsteads (khutors; хутор), located in isolated rural areas in the Baltic states, Ukraine, Siberia and cossack lands.

[58] David A. Dyker sees the Soviet Union of circa 1930 as in some ways a typical developing country, characterized by low capital-investment and with most of its population residing in the countryside.

[58] The economic problems in agriculture were further exacerbated by natural conditions, such as long cold winters across the country, droughts in the south and acidic soils in the north.

Lenin had to persuade communist skeptics that "state capitalism" was a necessary step in achieving communism, while he himself harbored suspicions that the policy could be abused by private businessmen ("NEPmen").

The Soviet government changed its previous course and allowed international relief to come in from abroad, and established a special committee chaired by prominent communists and non-communists alike.

Privately owned farms in Armenia were collectivized and put under the control of the state starting in the late 1920s, however this was frequently met with vigorous opposition by the peasantry.

However, the 1930s economic revolution came at a high price: it destroyed the conventional peasant family and village institution and caused many people who lived in the remote countryside to relocate to cities.

After the reconstruction of the economy in the wake of the destruction caused by the Russian Civil War was completed and after the initial plans of further industrialization were fulfilled, the explosive growth slowed down until the period of Brezhnev stagnation in the 1970s and 1980s.

Trotsky maintained that the disproportions and imbalances which became characteristic of Stalinist planning in the 1930s such as the underdeveloped consumer base along with the priority focus on heavy industry were due to a number of avoidable problems.

[67] Led by the creation of NAMI and by the GAZ copy of the Ford Model A in 1929,[68][69][circular reference] industrialization came with the extension of medical services, which improved labor productivity.

Campaigns were carried out against typhus, cholera and malaria; the number of physicians increased as rapidly as facilities and training would permit; and death and infant mortality rates steadily decreased.

In 1947 politburo announced a monetary reform (1947) that basically intended to confiscate "excessive" amount of money in order to weaken rampant illegal trade (which was banned at the time) and fill up budget at cost of people.

The Soviet Union became the world's leading producer of oil, coal, iron ore and cement; manganese, gold, natural gas and other minerals were also of major importance.

To some estimations, in 1933 workers' real earnings sank on more than 11.4% from 1926 level,[70] though it needs an adjustment due to elimination of unemployment and perks at work (such as inexpensive meals).

The cumbersome procedures for bureaucratic administration foreclosed the free communication and flexible response required at the enterprise level for dealing with worker alienation, innovation, customers, and suppliers.

In 2007, economist and former Prime Minister Yegor Gaidar wrote the following about looking back to these three decades: The hard currency from oil exports stopped the growing food supply crisis, increased the import of equipment and consumer goods, ensured a financial base for the arms race and the achievement of nuclear parity with the United States, and permitted the realization of such risky foreign-policy actions as the war in Afghanistan.