STATE ORDERS

The introduction of state orders, as a part of perestroika, was an attempt to move from a total state control over the economy toward introduction of some market elements. During the mid-1980s, the Soviet communist leadership realized that the country was losing the economic competition to the West. The last Soviet leader, Mikhail Gorbachev, introduced cautious policies designed to set up some market elements. One such change was the introduction of state orders.

Prior to perestroika, state enterprises were supposed to produce goods according to the state plan and deliver them to the state for distribution. Gorbachev's idea was to replace the state plan with state orders. Enterprises first had to produce and sell to the state production to fulfill their state orders. However, the state order should be for only part of their production. After enterprises fulfilled the state order—a guaranteed quantity of products that would be purchased by the state and production for which the state provided necessary resources—they could sell the remainder to customers at negotiated prices. The state order was supposed to constitute only a portion of a plant's potential output. It was included in the state plan, and the resources for its implementation were supposed to be allocated by Gosplan. The percentage of state orders of total output was supposed to decline, giving way to a marketlike economy.

See also: gosplan; market socialism; perestroika.

bibliography

Gregory, Paul R., and Stuart, Robert C. (2001). Russian and Soviet Economic Performance and Structure. Boston, MA: Addison Wesley.

Paul R. Gregory