1. Economic policy under Gorbachev

2. 1987 — Law on state enterprise Companies had to fulfil state orders but could sell excess They were free to determine output levels State still held means of production, and prices were still centrally set Government wouldn't fund poor industries Gosplan was replaced with workers’ collectives

3. 1987 — Joint venture law Foreigners allowed to invest The Soviet share in a company had to be >50% though Soviet citizens had to occupy Chairman and General manager positions This was changed after potential western partners complained

4. 1988 — Law on co- operatives Allowed private ownership of businesses Initially with high taxes and employment restrictions These were later removed Co-operative restaurants, shops etc. sprang up

5. Evidence for Failures of Perestroika

6. Nomenkaltura were resistance to change as they wanted to maintain their privileges Promoting a freer market so quickly in a communist state was doomed to fail Anti-alcohol campaign allowed the black market to thrive and the state was unable to tax alcohol sold in this way It was brought in too late to be effective General Issues

7. Production fell by 4% in 1990 and 15% in 1991 - Freer market led to price increases, unemployment and shortages as businesses were able to set their own prices and wages, sell products as they wish, as well as having the ability sack workers Falling price of oil and gas Production

8. State Expenditure Thought that disarmament would free resources and money, but they were ties up in Afghanistan State budget deficit shot up to 14% by 1989