Journal Article

Three attempts at market reform of the Soviet economy: A comparative analysis

Mau, Vladimir A., Baydakov, Ivan M.

2026

Overview

This article presents a comparative overview of the three main attempts to introduce market approaches into the economy of the Soviet Union during its seventy-year history: the New Economic Policy (NEP) of 1921–1928, the Kosygin reform of 1965, and perestroika from 1985 to 1991. The research aims to analyze and compare the nature, political conditions, institutional challenges, and ultimate consequences of these three initiatives, which sought to improve the Soviet system through incremental market integration without changing the core political power structure. Each of the three reform efforts initially triggered a period of accelerated growth, outperforming previous economic trends. However, these successes were short-lived, and all reforms were quickly rolled back. The study’s main finding indicates a fundamental structural incompatibility between market mechanisms and the Soviet political order. This contradiction, rooted in the communist idea, meant that when central control weakened, immediate interests (wages, consumption) outweighed long-term interests (investment). The reforms also differed significantly in their approach to private property: the NEP allowed it as a “temporary retreat,” the Kosygin reform strictly prohibited it, and perestroika gradually permitted private enterprise, eventually evolving into a “real revolution.” In the end, all three attempts failed to create a stable, durable system. The Soviet experience clearly demonstrates that, within its specific historical context, it was impossible to combine Soviet political power with market efficiency. The political core consistently rejected the necessary deep changes, leading to the strategic failure of all liberalization efforts.

• Publisher: Voprosy Ekonomiki