The USSR is fast becoming an example of socialist state capitalism at work in the post-World War I and World War II era. The reason for this is obvious, as the Soviet Union is a heavy producer of both weapons and technology. Today's USSR is less dependent on foreign trade than any other country in the world but has yet to reach the heights of economic development that it desires.
The bureaucracy in the Soviet Union is more interested in purging old party members than creating an efficient economic system. The massive number of deaths caused by over-productive state-run businesses are a direct result. A small number of people have been put in prison for “reasons” unclear to the courts or citizens. The courts often hand down sentences of life without parole, and the few businesses that survive are generally too small to be worth the investment.
A closer look at the type of goods that the Russian state offers reveals much about their lack of interest in expanding their economy. There are no stores on the street, and the number of privately owned shops is roughly equal to the number of state-run shops. They use a centrally controlled distribution system and ration distribution amongst the various groups of citizens. Workers receive wages from the distribution centers, rather than a wage check which they can use to purchase necessities. The level of inflation is so high that some basic necessities are unaffordable.
Private property is not allowed in the Soviet Union. Instead, all real estate is state owned, including vast expanses of land along the front, back and forth with railroads that link all corners of the country. Private ownership of real estate is limited to a small number of individuals who control multiple properties.
The size and scope of the Russian economy are the main reason why it is unable to attain true USSR economic growth. As stated before, the size of the population is too great to support a market for private property. In addition, because the state controls most of the resources, there is no realistic possibility of the state expanding its grasp on them. All growth is dependent upon outside sources, most of which are not forthcoming.
The government is mostly concerned with keeping the population content and maintaining a level of infrastructure necessary for a healthy economy. Limited free trade and liberalization policies are in place to encourage entrepreneurial activity. However, these have had very little effect because most entrepreneurs are from very prosperous backgrounds and have access to Western-style amenities. The small number of truly entrepreneurial entrepreneurs has little influence on the overall level of economic growth. True entrepreneurial activity is also difficult to come by because of high startup costs, Western-style business cultures and dearth of good managers.
The benefits of capitalism are also limited to the Russian economy. Private property, particularly in the form of apartments, is highly restricted and is unlikely to be sold off through the traditional estate system. The state controls the distribution of property . . . . . . and attempts to promote investment in infrastructure, science and technology, agriculture, and other areas often fail. The state-run economy, based on heavy regulation of the economy, tends to protect the interests of businessmen and their affiliates rather than truly benefiting the average citizen. True freedom of choice is rare, and the country's culture of conformism and incessant dependence on state guidance and protectionism prevents much economic growth from occurring.
The limitations of the Soviet Union's economic system are more than evident in their inability to attain the type of rapid economic growth that would lift the entire system out of stagnation. The system remains largely dependent on ex-conservatives for basic services and staples, and it is unlikely that they will be able to cooperate in the future with the west due to fears of antagonism. This is why the United States and other western powers are particularly worried about the security of the Russian economy and are working hard to make sure that any economic growth occurs at the right time and pace. Economic growth failure in the United States is less likely to happen because of its overall larger-scale system, but it does occur and to prevent this from happening US assistance in various forms must continue.