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The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change Steven M East Tennessee State University Digital Commons @ East Tennessee State University Electronic Theses and Dissertations Student Works 8-2012 The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change Steven M. Efremov East Tennessee State University Follow this and additional works at: https://dc.etsu.edu/etd Part of the Economic History Commons Recommended Citation Efremov, Steven M., "The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change" (2012). Electronic Theses and Dissertations. Paper 1474. https://dc.etsu.edu/etd/1474 This Thesis - Open Access is brought to you for free and open access by the Student Works at Digital Commons @ East Tennessee State University. It has been accepted for inclusion in Electronic Theses and Dissertations by an authorized administrator of Digital Commons @ East Tennessee State University. For more information, please contact [email protected]. The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change ______________________ A thesis presented to the faculty of the Department of History East Tennessee State University In partial fulfillment of the requirements for the degree Masters of Arts in History ______________________ by Steven M. Efremov August 2012 ______________________ Dr. Henry Antkiewicz, Chair Dr. Stephen G. Fritz Dr. Gary Shelley Keywords: Russia, Soviet Union, Hyperinflation, Living Standards, Shortages ABSTRACT The Role of Inflation in Soviet History: Prices, Living Standards, and Political Change by Steven M. Efremov This thesis discusses the interaction between inflation, living standards, and political change in Soviet/Russian history. It traces the establishment and evolution of the Soviet monetary system, inflationary episodes, and their consequences. The goal of this study is to show how inflation affects the lives of ordinary people and how it has contributed to larger changes in Soviet history. Sources include economic statistics and analysis from articles and monographs, as well as first-hand accounts from interviews and newspapers. The results show that inflation was a factor in both the rise and the fall of the Soviet Union. Russia‟s first hyperinflation (1917-1923) nearly destroyed the economy, and the Bolsheviks were forced to stabilize prices. The Soviet system of price controls prevented inflation, but it also created persistent shortages of food and consumer goods. Mikhail Gorbachev tried to alleviate these problems, but his efforts resulted instead in Russia‟s second hyperinflation (1992-1993). 2 ACKNOWLEDGEMENTS I am eternally grateful to the History Department and the Study Abroad Office at East Tennessee State University for providing grants that allowed me to travel to Pskov, Russia and gather primary sources for this thesis. The trip also would not have been possible without the assistance of my family in Russia, who provided material support in the form of food and a place stay, showed me around to the local library and archives, and talked for countless hours about their memories of the Soviet Union and post-Soviet Russia. I want to sincerely thank everyone who made the trip possible, especially my committee chair Dr. Henry Antkiewicz, who guided me every step of the way and helped me with the grant process. Hearing first-hand accounts and reading contemporary newspapers about this topic was much more was enlightening in a way that secondary sources can never be. I would also like to thank everyone who has provided guidance and support as I have worked on this project. Dr. Antkiewicz has taught me a wealth of information about Russia and Soviet Union throughout several of his classes. He has always been there to provide advice on the numerous occasions I have come to him with questions. Dr. Antkiewicz‟s kindness to students is unparalleled. Dr. Stephen Fritz has also taught and assisted me for many years, and he has set an amazing example as a professor that I hope to emulate one day. Finally, Dr. Gary Shelley has always been there to explain difficult economic questions that a history student struggles to understand. I want to thank all of my committee members for their incredible patience as I have attempted to travel to Russia and finish my thesis simultaneously. Last but not least, I would also like to thank my girlfriend of many years, Jessica Davis. Not only has she tolerated my long days working on this project and given me encouragement during the most difficult hours, but she was also the one who gave me the idea to study abroad. 3 CONTENTS Page ABSTRACT.....................................................................................................................................2 ACKNOWLEDGEMENTS .............................................................................................................3 LIST OF TABLES ...........................................................................................................................6 LIST OF FIGURES .........................................................................................................................7 Chapter 1. INTRODUCTION .........................................................................................................8 2. RUSSIA‟S FIRST HYPERINFLATION ....................................................................12 Background ............................................................................................................12 Hyperinflation ........................................................................................................16 Discussion ..............................................................................................................23 Stabilization ..........................................................................................................29 Conclusion ............................................................................................................35 3. REPRESSED INFLATION AND SHORTAGES .......................................................38 Open and Repressed Inflation: 1921-1949 ............................................................38 Repressed Inflation: 1949-1985 .............................................................................44 Effects ....................................................................................................................47 Discussion ..............................................................................................................52 Conclusion ............................................................................................................55 4. RUSSIA‟S SECOND HYPERINFLATION ...............................................................59 Perestroika .............................................................................................................59 Inflation and Collapse ............................................................................................66 Discussion ..............................................................................................................72 Stabilization ..........................................................................................................76 4 Social Effects .........................................................................................................78 Political Effects ......................................................................................................82 Conclusion ............................................................................................................89 5. CONCLUSION ............................................................................................................94 BIBLIOGRAPHY ..........................................................................................................................96 VITA ............................................................................................................................................104 5 LIST OF TABLES Table Page 1. Amount of Paper Currency in Circulation, 1914-1924.............................................................17 2. Yearly Money Emissions and Price Increases, 1913-1923........................................................18 3. Budgetary Figures, 1914-1921...................................................................................................21 4. Output Comparison, 1913 and 1921 ..........................................................................................22 5. Percentage Rate of Change of the Money Stock, the Price Level and Output, 1919-27 ..........................................................................................................32 6. Private Turnover during and after NEP, 1922-1930 .................................................................34 7. Comparison of Private and Official Prices, 1926-1929 ............................................................41 8. Soviet Price Trends, 1928-1956 (in rubles) ..............................................................................43 9. USSR: Household Access to Utilities and Other Amenities (in percent) .................................51 10. Average Life Expectancy at Birth in the Soviet Union (in years) ...........................................53 11. Indicators of Money Supply and Overhang, 1987-1991 ..........................................................65 12. Inflation in the Soviet Union or Russian Federation, 1985-1995 ...........................................71 13. Food Production
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