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Posted: January 24, 2026
By this point in our series, the USSR has passed its high point in terms of socialist construction. The following 37 years (1954-1991) will chart the economic developments behind the protracted downfall and dismantling of the world’s first socialist state.
Stalin’s death in 1953 was followed by a power struggle atop the CPSU between his allies, led by Lavréntiy Beria and Georgy Malenkov, and the anti-Stalin wing of the party, led by Nikita Khrushchev. Khrushchev’s eventual ascension was crowned by his ‘secret speech’ denouncing Stalin and ‘Stalinism’ (a cornerstone of anti-communist falsehood and propaganda to this day).
The decade of Khrushchev’s leadership can be broadly defined by two economic trends. First, economic and bureaucratic decentralization (1957-1962), followed by recentralization (1962-1964). Second, a prioritization of agriculture and light industrial production over heavy industry and military production.
Starting in 1957, the Khrushchevites began ‘decentralizing’ the Soviet industrial and administrative infrastructure. In a move against the state bureaucracy (primarily based in Moscow), they replaced individual industrial ministries in Moscow with regional Councils of People's Economy. The theory was that regional councils could better coordinate between industries than the vertically-integrated industry ministries. However, in practice, decentralization failed to enable such coordination. Beyond the rash implementation of such an immense structural change, the regional councils suffered from similar ‘siloing’ problems as the industrial ministries.
The Virgin Lands campaign was a concentrated effort to open new land for agricultural production in less developed, or more remote, areas like the Northern Caucasus, Kazakhstan, and Western Siberia. From 1953, agricultural investment grew from 3% to 12.8% of the Soviet budget by 1959. By 1964, the Virgin Lands campaign had increased the USSR’s total area sown by 5.35x, and the total labour employed in agriculture by 3.3x. This new agricultural land was mostly entrusted to state-owned companies, rather than agricultural co-operatives. It led to a greater availability of food in shops, and a great increase in income for agricultural workers.
The campaign’s success allowed Khrushchev to consolidate his position, and pursue an even more ambitious target. In 1956, Khrushchev announced a commitment to outpace the USA in food production by 1960. This would require a 300% increase in just four years. However, the Virgin Lands campaign’s early gains quickly tailed off. Between 1960-1964, production gradually increased, but agricultural production was only 15% higher in 1964.
There was also the 1958 ‘Corn Campaign,’ which encouraged Ukrainian farmers to grow maize, shifting wheat production to the ‘Virgin Lands.’ This also failed, due to factors like poor growing climate and low labour productivity. Soviet agriculture remained relatively inefficient and labour intensive. At the time, 45-55% of the Soviet population still worked in agriculture, compared to just 5% in the USA, which still produced twice the amount of food.
The necessary military build-up to reinforce the USSR against the coming Nazi invasion had kept living standards relatively low. 10 years after the Red Army’s glorious defeat of fascism, Khrushchev began making cuts to the military, decreasing military spending as a percentage of GDP from 12.1% (1955) to 9.1% (1958). However, by 1964, military spending had bounced back to 11% of GDP, the rise in military spending, coinciding with slowing economic growth.
In 1959 Khrushchev launched his Seven Year Plan, with the goal of increasing light industrial and chemical production, to increase living standards through more fertilizer and consumer goods. This shift reflected leadership’s belief that the USSR no longer needed to prioritize heavy industry, because (so they believed) Soviet heavy industry was as advanced as it needed to be. The Seven Year Plan increased chemical and consumer goods production between 1959 – 1965, but missed their lofty targets: 60% increase in consumer goods (5% short), 19M ton increase of fertilizer (3.5M tons short), 241k ton increase of synthetic fibers (200k short).
Most detrimental to Khrushchev’s leadership was the counterproductive continual reorganization of the economic plan. Reforms were often so short lived that they didn’t have time to take effect. The Soviet economy the Khruschevites inherited was shaped around heavy industry, not light goods production. Production targets were set in weight, so factories produced thick sheet metal over thin steel, to quickly meet targets. However, finer consumer goods needed thin steel. This resulted in ridiculous items, like light fittings too heavy for ceilings. Consumer industries were also set targets in monetary value. This incentivized the production of less, more expensive goods. Huge, fancy sofas met targets, but workers couldn’t afford to buy them. Still, Soviet citizens’ living standards improved in the short term, by shifting resources from capital goods to consumer goods production.
The compounding problems caused by decentralization and endless reform led to a recentralization campaign starting in 1962. Economic councils were created at the republic level, in Russia, Ukraine, Kazakhstan, etc, with the Supreme Soviet of the National Economy coordinating between councils, and consolidating them into larger economic districts. The previously abolished industrial ministries were replaced with state production committees, concentrating research, design and project organizations.
Economic management reform was also accompanied by political reorganization. In November 1962, the CPSU Central Committee plenum divided each party body into an industrial and agricultural faction. As such, the number of local party and soviet bodies doubled overnight, with party bodies in the economic planning system replacing soviet ones.
It can be tempting to view the Khrushchev period of increased agricultural output and consumer goods production as a golden age of USSR prosperity. However, with hindsight that doubles as foresight for future socialist construction, we can see how the shift away from heavy industry sowed the seeds of the USSR’s future economic problems.
The campaign to overtake the USA in food production is a perfect example. Based on population estimates of 179M for the USA, and 214M for the USSR, 8.95M farmers in the USA were producing double the food of 100M+ farmers in the USSR. Khrushchev’s leadership ended a policy of prioritizing the fundamental economic base, the production of the means of production, which was as old as the USSR itself.
As modern day socialists, we need to think deeply about this situation. The USSR had just suffered the brunt of WWII in Europe. More food and consumer goods was likely a popular position. However, rather than catching up to the USA in industrial terms, as it had throughout the 1930s, the USSR fell further and further behind from the 1960s onwards.
Next time, we will look at the beginning of the leadership of Leonid Brezhnev, and the 1965 Kosygin Reforms.
References
https://blogs.lse.ac.uk/economichistory/2023/10/06/the-legacy-of-khrushchevs-agricultural-reforms/
https://www.marxists.org/archive/khrushchev/1959/make-progress-in- agriculture.pdf