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Building a Ruin: The Cold War Politics of Soviet Economic Reform
A masterful account of the global Cold War’s decisive influence on Soviet economic reform, and the national decay that followed.
What brought down the Soviet Union? From some perspectives the answers seem obvious, even teleological―communism was simply destined to fail. When Yakov Feygin studied the question, he came to another at least one crucial factor was a deep contradiction within the Soviet political economy brought about by the country’s attempt to transition from Stalinist mass mobilization to a consumer society.
Building a Ruin explores what happened in the Soviet Union as institutions designed for warfighting capacity and maximum heavy industrial output were reimagined by a new breed of reformers focused on “peaceful socioeconomic competition.” From Khrushchev on, influential schools of Soviet planning measured Cold War success in the same terms as their Western productivity, growth, and the availability of abundant and varied consumer goods. The shift was both material and intellectual, with reformers taking a novel approach to economics. Instead of trumpeting their ideological bona fides and leveraging their connections with party leaders, the new economists stressed technical expertise. The result was a long and taxing struggle for the meaning of communism itself, as old-guard management cadres clashed with reformers over the future of central planning and the state’s relationship to the global economic order.
Feygin argues that Soviet policymakers never resolved these tensions, leading to stagnation, instability, and eventually collapse. Yet the legacy of reform lingers, its factional dynamics haunting contemporary Russian politics.
What brought down the Soviet Union? From some perspectives the answers seem obvious, even teleological―communism was simply destined to fail. When Yakov Feygin studied the question, he came to another at least one crucial factor was a deep contradiction within the Soviet political economy brought about by the country’s attempt to transition from Stalinist mass mobilization to a consumer society.
Building a Ruin explores what happened in the Soviet Union as institutions designed for warfighting capacity and maximum heavy industrial output were reimagined by a new breed of reformers focused on “peaceful socioeconomic competition.” From Khrushchev on, influential schools of Soviet planning measured Cold War success in the same terms as their Western productivity, growth, and the availability of abundant and varied consumer goods. The shift was both material and intellectual, with reformers taking a novel approach to economics. Instead of trumpeting their ideological bona fides and leveraging their connections with party leaders, the new economists stressed technical expertise. The result was a long and taxing struggle for the meaning of communism itself, as old-guard management cadres clashed with reformers over the future of central planning and the state’s relationship to the global economic order.
Feygin argues that Soviet policymakers never resolved these tensions, leading to stagnation, instability, and eventually collapse. Yet the legacy of reform lingers, its factional dynamics haunting contemporary Russian politics.
288 pages, Hardcover
Published June 11, 2024
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December 29, 2024Discusses Soviet economic theorists and policy types and their approaches to reform. I found it interesting how debates over pricing and use of producer goods could help expose tensions in Marxist theory. I knew some of this going in but having the different perspectives and their implications laid out in fundamentals helped clear things up. The different reform-minded schools seemed plausible on their own terms so I'm not really sure where I'd land on it. It's also interesting how technology could be deployed as a conservative force to improve the existing economy as a technique of optimization and mobilization.
July 1, 2024
A good book that leaves me more puzzled and frustrated than before. It takes several intuitions I've had that have puzzled me and says "yeah, those really DO make no sense."
The neoclassical and Austrian critiques of the Soviet economy - and even much of the market socialist, etc. critiques - are essentially that they got the prices wrong, which led to incorrect allocation decisions. But, alas, with no market, or with no comprehensive system of input-output tables, how could you possibly know what the correct allocation decisions were??? BAR confirms the vague impression I already had: none of the broad strokes about improving allocation were even a slight mystery; all economists were perfectly aware that consumer prices needed to be higher, and investment moved from capital to consumer goods production. The government - which did not have any ideological commitment against profitability incentives during the postwar period, far from it if anything - refused to do so. Why?
Part of the answer appears to be particular events that foreclosed particular policy solutions, but each of these just increases the puzzle. The Novocherassk massacre made the political costs of consumer goods increases clear (but why not directly subsidize them for a time until supply increased?) Mikoyan argued for shifting investment from producer to consumer goods, and as part of his succession maneuvers against him Khruschev condemned this as capitalistic (but why not reconsider this alongside all sorts of other measures that were implemented in the mid-60s as a fuck-you to Khruschev?) Any sort of mechanism that would have automatically eliminated crappy firms was rejected because it would lead to unemployment (but why not adopt any of the many measures that were perfectly available for keeping full employment?)
The best answer the book offers is "interest group politics," but why weren't interest groups bought off? These battles weren't conducted in street fights over religious identity, but in conference rooms over who whether the Branch Regional Manager of Zinc Production got seven or twelve patronage positions to distribute to his sons-in-law. You should be able to buy that guy off!
The depressing - and really, to an inhabitant of contemporary capitalism, familiar - picture is one of a gerontocratic, nepotistic vetocracy shuffling deck chairs around because everyone's too afraid of real ideological questions, and even rightly so (everyone in charge had survived the Stalin years through a mix of cowardice and luck, everyone but a few universally hated weirdos looked back on those years with horror, and as soon as history restarted under Gorbachev everything indeed got way worse again, albeit nowhere near as bad as the Stalin years.) Questions of sustainability are kicked down the road to some kind of technological eucatastrope, another obvious parallel with the present moment.
February 4, 2025
A great intellectual history of the various economic reform movements in the USSR and how they were defeated by a combination of entrenched conservatism, political opposition and interest groups. I also very much agreed with the author's Kalecki/Kornai inspired criticisms of the planning system. I found following the various dramatis personae a bit difficult at times and would have liked to see more where the author fits into the broader economic history debates about the USSR.
November 21, 2024
In this exceedingly well researched, insightful academic book, Feygin lays out the evolution of economic debate within the USSR, with a focus on the interactions between economists and politics.
I feel personally connected to this book, in part because of a visit to the title ruin. The "Blue Tooth" is a 1980s international-style skyscraper, but half-finished, a ruin in the dirty snow. It sits outside RANEPA, a national Russian economics and political science academy that I visited in 2015, and where Feygin spent a year. The failed Soviet skyscraper, started at the very end of the Soviet period with imported Italian (and mafia connected, natch) labor, is a fitting symbol of the first world economy that the Soviets never developed. (It also makes me think of the Wagner headquarters in St. Petersburg, a building with a similar style and parallel destinies).
Fittingly, this same Blue Tooth graces the cover of the book, and as my hosts at RANEPA pointed out to me, it stands as a stark symbol of Russia's failure to become a "Normal Country." Indeed, Feygin himself has written movingly about this building's significance in a recent piece about Vladimir Mau and RANEPA's fate - I wonder if we overlapped briefly there during the 2015 Gaidar forum?
The book identifies three distinct reformer camps within the Soviet economic establishment, though their boundaries shifted over time:
1. Traditionalists who advocated improving current systems, possibly with sectoral reallocation, increased R&D, austerity, and “volunteerism”
2. Market-oriented reformers pushing for gradual introduction of market mechanisms while maintaining state control of commanding heights - these "computational economists" supported cost accounting, enterprise self-financing, flexible private cooperatives for small scale service and retail, and more flexible wage setting
3. Cyberneticists, the most internationally-minded group, who respected Hayek and saw the key challenge as centralizing information to make better 5-year plans. They focused on developing data transmission and processing capacity
A key theme is the attempted de-politicization of the economy and growth of technocracy. The government, reluctant to choose winners and losers in addressing inflation, delegated these decisions to technocrats. When these experts proposed radical solutions, their recommendations were sometimes tolerated, sometimes suppressed, but even politically supported ones were consistently diluted until the very end. In the earlier period, quasi-academic debates about how textbooks should describe the economy became ideologically laden. While Stalin could pragmatically edit official ideology, later developments were sometimes hamstrung by inherited language. There was also persistent tension between ideology emphasizing producer goods and technocrats advocating for consumer goods to reduce inflation and make price mechanisms and profit incentives work better.
The book reveals several surprising aspects of Soviet economic governance, particularly the intense conflicts between Gosplan, industrialists, and academics. Perhaps most striking is the revelation that Soviet doctrine had no fundamental objection to wage inequality - a fact that makes many of the period's theoretical debates seem particularly academic.
The USSR’s breaking point ultimately came when cooperatives were allowed to trade consumer currency for wholesale scrip. This policy introduced wild inflation from the consumer sector into the wholesale economy, with cooperatives functioning more as arbitrageurs than value creators.
The leadership faced two choices: embrace a full market economy or formalize oligarchic market management. As Gaidar observed, given that they already had the latter [high up political bosses bargaining over resources], they might as well formalize it. The pace of change in the final days was breathtaking - by 1989, RANEPA's leader was advocating for a stock market (with the fig-leaf of calling this a means of giving workers a stake in their enterprises!)
I give this book 4.5 stars (rounded up to 5) for its rare insights and surprising revelations, even if the reading can be sticky at points. My main wish is for more detail about the interaction between Jeffrey Sachs and Gaidar, though this may be beyond the book's scope. Feygin has produced an essential work for understanding both late Soviet economic thought and the challenges facing contemporary state-directed development efforts.
I feel echoes of this book in China’s failure to shift sectors, and in the US contest between those who promote ESG and regulation vs. Gordon Geckos. Around the world in the question of whether the economy should be a 'political arena' or not. I think of my economist friends in Moscow, who as Feygin memorably describes RANEPA graduates, are "first rate managers and liberals but cadres for an illiberal regime." Lots of lessons for today.
One last note- read this book after a relative of the author mentioned it, and called it a dry book not worth my attention. Glad I rebelled!
====
Review of Building a Ruin -- raw notes follow
In this exceedingly well researched and insightful, although sometimes dry book, the author lays out the state of economic debate within the USSR, with a focus on the Krushev through Breshnev, so roughly the 1960s to 1980s.
I feel personally connected to this book in two ways. First are my connections to the title ruin and one of the main characters who emerges at the end. The “Blue Tooth” is a 1980s international-style skyscraper, but half-finished, a ruin in the dirty snow. It sits outside RANEPA, a national Russian economics and political science academy that I visited in 2015, and this author spent a year at. The failed Soviet skyscraper, started at the very end of the soviet period with imported Italian (and mafie connected, natch) labor, is a fitting symbol of the first world economy that the Soviet’s never developed. (It also makes me think of the Wagner headquarters in st Petersburg, a building with a similar style and parallel destinies).
> Very compelling article from the author about his personal RANEPA connection – I wonder if we overlapped there briefly in the 2015 Gaidar forum? https://building-a-ruin.ghost.io/vlad...
>Reformer camps. Shifting, but three tendencies I detect
>>Current stuff but better; maybe with sectoral reallocation + more R and D + austerity
>>Slowly introducing market mechanisms, and reducing top down planning, while retaining control of the commanding heights (Cost accounting, self-financing of enterprises, private coops for more flexible smaller scale service + retail industry; earlier on – more flexible wage setting allowed) – computational economists
>>Cyberneticists; most international; respected hayek, focused on developing data transmission technology
Technicaliztion of the economy/Growth of technocracy
>It was seen that gov didn’t want to have to choose winners and losers to deal with inflation. So technocrats were assigned to solve. They had more radical solutions, but these got sanded down until the very end. Analogy to other countries
>In the earlier part of the period, there are lots of quasi academic debates about how the textbooks should describe the economy, that were ideologically laden. Stalin could pragmatically edit, but later developments are sometimes hamstung by language.
>Tension between ideology which emphasizes producer goods, and technocrats who want consumer goods to reduce inflation and make the price mechanism/profit incentive to work better
Stuff I didn’t know
>Fights between Gosplan and the industrialists and the academics
>The fact that soviet doctrine didn’t really have any problem with wage inequality. Which makes all of these arguments feel extra academic
… ‘first rate managers and liberals but cadres for an illiberal regime.’
There is no alternative –
Idea that breaks things is allowing the coops to trade consumer currency for wholesale scrip. This introduced the wild inflation of the former into the latter, making all out of control. Coops were mere arbitragers not adding value
Two choices:
>Full market economy
>Oligarchy managing a market
Gaidar: we already have the latter, let’s formalize it
How fast things changed at the end. The leader of RANEPA calling in 1989 for a stock market as a way for workers to have a stake in their enterprises!
4.5 stars rounded up because it was rare and surprising and a learned from it even though it was sticky reading at some points. What do I want more – how does Jeff Sachs + Gaidar work?
I feel personally connected to this book, in part because of a visit to the title ruin. The "Blue Tooth" is a 1980s international-style skyscraper, but half-finished, a ruin in the dirty snow. It sits outside RANEPA, a national Russian economics and political science academy that I visited in 2015, and where Feygin spent a year. The failed Soviet skyscraper, started at the very end of the Soviet period with imported Italian (and mafia connected, natch) labor, is a fitting symbol of the first world economy that the Soviets never developed. (It also makes me think of the Wagner headquarters in St. Petersburg, a building with a similar style and parallel destinies).
Fittingly, this same Blue Tooth graces the cover of the book, and as my hosts at RANEPA pointed out to me, it stands as a stark symbol of Russia's failure to become a "Normal Country." Indeed, Feygin himself has written movingly about this building's significance in a recent piece about Vladimir Mau and RANEPA's fate - I wonder if we overlapped briefly there during the 2015 Gaidar forum?
The book identifies three distinct reformer camps within the Soviet economic establishment, though their boundaries shifted over time:
1. Traditionalists who advocated improving current systems, possibly with sectoral reallocation, increased R&D, austerity, and “volunteerism”
2. Market-oriented reformers pushing for gradual introduction of market mechanisms while maintaining state control of commanding heights - these "computational economists" supported cost accounting, enterprise self-financing, flexible private cooperatives for small scale service and retail, and more flexible wage setting
3. Cyberneticists, the most internationally-minded group, who respected Hayek and saw the key challenge as centralizing information to make better 5-year plans. They focused on developing data transmission and processing capacity
A key theme is the attempted de-politicization of the economy and growth of technocracy. The government, reluctant to choose winners and losers in addressing inflation, delegated these decisions to technocrats. When these experts proposed radical solutions, their recommendations were sometimes tolerated, sometimes suppressed, but even politically supported ones were consistently diluted until the very end. In the earlier period, quasi-academic debates about how textbooks should describe the economy became ideologically laden. While Stalin could pragmatically edit official ideology, later developments were sometimes hamstrung by inherited language. There was also persistent tension between ideology emphasizing producer goods and technocrats advocating for consumer goods to reduce inflation and make price mechanisms and profit incentives work better.
The book reveals several surprising aspects of Soviet economic governance, particularly the intense conflicts between Gosplan, industrialists, and academics. Perhaps most striking is the revelation that Soviet doctrine had no fundamental objection to wage inequality - a fact that makes many of the period's theoretical debates seem particularly academic.
The USSR’s breaking point ultimately came when cooperatives were allowed to trade consumer currency for wholesale scrip. This policy introduced wild inflation from the consumer sector into the wholesale economy, with cooperatives functioning more as arbitrageurs than value creators.
The leadership faced two choices: embrace a full market economy or formalize oligarchic market management. As Gaidar observed, given that they already had the latter [high up political bosses bargaining over resources], they might as well formalize it. The pace of change in the final days was breathtaking - by 1989, RANEPA's leader was advocating for a stock market (with the fig-leaf of calling this a means of giving workers a stake in their enterprises!)
I give this book 4.5 stars (rounded up to 5) for its rare insights and surprising revelations, even if the reading can be sticky at points. My main wish is for more detail about the interaction between Jeffrey Sachs and Gaidar, though this may be beyond the book's scope. Feygin has produced an essential work for understanding both late Soviet economic thought and the challenges facing contemporary state-directed development efforts.
I feel echoes of this book in China’s failure to shift sectors, and in the US contest between those who promote ESG and regulation vs. Gordon Geckos. Around the world in the question of whether the economy should be a 'political arena' or not. I think of my economist friends in Moscow, who as Feygin memorably describes RANEPA graduates, are "first rate managers and liberals but cadres for an illiberal regime." Lots of lessons for today.
One last note- read this book after a relative of the author mentioned it, and called it a dry book not worth my attention. Glad I rebelled!
====
Review of Building a Ruin -- raw notes follow
In this exceedingly well researched and insightful, although sometimes dry book, the author lays out the state of economic debate within the USSR, with a focus on the Krushev through Breshnev, so roughly the 1960s to 1980s.
I feel personally connected to this book in two ways. First are my connections to the title ruin and one of the main characters who emerges at the end. The “Blue Tooth” is a 1980s international-style skyscraper, but half-finished, a ruin in the dirty snow. It sits outside RANEPA, a national Russian economics and political science academy that I visited in 2015, and this author spent a year at. The failed Soviet skyscraper, started at the very end of the soviet period with imported Italian (and mafie connected, natch) labor, is a fitting symbol of the first world economy that the Soviet’s never developed. (It also makes me think of the Wagner headquarters in st Petersburg, a building with a similar style and parallel destinies).
> Very compelling article from the author about his personal RANEPA connection – I wonder if we overlapped there briefly in the 2015 Gaidar forum? https://building-a-ruin.ghost.io/vlad...
>Reformer camps. Shifting, but three tendencies I detect
>>Current stuff but better; maybe with sectoral reallocation + more R and D + austerity
>>Slowly introducing market mechanisms, and reducing top down planning, while retaining control of the commanding heights (Cost accounting, self-financing of enterprises, private coops for more flexible smaller scale service + retail industry; earlier on – more flexible wage setting allowed) – computational economists
>>Cyberneticists; most international; respected hayek, focused on developing data transmission technology
Technicaliztion of the economy/Growth of technocracy
>It was seen that gov didn’t want to have to choose winners and losers to deal with inflation. So technocrats were assigned to solve. They had more radical solutions, but these got sanded down until the very end. Analogy to other countries
>In the earlier part of the period, there are lots of quasi academic debates about how the textbooks should describe the economy, that were ideologically laden. Stalin could pragmatically edit, but later developments are sometimes hamstung by language.
>Tension between ideology which emphasizes producer goods, and technocrats who want consumer goods to reduce inflation and make the price mechanism/profit incentive to work better
Stuff I didn’t know
>Fights between Gosplan and the industrialists and the academics
>The fact that soviet doctrine didn’t really have any problem with wage inequality. Which makes all of these arguments feel extra academic
… ‘first rate managers and liberals but cadres for an illiberal regime.’
There is no alternative –
Idea that breaks things is allowing the coops to trade consumer currency for wholesale scrip. This introduced the wild inflation of the former into the latter, making all out of control. Coops were mere arbitragers not adding value
Two choices:
>Full market economy
>Oligarchy managing a market
Gaidar: we already have the latter, let’s formalize it
How fast things changed at the end. The leader of RANEPA calling in 1989 for a stock market as a way for workers to have a stake in their enterprises!
4.5 stars rounded up because it was rare and surprising and a learned from it even though it was sticky reading at some points. What do I want more – how does Jeff Sachs + Gaidar work?
July 4, 2024
After Stalin’s death, the USSR faced existential questions about how to conduct modernizing economic reforms without abandoning the Soviet project wholesale. In BUILDING A RUIN, Yakov Feygin, an economic historian and policy analyst at the Center for Public Enterprise, articulates the opening of new cadre of policy elites who introduced economics as a policy science beginning in the late 1950s. In this era, economic reformers led the transition from Stalin’s terror campaigns and military industrialism to policy entrepreneurship and technocratic experimentalism backed by the logic of scientific expertise. This retooling was intended to preserve the Soviet socialist system, while also enabling it to be competitive in the context of Cold War social competitions.
Feygin describes each successive wave of reform and its theoretical motivations, each insufficient to jostle the USSR out of its economic stagnation. Khrushchev’s ambitious decentralization and investments in the productive sector nonetheless created economic inefficiencies and shortages. The Kosygin Reforms beginning in 1964 reformed state enterprise and attempted technological advancement but lacked the necessary price reform to provide the citizenry with both guns and butter. The Brezhnev conservative consensus on the 1970s built on these reforms but sacrificed economic growth for political preservation. Gorbachev’s liberalizations, while only briefly mentioned, elaborated on this consensus by appealing to more radical elements of the “scientific-technical revolution” but still missed the mark. By outlining both the emergence of a new science of economics and its subjugation to Soviet socialist political imperatives, Feygin shows how Soviet reformers repeatedly fell short of undertaking reforms that would have enabled the USSR to “catch up and overtake” capitalist rivals. Therein is a lesson offered to the inheritors of the Soviet empire, including contemporary leaders, of the risks of trading economic progress for political stability and returning to a path of centralized planning and war mobilization.
Feygin describes each successive wave of reform and its theoretical motivations, each insufficient to jostle the USSR out of its economic stagnation. Khrushchev’s ambitious decentralization and investments in the productive sector nonetheless created economic inefficiencies and shortages. The Kosygin Reforms beginning in 1964 reformed state enterprise and attempted technological advancement but lacked the necessary price reform to provide the citizenry with both guns and butter. The Brezhnev conservative consensus on the 1970s built on these reforms but sacrificed economic growth for political preservation. Gorbachev’s liberalizations, while only briefly mentioned, elaborated on this consensus by appealing to more radical elements of the “scientific-technical revolution” but still missed the mark. By outlining both the emergence of a new science of economics and its subjugation to Soviet socialist political imperatives, Feygin shows how Soviet reformers repeatedly fell short of undertaking reforms that would have enabled the USSR to “catch up and overtake” capitalist rivals. Therein is a lesson offered to the inheritors of the Soviet empire, including contemporary leaders, of the risks of trading economic progress for political stability and returning to a path of centralized planning and war mobilization.
December 24, 2024
Dense analysis - as the title suggests, it is about the politics of economic policy, so some background in domestic politics and/or economics of the Cold War USSR would be helpful.
Evokes thought-provoking parallels with contemporary PRC, e.g., the current push for "new quality productive forces."
Evokes thought-provoking parallels with contemporary PRC, e.g., the current push for "new quality productive forces."
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