Perestroika: Definition & History

Instructor: Erin Carroll

Erin has taught English and History. She has a bachelor's degree in History, and a master's degree in International Relations

This lesson will discuss Mikhail Gorbachev's economic policy of perestroika in the Soviet Union. You will learn why the policy was introduced, and what effects it had on the Soviet Union.

The End of the Cold War

Sometimes, you will hear people talk about the fall of the Soviet Union and the resulting end of the Cold War as though they were inevitable. Some people even claim that President Reagan brought down the U.S.S.R. himself. In reality, the end of the Cold War was both a total surprise and a process that had a lot to do with what was going on inside the Soviet Union. One of the most important factors in the fall of the Soviet Union was its domestic policy of perestroika.

Soviet Worries

In 1985, Mikhail Gorbachev became the Communist Party leader in the Soviet Union. Under his predecessor, Leonid Brezhnev, some officials in the U.S.S.R. had already begun to doubt the communist system, and recognized that the collapse of capitalism was unlikely. So, when Gorbachev took office he hoped to introduce 'new thinking' about foreign and domestic policies in order to find new ways to move forward for the U.S.S.R. Two things were very clear to Gorbachev: first, the capitalist system was not going to collapse, and second, the Soviet command economy was too weak and inefficient to compete with the U.S.

While the Reagan administration in the U.S. took a more aggressive stance against the U.S.S.R., Gorbachev looked for ways to improve relations with the West. The costly arms race was bleeding the U.S.S.R.'s already weak economy dry. Meanwhile, unrest within the Soviet Union grew. People were frustrated with the weak economy and widespread party corruption. Soviet leaders were no longer concerned with winning the Cold War, but with keeping the U.S.S.R. financially and politically viable.

Mikhail Gorbachev
mikhail Gorbachev

Gorbachev's solution was the introduction of two new domestic policies: perestroika and glasnost. Glasnost was a new political policy of openness and transparency. Citizens of the U.S.S.R. would have access to more information about how things happened in their own country, as well as in the West and the outside world. Perestroika was his economic policy.


Gorbachev's plan to fix the Soviet economy was perestroika. Perestroika, which means 'restructuring,' was a plan to reform the Soviet economy, increase economic growth, and bring the economy up to par with the U.S. This would be achieved by introducing some free-market policies into the Soviet command economy. Under the command system, the U.S.S.R. maintained control over all the means of production; it specified how much a business could produce and how much it could charge for its products, and it also helped unprofitable industries stay afloat. Under perestroika, the state would still maintain a great deal of control over the economy, but it would have some capitalist characteristics.

Propaganda stamp: Restructuring is the reliance on the living creativity of the masses.

For example, under the Law on Cooperatives, Gorbachev began to allow some private ownership of enterprises. This was a total departure from Communist Party ideology, which had outlawed all private ownership. Other reforms included encouraging foreign capital investment, and allowing weak industries to fail. Gorbachev hoped that by introducing some free-market strategies, the communist economy could become more efficient.

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