I'm not sure if this is more of an economics question, but the two often have a lot of overlap so here goes. In the west you often hear of stories where Communist leaders would see the overabundance of wealth in capitalist countries and be absolutely shocked. Now stories like these are kind of used as semi-propaganda to show how superior our system was, but was the discrepancy a result of different economic systems, or the fact that most of Russia is tundra and/or bad farmland?
Now stories like these are kind of used as semi-propaganda to show how superior our system was, but was the discrepancy a result of different economic systems, or the fact that most of Russia is tundra and/or bad farmland?'
A few things, first of all, the "poverty" in Soviet Russia (and do note the "Russia" part because Soviet Turkestan or w/e would be very different) are generally pretty exaggerated. In 1989, GDP per capita in the USSR was something like $9000-$10,000. While far far below that of the US (which was at ~$23,000). It really wasn't that bad.
But it was economic system for the simple reason that much of the Soviet Union was quite wealthy/good farmland. The Ukraine was a bread basket of Europe for instance. The Tundras of Siberia actually have a lot of valuable resources in them, from oil to gems/diamonds to gas to timber. Not only that, but if the lack of natural resources and such were the main responsibility for economic failure those would have manifested themselves fairly early on.
Instead the Soviet Union more or less developed the same way as most other developing countries did. They started off with impressive economic growth, especially as the state applied full force in urbanizing and industrializing the country. It was eventually able to drag the country into Middle-Income status.
But problems started occur in the late Khrushchev era, and of course into the infamous Brezhnev stagnation. While the command system was good at urbanizing and industrializing, once it exhausted the source of peasants to move to cities it had trouble generating growth by increasing efficiency.
At this pint however, global oil prices shot up, and stayed high throughout the 1970s. For all the talk of Russia being poor, it is actually very well endowed in oil resources. And the Soviet Union became more or less a petro state in the 1970s, and when oil prices dropped in the 80s, it perpetrated the crisis which led to the Gorbachev reforms and the fall of the Union.
Basically near the end, the Soviet Union was largely a rust belt, with rockets and propped up by oil money. It was a system which was good (but I would argue far from the best at) mobilizing the country for westernization and modernization into Middle-Income status. It's a good system for extensive growth, not for intensive growth.
http://en.wikipedia.org/wiki/Economic_development#Intensive_versus_extensive_growth