Why did the 1991 Soviet coup attempt fail? | AskHistorians Archive Observer

Part 1

So, let me address each question individually.

We must understand the weakened position of the Soviet Union government with respect to their economic position. The ability of the Soviet Government to maintain power was always based upon it's ability to provide a decent standard of living which in turn depended on economic growth and on the nature of it's institutions both of which were under severe pressure during the 1980's. It is not possible to answer your question about role of glasnost and perestroika without understand the general economic situation and policy that prevailed starting from 1960's.

How about economic prosperity?

The Soviet Union saw a relatively high rate of economic growth during the period from 1950's till early 1970's. In 1959, the Soviet Planners had set set 1972 as the year to surpass the United States in per-capita output. This was based on capital accumulation, heavy investment into industry in form of new machinery and improvement in technical management. The improvement of already existing machinery was not emphasized as much as the former primarily because it was believed it would slow down economic growth. Yet, one worrying feature that was becoming increasingly obvious to the Soviet planners was that the total amount of input required to produce the same output even in heavy industry was twice that of advanced Capitalist countries. Part of the reason for the comparative advance of Heavy Industry was because of militarization of Soviet economy. On the other hand, Agriculture and Consumer products were even further behind Heavy Industry.

Starting from late 1960's, the Soviet Union faced systematic economic problems. Soviet Union was becoming increasingly urbanized and richer leading to increase in demand for food and other consumer products. Similarly, the benefits from existing tools and instruments were decreasing. The labour force was becoming depleted because of urbanization and raw materials were also being consumed at a paid rate. One of the problems was that the Soviet government stressed upon production figures but not at sales or profits. Similarly, even unproductive enterprises could never go bankrupt nor could workers be layed off as it was viewed as a sign of traditional Capitalist wastage because of overproduction. Yet, the ill effects of not doing so was becoming apparent in form of low returns on investment and underemployment. From 1961 to 1973, the growth in labour and Capital inputs were 1.8 percent and 4.3 percent. The factor productivity for labour and Capital was 3.1 percent and negative 2.9 percent. It is in this context, that we must look at the reforms that were started by Alexei Kosygin in 1965 and again in 1973 which stressed upon profitability and sales of enterprise along with maintenance of old equipment and focus on increasing labour productivity. I have mentioned it in more detail here.

Nonetheless, the finding of oil reserves in the country led to increase in trade it had with outside countries. Because, the Soviet economy was not particularly competitive, it's primary exports were commodities (mainly oil). It used it to buy advanced equipment for Industry and grains. The high oil prices helped it to sustain this practice but even taking that that into account, the balance of payments had deteriorated considerably. Western countries ,particularly the US imposed sanctions to punish the Soviet invasion of Afghanistan in 1979 which also coincided with the fall in oil prices. When oil prices crashed, the Government was left with a very precarious situation of excess dependence on foreign banks from which had lend it money for procurement of ever growing imports which gave the Western World a tool to leverage the USSR.

What role did glasnost and perestroika play?

Gorbachev's policy was intended to weaken the hold of the planning in the economy and especially the bureaucracy. This was done by allowing autonomy for enterprises in not only creation of products but also in sales. They were to sell a certain portion of their produce to the State at a fixed price and the rest at a market price to customers or other enterprises. He felt that this would lead to an improved situation and thus increase public support for the Government.

However, this had a fatal impact. The independent enterprises started using much of the funds they received to increase profits and reduce investment. This increased the supply constraints and created even more shortages which was made worse by removal of price controls on certain categories of products. Some enterprises even started buying State goods at low prices and later sold it on the International markets at high prices. The workers were losing their fear in the system because of weakening of administrative control.

The Soviet Government passed a law in 1988 allowing the birth of the private Cooperative sector. So, the Law on Cooperatives gave birth to a lot of capitalist firms. A large amount State managers ended up becoming entrepreneurs and considerable number of workers jumped ship to private Enterprises because the wages were two and a half times higher than the State sector. The cooperative model was so successful that, by July 1989, barely one year after the approval of the law, almost three million people were working in cooperatives. At the end of 1991, they were more than 6.2 million. This led to a serious disruption of system of distribution of goods which could no longer be produced by State sector because they were falling apart and private companies were not doing so primarily because they were not profitable. The Private sector for the most part produced the 'new goods' whose prices were not controlled by the Government.

Thus, in 1991, the USSR was in a dramatic economic situation. The Soviet oil production began to fall in 1989 because of the overuse of the most productive deposits. The Soviet current balance of payment deteriorated during the Perestroika leading to even more borrowing from foreign banks leading to a tripling of net foreign debt from the levels in 1985. Unable to attend domestic needs for consumer and agricultural goods, central Soviet institutions had no more authority on the economic and political system.

How could Gorbachev tolerate such a decentralization of power?

So, it was not so much as Gorbachev tolerating decentralization but more so a combination of weakening of State power over institutions and an unintended consequence of economic reforms that led to disintegration of economy and the political power of the State. See the answer by u/sowenga above on certain compromises Gorbachev made with the other Republics. Some of the problems were inherited by Gorbachev which tied his hands behind his backs. He had to allow the collapse of the Soviet installed governments in Eastern Europe because of Soviet dependence on foreign imports and consequent Western leverage. When he sought to improve the economic situation at home, it had led to collapse of the Party's power. Meanwhile, Boris Yeltsin had already put forward a proposal to create a collection loosely organized autonomous republics in place of the all powerful USSR leading to a panic in the hardline Communist Party officials.

Was the coup plotted poorly?

Yes. The coup was instigated by a relatively small number of officials at a time when much of the institutions that governed the country were falling apart. Moreover, they did not arrest Yeltsin when he led the opposition, making him a (deserved) hero at the time as he was standing up to the most repressive elements in the bureaucracy. Gorbachev who was in Crimea did not return at the behest of the coup leaders either. An important role was also played by the United States which continued the same policy it had in 1980's of supporting Gorbachev when he was implementing Capitalist reforms and opposing him (mostly) through economic means when it came to handling protests in Eastern European countries.

Not all people who participated in the coup were against reforms though. I would add that one person who initiated the coup in the first place (Valentin Pavlov) was actually supportive of the reforms that Gorbachev had begun. Pavlov was a veteran of the Soviet bureaucracy and was already in a significant position of power during the Brezhnev era. He later joined the Free Economic society which was started by the Russian liberals in the 19th century and whose activities were stopped by the Bolsheviks. Curiously, he also was the head of a private bank whose licence was revoked by the Russian Central Bank for not following proper regulations.