Alright so the first thing is that the Soviet Union was around for quite a while and its economy and by extension the living standards of its people changed over time. So, my answer will consist mostly of a kind of summery of the Soviet Union’s economic history with a focus on living standards and how some of the Soviet Unions economic problems affected ordinary citizens. I am personally not really qualified to touch the Western propaganda chunk of your question but yes, the idea that in the late USSR ordinary people were living in poverty is for the most part incorrect.

A good place to start is the New Economic Policy (NEP) which was introduced in 1921. The NEP legalised many types of small scale private trade and ended grain requisitioning whilst at the same time keeping the “commanding heights” of the economy (most types of heavy industry as well as things like the banking system) state controlled. During this period the economy suffered immensely. The lands that the newly formed Soviet Union controlled had been devastated first by WW1 and then by vicious civil war. The value of the rouble under war communism had collapsed (this was not a uniquely soviet occurrence however) and industry, even when state controlled was hopelessly disorganized and unproductive. Then famine struck. The 1920 and 1921 harvests were significantly below prewar yields and millions died in affected areas despite massive attempts at famine relief. After the famine ended however a massive process of economic re-organisation began. The rouble was slowly stabilised, industry began to recover and a series of good harvests on the peasants newly redistributed land significantly improved the average peasants wellbeing and that of those in the city who appreciated having a reliable supply of bread. Minor and major economic problems abounded in these years and state industry was reorganised repeatedly, however on the whole things were slowly but steadily improving.

During the NEP there was widespread poverty throughout the country. The average consumer had significantly less purchasing power than those then in say the United States. However, there were a great deal of mitigating factors, the most notable being that the state was recovering from the devastation of a world war and a civil war in a place which didn’t have a particularly brilliant economy to start off with. Peasants had access to land that had been redistributed and by 1926 the average wage of an urban worker in Moscow had roughly returned to the pre-war figure. If you combine that with the various benefits that existed for urban workers that had been introduced (the eight hour work day, two weeks holiday with pay, social insurance benefits) you can say that things had improved on Tsarist times and the situation for ordinary people during the NEP was better than that of many people in comparable situations in foreign countries.

Then you get what is called the Great Break which occurred under Stalin in 1928. Stalin and many others in the party were desperate to comprehensively industrialise their country but attempts to get foreign capitalists to invest in the USSR had (perhaps unsurprisingly) failed. Stalin’s solution to this problem was to “squeeze the peasants” by collecting as much grain as possible from them and selling it abroad for cold hard cash which was used to fund industrialization. All throughout the state private peasant holdings were with varying levels of coercion forcibly made to join collective farms in which strict labour discipline was enforced. Grain collecting expeditions led by important party officials such as Molotov and Kaganavich were sent out into the countryside in which local community members were pressured to give up “excess” grain under the threat of being labelled a kulak and punished. Naturally poor harvests were exacerbated by these policies, especially when Stalin who believed that the peasants were staging a go-slow strike (not entirely inaccurately) was far too hesitant in sending food aid to affected regions. The resulting famine killed millions of peasants.

So, to put it simply, this was a terrible time to be a Soviet peasant by almost any measure.

But how was life for the urban workers? Well, the first five year plan was racing ahead and despite significant inefficiencies and setbacks the USSR was industrialising incredibly speedily. However, many of the fruits of industrialisation were not experienced by the urban workers. As peasants raced into towns both to escape collectivisation and to work in newly constructed industries towns quickly became massively overcrowded with multiple families often living within a few shared rooms. During the First Five Year plan alone over ten million peasants moved into towns and became wage earners, illustrating the extent of the housing crisis, with many having to move into hastily built barracks’. Public transport was similarly overwhelmed. It was also during this period that private trading was simply banned and the entire economy was shifted to planned economy, which almost immediately resulted in massive shortages of consumer goods of all kinds. Shoes in particular were notoriously problematic during this period both because of the difficulty of finding some to buy and their often poor quality of manufacture (there are comics from the era in which people complain about poor shoe quality).

So, things weren’t going brilliantly for the country’s workers either.

To put it simply the governments focus during this period was on industrialization at the cost of the peoples living standards. Living standards for the common people simply were not a priority and many citizens lived in poverty. In 1935 there was a softening of official rhetoric. To quote Comrade Stalin “Life has become better, life has become more cheerful”. More effort was put into the production of consumer goods with the minister for trade Anastas Mikoyan introducing the mass production of things such as ice-cream and frankfurters. This policy shift was immensely popular domestically.