I will say right off the bat that I do not believe the estimates in the question are correct - the USSR is not estimated to have had a GDP per capita similar to Spain's in 1990. The Soviet ruble had an administratively-set exchange rate with loads of capital controls, and prices in the USSR were also set by central planners and therefore did not actually have any relation to what it actually cost to produce them, so it was extremely difficult for non-Soviet economists then and now to actually come up with reliable ways of translating the Soviet economy into terms comparable to the rest of the world. You basically can't just plug in some exchange rates or an inflation/exchange rate variable like in PPP.

The data set that I see used nowadays for is the Maddison Project, which has comparable estimates for the size of the Soviet Economy in the 20th century (the links to those Wikipedia articles using IMF data don't seem to have anything listed for the USSR, and I don't believe the IMF kept data for the Soviet Union).

That data for the USSR uses 1990 constant international US dollars, and the GDP per capita for the USSR in that period is around $5,000, while that for Spain is around $13,000. Another rough estimate I've seen is that the Soviet economy was a third the size of the US economy, and it had more people (in 1990 290 million versus 250 million in the US), so GDP per capita would be less than a sixth in that estimate. As for the Maddison data, GDP per capita for the Soviet Union at the time was closer to Mexico or Argentina than to an East Asian Tiger or a Western European country.

So that's the first point as to why there was a difference in living standards - the USSR was definitely a big developing country rather than a developed country, albeit one with a big industrial base and a gigantic military. A second reason is that of this smaller economy, a vast relative proportion was invested in that industrial base, and that industrial base prioritized defense needs over consumer needs. Something like 15 percent of Soviet GDP (some estimates go higher) was devoted to defense in the late 1980s, compared to about 5% of US GDP (which was much bigger). Indeed, a big part of Gorbachev's perestroika was that by reducing Cold War tensions and demilitarizing Soviet foreign policy and its economy, the Soviet economy could be retooled to consumer needs and raise living standards (it didn't really work, but that was the plan).

Next, about those consumer goods - yes, a huge weakness in the Soviet economy was the supply chain. Economic targets were measured in production figures, and this didn't particularly translate well into the supply chain end of things.

A final note is that what Soviet markets looked like in 1990 isn't necessarily indicative of, say, 10 years earlier, as starting in 1989 or so the Soviet economy was going into essentially a period of collapse as macroeconomic policy lost control and the centrally planned economy fell apart.

Some further answers I wrote that touch on these points:

• What Could You Buy with 800 Rubles in Russia in 1986?. I get into some details here about just how hard it was for a regular Soviet citizen to get foreign consumer goods.

• This part of a multipart answer on Gorbachev's reforms that talks about how the economy began to break down in the 1980s.

• What was life like in the former Soviet Socialist Republics after the fall of the USSR?, where I talk a bit about supply chain issues and other economic factors in the last years of the USSR.

• An answer comparing Soviet and American food options, which talks a bit about supply chain problems.

The short answer is because: they Soviet system preferred guns to butter.

More broadly (and partially in jest), the Soviet's were spending their GDP on the military hardware you see in Ukraine now and on their war in Afghanistan, and not on stocking grocery store shelves.

There was an entire cottage industry in American think tanks and academia, during the Cold War, working to estimate the size of the Soviet economy and specifically, the size and value of Soviet defense expenditures. The estimates from 1970 until 1990 varied widely and wildly. Many were trying to answer a variation of your basic question, along with questions related to "how much should the USA be spending on defense, if the USSR is spending X?"

The complexity was driven by numerous factors. First, Soviet secrecy. Second, technical economic questions like how do you estimate the cost of production when there is no competitive market and demand is created by central planners in Moscow? How is inflation accounted for? Substitution costs? Technical parity? Research budgets? Third, incongruence (for example, even if you know the absolute number of rubles spent on soldier's pensions, should a soldier's pension be considered "defense" spending or general social spending?) Fourth, how to you measure the expense of opportunity costs on the economy as a whole; for every engineer working in military research or factory worker building tanks, those are workers who could be dedicated to civilian production (and how do you account for engineers or workers who build both tanks and tractors?). Fifth, Soviet, for lack of a better word, incompetence or incoherence. The CIA was very involved in trying to estimate Soviet defense production, research budgets, and spending, and numerous academics were involved as well. After the Cold War, it was revealed that this undertaking was so complex (and even, impossible) because even most Soviet officials did not know how much was being spent on defense. Or to put it otherwise, how militarized the industrial sector of the economy was.

Stepping back in time, Soviet official statistics had lied since at least 1970 about the true size of the Soviet military budget. The figure the Soviet Union reported – around 20 billion rubles in the mid-1980s – drastically underestimated defense spending. This number did not include weapons costs, military R&D budgets, or testing facilities.In 1985, Gorbachev rises to power and the USSR tried to convince the USA (and NATO) that the Soviet Union was neither a strategic threat nor a growing one. Based on the papers of a senior Soviet arms control official from the 1980s, Vitalii Kataev, Kremlin leaders largely didn't know the full extent of defense spending, and it was possible that no one in the USSR knew exactly what the amount was. Rather, whatever the true % of GDP spent on defense was, it was hidden in many different government departments and accounts, from different sources and subsidies, including direct-budget and off-budget subsidies to the engineering industry.

Gorbachev's policy of more openness on these issues met with resistance, including from Marshal Sergei Akhromeev (chief of the general staff). At the time, the USSR was trying to negotiate an arms control treaty with the USA from a position of strategic partnership, as one global superpower with another. In this context, the emerging ruble figure was going to look "too low." If the USSR wanted to be perceived as a peer to the USA, it needed to pump the numbers up. Similarly, a large part of the USSR's foreign capital exchange was from selling arms to client states. The revised military budget could not make Soviet military hardware look "too cheap" because this would undercut the profitable prices that Soviet arms exporters were currently charging to foreign purchasers of armaments.

In a compromise, in 1987, Gorbachev told the world that the previously published budget figure was incomplete. He stated that it would take 2-3 years of accounting and price reforms to better understand what the actual defense budget was. In 1989, Gorbachev stated that the defense budget was 77 billion rubles, which was 4 times higher than the previous figure. Western experts believed it was still an under-estimate, but probably closer to the truth rather than a deliberate lie.

At 77 billion rubles, that would be about 9% of gross national product rather than 2% which had been reported. Most Western estimates at the time, and later, put the number at closer to 15-18% of GNP.

A year later, in 1990, Gorbachev revised this figure upward, stating that Soviet military spending was 18 percent of Soviet national income, or approximately 15 percent of gross national product (but the official figure was still 77 billion rubles for 1989 and no effort was made to reconcile the firm number of 77 billion rubles with the increasing percentages between Gorbachev's speech and the official government position.)

Another year later, in the November 1991 issue of the USSR's Military Historical Journal, Vladimir Lobov (chief of the General Staff of the Soviet military) referred to Soviet military spending as one-third of the Soviet gross national product. During the same month, in issue no. 44 of Moscow News, Gorbachev placed Soviet military spending at the same level, stating, "If this (the Soviet military-industrial complex) is not half of society, then it's at least a third of it."

At that time, the USA published an estimate in Military Forces in Transition (based probably on CIA estimates) that USSR's military spending was half that much; at 15 to 17 percent of GNP (roughly consistent with Gorbachev's 1990 statement). So was the CIA wrong, was the USSR bluffing and inflating by 1991, or did no one really know the truth?

For perspective, in 1990, the US's defense spending was about 5.2% of GDP. It had been 13 percent at the height of the Korean War, 9 percent at the peak of the Vietnam War, 6 to 7 percent during the military buildup of the 1980s, and 42 percent during the maximum World War II mobilization during 1943 and 1944. If the USSR figures of one-third of GNP spent on defense during peacetime were true, then that explains why the grocery store shelves were empty. Oleg Bogomolov (a Soviet economist and professor) stated in Moscow News, No. 20 of 1990, "For decades we lived . . . in conditions of a wartime economy."

Anatoly Rakitov, an advisor to Boris Yelstin on science and technology, in the March 26, 1992 issue of Izvestia, stated that "80 to 90 percent of our national resources - raw material, technical, financial, and intellectual - have been used to create the military-industrial complex" and that "the military-industrial complex is virtually synonymous with our economy. " That was probably not literally true. Also in 1990, US Senator Bill Bradley commented in the Washington Post, after visiting Russia, that 70% of the people in St. Petersburg had jobs directly tied to the military and nationwide it was over 50%.

In summary, the scope of Soviet defense spending remains, 30 years later, "a riddle, wrapped in a mystery, inside an enigma." During the time period in question, as a % of their national production, it's safe to say that it was somewhere between what the US was doing during the Korean War, but less than the US did during WWII. But it was a lot and pervaded much of the economy, such that the supermarket shelves could not remain stocked.

​

Soviet Defence Spending: The Contribution of the New Accountancy. Steven Rosefielde. Soviet Studies. Vol. 42, No. 1 (Jan., 1990), pp. 59-80 (22 pages)

The Soviet Military Burden: a critical analysis of current research., Dudkin L & Vasilevsky, A. Hitotsubashi journal of economics, 41-61.

Noren, J.H., (1995), The controversy over Western measures of Soviet defense expenditures. Post-Soviet Affairs, 11(3), 238-276 [this one has a great graph/chart in it comparing many scholars views]

Steinberg, D., (1990), Trends in Soviet Military expenditure. Europe-Asia Studies, 42(4), 675-699.