neuvostotalous

Neuvostotalous, meaning "Soviet economy" in Finnish, refers to the command economy system implemented in the Soviet Union and other socialist states that followed its model. This economic system was characterized by state ownership of the means of production, central planning of economic activity, and the absence of private enterprise and market forces.

Under neuvostotalous, all major economic decisions, such as what goods to produce, how much to produce, and at what price to sell them, were made by government agencies. These agencies created detailed plans, typically five-year plans, that dictated the output of industries and the allocation of resources. The goal was to achieve rapid industrialization, military strength, and the equitable distribution of wealth, as envisioned by socialist ideology.

Key features included state-controlled enterprises, collective farms (kolkhozes), and a fixed price system. While this system enabled significant achievements in certain sectors, such as heavy industry and military production, it also suffered from chronic inefficiencies. These included shortages of consumer goods, poor quality of products, lack of innovation, and a lack of responsiveness to consumer demand. The absence of competition and profit motives often led to waste and misallocation of resources.

The collapse of the Soviet Union in 1991 marked the end of widespread neuvostotalous. Many former Soviet bloc countries transitioned to market economies, encountering challenges in this transformation process. The legacy of neuvostotalous continues to be debated in terms of its successes and failures in achieving its stated objectives.