EAST AND WEST

The Soviet Union under the leadership of Leonid Brezhnev experienced a period of economic stagnation during the 1970s and early 1980s. During the Brezhnev era, the Soviet economy faced significant challenges, including a lack of innovation, inefficiencies in production, and a centrally planned economic system. As a result, average salaries in the Soviet Union were considerably lower than those in the United States. In the 1980s, the average monthly wage in the Soviet Union ranged between 150 to 200 roubles, depending on the industry and occupation. By comparison, the average monthly wage in the United States during the same period was around $1,500 to $2,000, significantly higher than their Soviet counterparts.

Price Comparison of Common Goods

a) Bread: The price of a loaf of bread in the Soviet Union ranged between 20 to 30 kopeks, varying slightly depending on the region. In the United States, a loaf of bread cost around $0.50, substantially higher than in the Soviet Union.

b) Milk: A liter of milk in the Soviet Union was priced at approximately 30 to 40 kopeks, while in the United States, it was about $1.50 per liter.

c) Gasoline: Gasoline prices in the Soviet Union were heavily subsidized, making it relatively inexpensive for consumers. A liter of gasoline cost around 20 kopeks, compared to the United States where it ranged between $0.80 and $1.00 per liter.

d) Automobiles: The availability of automobiles was limited in the Soviet Union, and their prices were relatively high. A Soviet-made car like the Lada cost around 8,000 to 10,000 rubles, whereas an average American car in the United States ranged from $5,000 to $10,000.

e) Clothing: Clothing prices in the Soviet Union varied depending on the quality and type of clothing. A pair of jeans, for example, would cost around 50 to 60 rubles, while in the United States, it could range from $20 to $50.

f) Housing: Housing was generally provided by the state in the Soviet Union, with limited opportunities for individual ownership. Rent prices were considerably low, with an average monthly payment of 20 to 50 rubles. In the United States, the average monthly rent ranged from $300 to $500.

During the Brezhnev era and until 1985, the Soviet Union had limited availability and high prices for consumer goods, including cars. The average Soviet worker needed a significant portion of their salary to purchase a car. Let’s compare this to the situation in the United States.

Cars

In the Soviet Union, the most common domestically produced car was the Lada, which cost around 8,000 to 10,000 rubles during that period. As mentioned earlier, average monthly wages in the Soviet Union ranged between 150 to 200 rubles. Thus, it would take a Soviet worker around 40 to 67 months, or roughly 3 to 5.5 years of salary, to purchase a car.
On the other hand, in the United States, the average monthly wage in the 1980s was around $1,500 to $2,000. Considering a car price range of $5,000 to $10,000, an American worker would need approximately 2.5 to 6.7 months of salary to buy a car. This indicates a significantly shorter timeframe for an American worker to afford a car compared to their Soviet counterpart.

Bread

The price of bread in the Soviet Union during that period ranged from 20 to 30 kopeks per loaf. With an average monthly salary of 150 to 200 rubles, a Soviet worker could purchase approximately 5 to 7.5 kilograms of bread per month.
In the United States, the price of a loaf of bread was around $0.50. With average monthly wages ranging from $1,500 to $2,000, an American worker could buy approximately 100 to 133 loaves of bread, equivalent to around 50 to 67 kilograms per month.

These comparisons highlight the differences in purchasing power and affordability of goods between the Soviet Union and the United States during the Brezhnev era. The relatively high cost of cars and limited availability of consumer goods in the Soviet Union meant that it took significantly more time for a Soviet worker to save enough money to purchase a car, and their ability to afford other basic goods, such as bread, was also comparatively limited.

Televisions

In the Soviet Union, the availability of televisions was limited, and they were considered luxury goods. The prices of televisions varied depending on the model and specifications. A typical Soviet-made television could cost around 600 to 1,500 rubles. Considering the average monthly wage of 150 to 200 rubles, it would take a Soviet worker around 3 to 10 months of salary to purchase a television.
In the United States, televisions were more widely available and had a broader range of options. The prices of televisions in the 1980s ranged from $200 to $1,000, depending on the size and features. With the average monthly wage of $1,500 to $2,000, an American worker would need approximately 1 to 6 months of salary to buy a television.

Radios
Radios were more affordable and commonly owned in both the Soviet Union and the United States. In the Soviet Union, the price of a basic radio ranged from 40 to 100 rubles. With the average monthly wage, a Soviet worker could purchase a radio in just a few weeks.

In the United States, the price of a radio varied depending on the brand and features, but generally ranged from $20 to $100. With the average monthly wage, an American worker would need less than a week to buy a radio.

These comparisons demonstrate that while televisions were relatively more expensive and less accessible in the Soviet Union, radios were more affordable for workers in both countries. The Soviet Union’s centrally planned economy and limited consumer goods production contributed to higher prices and limited availability of certain products compared to the more market-driven economy of the United States.

Macroeconomic Outlook

The Soviet Union faced various macroeconomic challenges during the Brezhnev era. The centrally planned economy struggled with inefficiencies, a lack of incentives for innovation, and a cumbersome bureaucracy. Economic growth rates were modest, and the economy relied heavily on natural resource exports, particularly oil and gas.

Additionally, the Soviet Union faced a growing budget deficit due to overspending on defence and subsidies to maintain artificially low prices for goods and services. This deficit led to increased borrowing, contributing to the mounting debt burden.

During the Brezhnev era and until 1985, the exchange rate between the Soviet rouble and the US dollar was fixed and heavily controlled by the Soviet government. The official exchange rate was artificially set and did not reflect the true value of the rouble in international markets. The exchange rate was primarily used for foreign trade purposes and was not accessible for individual currency exchanges by Soviet citizens.

The fixed exchange rate meant that the Soviet rouble was overvalued compared to the US dollar. This was done to maintain a favourable trade balance and support the Soviet Union’s export-oriented economy, particularly in the export of natural resources like oil and gas.

However, it is important to note that the official exchange rate did not accurately represent the true economic value of the rouble. In reality, there existed a significant disparity between the official exchange rate and the black market rate, where the rouble was significantly devalued compared to the dollar due to the scarcity of convertible currencies in the Soviet Union.