The Soviet Union established an economic system that was to become known as the administrative-command economy. The system was characterised by state ownership of most means of production, prices determined by state authorities, centralised state management and the state being responsible for the distribution of resources rather than markets. Such a system had a number of strengths, such as the ability to build a successful economy and promote rapid growth, the ability to mobilise for war effectively and the absence of inefficiencies and injustices that are present in capitalist economies. The command economy did however have many disadvantages, such as its vulnerability to poor state decisions and bureaucratic corruption, the totalitarian political setup which allowed such a system to function and the system’s inadequacy in promoting hard work, enterprise and innovation.

The Soviet Union’s command economy had certain advantages, arguably making it superior to alternative economic systems in some respects. It was able to demonstrate substantial economic performance in the first decades of its existence, before the slowdown that began in the late 1970s. Through state control and central planning imposed in the Five Year Plans, Stalin was able to transform the country’s predominantly agrarian economy into a heavily industrialised one in a relatively short period of time. Industrialisation was a process that took place in capitalist countries over centuries. Stalin was able to make similar progress in a number of years.

The economic performance of the Soviet Union was demonstrated in the country’s power and prestige in the twentieth century. It was able to defend itself quite effectively against the surprise attack from Germany in 1941. Historians who favour the Soviet system often compare the Soviet Union’s performance in the Second World War with that of Tsarist Russia in the Great War. They claim that the Soviet Union demonstrated self-reliance and efficiency in 1941-5, whereas the tsarist regime relied heavily on foreign loans and high inflation to fight its war. (Dukes 1998: 274) The centralised state control of the economy also better enabled the Soviet Union to adapt to the needs of the war effort. It was able to relocate many enterprises away from the areas more vulnerable to German invasion. Labour was mobilised “to an unprecedented degree” (Dukes 1998: 274), with forced overtime and directed employment, achieving large increases in productivity. Given the dangers that the Soviet Union faced, some might argue that the oppressive methods used by Stalin in modernisation were justifiable.

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