Some economic context leading up to the dissolution of the Soviet Union: A larger portion of Soviet industrial output was being devoted to defense during the later era of the Cold War which increasingly siphoned away the skilled manpower of Soviet scientists and engineers from other more productive economic sectors. A Western capitalist imposed technological embargo on the Soviet Union also damaged industrial development and innovation.

The Communist Party had developed an overrepresentation of a strata of managers, intelligentsia, and the more skilled technical and professional employees in its membership which gave them disproportionate influence within the Soviet government during a time when Soviet economic growth was slowing down to US levels (after the years of the “stability of the cadres” policy that defined the Brezhnev era) as these strata compared themselves to their American managerial and professional counterparts that had disproportionately benefited from the rise in US national income in the 80s (the smaller income differentials among occupations in the Soviet Union were seen as more tolerable by these strata in previous decades in the Soviet Union as economic growth had been much higher then with all groups seeing their incomes rise at higher growth rates).

The Soviet Union saw large losses in revenue from the global oil price collapse from the 1980s oil glut that severely reduced Soviet oil export revenues as well as Gorbachev’s economic policies backfiring with his ban on alcohol that only marginally improved labor productivity while depriving the state of a critical source of revenue in alcohol taxes, promotion of decentralization allowed for local governments to withhold tax revenues from central government, and Gorbachev's large reductions in turnover taxes on enterprises under the belief that the managers would make better use of the revenue than the state further contributed to the Soviet revenue crisis that led to further reliance on credit from the central bank that precipitated a large rise in inflation and a consequent erosion of public economic confidence during the Perestroika reform era.

In contrast to Deng’s reform process in China that (after installing ideological discipline in the CPC with the Four Cardinal Principles) had preserved the dictatorship of the proletariat to more carefully ease the transition with dual pricing systems towards the development of more of a NEP-style transition phase of a socialist market economy predicated on developing productive forces and to facilitate bringing in foreign investment and technology transfers, Gorbachev naïvely wanted to quickly remake the Soviet Union as a liberal social democracy by misguidedly establishing Glasnost that further empowered Boris Yeltsin’s neoliberal corrupt anticommunist faction (that had grown increasingly larger throughout the years of ideological decay and corruption in the Soviet government after Stalin’s death) at the same time as he was attempting to execute the Perestroika reforms that contributed to a more chaotic reform process with older economic mechanisms of planning often being dismantled faster than new economic mechanisms could be put in their place as traditional supply-demand relationships broke down and further contributed to shortages.