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A series of economic changes directly led to the fall of USSR. In 1985, Mikhail Gorbachev was elected as the leader of USSR. In order to deal with the economic stagnation, he started a series of reforms, which aimed at raising productivity and efficiency through the economy but later proved to be unsuccessful. By definition, a command economy only works over long-term of monitoring in which the dictators, also know as the leaders of the union, determine the input (the quantity of product that is produced) and output (the quantity of product that can is released) of the market. However, monitoring was costly. "The dictators could not collect all the units of real output without police measures: security guards, transport police, market inspectors, enterprise and ministry accountants, ministry and Gosplan sectors of material balances"(Harrison). After the WWII, high coercion and effort ceased to maximize dictator's gain and monitoring became unprofitable; therefore, the dictator decided to abandon high coercion. To appease the dictators needs, Mikhail Gorbachev, in his economic reform, cut out the monitoring cost and enlarged the feasible space of economy by allowing people, especially dictators, to privately own the companies (Harrison). Yet, after years of the central planning system, the market reacted poorly to the free market. The economic novices who had neither skill nor experience in managing the business in a free market, finally got deficits (Carlyle). "A former Soviet official said: 'We used to work in a centrally controlled system where they told you what to produce. Now they've stopped telling us what to produce, so we don't produce anything. (Harrison)." The lack of sophisticated economic managers eventually led to a economic slump.
Simultaneously, the economic reform enlarged the gap between rich and poor. As elites were allowed to own private companies, they accumulated much of the country's wealth.
