Soviet Union-Retail and Wholesale Distribution System

In the mid-1980s, about 8 percent of the labor force worked in the distribution system. For the most part, internal trade took place in state retail outlets in urban areas and in cooperatives in rural areas. Prices in state and cooperative outlets were set by the State Committee on Prices and were determined by many considerations other than supply and demand. Both rural and urban inhabitants could also use "collective farm markets," where peasants, acting both individually and in groups representing collective farms, sold their produce directly to consumers. Here prices fluctuated according to supply and demand. Similar arrangements existed for nonedible products, although in a less developed form, as could be seen in a variety of secondhand stores and flea markets. Although such enterprises specialized in used items, they also sold new products, again on a supply-and-demand basis.

With regard to many types of consumer goods, the country's economy was "taut," that is, enterprises carried low inventories and reserves. Demand for good-quality items frequently exceeded supply. In effect, some goods and services, such as housing, were rationed as a result of their scarcity. In addition, a system of special stores existed for use by privileged individuals and foreigners. These stores could be found in major population centers but were not highly publicized. They contained good-quality items, both food and nonedible goods, in scarce supply. Moreover, a second economy had long flourished to supply consumer goods and services, such as repair work and health care, for which the official retail distribution system could not meet consumer demand. Observers expected that as a result of the reforms of the 1980s, a growing variety of goods and services would be distributed through the expanding private sector of the economy (see The Twelfth Five-Year Plan, 1986-90 , this ch.).

Distribution on the wholesale level took place largely through state-directed allocation, in conjunction with the planning process. Heavy industry, particularly producer goods, and the defense industry received highest priority. Reforms of the mid1980s promised to decentralize this system somewhat, with users of materials free in many cases to make purchasing contracts with the suppliers of their choice. Western observers were uncertain as to the impact such an alteration would have on the supply system as a whole.

In 1984 per capita consumption was about one-third that of the United States. It was about half that of France and the Federal Republic of Germany (West Germany) and roughly two-thirds that of Japan. Soviet levels of consumption were below those of some of the country's allies in Eastern Europe as well.

Data as of May 1989