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The fundamental questions of economics are; what will be produced, how will it be produced, and who will produce it? The Soviet Union operated under a command economy where by the government answered those questions. This type of economic system has not proved itself to be very successful. Centralized planning in the Soviet Union resulted in shortages across the economic spectrum. A major disadvantage of a permanent command economy is that it cannot fully predict the needs of its people. As a result many 'goods' considered necessities by most became scarce due to the government's miscalculations. Obviously this had an adverse effect on the people of the Soviet Union. Government control of the means of production prevented the theories of supply and demand to address the needs of the people and as a result the people suffered and paid the price.
The Soviet government, controlling the means of production and distribution, resorted to a quota system for the country’s manufacturing and agricultural output. Agriculturally, this required the collectivization of farms in the 1920’s which were required to grow a given crop, which was turned over to the government, which unfortunately used food as a weapon to starve residents in the Ukraine in the 1930’s who were slow in adapting Soviet philosophy. Industrially, a given plant was required to produce a a certain number, or weight of items as determined by the central planners. Thus, the Soviet automotive industry was required to produce a certain tonnage of trucks; this caused few trucks to be produced, but a Soviet truck was the heaviest in the world, and the total weight of the few produced met the terms of the imposed weight quota. These policies did not bring the most or best goods and services to the most people; in fact, shortages and poor quality of all consumer goods characteristically defined the Soviet era. In contrast, the centrally planned economy proved vital for production of war materiel during WWII, and much of the Soviet economy remained geared towards the military during the ensuing Cold War through the 1990’s. The net result of the governmentally run economy resulted in shortages of poor quality goods and services, and a declining standard of living.
The government took complete control of the Soviet Union's economy. A new government department was set up to set targets in each industry, like what production each industry was supposed to reach. If it had been reached, there would be rewards given to the workers for their contribution, earning a higher salary. If it was not up-to-standard, they were punished or sacked from their jobs. This really limit work productivity as they are forced to follow targets, limiting their creativity, listening to the government's beck-and-call.
Also, farms were collectivized. Farmers were given bigger plots of land and also newer farming machinery, instead of the old tractors. But, some peasants resisted this farming policy as they did not want to abandon their traditional way of life and also experience in the WWI that it brought about food shortages. So, it led to conflict and so led to prolonged famine as lesser crops were produced. The quality of life was affected at this moment.
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