After World War II, the United States and the Soviet Union were the most powerful countries in the world. The Soviet Union, which had suffered tremendous devastation following the German invasion, developed an enormous industrial capacity, albeit suited mainly for the manufacture of weaponry needed to push German forces out of its territory. The ineffeciencies of the Soviet economic system could not compete with the level of economic development occurring in the United States and in European and Asian countries over which the U.S. had influence at the end of the war.
Over time, the quality of life of Soviet citizens fell farther behind that of people residing in Western Europe, the United States, and Asia. West Germany developed a strong economy while East Germany lagged far behind. Similarly, Japan emerged as one of the most powerful economies in the world, while China under Mao Tse-Tung suffered through horrific periods of political turmoil resulting in millions of deaths. (Chinese economic growth only took off following Mao's death and the ascent of Deng Xaoiping and the latter's endorsement of capitalism while maintaining total political control).
The election of President Reagan and his pronouncements of Western economic and political superiority over the Soviet-dominated East, combined with his emphasis on increasing U.S. military strength, coincided with the ossification of the leadership of the Soviet Union. Long-time General Secretary of the Communist Party Leonid Brezhnev died in 1982, an event quickly followed by the deaths of his successors, Yuri Andropov and Konstantin Chernenko. With the deaths in rapid succession of three top Communist Party officials, the path was open for the rise of a younger member of the ruling Politbureau, Mikhail Gorbachev.
Gorbachev recognized that the Soviet economy was losing ground against the economies of the West, and that the economic system kept in place by force in the Soviet Union was no longer sustainable. The pressure from President Reagan's military build-up combined with the increasing fragility of the Soviet command economy and rumblings of social discontent appearing more frequently led Gorbachev to implement two major policy reforms: glasnost, or political openness, and perestroika, the restructuring of the Soviet economic system. The subsequent loosening of political and economic control enabled people exhausted by the lack of basic freedoms to express themselves for the first time.
Gorbachev's policies not only enabled Russian citizens to express themselves freely for the first time, they also gave the many non-Russian peoples comprising the Soviet Union the opportunity to agitate for freedom. Consequently, populations in the Caucasus and Central Asia as well as the Baltic nations of Estonia, Latvia and Lithuania began to assert their independence. By the time of the failed coup attempt against Gorbachev by hard-line elements in the Russian government and military in August 1991, the process of introducing freedom into the Soviet political and economic systems had made continued dictatorship of the kind that had existed increasingly difficult to maintain, and the Soviet Union fell apart.