Council for Mutual Economic Assistance

The Council for Mutual Economic Assistance (COMECON) was an organization created to foster economic and technical cooperation between communist countries in Eastern and East Central Europe (USSR, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, East Germany, with Albania leaving in 1961), and, later, a number of Soviet allies in the third world (Mongolia in 1962, Cuba in 1972, and Vietnam in 1978). It served for four decades as the principal means of economic cooperation and coordination in the communist world before being disbanded in 1991 on the disintegration of the communist regimes of Eastern Europe.

COMECON was coordinated by an extensive hierarchy of institutions and organization. It was headed by the Session of the Council for Mutual Economic Assistance, consisting of high-ranking representatives of each member state (up to the prime minister), which set the agenda for and the tone of future economic integration and coordinated the activities of subordinate offices. The most important supervisory organ was the Executive Committee of the Council, responsible for overseeing the implementation of policy initiatives. Below this were some thirty advisory committees, conferences, sectoral commissions, and specialized research centers.

COMECON was established as a loose set of arrangements designed to share experience, technical expertise, and mutual aid among members, at the time struggling not only to rebuild their shattered economies but, moreover, to chart a previously unmapped path of economic development through the establishment of central planning. Following the death of Stalin, and later as a reaction to the establishment of the European Economic Community (EEC), interest in new forms of regional forms of economic cooperation emerged.

COMECON's charter was established in 1959, and with it the scope of activities began to expand, and its goals became more ambitious. Plans to further tighten integration were stepped up, and in 1971 COMECON [Page 181]members adopted the Comprehensive Program for the Further Extension and Improvement of Cooperation and the Further Development of Socialist Economic Integration. The Comprehensive Program initiated the development of a set of increasingly complex institutions, coordination mechanisms, and planning strategies that covered trade (external as well as intra-COMECON), investment and production patterns, monetary relations, pricing procedures that facilitated closer tracking of world market prices, and plans to enhance research and development.

Therefore, despite a commitment to what it now described as socialist economic integration and an international socialist division of labor, many analysts and economic historians consider the evolution of COMECON as tacit acceptance that failure to use market price signals as a mechanism of allocating scarce resources, coordinating policy, and developing cost-effective production specialization in the pursuit of enhanced economic interdependence would result in failing to meet the overriding goal of economic modernization.

Mikhail Gorbachev's election to the position of General Secretary of the USSR marked the realization of the looming and deep economic crisis, symptoms of which included extensive shortages of essential goods, large-scale corruption and a flourishing black market, poor productivity, inability to meet consumer demands, high energy inefficiency and pollution levels, research and development failures, and a persistent and increasing technological gap.

Hence, in 1985, COMECON initiated the Comprehensive Program for Scientific and Technical Progress up to the Year 2000. The program was a broad-based plan to move in the direction of tighter economic integration, increasingly seen as necessary if the slide behind the Western economies was to be halted. However, as Western economies boomed following the recession of the early 1980s, the communist crisis deepened, and Gorbachev's attempts to reform the system stalled, largely because they failed to address the root cause of the crisis. With the failure of Gorbachev's reform initiatives clear by 1990, the disintegration of communism and the regimes it had cemented together was sealed, and COMECON, whose rationale had essentially dissolved, was quietly disbanded early in 1991.

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