Personally, I think the propaganda war played the biggest role in the fall of the Soviet Union. Not that economic factors, and military spending weren't important factors too, but I downplay their role.
The U.S. and west in general, promoted itself and convinced almost a whole generation of young Russians that "blue jeans and rock music" (American images in general) were good things. Gorbachev saw the writing on the wall and had to modernize, and I personally don't think the arms race was all that significant. If anything, it only made things worse for a while as it created and perpetuated the "good-guy/bad-guy" theme of the Cold War. Once Gorbachev made concessions to the liberal movement in Russia, it couldn't be controlled until communism fell.
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"A pessimist thinks things can't get any worse. An optimist knows they can."
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