The Cold War period of 1985--1991 began with the rise of Mikhail Gorbachev as leader of the Soviet Union. Gorbachev was a revolutionary leader for the USSR, as he was the first to promote liberalization of the political landscape (Glasnost) and capitalist elements into the economy (Perestroika); prior to this, the USSR had been strictly prohibiting liberal reform and maintained an inefficient centralized economy. The USSR, facing massive economic difficulties, was also greatly interested in reducing the costly arms race with the U.S. President Ronald Reagan, although peaceful confrontation and arms buildups throughout much of his term prevented the USSR from cutting back its military spending as much as it might have liked. Regardless, the USSR began to crumble as liberal reforms proved difficult to handle and capitalist changes to the centralized economy were badly transitioned and caused major problems. After a series of revolutions in Soviet Bloc states, the Soviet Union collapsed in 1991.

Russia and the other Soviet successor states have faced a chaotic and harsh transition from a command economy to free market capitalism following the dissolution of the Soviet Union. A large percentage of the population currently lives in poverty. GDP growth also declined, and life expectancy dropped sharply. Living conditions have also declined in other parts of the former 'Eastern bloc'.

In addition, the poverty and desperation of the Russians, Ukrainians and allies of post--Cold War have led to the sale of many advanced Cold War-developed weapons systems, especially very capable modern upgraded versions, around the globe. World-class tanks (T-80/T-84), jet fighters (MiG-29 and Su-27/30/33), surface-to-air missile systems (S-300P, S-300V, 9K332 and Igla) and others have been placed on the market in order to obtain some much-needed cash. This poses a possible problem for western powers in coming decades as they increasingly find hostile countries equipped with weapons which were designed by the Soviets to defeat them. The post--Cold War era saw a period of unprecedented prosperity in the West, especially in the United States, and a wave of democratization throughout Latin America, Africa, and Central, South-East and Eastern Europe.

Sociologist Immanuel Wallerstein expresses a less triumphalist view, arguing that the end of the Cold War is a prelude to the breakdown of Pax Americana. In his essay "Pax Americana is Over," Wallerstein argues, "The collapse of communism in effect signified the collapse of liberalism, removing the only ideological justification behind US hegemony, a justification tacitly supported by liberalism's ostensible ideological opponent."[5]

The space exploration has petered out in both the United States and Russia without the competitive pressure of the space race. Military decorations have become more common, as they were created, and bestowed, by the major powers during the near 50 years of undeclared hostilities.