Why did the Soviet Union's economy collapse? What specific decisions and/or events caused it?

From what I've read in Viktor Surorov's writings about the internal workings of the red army and military intelligence [GRU] (The Liberators, Inside Soviet Military Intelligence, Inside the Soviet Army), it wasn't so much that the economy was prone to collapse, but rather that Soviet society wouldn't allow a collapse to lead to regime change. This requires an understanding of soviet psychology, which even in the 1960s was miserable.

You can understand the fall in relation to the '68 invasion of Czechoslovakia. In "The Liberators" Suvorov mentions a conversation with his peers who worried that the government was risking famine by deploying the army late in the year. At this time the army was necessary to gathering the harvest, so if they were elsewhere late in the year it would cause logistical problems. And the USSR chose to invade Czechoslovakia precisely because they considered the Czechoslovak free press to be a greater threat to the survival of the entire soviet system than famine or war could ever be (Stalin caused plenty of both and it never stopped him). So it's little surprise in this context that when Gorbachev reformed society to be far more open, tolerant, and representative, the whole thing fell apart.

Incidentally, argument's I've often heard from America's right wing; that it was just a matter of America outspending the USSR or Reagan doing something, are absurd simplifications which completely ignore the internal events in the USSR driving the collapse to benefit their own smug sense of ideological superiority; but then they were blinkered in understanding history through a limited economic spectrum. To be blunt; the USSR would undoubtedly still be here today if it wasn't for the loosening of political authority after Stalin, and this has little relation to its inability to perform economically or militarily. Indeed the likes of North Korea cannot be explained in purely economic terms, and both they and the USSR makes a lot more sense when looking at regime survival through the lens of authoritarian politics.

You've got to remember, by this stage the Soviets had completely lost belief in their own system. The Berlin wall was established because Kruschev and Ulbricht agreed on the need to stop the brain drain, which risked proving that the Soviet system couldn't compete with the capitalist in providing a good standard of living for the people.

http://www.spiegel.de/international/germany/the-khrushchev-connection-who-ordered-the-construction-of-the-berlin-wall-a-628052.html

But Czechoslovakia backfired. The locals who were initially hostile to the Russian soldiers actually became sympathetic after a few months, taking pity on them given their poverty and ignorance. This caused a huge problem, and in the end the whole army was sent far east for "re-education" to straighten out what exactly happened. After this disaster soviet leadership didn't want to invade a nation which was wealthier than Russia... which goes some way to explain Afghanistan. And the USSR embarked upon intervention in Afghanistan with revolutionary zeal because they knew it was their last chance to prove themselves and legitimise their system. But as it all fell apart militarily, and their cultural initiatives failed to gain traction with the Afghans, this basically sealed the fate of the regime. Most soldiers who came back from the war were depressed, often put poetically (referenced by Adam Curtis' BBC documentary on Afghanistan "Bitter Lake") as being haunted by mujahadeen ghosts. This disillusionment spread. Even the leadership class wasn't confident, which led to Gorbachev's reforms, echoing the reforms his predecessors had put down with tanks in Czechoslovakia decades prior. And it turned out that the orthodox Soviets had been right in '68, and were again right in the 80s; a free press would destroy the USSR.

/r/AskHistorians Thread