The Multinational Monitor


G U E S T   C O L U M N

A New Soviet Dawn?

by Richard Parker

PERESTROIKA--Mikhail Gorbachev's gigantic "restructuring" not just of the Soviet economy, but more deeply the way all Soviets look at work, money, government, initiative and responsibility-- has been bumping up against hard times. A few months ago, at the Communist Party Congress in Moscow, Gorbachev came close to defeat at the hands of disgruntled conservatives, only to be dramatically rescued at the last possible moment by Boris Yeltsin's counterattack and Gorbachev's own stinging rebuke of his opponents' failures. Now he and erstwhile critic Yeltsin are staunch allies (if not pals), and well launched on perestroika's most daring leap toward The Market to date.

Dubbed the "500 Days" plan by Yeltsin, perestroika's new phase is slated to privatize housing, denationalize enterprises, sell off giant collective farms to farmers, create functioning stock, bond and commodities markets, a Western-style banking system and, soon afterward, even the heretofore-elusive convertible ruble.

But will the plan work--especially when earlier attempts by Gorbachev have so clearly failed?

Or have they?

Western and Soviet critics alike regularly scorn the effects of Gorbachev's attempts at restructuring to date. "Disastrous," incoherent," says Harvard's Marshall Goldman. "All talk, no result," echoes Vladimir Tikhanov, a Soviet cooperatives expert.

Yet co-ops themselves have soared from near-zero sales three years ago to nearly $80 billion worth today--as if the United States had created Sears, K-Mart, Penneys and a dozen other retail giants almost overnight. Consumer goods and food prosecution have both risen measurably under Gorbachev--though nowhere near as fast as consumer expectations . Enterprise managers are slowly learning how to manage effectively; 85 percent of firms actually make money nowadays, and joint venture deals are rising at an astronomical pace. Even the much-maligned anti-alcohol campaign has produced one clearly tangible benefit: male life expectancy is up an average of two years, after eroding steadily in the decades prior.

Why then the move by Gorbachev now to share power with nemesis Yeltsin and "accelerate" so drastically the pace and scope of change?

First, there has been a revolution in popular expectations, fuelled not just by Gorbachev's own early promises of quick results, but by the Soviet Union's new-found glasnost-sparked openness to the West and its cornucopia of goods. (Yeltsin, touring a U.S. supermarket last year, captured his fellow citizens' pregnant yearning in a stroke: "Heaven," he exclaimed dreamily strolling between the meat and produce departments. "This is heaven.") Second is the clear and still-growing gap between the rising Soviet production figures and consumption. In 1988, and to a smaller degree in 1989, Soviet harvests were savaged by the prolonged climatic warming that spanned the globe, but hit vulnerable Soviet food production hardest. The growing output of consumer goods, which Gorbachev has treated to 35 billion rubles in unexpected additional investment, mysteriously seems to slip out of official channels and into the huge, shadowy second economy, where everyone from apparatchiks to the Soviet mafia--but not the cash-starved government--is making money.

Will the new Gorbachev-Yeltsin "500 Days" plan solve the Soviet economy's problems which have so far been significantly but incompletely addressed by perestroika? Not if by the term one means that at its end (in mid-1992) we can expect to see a smoothly functioning, prosperous and peaceful Soviet Union. But it will have a major effect, as it unfolds, if we set the more modest standard of pushing the country further toward substitutes for the abysmal 50-year record of centralized Soviet state planning. Some observers now claim even to see the dim outlines of what they say the Soviet Union may come to resemble in the next few years--the roisterous, uneven, class-, sectoral- and regionally-divided Italy of the 1950s, a land prone to corruption and the creation of wealth that somehow was never seen by the tax collectors. (Moscow, for example, already contains 30 to 40 legal millionaires, and at least several hundred no-so-legal ones.) Like Fifties Italy, this view of the Soviet Union sees the country retaining foreign exchange and capital controls, a large (and inefficient) state sector, a chaotic infrastructure and even a Communist Party nibbling at the edges of power--all while the real, but unrecorded economy is finally growing.

Is the Moscow of the early '9Os about to become the Rome of the late '50s? If so, it is actually a hopeful scenario, much more realistic than earlier glasnost-driven dreams about moving "swiftly and efficiently," as Gorbachev promised in 1986, to the prosperity and democracy so long denied these 285 million people. And more realistic too than still-popular Western jeremiads about imminent Soviet collapse.

Moreover, the United States has much to gain if such a scenario does grow out of the "500 Days," especially since Washington, D.C. itself is looking more and more like Rome these days, albeit of the Late Imperial, rather than the 1950s, era.

Despite the U.S. preoccupation with Iraq, half of the nation's defense budget still is aimed at the Soviets, who frankly could not care less about the Cold War at this point. That means, without a "500 Days" of its own, the United States is slated to spend $1.5 trillion in the next decade to protect itself from somebody who does not have the faintest desire to fight.

Gennadi Gerasimov, the Soviet Foreign Ministry spokesman, once glibly suggested that the United States "could use a little perestroika and glasnost herself." With the U.S. happy-talk of the Eighties a thing of the past and creditors pounding on the door, Gerasimov just may be right.

Richard Parker is a Washington, D.C.-based economist and writer.

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