GORBACHEV'S CHALLENGE: Economic Reform in the Age of High Technology

A sweeping overview of the Soviet Union's economy that takes as its focus just what Gorbachev needs to do to successfully engineer a systemic reform. Goldman (economics/Wellesley), author of USSR In Crisis, and associate director of Harvard's Russian Research Center, invests his task with unusual comprehensibility: readers on this side of the Iron Curtain can visualize an economy from the bottom up on their own terms. The Soviet worker, foreman, middle manager, or executive is easily envisioned as a derivative of our own types. Here are no faceless robots, doing the bidding of a nameless central planner. ""Factory managers have been and . . .continue to be subject to intense scrutiny."" Why? Because just like managers in our own country, they apply loopholes in regulations and policy statements to work to their advantage. For example, a factory that made, say, light widgets and heavy tanks looked at a new policy that rewarded tonnage production and opted to manufacture only tanks, leaving a widget shortage. When Soviet planners designed a new system (known as VAL) that would put a premium on total ruble output, regardless of weight, the factory would still produce only the more expensive tanks. Goldman writes in the style of a policy briefing paper for Gorbachev's own eyes. He suggests a variety of ways the Soviets might reform. Among them: employee ownership of state enterprises (perhaps a little too communistic for the communists), gradually bringing into being a free price system (which is always followed by inflation, thus anathema to the central planners); the abolition of direct administrative allocation of goods and the decentralization of banking. All in all, ""there would have to be more emphasis on consumer and innovator sovereignty and less on the preferences of central planners."" Though this might sound like pie-in-the-sky Western dreaming, the Politburo has already agreed in principle to many of these changes. An excellent review.