Perestroika and the future of socialism - part 2

PERESTROIKA AND THE FUTURE OF SOCIALISM--PART TWO

Last month in this space we dealth with the troubles in the Soviet Union that preceded and led up to glasnost and perestroika. The facts on the severity of the crisis that emerged in the 1970s and 1980s are clear enough. The puzzling question is why regression set in after so many years of social progress and impressive achievements in industrialization.

Bourgeois economists have an easy answer to this question. They have claimed all along that central planning of an economy would come a cropper: it couldn't deliver the goods and was bound to fail. In recent years, quite a few prominent economists in the Soviet Union and Eastern Europe have joined the bandwagon in blaming central planning for the economic woes of their societies. It is now common for critics in the Soviet bloc to argue that even though national planning was serviceable in the past, it long ago outlived its usefulness. Not only is an administered economy intrinsically inefficient, they maintain, but its failures inevitably loom larger the more it attempts to extend its functions from basic industrialization to the satisfaction of consumer needs.

It seems to us that this kind of blanket condemnation of central planning is based on the implicit assumption that Soviet practice reveals the essential nature of a centrally planned economy. What is missing and what needs to be understood is that the Soviet way of running an economy evolved under very special historical circumstances. There was pitifully little experience to rely on, nor was there time or opportunity for the trial-and-error experiments essential to the rational construction of a new economic system. Furthermore, what was at stake was not only a desire to build socialism but the simultaneous need to industrialize the nation--each a formidable enough task in its own right. And both were undertaken under the continuing actuality or threat of invasion by one or more hostile capitalist powers.

Not only were the blueprints for a new order missing, so were trained and experienced administrators of a socialist persuasion. In large measure, the available personnel with administrative knowhow came from the old state apparatus, ridden with bureaucratic and semi-feudal traditions. All in all, the Soviet planning system was designed and introduced under economic and social conditions that bordered on the chaotic.

The Soviet Union did not have to embark on central planning and massive industrialization when it did in the late 1920s. An important part of the leadership, led by Bukharin, advocated a slower and more gradual course. But once the decision was made, it was inevitable that certain consequences would follow from the initial goal of an incredibly rapid acceleration of economic growth under unusually strained conditions: a vast increase in the economic role of the state, extreme centralization of decision making, harsh regimentation of the population.

The state and the economy thus became fertile ground for the emergence of a huge bureaucracy which in turn shaped and controlled its members, teaching them ways of operating and giving them jobs and special privileges they soon became masters of extending and protecting. Although changes were later made from time to time in some aspects of organization and planning, the system inherited by Gorbachev and which he set himself the task of overhauling remains essentially the one forged under Stalin in economic and social conditions very different from today's.

It was not only the bureaucracy and its way of functioning and protecting its interests that survived from the time of Stalin but also the ruling ideology which developed to rationalize its existence and that of the system it served. Planning was elevated to the status of a science, invented in the Soviet Union and available for adoption by the rest of the world. Planning was guided by alleged laws of socialism--actually rationalizations of existing practices but proclaimed as eternal truths. This was part and parcel of a general tendency to project all aspects of Soviet society--the Communist Party, its monopolization of state power, the planning system--as inherent in socialism and the necessary model for any country taking the road to socialism.

For purposes of the present discussion it is crucial to keep this background in mind and to reject any notion that Soviet practice during this stormy period and central economic planning are one and the same, with its logical corollary that the present crisis of the Soviet economy and society is also a crisis of economic planning. The truth is rather that what led to the present plight of the Soviet economy is precisely those aspects that are peculiar to the Soviet experience and not any inherent characteristics of planning as such.

The forced-draft industrialization of the Soviet economy set in motion by the First Five-Year Plan would of course have been impossible if the necessary human and material resources had not been available within the borders of the Soviet Union. They were there, a rich potential supply of fuel, minerals, other raw materials, and a large pool of unutilized and underutilized labor. But none of these reserves was inexhaustible, and there was never any guarantee that needed inputs called for by the planners would be available in the right proportions at the right times. Unless this aspect of the planning process could be developed and steadily improved, there was always a danger of crises and/or slowdowns in the overall performance of the economy. And it was in fact precisely in this complex of problems that the tendency to declining growth rates discussed in last month's article had its roots.

The slowdown in the growth of the labor force is a case in point. During the early stages of industrialization, a huge potential labor reserve was available. Women were drawn into the labor force and surplus farmers recruited for industry. From 1928, the start of the First Five-Year Plan, to 1940 employment of wage and salary workers increased at the rate of 9.5 percent a year. But once the main pre-existing labor reserves were tapped, the rate at which the work force could be expanded depended on population growth and further redundancy of agricultural workers. Population growth, however, slowed down. The birth rate declined from 31.2 per thousand of the population in 1940 to 18.3 in 1980. And even though the death rate also fell, the natural increase of the population (births minus deaths) in 1980 was less than half what it had been in 1960.

The net effect of the drying up of existing labor reserves, heavy wartime losses, and lower birth rates has been an unavoidable slowdown in the rate of increase of employment. Instead of the 9.5 percent a year increase during the first two Five-Year Plans, the annual growth rate was 3.8 percent in the 1960s, 2.2 percent in the 1970s, and only 0.9 percent between 1980 and 1985.

The declining rate of growth in employment is hardly a full explanation of the downward trend in the national income growth rate that began in the late 1950s. Theoretically, an increase in labor productivity could have made up for a lag in labor inputs. Productivity did indeed rise, but not enough to fill the gap. And the problem was compounded by the changing needs of a rapidly urbanizing society: the expanded need for services drew workers away from construction and industrial production.

These and other problems arising from the slowdown in the rate of growth of the labor force are certain to become more acute in the period ahead. Already the less than 1 percent growth rate of 1980-1985 has dropped, and Leonid Abalkin, one of Gorbachev's top economic advisers, warns that in "the next 15 years the national income and the output of all branches of material production will grow without an increase in the work force." (The Strategy of Economic Development in the USSR, Moscow: Progress Publishers, 1987, p.21)

A similar hindrance to growth showed up in the extraction of minerals. Blessed as the USSR is with ample natural resources, it is equally true that these are nonrenewable and subject to exhaustion. Thus, Abel Aganbegyan, another key economic adviser to Gorbachev, points out after discussing the difficulties arising from the declining labor force:

Yet more striking are changes in the extraction of fuel and raw materials. In the 1971-75 period the volume of output of the mining industry increased by 25% but only by 8% in 1981-85. This decline in growth by a third was mainly connected with the worsening of the geological and economic conditions of mining. With its large-scale mining industry, currently the largest in the world, the Soviet Union is rapidly exhausting the most accessible of its natural resources. To maintain levels of extraction it is necessary to dig deeper, to discover new deposits and to transfer to less favorable fields. The fuel and raw material base in the inhabited regions of the country is already unable to meet our requirements and in many of them the volume of extraction is declining. It is necessary therefore to discover new deposits in the north and eastern regions, to construct transport links, to create new towns and develop territories and attract population there. (Abel Aganbegyan, The Economic Challenge of Perestroika, Bloomington: University of Indiana Press, 1988, p.8)

Problems relating to the production of raw materials are matched by others no less serious on the side of their utilization. Comparative international statistics strongly suggest that there is a great deal of waste and inefficiency in the use of material inputs in the Soviet Union. Howe else explain why the Soviet Union, with a much smaller industrial output than the United States, produces twice as much steel and consumes about 10 percent more electricity in industry? Equally puzzling is the situation in agriculture where the Soviet Union with a much smaller total output than the United States turns out about 80 percent more mineral fertilizer and at least three times as many tractors. These are only a few examples among many that could be cited: they point to the conclusion that Soviet planning practice from the beginning was focused on expanding production in the various separate sectors of the economy without paying adequate attention to their necessary interrelations.

Among the "laws of socialism" enshrined in Soviet textbooks was the supposed necessity to expand production of the means of production more rapidly than the means of consumption. It is therefore not surprising that planners, when faced with increasing problems of labor and material supplies, should seek a way out through expanding production in plant and equipment. Whatever the problem, more investment in means of production was the solution.

The trouble with this is that it flew in the face of experience dating back at least as far as the 1960s. As Moshe Lewin, one of the West's most insightful historians of the Soviet period, pointed out in 1974:

Unnoticed for some time [in official circles] were those self-defeating features in the economic mechanism that had appeared in the early 1960s. Growing means devoted to accumulation and investment ironically led to falling returns on investment and a dwindling growth rate. . . . Research showed that the growing cost of the operation slowed down the whole process, and that the strategies employed had become blatantly counterproductive and urgently needed revision. The unilateral devotion to priority of investment in heavy industry, which was supposed to be the main secret of success, together with huge injections of labor force and coercive political pressure, appeared as factors in this slowdown. Yet dogmas and the practices behind them were tenacious. Heavy industry still continued to be lavishly pampered, at the expense of consumption, with relatively more products serving heavy industry rather than benefiting consumption. "Production for production's sake" certainly expressed the position of the Soviet economy, and neither the standard of living nor the national income adequately benefited from it. (Moshe Lewin, Political Undercurrents in Soviet Economic Debates, Princeton: Princeton University Press, 1974, pp. 132-33)

One of the most serious consequences of investing in new plant and equipment as a remedy for all ills was neglect of existing industry. Normally, as an economy becomes industrialized, a larger and larger proportion of its capital investment is used to replace worn-out equipment. Because of the strong emphasis on creating additional capacity, this generalization does not apply to the Soviet Union, where on the average only about 2 percent of machinery and equipment has been replaced each year. "Under these circumstances," according to Leonid Abalkin, "it would take 40 years to completely modernize [machinery and equipment] in industry, and in the engineering [and metal-working] industries it would take around 50 years." (Abalkin, p. 57) Depreciation reserves have been used in the main to patch up worn-out equipment, with little being done to replace inefficient or obsolete machinery. By far the lion's share of investment goes to expanding the country's gross capital stock, a fact that goes far toward explaining why the ratio of capital to industrial output declined by almost 40 percent between 1960 and 1985. Workers have to operate inefficient and obsolete equipment, with frequent time out for breakdowns. Furthermore, to the extent that the new equipment is added with a view to compensating for inadequate supplies of labor, raw materials, and parts, it may only add to an already existing problem of unutilized productive capacity.

Clearly, the social and economic crisis that preceded Gorbachev was not an accidental phenomenon. As constituted, the Soviet economic system could produce growth as long as there were ample resources that could be mobilized. But with the exhaustion of the resources, the "magic" of the command economy evaporated.

By the late 1970s and early 1980s it had become apparent to important segments of the ruling elite that the well-trodden path was leading to a precipice. The stagnation of national income was alarming enough. But taken together with the incredibly steep drop in capital productivity it looked as if the economy might be on the verge of going over the precipice and landing in an abyss.

Once this was understood--as it clearly was by Gorbachev and his circle of supporters and advisers when they came to power in 1985--the way out of the impasse seemed relatively straightforward. Much could be achieved by economizing on the use of energy and raw materials; the well-developed machine-building industry could be devoted to modernizing existing industry instead of continually expanding it; the accumulated knowledge and skill of the working class could be mobilized. And it was around a core of such measures as these, and in an atmosphere of excitement and optimism, that Gorbachev's ambitious program of perestroika (reconstruction) was launched.

The results, however, were far from what was expected. Not only was the crisis not overcome, it actually deepened. What needed to be done, in general if not in detail, was obvious: the trouble lay elsewhere in the very political and economic processes that produced the crisis in the first place: the repressive political system, the strategy of economic development, an over-centralized and cumbersome planning apparatus, above all a deeply entrenched bureaucracy jealously guarding its turf to protect jobs and privileges. In short, what was needed was not bright ideas but a radical overhaul of the entire political-economic structure.

To a certain extent, of course, glasnost, which accompanied perestroika from the beginning, was itself a move toward such an overhaul. Open discussion in areas previously hidden from the public view was not only allowed but encouraged. The dark side of the history of the Communist Party and Soviet society began to be revealed in a fresh wind of truth-seeking and truth-speaking. Exposes of current ills (corruption, alcoholism, prostitution, etc.) appeared in the media, along with harsh criticism of high officials and leading institutions. Censorship of literature, drama, and film was in large measure lifted. All of this freeing of speech was a necessary prelude to the reconstruction of the political system: an ongoing process aimed at a separation of the government from the Communist Party, revitalization of the state by empowerment of the soviets, and elections of delegates to these bodies at all levels from slates of candidates selected independently of the nomenklatura.

In an important sense this thrust toward democracy is consistent with the ideals that inspired the Bolshevik Revolution and very much in keeping with the socialist vision of Marx and Engels. Their views of the Paris Commune are especially relevant in this respect. In his introduction to the 1891 German edition of Marx's The Civil War in France, Engels hailed the Commune as a model of the dictatorship of the proletariat in action. Crucially important was the need for safeguards against corruption of state officials and the danger of their becoming masters instead of servants of the people:

From the very outset the Commune was compelled to recognize that the working class, once come to power, could not go on managing with the old state machine; that in order not to lose again its only just conquered supremacy, this working class must, on the one hand, do away with all the old repressive machinery previously used against itself, and, on the other, safeguard itself against its own deputies and officials, by declaring them all, without exception, subject to recall at any moment. What had been the characteristic attribute of the former state? . . . .

Against [the] transformation of the state and the organs of the state from servants of society into masters of society--an inevitable transformation in all previous states--the Commune made use of two infallible means. In the first place it filled all posts--administrative, judicial, and educational--by election on the basis of universal suffrage of all concerned, subject to the right of recall at any time by the same electors. And, in the second place, all officials high or low, were paid only the wages received by other workers. . . . In this way an effective barrier to place-hunting and careerism was set up, even apart from the binding mandates to delegates to representative bodies which were added besides.

It should go without saying that the Soviet Union is very far from meeting the standards set by Marx and Engels in this and other writings. Yet in glasnost and related political reforms, it seems thus far to be at least facing in that direction.

Encouraging, important, and necessary as these moves toward democracy are, they still do not directly address the stubborn problems of the economic crisis in which the Soviet Union finds itself mired. Why?

As discussed earlier, structural problems in the supply of labor and materials brought about a long-run decline in the rate of growth of the economy, and the traditional panacea of Soviet planners--increasing the stock of capital goods--had lost its effectiveness and even become counterproductive. Here, perhaps more than anywhere else, the bureaucratic structure of the party and the state served as a protective shield against change. The administrative apparatus had plenty of ways to sabotage innovative reforms. Officials had little reason to be concerned about whistle blowers and other critics as long as the means of repressing trouble makers were at hand. Incompetence and corruption were covered up in an intertwined and interdependent network in which patronage played an ever present role. There was no way the counterweight to bureaucratic inertia inherent in the creative potential of the masses could express itself. The political turning to democracy was thus a necessary but not a sufficient condition for the reawakening of the economy.

Against this background, it is hardly surprising that Soviet economists, including Gorbachev's closest advisers, should conclude that the country's economic problems were attributable to the planning system and that the way out would be to substitute a system of economic regulation through markets as practiced under capitalism. This would involve freeing the various units that make up the economy from bureaucratic restraints and directives and allowing them to operate in the manner of competing enterprises in the market economies of the West. The result would presumably be elimination of shortages and waste and a greatly increased efficiency in the utilization of labor and materials.

This way of viewing markets and market economies is not wrong, but it is greatly simplified and can be seriously misleading. Markets have many purposes and consequences, and in any given context it is important not to omit or unduly neglect those that are of greatest relevance. In the kind of debates that are taking place today in both capitalist and noncapitalist societies, there are three functions of markets that are particularly important: (1) as a means of distributing goods and services to consumers; (2) as a mechanism for allocating productive resources among various uses; and (3) as a way of deciding how much individuals and groups get paid for their labor and/or other assets they own.

In capitalist societies, markets typically perform all three of the functions--modified to a greater or lesser extent (depending on the differing histories of the countries concerned) by state intervention of one sort or another. In planned societies of the Soviet type, on the other hand, only the first of these functions (distribution to consumers) is entrusted to the market (again with modifications), while the other two are for the most part discharged by executive organs of the state (presumably guided by the planners).

Capitalist markets of course operate on the principle of profit maximization. Competition supposedly forces all suppliers to sell at the same price. The more efficient gain higher profits and expand their share of the market. The less efficient stagnate or fall by the wayside. Capital (followed by labor) moves into industries with higher profit rates and out of those with lower, creating a tendency toward a uniform average rate of profit across all industries. Everywhere, in these circumstances, a system of competitive markets generates unremitting pressure on enterprises to produce at lowest possible costs and to gain advantage over rivals by introducing new products and new methods of production.

This is the textbook theory of a market economy which since the days of Adam Smith has dominated bourgeois ideology. It is easy to understand its enormous attraction for Soviet economists, confronted as they are by the rigidity, inefficiency, waste, and palpable failures of their own system of central planning and economic management. To the architects of perestroika nothing could have seemed more logical or appealing than substituting the elegant "magic" of the market for the discredited Stalinist "laws of socialism."

The trouble is, as most readers of MR surely know, that capitalist reality has never conformed with the textbook model even under the most favorable conditions, while under less favorable conditions--such as exist in most of the Third World today--the resemblance is close to nonexistent. The reasons are many and hardly need elaboration here: the universal tendency of competition to turn into monopoly, the tendency of capital accumulation to generate wealth and income at one pole and deepening poverty at the other (not only within nations but between rich nations and poor nations as well), the system's periodic crises of overproduction and mass unemployment--and much, much more.

Are the perestroika reformers unaware of the manifold evils produced by market economies? It hardly seems likely. While most of them have had only limited contact with capitalist reality, they surely have had ample opportunity in the course of their studies to acquaint themselves with the history of capitalism and the contemporary problems and crises of the system, especially its third world underside. But if this is so, we may wonder why they would still embrace a comprehensive marketization of the kind described in the following statement by Aganbegyan, considered by some to be the chief architect of perestroika:

Let us now sum up what is meant by the extension and the intensification of the socialist market. We can safely say that the market will encompass the key sections of the economy and will play a very important, indeed crucial role in the further development of our country's economy. It will be in the marketplace that the goods and services produced by enterprises to satisfy money-backed demand will acquire their social value. It will be the market that balances production and demand in the country. And it will be through the market the production will start to depend more on consumer demand and will begin to satisfy social needs. (Abel Aganbegyan, Inside Perestroika, New York: Harper & Row, 1989, p. 47)

Two possible explanations of this seemingly unconditional enthusiasm for the market suggest themselves.

First, the economic crisis that gave rise to perestroika has shown no signs of abating: on the contrary, it seems to have gotten worse. By the time of Aganbegyan's statement (and many similar pronouncements by his reforming colleagues), one can sense the emergence of a mood of desperation. Something has to be done quickly lest the situation get out of hand, and as far as the Soviet economists are concerned, the only measures they can conceive of are a more rapid and more intensive resort to marketization. True, this would run the risk of bringing with it the evils capitalist experience has shown to be associated with marketization. But the risk must be assumed, leaving the evils to be dealt with later.

A second possible explanation puts the attitude of the reformers in a different light, i.e., that they, reflecting the values and aspirations of the relatively privileged stratum of Soviet society to which they belong, feel in their heart of hearts that their place in the world is with the better-off, more privileged intelligentsia of the West. Capitalism, whatever its faults and shortcomings, has created in a few of its most advanced units a standard of living and a degree of security for its more fortunate citizens far beyond anything available in any other form of society, whether earlier or contemporary. Among these fortunate citizens are many in the arts, sciences, and professions whose status in their respective countries is below that of the ruling establishments but who live well, are influential in their own communities, and enjoy a wide latitude to dissent and criticize. Politically most of these people are liberals or social democrats who believe in more or less basic reforms. Most Soviet reformers would doubtless like their own country to develop along similar lines, and they tend to see marketization as a necessary step in that direction. That it is also a step toward the restoration of capitalism may or may not be recognized; that degree of understanding may only come further along the road to capitalism.

Pressure for marketization is not the only indication that the Soviet reform movement has a capitalist orientation. Others are the strong preference for integration of the Soviet economy into the global capitalist network of trade and finance, and the great admiration for the high-tech culture of the advanced countries of the West, both of which permeate the Soviet reform literature. In evaluating these tendencies, it is important to preserve a sense of balance and to avoid falling into a sterile dogma of either condemnation or uncritical enthusiasm.

No sensible person believes that a socialist country should eschew economic relations with the capitalist world, but it is a time-honored tenet of socialist thought (and indeed of heterodox bourgeois thought as well) that a country with a weak economy that wants to maintain its independence and the possibility of charting its own course needs to protect itself against being overwhelmed and economically subjugated by stronger countries. The form this protection takes can vary according to circumstances, but what is essential is that the weaker country should have control over what it buys and sells abroad and the terms on which foreigners do business within its borders.

History records many cases of weak countries that have successfully defended their independence and have grown strong in the process (the United States and Japan are perhaps the two most outstanding examples). On the other hand, there are even more cases of weak countries shunning protective measures in the belief that laissez-faire in matters of trade and investment would be in their best interest. Most of these have ended up as dependents of their stronger partners, with their economies being shaped for the benefit of others rather than their own citizens. In the present international context there is no doubt that the Soviet Union is a weak economy vis-a-vis the advanced capitalist countries it wants to integrate with, and the perestroika literature certainly suggests a willingness to do so on terms very favorable to the capitalist side. If things actually develop along these lines (so far there is not much concrete experience to go by), it is hard to see how the Soviets can avoid increasingly adapting and adjusting their institutions and policies to the needs and preferences of their stronger partners.

With regard to the Soviet Union's relation to the high-tech culture of the West, no sensible person believes that in developing their economy the Soviets should avoid taking part in and deriving maximum benefit from today's ongoing scientific-technological revolution(s). But there are different ways of going about it. One is to be guided at all times by the needs and priorities of a huge country suffering from all the grave problems and deprivations that we discussed at considerable length in Part One of this essay in last month's MR

-- the need to supply running water to hospitals, toilets for schools, sewers for villages, silos to save grain from going to waste, country-to-town roads, and much, much more.

How can the latest technology contribute to solving these problems? How can computers that make possible the exploration of space be adapted to the equally complex and challenging problems of national economic planning? How can modern industry and technology be reconciled with and harnessed to the task of saving the environment? How convert the monstrous engine of death and destruction that is the legacy of the cold war to satisfying the urgent needs of liberated humanity? These are just examples of the infinite number of problems science and technology can help to solve.

But there is another way of taking part in the high-tech culture, and that is to become dazzled by the fads and fashions of upper class Western consumerism; to see the accumulation of computers, automobiles, and gadgets of all kinds as the purpose of life; to elevate the quantity and style of personal possessions over the quality of life for society as the criterion for development and progress. These are the hallmarks of late capitalism and the frightening symptoms of its degradation and decay. There are unfortunately all too many indications that the Soviet reformers share the same values and aspirations and hope to see their own society join the club.

So far in our discussion of perestroika we have been dealing mostly with theories and blueprints. Apart from the very positive moves toward openness and democracy discussed above, very little changed. Five years into perestroika, the structure of the economy and its working principles remain as they were. All the talk about marketization and what is supposed to go with it is just that--talk. Attempts to introduce private enterprise under the guise of cooperatives have yielded meager results and by all accounts have aroused more negative than positive feelings among the public. Meanwhile, the poor performance of the economy is not very different from the conditions that gave rise to perestroika in the first place.

There is nothing surprising in all this. Up to now the reformers have had little to offer except their marketization panacea. Their message seems to be: take from capitalism what has worked and hope that somehow the bad side effects will be absent or manageable. The trouble is that this is utopian thinking in the worst sense of the term. The conditions for a functioning market economy in the capitalist world quite literally took centuries to evolve, and in some parts of it are still far from fully developed. Not only were suitable property relations necessary but so was a sophisticated legal system to regulate and enforce them. Perhaps even more important was the shaping of a "human nature" fit to operate such a system. The possessive individuals of classical political economy did not just appear one fine day to run the new economy. It took generations to create them. A similar process was under way in Tsarist Russia, but it was cut short by the Revolution. Neither the institutional framework nor the human material needed for a functioning market system exists in today's Soviet Union, and bringing them into being can only be the work of decades, not months or even years. This is what we mean when we say that the idea of comprehensive marketization as a way of combatting the present Soviet economic crisis is hopelessly utopian.

If this argument is accepted, it follows that any realistic program for coping with the country's economic crisis has to start from the situation that actually exists. If the present system is not working--and it isn't--it has to be changed from within, not discarded in favor of another system which, whatever its supposed merits, is simply not a practical option in the relevant time frame. And change can only mean a massive infusion of new people with energy and ideas into the existing institutional framework.

How can this be achieved? To our way of thinking, the answer is: only through streamlining and speeding up the processes of democratization already under way. The assumption has to be made that there are human resources out there in the Soviet population, especially among the working people who constitute the vast majority, who, aroused and motivated, have the capability to turn things around.

As we write, crucially important elections at the local and regional levels are about to take place. They could be the beginning of a fundamental process of political change that clearly is a necessary condition for economic revival.

Necessary of course does not mean sufficient. New ideas and strong leadership are also needed. But they won't appear out of the blue. In fact, if they are to develop at all, it is likely to be in the course and as a result of an ongoing but still far from finished political revolution.

Socialists all over the world have not only an interest but a personal and political stake in what happens in the Soviet Union in this coming and decisive phase of the process that began with Gorbachev's accession to office in 1985. We can only hope that the outcome will be positive and that it will set the stage for a following phase of economic recovery.

Poland has blasted off for capitalism.

A new age of abundance, Western-style, dawned here with the new decade. In one stroke, a miracle of macroeconomics vanquished the empty shelves and endless lines of communism. Now, cheesecakes gorge the bakeries, sausages festoon the butcher shops, groceries burst with bananas. The lines are gone. Just like that.

Anyone can walk in off the street to buy a television set, pull right up to a gasoline pump for a tankful. Trains and planes have plenty of seats. Warsaw's crowds are thinner. Poles don't sneak out from work anymore to jam the shops in pursuit of a coat or a hair dryer. They know the shops have coats and hair dryers and everything else everyone hunted for last year.

The catch is that this year, it is all too expensive to buy.

Wall Street Journal February 21, 1990

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