BUSINESS WATCH

New openness in the U.S.S.R.

Peter C. Newman November 17 1986
BUSINESS WATCH

New openness in the U.S.S.R.

Peter C. Newman November 17 1986

New openness in the U.S.S.R.

BUSINESS WATCH

Peter C. Newman

One of the main signs that a very different and not just a new regime has taken over in the Kremlin has heen the willingness of well-informed Soviet experts to predict that the U.S.S.R. is evolving toward something resembling a market economy, a freedom that was strictly forbidden before Mikhail Gorbachev came to power. Last week Dr. Andrei Anikin, head of the Institute of World Economy and International Relations at Moscow's Academy of Science, paid a rare visit to Canada. The author of six books and a professor of : theoretical economics at the University of Mosco w, he provided me with the following text, shortened here for reasons of space:

Our country has created a powerful modern economy, in its size second only to that of the United States, but during the past 15 years unfavorable stagnation-type phenomena have been evidently growing in the economic and social fields. One cannot say they were not observed, not spoken about, but not much was being done either. Only in 1985-1986 has a complex analysis of these phenomena been made and an efficient program of their liquidation worked out.

The most general and striking expression of the unfavorable development of the economy over this period has been the fall in the rate of economic growth. Continuation of this trend is inadmissible. There are certain objective factors that tend to hold down the yields of production. Among them are the worsening of conditions of production of minerals and fuel; shift of industry to the north and the east; and high expenditures on the creation of infrastructure facilities. The main cause of these difficulties has been the incomplete and incorrect utilization of possibilities created by our social and economic system. Too long the prevailing psychology, both in the centre and elsewhere, was to try to straighten things without changing anything in substance. This situation ruled out both material and moral incentives for favorable changes.

To judge the degree of radicality of the changes that have taken place and are contemplated, attention should be drawn to M.S. Gorbachev’s statement on July 31, 1986, where he called those changes a real revolution in the whole

system of social relations, in the people’s psychology, in the understanding of the contemporary period, especially of the role and problems of technical progress. The word revolution is not lightly used in our country.

Acceleration means first of all raising economic growth. But it is subordinated to the solution of strategic social problems—to the goal of raising the quality of life. The main task is to pull up the level of living of the population

with lower incomes. Special attention will be given to the development of public consumption funds (health, education, recreation etc.). The volume of housing construction will rise somewhat from 1986 to 1990, but the goal of providing every family with a separate flat and every person with a minimum living space of 20 square metres is postponed to the 1990s.

The structure of the U.S.S.R.’s special research institutions with insufficient material base has become not

flexible enough. It does not create material and prestige incentives for successful individual and team work. In many cases there is a gap between scientific ideas and their practical use. In this field, Soviet specialists are ready to borrow foreign experience that is applicable to our system. Some of my colleagues study the American practice of venture business and methods of financing research and design work.

There will be no reform containing any concessions to capitalism, no retreat from the basic principles of socialism such as public property of the means of production, centralized planning, promotion of socioeconomic equality and security. But what is now introduced is not a onetime reform but a system of changes gradually embracing an ever broader sphere.

Current economic reform is conceived in conjunction with corresponding changes in public life and psychology. In particular, present trends are for greater publicity, more criticism and initiative. They emphasize the fight against bureaucratism and administration by mere injunction.

Decisive steps are taken to stimulate individual, family and small cooperative labor activity. The business in question is production of food and other goods on home plots of land, supply of various everyday services and small public catering outlets. There are no objections of principle to this form of organization of labor and use of the available productive potential. Collective farms will receive much greater freedom to dispose of their produce at their discretion, including sale at flexible prices dictated by the market.

In conformity with the general direction of economic reform, the methods used in the sphere of external economic relations will become an organic part of the operations of an enterprise or association. The leading idea is to make results of export and import business an important factor of the level or profitability and, to a certain extent, of direct bonuses and different social fringe benefits of the employees—from high managers to rank-andfile workers.

Big associations regulated by industrial ministries will now have direct links with their foreign counterparts. It means that industry will have much greater autonomy in decision-making, involving exports and imports based on economic considerations.