Soviet Economy Slogging Forward

A goggle-eyed tourist on his first trip to the Soviet Union has no business posing as an instant expert. Nevertheless, I simply couldn’t restrain myself from making a few amateurish observations on an intriguing society and economy.

Arriving in Moscow just before sunset, I walked for several hours around the Kremlin and in Red Square. I gradually became aware that, save for the occasional street lamp, there are no lights in Moscow, no neon signs, no advertisements, nothing. It was an eerie, enveloping darkness. It was also a silent darkness. Red Square was full of people promenading in the vicinity of Lenin’s tomb, but for all one heard, it might as well have been empty. No one talked above a whisper, perhaps out of reverence, perhaps for other reasons. In any case, I couldn’t help but think of what I’d be hearing were I standing in a similar plaza in a Western country.

In the next few days, fully realizing that as a tourist I couldn’t hope to do more than skip across the surface, I took advantage of every opportunity to expose myself to the Russian economies. I use the plural because there clearly are at least four: the military economy (which appears to be by far the most advanced and efficient, but also seems to exist in a vacuum) the official civilian economy, the berioska (Western currency stores) economy and the street market. I don’t have to tell you which one is the most dynamic.

I could not escape the conclusion that the Soviet civilian economy has been a pretty colossal failure. How they have managed for so long to keep it an open secret is a tribute to something other than glasnost, the term for the new Soviet policy of openness and candor. A walk through any store or down any commercial street gave eloquent testimony to the observation by the New York Times’ Hedrick Smith, author of “The Russians,” that the problem in Russia is not so much money as it is access to goods. There are lines everywhere for everything. The voice of the marketplace is seething but silent.

Few Consumer Rights

The “street goods,” sold from makeshift tables on the sidewalk, seemed to be in hottest demand. I have no idea where the stuff came from, but it reminded me of the hawkers one often sees on the streets of New York (and I’m pretty sure I know where those goods came from). But the longest lines of all (other than for vodka) were for plastic shopping bags. It would seem that plastic bags are in very short supply--and they appeared to be a critical adjunct of daily life. As a Russian told me: “I always carry a bag because whenever I see a line, I get into it, because it’s probably something I need and can’t get in the stores.”

In the stores the heavy, visible hand of central planning--absolutely devoid of any market feedback--is startlingly displayed. In fact, there is very little that people really want. That they want other things is dramatized by the constant offers in the street to buy almost any Western good, including the clothing and shoes I was wearing.

I’m told by experts on the Soviet economy that the military is the only entity that has the right to return shoddy goods. Other entities must take what they’re sent and work with them as best they can. A young Russian told me that it was most unwise to buy anything that was produced during the last 10 days of the month. That’s when the factory workers are racing to make their monthly production quotas and, given the aforementioned customer returns policy, it would seem that anything goes.

The berioska shops are something else again. They appear to have goods that people want, although I certainly didn’t see much there myself. Unfortunately for the average citizen, however, these shops take only Western currencies at the official and outrageously unrealistic exchange rate of 0.65 rubles to the U.S. dollar. It would appear that the exchange rate was set so that prices translated to dollars would be about equal to those in New York with no adjustment for considerable differences in quality.

I must have been asked at least two dozen times if I wanted to change money on the street. The street rate seemed to range from 3 to 4 rubles to the U.S. dollar in Moscow, falling to 2 to 3 rubles to the dollar in Leningrad. Leningrad, being on the Gulf of Finland, is closer to the West, thus more dollars are available. (Markets do work, under if not on the table.) When I asked the street changers what they would do with the dollars if I dealt with them, the answer was always, “Berioska.” I doubt that they can freely enter those stores, so there must be an underground system worked out for getting goods from those stores.

Speedy Change Unlikely

All this is supposed to change under perestroika, the term used for a brand-new approach to the functioning of the economy. Perestroika would seem to be an idea whose time had to come, with or without the willing and able assistance of General Secretary Mikhail S. Gorbachev. Surely, the Soviets could not have ignored the obvious much longer.

Unfortunately, the view is fairly uniform among experts that perestroika, at least in present form, will not produce major change soon, if it is allowed to produce any at all. One expert maintains that at least 10% of the Soviet labor force is redundant and must be squeezed out if the economy is to approach efficiency. How do you do that in a society committed since the beginning of the revolution to “full” employment? What happens to those people? At the same time, everyone agrees that the change is real to some degree and that the Soviet economy has seen the worst.

Two of the major forces that motivate economic behavior are fear and greed. It would seem that the Soviets, either by choice or necessity, have emphasized the former while the United States tends to accent the latter. The U.S. system is far from perfect and often generates extremes of inequity, to say nothing of taste, along with the genuine benefits. Yet, even a brief tourist’s look at the Soviet economy was sufficient to demonstrate that a system that is deaf to the voice of the marketplace and ignores rather than channels some of the baser elements of human nature is likely to generate a lot of words, paper and police but not much in the way of genuine improvements in either the level or quality of living of its citizens.