For Perestroika, Mikhail the Good May Have to Become Mikhail the Great

In the United States, “competitiveness” is the chief economic buzzword. Cutting taxes will make us more competitive. So will spending more money on schools. So will--depending on who is talking--eliminating labor unions or involving them more directly in management. We have a broad national consensus in favor of competitiveness--now, if we could just agree about what competitiveness means.

Unfortunately for the Soviet Union, the P-word works much the same way. Everybody has a pet problem and everybody has a pet solution--and everybody’s pet solution is perestroika.

Most of what Westerners believe about perestroika comes from the advocates of what we might call official perestroika. This starts from what Soviet leader Mikhail S. Gorbachev’s economic advisers are telling him--that there are two principal forces hindering progress in the Soviet Union: the near-total absence of accountability, so that people neither get rewarded for good work nor penalized for bad; and the dictatorial command structures of the Soviet economy and society, which stifle initiative and innovation from the factory floor to the ministry.

The perestroika of markets seeks to create a viable price system so that managers and others can be held accountable for producing goods that people want. If an enterprise does well, producing goods more efficiently and so on, then it should receive benefits; if it does poorly, it should suffer the consequences. Naturally, this demands a thorough restructuring of the economy, and this is the element in perestroika that most Westerners understand.

Then comes the perestroika of glasnost. The stranglehold of the bureaucracy must be broken, which means in practice that bureaucrats must be subjected to more public scrutiny and criticism. By holding decision-makers accountable to public-opinion, glasnost compliments market perestroika, which holds producers accountable to market forces. The other side of glasnost , which also has an economic dimension, involves opening up Soviet management and workplaces at the microlevel, allowing those with new ideas to escape from the stagnation so comfortable for those happy with the old ways.

The third perestroika has to do with what some call the Third Wave--the third great economic revolution in human history after the neolithic revolution established humans as farmers and the Industrial Revolution that created modern society. The Third Wave, the electronic revolution, now in progress, has left the Soviet Union behind--so far.

In 1913, Russia was a backward country. While the advanced nations of that time were industrial powers, Russia was still predominately agricultural. That changed, at immense cost, under Josef Stalin. In the 1950s, the Soviet Union was a modern economy, if a poor one. The Soviets made as much steel and pig iron as anybody else, they poured tons of cement, they built huge dams and power stations. But the Soviets missed the Third Wave, the information-processing technology so important to the West. The Western visitor to Moscow sees strange sights: abacuses used by clerks in major stores, carbon paper in offices and, perhaps most jarring, slide rules on sale for Soviet scientists.

These are only the most visible signs of technological backwardness. The Soviet telephone system depends, for the most part, on older equipment. Telephone lines cannot handle computer data; outside of certain showplace industries, there is little use of robots or other advanced equipment. Technological perestroika is the key to the Soviet Union’s long-term goal of restoring parity with the most dynamic Western economies.

Glasnost and market perestroika are almost uniformly popular in the West; we believe that these changes will make the Soviet Union a more open and, therefore, less dangerous presence in the world. Technological perestroika makes us a little more nervous; we can’t help but think about the impact of modernization on the Soviet Union’s military capability.

These are the official perestroikas ; beyond them is a collection of what we could call popular perestroikas. There are many Soviet citizens who would like to see a crackdown on official corruption and on the private marketers whose activities still seem vaguely criminal to Socialist-educated Soviet citizens. They see free markets, indisciplined reporters and alienated young people as signs of a breakdown in social values.

But the most popular perestroika is less ideological than this. A “consumer perestroika “ would improve the quality and increase the availability of goods. It would improve Soviet standards of housing and medical care and eliminate the petty annoyances of Soviet life--the occasional shortages of such goods as toilet paper and the seemingly eternal lines.

The problem for Gorbachev is that not all these perestroikas are compatible. In particular he faces a contradiction, as the Marxists say, between investment and consumption. If the Soviets are serious about rebuilding the technological basis of their society--and catching up with the West--they must increase investment. In a message familiar on our side of the Iron Curtain, the Soviet people have been “consuming too much” and “living beyond their means” and are going to have to tighten belts.

Meanwhile, market perestroika has its problems. “Price reforms” rarely mean price cuts; prices for subsidized Soviet consumers have already begun to rise--without significant improvements in quality or availability. Ordinary Soviets are left with the bittersweet taste of glasnost : an increased ability to read about how bad things are.

Without more economic success, official perestroika has a difficult problem. How far can the leadership democratize Soviet society while imposing an unpopular program of belt-tightening? Gorbachev hopes that he can cut military spending, and borrow enough abroad to raise living standards as perestroika takes hold--but few outside observers believe he can succeed. Worse, Gorbachev must shift investment from old-style industries to new high-tech sectors. Less to steel, more to microchips: good news for microchip makers, but not so good for industrial workers in the older industries--the very workers who, for more than 150 years, were considered the bulwark of the proletariat.

In American terms, we can think of Gorbachev as an Atari communist, a neo-Bolshevik. He has to shift purchasing power and political pull from the entrenched labor unions and heavy industrial bureaucracies to the Soviet yuppies. Another way to look at him is as the Margaret Thatcher of Russia, whose job it is to stir up a stagnant economy by breaking down the institutions originally built up to serve the old industrial working class. The Soviet press already hails Thatcher as the author of perestroika-- British style.

Westerners encouraged by signs of greater democracy and openness in the Soviet Union need to remember that for the Soviet leadership--and perhaps also the Soviet people--technological perestroika is the end, glasnost and market perestroika are the means. We should not underestimate the Soviet--and especially the Russian-- determination to escape technological backwardness at any price.

If the Soviet working class has to be dragged kicking and screaming into the computer age, well, that is how Stalin industrialized the Soviet Union in the first place, and that is how Peter the Great introduced Western technology into the Russia of his day. Russian nationalism served as a trump card for both Peter and Stalin. Today’s consumers are likely to endure sacrifices for the sake of their country and, if sacrifices must be imposed, today’s leadership may also have to appeal to Russian patriotism in the end.

Gorbachev may want to be Gorbachev the Good, but for his reforms to work, he may have to become Gorbachev the Great, or even Gorbachev the Terrible. If hard choices are required, and Gorbachev does not make them, then the Soviet Union will look--as it has in the past--for someone else to do what is required, whatever the cost. Let us hope, for the sake of the Soviet people and for world peace, that the cost will be less this time than in the past.