Gorby's Appeal For Aid


Mikhail Gorbachev is told by the West that the Soviet Union has to reform its economy in order to merit Western aid. He replied in Oslo, in his Nobel Peace Prize acceptance, that the U.S.S.R. requires aid without preconditions.

This is deeply unrealistic on both sides, as is much of the Western debate over whether we should or shouldn't help Russia. The West certainly is not going to give aid of any scale without setting conditions, but at the same time the Soviet Union has already demonstrated its inability to produce the kind of reforms the West really wants to see.

There is an unmistakable factor of fantasy in all of this. Too many economists in the West are recommending measures of reform to the U.S.S.R., and to all the Eastern countries, which rest upon theoretical conceptions of the market economy with little attention to how the real market economies of the West -- the American, the British, the West German -- actually function, and with little regard for actual conditions in the ex-socialist nations. They offer models of the market economy that could never be applied in their own countries.

They treat the East as a vast laboratory in which to apply economic theory. What happens to the people who live in these economies if the theory proves wrong? For the theorists, as in Peter Arno's immortal cartoon, it's back to the old drawing board. For the rest, it's penury and waste.

The good advice -- or otherwise -- includes advocacy of the "Big Bang" (the "Big Bung," in a felicitous but, one hopes, unprophetic Czech mispronunciation I recently heard) -- total and unqualified liberation of the economy. Poland is supposed to be trying this out. There are advocates of gradualism. There are unrepentant social democrats. There are advocates of French-style technocratic dirigism, and of the German-style social market.

There are charlatans at work in the East, adventurers anxious to buy up public-sector goods and property at sale prices, asset-strippers, confidence men, thieves, swindlers. There are Communist Party survivors assiduously turning party power into privatized riches.

Those who would aid the East must also acknowledge the deep constraints upon what an outside agent, however well-intentioned and well-informed, can actually do for another society in the plight in which the ex-socialist countries find themselves. "Socialism" has endowed them with mid-19th-century industrial structures and work forces trained to mid-19th-century skills and standards, with the outlook of a rTC century industrial proletariat.

Czechoslovakia, Poland and Hungary at least have had the experience, as recently as 50 years ago, of relatively modern industrial organization and production. Having been modern industrial societies before, it is reasonable to think they can eventually reconstruct such systems if given investment capital, markets to sell to and an energetic and generous western program of managerial education, or reeducation. Bulgaria and Romania are more problematical cases.

A further complication arises from the problem of debt. East-bloc analysts argue that the East European countries and the U.S.S.R. have since 1989 been paying the West more in interest and debt service on the loans acquired under communist rule than the total of all Western aid thus far supplied since 1989 to the East: that the actual flow of wealth since the East's liberation has been from East to West -- not the other way -- and that this continues to be the case.

The Soviet Union presents the biggest problem of all because it has virtually no national experience of modern economic functioning or of the social and moral foundations of the modern economy. Industry in Russia dates only from the last decade of the 19th century. In February 1900 the imperial Minister of Finance, Sergei Iulevich Witte, in a memo to the Tsar, wrote that "without her own industry (Russia) cannot achieve genuine economic independence": the case even then still had to be argued.

Industrial production and income grew rapidly in Russia between 1900 and 1914, but from a minute base, for an immense population. (Richard Pipes, historian of the Russian Revolution, cites figures indicating that in 1910 the per-capita Russian consumption of coal was 4 percent of that of the United States and of iron, 6.25 percent.)

The industrial culture that has existed in the Soviet Union during the last 80 years -- the agricultural culture as well -- is that of the command economy. And there has been no commercial culture, no trading and free retailing experience, at all. How is this going to be remedied? Not by good advice from Harvard.

The outlook for Russia seems all too convincingly that of collapse, followed by no one knows what. No one wishes such a calamity on Russia. If there were anything to prevent it, one should, and would, do it. But this end, or beginning, may prove inevitable. The Revolution goes on, taking its victims.

William Pfaff is a syndicated columnist.

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