SCRATCH OFF ANOTHER utopian experiment. Tanzania is abandoning decades of failed socialist policies. The East African country is in the midst of privatizing 400 state-owned companies -- everything from agribusinesses to electric utilities to telecommunications to railroads.

The move represents a startling rebuke to the legacy of Julius K. Nyerere, Tanzania's first president, who died three years ago. He wanted to build a socialist state. His goal was self-reliance, which was ironic because Tanzania remained an African weakling financed by foreign donors, chiefly in Scandinavia and West Germany. Later, as the Chinese moved in, the United States became increasingly disenchanted, cutting aid.

Mr. Nyerere, who wanted to be called mwalimu ("teacher"), is still respected among his people. But many Tanzanians now willingly acknowledge that their country would have been better off without Mr. Nyerere's ideological blinders.

So far, privatization has had mixed results.

When Hong Kong interests started running Dar es Salaam's container port, volume and productivity soared. Reforms also have increased economic stability. One gauge: Inflation has dipped from 30 percent in 1995 to 4.7 percent today, the lowest level in 40 years. The economy is growing ahead of the African average. Perhaps most striking is the opening of a small stock market in Dar es Salaam. Granted, it only has seven brokers (and operates three weekly half-sessions), but it is a beginning.

The flip side is that several formerly state-owned companies have failed after privatization. Income disparities have increased between the cities and rural areas. Unemployment is widespread; much of the population is under 25 years old, dissatisfied and restless.

Under prodding from the International Monetary Fund, Tanzania is finally on the move. Few would want to return to the failed experimentation of the Nyerere days, particularly in collective farming. But not all idealism has been lost. Tanzania's challenge now is to control the negative byproducts of economic liberalization -- from greedy profiteering to poverty.