Russia: Borrowing from the Capitalists

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Russia itself has lagged behind the satellites in the economic shift toward Western ways. At stake is nothing less than Russia's vast "command economy," with its Kafkaesque, topheavy bureaucratic fiefdoms regulating every pulse and throb of the nation's economic engine. And though Marx never mentioned central planning and Lenin came to it only late in life, such is Stalin's historical shadow that at stake, too, are a generation of ideological maxims boastfully vaunting the superiority of Socialist planning over capitalism, the pervasive power—and perhaps the jobs —of some 10 million planners large and small, and ultimately perhaps the amenities of life of millions of ordinary Russians.

Clearly, such unsettling prospects would not even be countenanced in the Krernlin were it not for yet a grimmer vista already looming. That vista is a continuing turnabout in the Soviet growth rate, whose longtime double-figure performances led Nikita Khrushchev as recently as 1961 to assure the world that the U.S.S.R. would over take the U.S. by 1970 as the world's mightiest economy. It has been slowing down ever since. Last week Moscow reported that industrial output grew at 7.1%, a sizable figure for a mature economy but the lowest in Russia since 1946. And each year the evidences of waste, mismanagement, inefficiency and planning gone berserk multiply.

Ukrainian Contribution. Russia's growing community of pragmatic, highly professional economists and engineers understands very clearly what has happened, and is sure that it has the cure—even if much of it has to be borrowed from the capitalists. Among the foremost is Kharkov Economics Professor Evsei Liberman, 67, whose quizzical smile masks an imperious and demanding intelligence, and who as much as any other Russian is credited by the West with initiating Russia's great debate. A stocky Ukrainian with a quick and witty command of English, Liberman is typical of Russia's new breed that has used the freedom of the post-Stalin era to correspond with and receive Western economists, is as at home in Moscow's ministries as conducting a postgraduate seminar.

The crux of their arguments for change comes down to the fact that the Soviet economy has grown too complex and sophisticated to be efficiently manipulated by pushbutton from Moscow. The economic reformers are not out to undermine Communism but to improve its efficiency. Nonetheless, the solutions they have proposed are distinctly Western: the use of profits on invested capital as the single best indicator of factory performance, flexible prices responding to the market forces of supply and demand—and, of all things, charging interest on the use of government money by shops and factories.

Sensible pragmatism or rank heresy? Khrushchev himself provided the reformers with a text, if not an answer, late in 1962, when the debate was beginning to gather momentum. He reminded the Central Committee of "Lenin's directive that we be able, if necessary, to learn from the capitalists, to adopt whatever they have that is sensible and advantageous."