Autopsy of Russian reform is premature

November 23, 1994|By Scott Shane | Scott Shane,Sun Staff Writer

The trouble with this book begins with the title. It is too early to pass judgment on Russian economic reforms. And if an interim judgment must be pronounced, it should be that reforms have begun to work reasonably well, filling long-empty shops with goods, propelling millions of workers into the private sector, and, in recent months, beginning to boost living standards.

Mr. Goldman, of Wellesley College and Harvard's Russian Research Center, has for a decade been one of America's best-known Sovietologists. In this book, the latest of a dozen he has written on the Soviet or Russian economy, he first describes the tentative, inconsistent moves of Mikhail S. Gorbachev in the direction of economic reform, offering brief portraits of Mr. Gorbachev's succession of economic advisers. He accurately describes the Gorbachev economic policy as "the reform that never was." Unfortunately, in view of that reality, Mr. Goldman's recitation of plans not implemented and advice not taken becomes merely tedious.

Next, Mr. Goldman moves on to describe how Boris N. Yeltsin displaced Mr. Gorbachev, first in public affection and then in political power, as the collapse of the 1991 coup led to the disintegration of the Soviet Union.

As Mr. Goldman suggests, genuine economic reform in Russia dates only to January 1992, when Mr. Yeltsin and his chief economic strategist, Yegor Gaidar, took the bold step of freeing prices on most goods. But in describing the Gaidar shock therapy, Mr. Goldman adopts an annoyingly patronizing tone, suggesting that if only the Russian reformers had consulted him, they could have avoided much trouble. The fact is that American economists, who have had the good fortune to be born into a market economy, have no better idea than Russian economists how to manage the transition from Stalinist socialism to market democracy. This point is demonstrated by Mr. Goldman's occasional jibes at his fellow American economists, who have reached no consensus on Russia's proper path.

"Lost Opportunity" becomes more interesting when Mr. Goldman moves on to compare the Russian reforms with other countries' strategies for moving out of the morass of central planning and fixed prices. He recounts the rise of post-war Germany and Japan, noting wryly that the destruction of the old industrial base and the presence of a benign occupying army contributed crucially to the success of reform. In neither country did economic planners have to cope with a massive, outmoded state industrial sector like that of Russia, nor did they have to fret about popular unrest.

He contrasts the cunning, gradual reforms of Hungary with the dramatic shock therapy of Poland. In one of the book's most interesting chapters, he tells the story of China's stunning economic success, instructively contrasting the legacy of communist rule in China and Russia and their respective approaches to reform.

A year or so ago, when Mr. Goldman presumably was shaping this book, Russian prospects looked darker than they do today. October 1993 saw the first serious violence in Moscow, as militants attacked the television center and Mr. Yeltsin ordered the shelling of the Russian White House. In December, the neofascist party led by Vladimir Zhirinovsky won a shocking quarter of the vote in parliamentary elections. Mr. Gaidar was cast aside and Viktor Chernomyrdin, labeled by the Western press as a Soviet-style bureaucrat, was put firmly in charge of economic policy.

So what has happened? The violence never recurred. Even considering the government shake-up over the ruble's recent roller-coaster ride, 1994 has been a year of relative political stability. Mr. Zhirinovsky's star has faded considerably, though nationalist nostalgia for empire remains a potent force. Mr. Chernomyrdin has proven a disciplined economic manager. Inflation has come steadily down until recently, allowing for a modest improvement in living standards.

Just three years after the collapse of communist rule, people who once skipped out of work early to stand in line for the makings of dinner now work second jobs to improve their lot. The ruble, while far from stable, is freely convertible and can be used to buy anything from sausage to imported automobiles. The rewards for hard work are on display in every shop window. True, as Mr. Goldman suggests, the grip of organized crime on the Russian economy is worrisome. The state's industrial dinosaurs are still being kept artificially afloat, and their ultimate bankruptcy could produce a dangerous backlash from millions of unemployed workers. Foreign investment in Russia has yet to take off. New businesses are invariably in the import or retail areas; new factories are few.

In other words, the hazardous journey out of the failed Bolshevik experiment is just getting under way. It is short-sighted and churlish to pronounce it a failure so soon.

Mr. Shane, The Sun's Moscow correspondent from 1988 to 1991, is the author of "Dismantling Utopia: How Information Ended the Soviet Union."

BOOK REVIEW

Title: "Lost Opportunity: Why Economic Reforms in Russia Have Not Worked"

Author: Marshall I. Goldman

Publisher: Norton

Length, price: 290 pages, $22.50

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