Newspaper article THE JOURNAL RECORD

Soviets Admit Economic Failings, Slow Progress

Newspaper article THE JOURNAL RECORD

Soviets Admit Economic Failings, Slow Progress

Article excerpt

Mikhail S. Gorbachev gained support for his proposals to reorganize his nation's economic and political system from this month's conference of the Communist Party.

But what is striking about the resolutions adopted is the admission of the failings of the Soviet system and the painfully slow progress made thus far in overcoming them.

The economic structure, one resolution charged, remains ``cost-intensive''; scientific and technological progress is slow; plans for increasing national income and resource-saving lag; there has been no noticeable improvement in product quality; the country's finances are ``still in a bad state''; ``tensions'' remain in the supply of foodstuffs and consumer goods; the people's demands for services are not being met, and the housing shortage remains ``acute.''

What those criticisms add up to is the picture of a system suffering on the supply side from central planning, bureaucracy and monopoly, and on the demand side from an excess of purchasing power. The Soviet economy is a sellers' market in which suppliers couldn't care less whether they satisfy the demands of buyers.

But it is a lot easier for Communist officials to focus on the deficiencies of supply than to curb excess demand, which keeps inefficient businesses afloat and preserves nominal full employment, whatever the cost in inefficiency and stagnation.

Thus, the conference attacked the ``bureaucratic methods of management typical of the command style,'' and called for overhauling the ministries and other central agencies, housing, transportation and other industries.

In agriculture, it said, ``Any attempts to command collective and state farms should be stopped immediately,'' to be replaced by a diversity of new contracts and leases, to build a new framework of farm cooperatives.

However, the proposed changes in Soviet agriculture do not appear to go as far as those already taken by China.

Since 1979, China has been steadily loosening agriculture from state control, increasing the rewards to farmers and relating those rewards to efforts expended, with dramatic increases in farm output.

The Chinese have also been more willing than the Russians to provide profit incentives to industry.

In a 10-year review of China's economic progress, published in the current Journal of Economic Literature, Dwight H. Perkins of Harvard says the portion of profits that Chinese enterprises retain has risen steadily, and profits are now the main source of the enterprises' spendable funds, rather than money allocated in detail by the state. …

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