LIBERMAN'S LATEST PRONOUNCEMENTS - - AN EVALUATION (S-3559)

Created: 3/16/1971

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LIBBRMAN'S LATEST PRONOUNCEMENTS--AN EVALUATION

A recently published monograph by Yevsei Libcrman,*

which has caused some concern among Yugoslav economists

as to the future status of SovieL policy toward economic

reform, appears to be little moreeemphasis of

the concepts expressed by Libcrman in thes

efense of the Soviet economic reforms promulgated

in Embassy Belgrade had reported that

economists nt the prestigious Belgrade Institute of

Politics andelieved the Libcrman analysis

signaled another round of attacks on Soviet lappa*

forms. eading of the relevant material in LibormanV monograph (Introduction and Description of the General Character of the Economic Reform, however, provides no indication that this new work by Liberman

* Libcrman,konj3mU.ho.sk iye Mo tody Povyr.lieniya EffektivnostiProizvoJnFva, (Economic Methods of Raising tho Effectiveness ot Socialkonomika,

Yevsei Liberman, the Khar'kov professor of economics who, in thes advocated increasedautonomy for enterprise managers and the use of profit as the main criterion for evaluating enterprise performance, has often been considered the chiefof the economic reforms implemented innd lhe major iconoclastic figure among Soviet economists.

'* Reported in Embassy Belgrade.

foreshadows any major shift in economic policy by tho Soviet leadership.

In the introduction to his book, Liberman stresses emphatically (as he didhat the aim of the proposals for economic reform, and the resultant reform implementedas not to replace or circumvent the system of central planning, but rather to reinforce it by drawing the producing enterprises themselves into the planning process. The appropriateness of the economic reform for strengthening the system of central planning appears to be the central theme running throughout the first part of the book. This theme is consistent with his earlier statements rogarding proposals for economic reform.*

In his new work, Libcrman again criticizes the "foreign" press in general, and specifically the Western press (as he didor misrepresenting theof the increased role of profits in evaluating enterprise performance and providing material encourage-

Plan, Profit, andndOnce Again on Plan, Profits, and Bonuses."

merit for increased production. Reiterating tho standard official position, he points out that the function of profits in the economic reform is only significant to tho extent that it promotes thoioning of the entire system of central planning and management of the national economy. As in the past, he again criticizes the foreign press for exaggerating the role of individualmplying himself) in developing the reform, and goes to some length to point out that the reform announced5 represented the combined workreat number of economists and was carried out under tho leadership, and with theof the Communist Party.

In describing the general characteristics of the reforms, Liberman emphasizes that the increasedwhich theyrovide to the indi-vidual enterprise is designed to promote initiative at the enterprise level for the economical utilization of resources in fulfilling the centrally planned targets of volume of production, assortment of product, and dates of delivery. He praises the successes that the reform has enjoyed to date, citing examples from articles published in Eicono:nichesk.iya Gazeta, Pravua,

and Izvcstia, and stresses that one of the most important results of the economic reform has been to establish "increased effectiveness of production" as the common goal of each and every membor of society, IVSKKH I KAZHDOGO).

Liberman alsoection of his first chapter to shortcomings that have appeared inthe reform. In this section, ho cites examples, again from articles previously appearing inGazeta and Pravda, of enterprises and ministries which tend to adhere to the traditional success He sees this as the primary deficiency in implementing the reform, and notes that the ministries retain the old methods of direction because they do not believe that enterprises will operate at full capacity on their own initiative. In addition, he points out that difficulties exist in the area of material supply because the material supply organizations have not yet been fully transferred to the now methods,e-liniation of responsibility between branch andsupply is still lacking. Liberman's only recommendation for eliminating deficiencies inthe reform is to "strengthen accounting relations.

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increase the role of material sanctions [forof plannednd strengthen the education of cadres in the spirit of adhering to state disciplines in all elemonts of our economic system."

Taken by itself, this new book by Liborraan does not indicate any abrupt turn in official policy away from the principles set forth in5 reform. Rather, the central theme of theof central planning within the context of the economicconsidered together with tl) the recent statements in Pravda by Gosplan chairman Baybakov, warning against depreciating tho role of central planning and exaggerating the role of tho market,he recent attack on the economic views of Otto Sikook by I. M. Mrachkovskaya, theh Party Congress, may be indicative of increased emphasis being placed on enhancing the image of central planning. This would be in keeping with the regime's proclivity for portraying the central authority as the cornerstone of all possibilities for improving the economy infor an impending Party Congress.

On the other hand, in view of Liberman's role in the past as spokesman for the "liberal" wing of Soviet

economists, his new book could bc interpretedimely restatement intended to defend the status quo of5 reforms against renewed attacks from the more conservative wing and preclude any possibilityhift in the attitude of the Soviet leadership toward an even more conservative position.

The main features ofn the number of economic indicators set from above, greater emphasis on profitability and sales andof decentralizedintended to give enterprise managers more freedom and the workers more incentive. So far the reforms have failed to change the basic operating principles of the Soviet economy, seriously limiting any chance for success* To be effective/ the reforms have to be accompanied by more rational and flexible prices, less central con-trol over the allocations of materials and relief from the chronic shortage of most materials- Thehas given no indication that radical changes necessary to improve matters in these areas will be introduced.

* Evidence of Liberman's previous role as spokesman for the group of more liberal Soviet economists is described inThe Politics ofoviet Studies, Vol,,.

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Original document.

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