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OCHMUT'IST ECONOMICeforms Ininutes)
At tho latest count, eeven oi the European Communist countries are engaged in reforming their economic organizations. These are East Germany, Poland, Hungary, Czechoslovakia, Bulgaria, Russia, and Yugoslavia. Those missing arc Rumania and Albania, two countries vhlch haveobby of being different. This vmve of reforms is almostad. It's fashionable In the Bloc to have an economic reform. Thus Bulgaria is growing steadilyear and liad no pressing need for reform. On tbe other hand, In East Germany, Czechoslovakia, and Russia, the motivation for tbe reformsainful slowdown in economic growth in the logo's. First East Germanyeformzechoslovakiau *fterdecline in GNPnd the USSR and others followed-
The reforms la the various countries are quite diverse. ommon theme la all, however,onscious attempt to reduce the degree of central control, and lees consciously to make use of price and profit incentives. These economies have been called crammed economies. The
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government not only owns nearly all the land and capital, but also has tried! to direct economic production In detail. They haw been run Like armies, the central control organs issuing orders through Intermediate levels to producing enterprises as to what to produce, and how to produce lt,to vhoo to distribute the product. The result of this excessive bureaucracyery obvious vaste In all the countriespoor quality goods, vhlch could not be sold, excess labor, underutiliefid machinery, prolonged periods of eon-Btructiou, etc.
As long es economic growth vas rapid, the Communist leaders ignored the waste. Whenever there were economic problems, thehave attempted to reform.
The current reforms am only the latestuccession of "reforms." The first was the rugoslav reform. Then came the Polish "new economic model"ollowing tbe uprising Also7 was Khrushchev's famous industrial reorganisation, he attacked the problem of overcent milsatloo by abolishing theministries and replacing themegional economic council*ertain amount of mrtonomy. It was the Job of tbe local Party organisations to keep the regional councils in step with national objectives. Tho autonomy of the regions did not last long. ew nonths it was withdrawn.
The three most Interesting of the current crop of reforms are the Soviet, the Czech, and the Yugoslav. The Soviet reform was hailed by
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an enthusiastic Soviet economist as ranking in significance with the HEP, and the initiation of the five-year plans. The key change is the use of profits and sales to measure the success of the enterprise, instead of physical product, in the hope of levering costs andhigher quality production. By the end of the year, one-third of Industry Is supposed to be operating under the nev syotem. But the price reform that vas supposed to accompany the other reforms Is still In the future. Will the Soviet reform work? Answer, based on experience, no! imilar Scheme was tried by the Czechs in an earlier reform They foundrofit motive combined with state fixed prices led to the production of the wrong things. In addition. In the USSR we already have reports of ministriesactions of enterprises, actions which the reform decrees specifically gave the enterprises the right to do. Thisasic problem vhlch has undermined all reforms so far. The new and old systems cannot work simultaneously. The old, represented by ministries, must be dismantled before the new can take over.
This identical problem has arisen In thezech reform. In principle, enterprises will be guided by profits and free market prices. But in practiceery few prices have been freed and the central authorities and the industrial trusts are actively and closely directing enterpriser, to the dismay of the reform advocates.
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Yugoslavia represents an ultimate stage in Coraomniet economicodel which has influenced all other reforms. In thereform, not only were most enterprises given almost complete freedom. Including freedom to set their own prices, but the central industrial ministries vere dismantled and tbe central plan and planning organization was severely curtailed. There seemed to be every prospect of establishing what la known as market socialism, thatocialism whichapitalism in the use of free markets and market prices and profits as guides to producing But provincial and local officials and Party members quickly rushed in to fill the void left by central planners, and an inflationary Investment and monetary policy soon led to price controls and more state interventionamiliar pattern.
In iaad tTito bad to set out to reform all over again, to stabilize the over-all price level sad to free Individual prices, to take economic control away from provincial officials and Party men and vest it In enterprises and banks which hopefully are neutral, objective and noo-capitalistic. He has not yet achieved stable and free prices and it looks like the second objective is turningurge of the Party, the outcome of vhlch is unpredictable.
We conclude from all this thathorough-going dismantling Of economic bureaucracies and the substitution of market processes will significantly Improve the operation of these economies. And it
remains to be seen whether any Cccnunlot Party will allow this to happen. The present round of refores ere, except possibly In Yugoslavia, not thorough-goleg enough to really change the essence of these systems nor to overecce lag Id growth. This suggests tbat this round of reforms lo not the last and the next round, as In tho Yugoslav reform, may be more radical.
P.6. Would you believe W. minutes?
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