RUSSIA’S ECONOMY THE QUEUES REMAIN, BUT “NEW ECONOMICS” PROGRESS

Press, Volume CIX, Issue 32145, 14 November 1969, Page 8

RUSSIA’S ECONOMY THE QUEUES REMAIN, BUT “NEW ECONOMICS” PROGRESS

(By

MICHAEL SIMMONS,

East European correspondent of the “Financial Times” London.)

(Reprinted from the “Financial Times” bu arrangement.)

The aggression and occasional panache that characterise what the Soviet Union does, at least in part, for external consumption—space exploits, rumbling at N.A.T.O. and the United States, blowing hot and cold at China, and so on—contrast starkly with the hard realities of life inside Russia. Doubtless today’s Soviet leaders still hold to the unequivocal “We will bury you” that Mr Khrushchev hurled at the Americans ten years ago, but their hold becomes a little tedious when one sees, as I saw this month, long queues in wretched weather for bruised apples at 3s a pound, or a department store crowd craning its neck to get just a glimpse of an exhibition of men’s shirts.

The 52nd anniversary of the Russian Revolution moves Michael Simmons, East European correspondent of the “Financial Times,” London, to look at Russia today.

Nor were the traffic jams that have been occurring in the centre of Moscow in the last week or two to be compared with those that happen in London or Paris. The cacaphony of horns was not caused by the sudden emergence of a car-owning proletariat—most of the halted vehicles were lorries, taxis and buses. The wait for a car, if you can get on the waiting list, is two to three years. The reason for the jams, symptomatically, was usually the closing of a number of the city’s main arteries to allow for a rehearsal of the big anniversary military parade. Cars To Come The output to come from the gigantic Fiat plant going up at Togliatti on the Volga would, I was told, change the car consumption picture. But it will take time. The original intention was that this plant should start production this month. But although no outside observers are allowed near the site it is known that construction work is at least a year behind. The overzealousness of planners in remote Moscow has been criticised in this context. Meanwhile, the waiting list for Togliatti’s end-product is well over a million long—enough, if initial output meets published targets, to keep the assembly lines going until early 1974. But then, 52 years after the much vaunted revolution, the Russians are used to waiting. And certainly, a big store manager told me, supplies were not infrequently held back to create a demand. As he spoke, scores of people waited downstairs to get in—six at a time—to that section of his store selling (ostensibly through self-service) a new consignment of women’s furcollared coats. A leading economist assured me that the Soviet consumers’ muted battle for recognition was, in fact, being won. A buyers’ club, he said, had been established in the column? of Vechernyaya Moskva, Moscow’s popular evening newspaper, which allowed readers to air their grievances about the lack, the shortage, or the poor quality, of goods in the shops. There are, however, plenty of complaints—as it were—by implication. Households with two or three wage-earners mean there is no shortage of money about. The queues are

for what is, relatively speaking, exotic, sometimes with those at the back of the queue not knowing what is on sale to those at the front.

Supreme Confidence But though the man in the street may disagree, the Soviet system, which has undeniably huge achievements behind it, stands or falls cn more than just its recognition of the domestic consumer. The U.S.S.R. is also an out-ward-looking, politico-econo-mic phenomenon, a massive force wilfully seeking to be reckoned with. Hence the supreme self-confidence of the Khrushchev retort quoted earlier, and hence, too, the seemingly unassailable selfassurance when one discusses, for instance, foreign policy initiatives, now stepped up after the (unacknowledged, of course) set-back of Czechoslovakia. Russian spokesmen with whom I talked about European security, the two Germanies and Czechoslovakia itself argued from entrenched and. predictable positions. But at least they talked. , Exchanges with Westerners on the domestic political setup are not really on—though one intelligent Muscovite did tell me confidently, albeit in an unguarded moment, that Mr Brezhnev could well be ; gone before a year was out. (Another told me he would love to have entertained me in his flat and to talk about politics, but that his wife was so ashamed of their furniture that he could not do it.) In the sector of economic management on the other hand, there has of late been an almost unprecedented flurry of discussion—and on issues that go to the very root of the system- Some holds are barred —but by no means all. Liberal-minded economists do not forget the fate of Dr Ota Sik in Prague, or that of Professor Brus, his Polish counterpart, in Warsaw. But questions are being asked which suggest that parts of the world’s vastest enterprise are creaking at the joints, and which confirm the suspicions of (surely) many a work study man that, if only he could get a foothold in this enterprise, he could surely enjoy himself. Kosygin’s Reforms What emerges is that the so-called “profit motive” reforms, introduced by Mr Kosygin just over four years ago as a gesture away from rigid centralist orthodoxy in planning methods, may have begun to solve some of the nation’s economic problems—though habits of thinking born of 30 years practice take a long time to break. But what also emerges is that other problems, coming partly in the wake of these reforms and partly as a backlash of the technological revolution,) have been created. There is public concern, led by talk in the columns of "Pravda” and “Izvestia,” the Party and Government newspapers, about shortcomings in management, over-staffing and over-spending, large-scale redundancies in the white collar as well as the manual labour sectors, the need to formulate a policy for the redeployment of the country’s labour resources, and more. The debate began to gather steam about last April, when the Soviet authorities conceded that “much remained to be done” to improve planning. At that time about 75 per cent of Soviet output was being produced by what is still called the “new” system, which allowed enterprises to collect bonuses in line with their earnings on capital employed (where in the oast they had been constrained to concentrate on attaining quantitative output targets). Then in July, the Council of Ministers examined in depth the admitted need to improve management organisations to merge, and sometimes do away with, certain less-pro-fitable small and mediumsized enterprises. “An analysis has shown,” said Moscow Radio in a broadcast to the nation, "that the advantages ; of the new system were not by any means being fully ex- 1 ploited. There were great opportunities for better: utilisation of production ; funds, materials and manpower,”

Evidence Available

The casual visitor does not have to look far to find evidence for this contention. A colleague who recently visited a number of Soviet machine tool factories tells me he saw great quantities of unused machinery—unused either because of the scarcity of necessary spare parts, or because of the chronic shortage of skilled manpower. In agriculture, harvesting may well be held up by the complicated servicing required by Russian • built harvesters (which are said to need oiling at 170 points every day).

Factories, told to reduce their labour force, refused to release their best qualified workers with the result that industrial graduates finish up in the typing pool. And despite the Kosygin reforms, there are still complaints which have a prereform ring about them. Chandeliers may be unduly heavy because output is measured in weight; new prototypes may remain undeveloped for years because a factory cannot get the required break from routine production to develop it; fertilisers may remain poor, despite the availability of good raw materials, because the price has to be kept low. The cumulative effect of such minor irritation can, of course, be considerable; add to them the fact that, despite huge capital investments, the Soviet growth rate has fallen to just under 7 per cent so far this year—against more than 10 per cent in the first two years of the reform and 8 per cent last year—and the problem becomes very considerable indeed. The sensible deployment of labour, at all levels, is seen as the key to the problem, and this is what the current debate is about. Hitherto, street noticeboards with cards telling of vacancies and lists posted outside every sizeable enterprise have been approved ways of getting workers. Now, in spite of a labour shortage thought to be near the 2m mark, employment exchanges are being set up. This in itself is an admission that there is surplus labour on a large scale, and the Government, surprisingly, has been quick to underline this fact. Perhaps, it was suggested to me in Moscow, this was because there is a keenly felt shortage of workers of all sorts in Siberia and the Far East, where so many of the country’s resources remain virtually untapped. Problems Crystallised

The whole problem has been neatly crystallised (with solutions offered) by one Alexander Birman, a contentious, dry-humoured economist with a chair at Moscow University. Writing a month ago in the Literary Gazette, he postulated that enterprises should be left to decide their own labour strengths, that more pensioners and housewives should be brought in to do part-time work, that there should be a drastic pruning —even in Government departments —of top-heavy management, and that more technology should be applied to the production line. And despite the professor’s contentiousness (he was shouted down in a similar debate two years ago), almost all his recommendations have been taken up. Government decrees that management spending be cut by £Boom as soon as possible, that technologists be freed from the ties of bureaucracy, and that extra part-time workers be taken on, have all been published in the last few weeks. It remains to be seen whether, in the short term, this massive efficiency drive will prove effective and, in the longer term, whether it will help in reducing the length of those miserablylong queues of frustrated consumers.