Higher wages and empty shops

Press, 29 December 1980, Page 16

Higher wages and empty shops

By

MARK FRANKLAND

in London.

. The. figures can’t be argued with. Over the last 30 years the Soviet economy / has been, growing at a slower and ssiower rate. The new Soviet five-year plan (198185) seems to support the Western guess that Soviet GNP may increase at a rate of only 2. per cent a year . over the next few years. / jjMoscbw no longer produces slogans about overtaking' the capitalist West. For the last seven years the economies of West Germany and France (though not the British or the American) have been performing better . than than the Soviet Union’s;:... '•*.'• This, is startling, because -whatever else Soviet-style ' Communism-’.was about, it was certainly meant to bring rapid economic growth. It now seems that the rapid growth that was achieved in the past as a temporary and not permanent feature of the ■ fully i planned socialist economy.; ■-■ . ' -' ■ ■ - The Soviet Union has run tip-against three problems that 1 have so far defied the wizardry of central planning; Its agriculture (which eats up a /quarter of all ’ investment and uses a quarter of the labour force) is expensive and inefficient. The extraction of raw materials and energy, suppiles of which it mostly has in great abundance, is increasingly slow, and expensive. And the population will grow at a rate of only about 0.5 per cent a year throughout the 1980 s. The result, for the Soviet

citizen, is a curious Moscow version of inflation. It is not that the prices shoot up. Some have been put up by the Government, which sets all prices outside the free food market supplied by peasants’ private. holdings. But in general prices, and especially in crucial areas like rent, utilities; and transport, have not behaved as they, have-in the West. 1

The Soviet problem is not that goods become.more expensive. It is that they dis- . appear. Soviet citizens have far more money than they have things to buy. A Soviet economist recently- calculated that personal savings in the Soviet Union come to over 40 per cent, of the. annual wages fund..

Under these, conditions what matters;to a consumer is not Wage increases - but, being, in a shop for. the latest delivery ■ of goods - in short supply,, though better still is to have privileged access, to special stores. . Money becomes 1 meaningless. ■ The ; hew five-year plan’ forecasts a- considerable in- ’ .crease in ’ agricultural pro-' : duction, largely with the help of more ;mineral’ fertili- ' . sers,/whbse; prodriction;is to' . be increased by 50 per cent ;• over the period. The average .annual grain; harvest over the.last I ;five years .was 200,. million tons. The - maximum target-for<l9Bs isi 24s /mil- 1 ' : Jionjons. If Would be a verybrave Soviet leader/who would Wager his job on. it being achieved. . > -. < The new plan confirms what was already known about Soviet difficulties, with

raw materials. Moscow is the happy possessor of 4000 billion tonnes of hard coal < and 1720 billion tonnes of brown coal. But coal production has actually decreased in the last two . years.. The . target for 1985 is lower than the one set (and not met) for 1980. . The hew coal deposits present enormous technical difficulties and, mostly situ- ' ated in desolate • areas, need heavy capital in- * vestment. That is. also true' of Soviet . oil extraction.' According to one calculation,' the Soviet Union is having, to lay the equivalent of an ’ Alaska pipeline every two months to bring oil and gas ' from the Siberian fields CO - the industrial areas in' the ' western half of the country. The new five-year . plan . forecasts a- continuing ins crease in oil production, from its present level of * some 600 . million tonnes' a ' vear to 640 .million tonnes, by 1985. Some Western forecasters, notably ; the Am^ri-.'. can , Central .. Intelligence. Agency, who, predict ,adrop / in , productiop ■■ from ...this,; year’s level, doubt this js ./ - possible! But even if the’tai:-.' • s get. is achieved, it will not.. be enough to meet growing ■: Soviet, and JEast European demand and - at . the • same ; time remain , most • important , hard . currency ■ export. ' ..• ; '■, ./ Fortunately, igas'.. r . may here take over from oiLI if One. of the few, bright, spots, in the’plan is theforecast of i , annual natural gas product ’ tion by T 985 of- perhaps 640 - billion cubic metres. _ nearly 50 per cent* more than this year. This could be spoilt, ■ though, by a Soviet invasion : of Poland, for Moscow, needs. .

both Western technology and finance for pipeline con- < struction. -Nothing short of a radical economic reform, which ended the inefficient manning levels in much of Soviet industry, could solve the labour shortage problem. In Eastern Europe, Hungary is frying such reforms and Poland may too, if it' has the ' cahqne. But understandably there is tremendous reistance in the Soviet Union to tampering with its tradi- • tional full employment policy. It may be inefficient, . but it is also arguably the ■ single greatest political ad- ’ vantage of the Soviet system. Economic reform (which '> no one expects this Soviet leadership to turn to, though •'many Soviet economists • ; plearly believe it necessary) would not remove the *aw ’material/energy problem. Nor could it be expected to achieve quick results in fanning, where quick fixes usually end up as quick failures." ” ■' '// The new plan makes one think of the Soviet economy £ as* an immense ocean liner ‘ whose direction can be changed only slowly, if at -/hill. .There is, though, one significant correction in the ; - Soviet course: consumer goods production is planned .. to ' increase slightly faster than that of industrial gqods. This is an important . -change in priorities. ; One wonders, therefore, if /Some people in Moscow may not‘be casting covetous eyes at defence spending, now growing at 4 to 5 per cent a year and thus faster than the economy as a' /whole.-—Copyright,' London . Observer Service;'*’ •' *