Russian economist urges market competition

Press, 8 October 1987, Page 7

Russian economist urges market competition

NZPA-Reuter Moscow

A leading Soviet economist on Tuesday urged the introduction of competition to the country’s socialist economy, as State monopolies were failing to provide the market with adequate goods and services.

Leonid Abalkin, head of the Soviet Economics Institute, told the trade union newspaper “Trud” that competition would be consistent with socialism if firms spurned the profit motive and competed for the good of society. "Extreme economic centralisation has led to monopolistic tendencies, that is, to a situation in which in many cases we have a single supplier of goods, a single body handling research and construction in a given sphere, etc,” he said. Mr Abalkin said this had led to a decline in qualify. He used the Soviet shoe industry as an example. "Today we produce as

many leather shoes as the United States, West Germany, England and France taken together. But it’s impossible to choose a good pair in a shop,” he said. Mr Abalkin, a supporter of Mr Gorbachev’s economic reform plans, said a good starting point would be competition between State firms and non-State co-operatives.

He said consumers presented with a choice would buy the best goods, ensuring profitability for the producer. He said this would differ from “capitalist” competition, as Western firms only wanted to make money while socialist competitors would serve the public good. Turning to price increases for basic goods due to be introduced from 1990, Mr Abalkin said State subsidies in fact benefited well-to-do families at the expense of the low-paid. He said the Soviet Union produced enough

meat for each person to receive 62kg annually, but research showed that families with high incomes bought 90kg a person and those with low incomes much less.

This meant that if the State contributed two roubles to the production of each kilo of meat, a welloff family effectively received a subsidy of 180 roubles per person, three times as much as others in the low-paid bracket, he said.

Mr Abalkin defined a well-to-do family as one earning more than 100 roubles ($150) a month for each family member and a low-paid as one earning less than 50 roubles ($75) per person per month.

Echoing the words of other officials seeking to allay public fears about the price rises, Mr Abalkin said complementary measures would ensure that no families suffered a drop in their standard of living and some could benefit from the reform.