Farmers hold the key to Gorbachev’s reform plans

Press, 12 October 1988, Page 18

Farmers hold the key to Gorbachev’s reform plans

Radical economic reform remains the biggest task ahead of President Gorbachev. William Rees-Mogg, of the “Independent/’ London, argues that the most dangerous of the Soviet Union’s economic weaknesses is the lack of enterprise in food production and distribution. Thus the farmers, not the intellectuals, will determine the success of perestroika.

IN 1900 Russia had one of the fastest growing economies in the world. In 1988 Russia is one of the least productive and poorest industrialised countries. The population of the Russian Empire in 1900 was 130 million. Its great European rival, the Prussian Empire, had a population of about 55 million. The Prussian economy was the larger and the stronger. In Prussia, 50 per cent of the working population was employed in commerce, industry and mining. In Russia the great majority of the population was still on the land. The German merchant navy was three times the size of Russia’s. The total exports of the Prussian Empire came to $636 million; Russia’s were $222 million.

By comparison the United States then had a population of 63 million and exports of $666 million, Japan had a population of 43 million and exports of $47 million, and the United Kingdom had a population of 41 million and exports of $Bl6 million. It is the comparisons which are interesting. The Russian Empire had by far the largest population, twice that of the United States, more than twice that of Germany, three times that of Britain and Japan. Britain had the largest exports, nearly four times those of Russia, 17 times those of Japan. France fits into this pattern behind Germany, with a population of 39 million and exports of $390 million, equal to Britain in population, but with only half Britain’s export trade.

These are the statistics from which the twentieth century started. Because of immigration the United States has had the most rapid growth of population — it is now 240 million, or four times the level in 1900. Russia, with heavy losses in two wars, still has the largest population of these countries, at 279 million. Japan has a population of 121 million. There is, however, a remarkable discrepancy in the trends of trade.

Germany, the United States.

Russia and Japan were in 1900 the countries of rapid industrial growth. Britain and France were the slow growth countries. Taking the twentieth century as a whole, the performance of the United States — at least until the late 1960 s — and of Germany, have been more or less what might have been expected. So is the slower growth of Britain and France. Japan has done spectacularly better than expected; Russia has done spectacularly worse.

There is no doubt what events caused the dramatic slowdown of Russian development. Even in 1900 the export figures for Russia, as for the United States, understate the relative strength of a largely self-sufficient continental economy. In the years immediately before World War I the Russian economy was growing faster than the American — faster than it has ever grown since. World War I and the Russian Revolution between them turned Russia into an economic invalid. World War I was intended to do so. The great reason Germany and Austro-Hungary had for starting the war in 1914 was fear of Russia. If they had waited, then by the 1920 s Russia would have replaced Prussia as the dominant power of central and eastern Europe, and the political dominance which Russia won in World War II would have been won earlier by economic strength. World War I was a military attempt to forestall Russian economic dominance; it succeeded, despite the loss of the war, because in 1917 Russia was captured by an economically disastrous communist regime. In 1914 Russia was far richer than Japan, and growing faster than the United States. Look at her now.

This is what President Gorbachev has to reverse, if he is not to fail. So far he has concentrated on the political preliminaries to reform. He has certainly increased internal free-

dom and he has reformed the political structure. But this is of little use without radical economic reform, and that is still ahead of him.

The essential difference between Russia in 1900 and Russia in 1988 is that the old Russia had free economic institutions and those in the new Russia are still servile and bureaucratic.

Russia in 1900 already had numerous successful industrial enterprises, but was also able to export grain, which in that year amounted to more than half of Russia’s total exports. Apart from the Tsar’s estates, all of that grain was grown on privately owned land, much of it on land owned by the kulaks against whom Stalin waged war. Russian grain exports in 1900 were more than double the total exports of Japan, more than double Britain’s exports of coal. They were one of the major factors in world trade.

It will not be possible for President Gorbachev to revolutionise the industrial structure of Russia in time to produce the results which he needs. For the first 35 years after the revolution they were still shooting entrepreneurs. The Soviet Union has continued to be particularly oppressive to Jews, who played a vital part in creating the first Russian industrial revolution.

After 70 years of destroying an enterprise culture, and bureaucratising industry, it must take a long time to recreate enterprise. No doubt retail trade can be revitalised more quickly, but retail trade distributes, it does not produce. The obvious starting point, therefore, is agriculture, which is also the greatest failure of the Soviet system. President Gorbachev has initiated a scheme for granting leases to farm enterprises and has sought to encourage farm co-operatives. But the great majority of the land is still being farmed by the State, and it is being farmed very inefficiently. Behind the inefficiency of Rus-

sian agriculture there stands the inefficiency of the agricultural supply industries, and of food storage and distribution. What is needed is a wholesale privatisation of the farms, the farm suppliers and the food distributors. If enterprise could be restored in food production and distribution, the most dangerous of the Soviet Union’s economic weaknesses would be cured. So one looks to see which Russian politician has been given the agriculture portfolio. He is the man who could well decide Gorbachev’s fate — the farmers, not the intellectuals, will determine the success or define the failure of perestroika.

Is it some radical ally who will fight for the privatisation of agriculture? No, it is Yegor Ligachev, the old party hand who has made himself the leader of the opposition to the Gorbachev reforms. It is as though Margaret Thatcher, at the start of her reforms, had handed the Treasury to Ted Heath. Perhaps President Gorbachev thinks that failure in agriculture is inevitable, and so wishes to wrap that failure round the neck of his old rival. But perhaps the President really believes that he can reform a communist economy while still keeping it communist. He must give the land to the farmers, or he will fail. \