Article 12
June 16, 1988


Makarov of Soviet Academy of Sciences comments on Hewett book on Soviet reforms. Doesn't challenge Hewett's views on Soviet agriculture. Why has growth rate of Soviet economy slowed down? The question of "equality" vs. "efficiency." Soviet prowess in space, oil drilling and other high technology. What social groups have become "indifferent"? Efforts to trim state apparatus. Do material incentives promote socialist construction? Not too much socialism, but too little. Equality must be increased. Makarov captured by euphoria over peaceful coexistence.

In Moscow last week, even as the summit meeting between President Reagan and General Secretary Gorbachev was proceeding, it was partially eclipsed by a public discussion of the implementation of the Soviet economic reforms. This gives an idea of the intensity of the discussion and preparations being made in anticipation of the June 27, 1988, Communist Party Conference, where all this will be brought up.

With such political ferment on the eve of the Conference, one is eager for any direct information about the reforms, especially the economic restructuring, coming from authoritative Soviet sources. We therefore read with great interest a piece by V.L. Makarov, director of the Central Economic and Mathematical Institute of the Soviet Academy of Sciences, that appeared in the New York Times Book Review. Makarov's commentary concerns a recent book by Ed A. Hewett of the Brookings Institution in Washington entitled Reforming the Soviet Economy.1

Unfortunately, Makarov's piece is disappointing, especially coming from somebody who holds such a prestigious office and who, needless to say, has direct information regarding the Soviet economy.

Hewett belongs to one of the many think tanks in the U.S. that studies the Soviet Union. However, he takes a more moderate bourgeois imperialist view of the Soviet economy than most and is one of the proponents of live and let live, with his own variety of peaceful coexistence. Of course, to him peaceful coexistence is based on the Soviet economy moving "forward" to a modified form of capitalism. At any rate, Hewett sounds friendly and thus Makarov's handling of the book is also in the same spirit.

Makarov lets Hewett off rather easy on some matters which are of more than passing interest. He doesn't mention, for instance, that Hewett, after saying there is little evidence the Soviet Union uses statistics to mislead the outside world, then adds that "There is ample evidence that when the regime does not like a number, it stops publishing it." Hewett adds in a footnote, "When, for example, the Soviet grain harvest fell dramatically in 1981, the Central Statistical Administration simply discontinued publication of those data, a policy continued through the 1985 data." 2 Considering that Makarov is the director of a major institute of the Soviet Academy of Sciences, it seems rather odd he should let this go unanswered.

Of course, the Soviet Union has at various times stopped publishing certain data, and there is no denying that a great deal of information which the public is entitled to is now becoming more available. But the point that Hewett makes here is wholly misleading and aids the imperialist position on the USSR.

Grain is a strategic weapon, as important as any save the nuclear ones. The USSR may even do well without some of its nuclear weapons, as the recent INF treaty shows, but it is extremely vulnerable to such catastrophic droughts as occurred in the 1960s. (Some credit the fall of Khrushchev to crop failures; Brezhnev, it is said, survived the early 1970s when a good harvest came to his rescue.)

The USSR is a deficit country when it comes to agriculture. Its rainfall is very meager by comparison to the U.S. and its growing season much shorter. It is therefore obliged to buy hundreds of millions of dollars worth of grain abroad, much of it from the U.S. So significant is the strategic aspect of grain that harvest figures are guarded almost as a military secret.

The U.S. regularly monitors weather conditions in the USSR by satellite. It is said that when President Jimmy Carter decided to decree a vicious embargo on selling grain to the USSR, his decision was guided by the forecasts of the U.S. meteorological apparatus, which projected that the Soviet Union would be driven to desperation because of the agricultural situation. Carter was confident that it would quickly succumb to starvation. However, it was able to buy the needed grain from other producing countries and the embargo was felt most by U.S. farmers.

Long-term crop forecasts prepared by the U.S. Department of Agriculture are highly guarded and kept under lock and key until their disclosure. This is all done with an eye to world market conditions. The predictions affect the futures prices of agriculture products, which are traded in the hundreds of millions of dollars hourly.

So when the USSR in 1981 stopped publishing grain statistics, it wasn't because it was a closed society as such. It was for important strategic reasons, because food is a weapon. When the harvests are good and abundant, there is no need for such secrecy. The grain statistics began to be published again in 1986, but not only as a measure of openness and democratization. The situation in the USSR with respect to agriculture has eased in the last several years, both because of economic and weather conditions.

Also to be taken into account here is the Challenger. It carried a very important spy satellite that had the newest meteorological and technological equipment for forecasting the weather. Its destruction has made it incumbent on the U.S. to employ foreign satellites for such purposes. Makarov, who alludes to the Soviet Union as a closed society, says nothing to dispute the so-called openness of U.S. imperialism.

One of the most important questions facing the Party Conference relates to the rate of growth of the Soviet economy. It is admitted by all the groupings that it has slowed down. The question is why? Makarov addresses the question of the growth rate of the Soviet Union.

From 1928 to 1955 the rate of growth of the Soviet economy was relatively high (between 5 and 10 percent a year) and during that time the Soviet Union became the second greatest power in the world from an economic point of view. At the same time there were marked advances in the social and economic lives of people; they could be assured of economic security, full employment, certainty about income levels. It seemed to us that we had achieved everything we could desire.

But there was a weakening of the factors that contribute to long-run economic growth. During the last 15 or 20 years the rate of growth slowed down steadily; the quality and variety of consumer goods deteriorated; people became increasingly indifferent to political and economic life and there were fewer incentives for them to work hard or become involved in difficult initiatives. That was also a period when information was becoming rapidly available through the growth of modern communications. People in the Soviet Union became much more aware of conditions in the rest of the world and it was no longer possible to maintain the closed position of Soviet society. As Mister Gorbachev has said, this was a precrisis and prerevolutionary situation.3

With all due respect to the high post Makarov holds, this answer is an amalgam of complete rubbish. It will not withstand the light of history and will be challenged. It's an echo of what the imperialist press is saying, that the Soviet people are finally learning of the glories of capitalist exploitation and imperialist oppression. The era of telecommunications is finally enlightening the Soviet people and opening up the closed society. Incredible as it seems, this comes from an official at the prestigious Soviet Academy of Sciences.

Indeed, this confirms what the so-called conservatives in the USSR are saying about a good many of the leading exponents of the reforms: that they are influenced by "the preaching of the `democratic' charms of present-day capitalism and fawning over its achievements, real and imagined." (From the letter to Sovetskaya Rossiya known as the Andreyeva manifesto, analyzed in our last article.)

Moscow News referred to another document of the so-called conservatives, a typewritten piece called "Information for Reflection" that is circulating hand to hand. It argues that perestroika will first lead to "economic disaster and social upheaval, and then to the country's enslavement by imperialist states." 4 The views put forward by Professor Makarov can hardly reassure this current.

But to get back to the slowing in the rate of growth. Makarov neglects to note, especially when he is addressing a foreign audience, that it is only the rate of growth that has declined. There has not been an overall decline in the economy. The gross national product has continued to increase. In other words, the Soviet Union ever since the first five-year plan has not once experienced one of those declines or wholesale collapses of the economy, with its consequent unemployment, that is so characteristic of capitalist production. Now with the high-tech revolution, unemployment continues to grow in capitalist society even in the best of times.

Another point to be borne in mind when discussing the rate of growth is that, just as it takes much longer to turn around an ocean liner than a small tugboat, it takes longer to expedite the growth rate in a developed economy, especially one that has received so many jolts from war, intervention and deliberate economic isolation by the imperialists.

Makarov does not directly respond to the basic thesis raised in Hewett's book, summarized by its subtitle: "Equality Versus Efficiency." The socialist system is inefficient, he says, because its objective is communist equality. Hewett's thesis is that the slow growth in the last period, the so-called stagnation, arises from systemic factors, factors inherent in a planned, socialist economy.

Makarov does not explain why some aspects of the Soviet economy have performed so splendidly while others have not. For instance, Hewett admits that the Soviet economy "produces a titanium-hulled alpha-class submarine that goes faster and deeper than any submarine in the world. It has also managed to build," he further concedes, "one of the world's largest natural gas distribution systems by relying primarily on domestically produced compressors and turbines and all of this realized ahead of schedule despite the U.S. administration's best efforts to delay construction." 5 Hewett is of course referring here to the Reagan administration's desperate attempt to intimidate Western European countries from either buying gas from the USSR or supplying materials to construct the pipeline, which was successfully built anyhow and is now in full operation.

"With its own technology," he goes on, "the Soviet Union has sent remote-operated machinery to the moon, established and maintained a working space station, drilled the deepest oil wells in the world, and developed a technology for producing continuous cast aluminum that the U.S. defense contractors have purchased." Isn't that interesting! "More important," he says, "over the last quarter of a century it has moved from a position of distinct strategic inferiority vis-a-vis the U.S. to one of at least parity, if not superiority." 6

The fact that the Reagan administration, for all its bombast, threats and trillion-dollar defense expenditures, has been obligated to sign an INF treaty with the USSR, whatever else it may or may not mean, denotes a significant moderation at least in posture. It is clear that the USSR has been able to make spectacular advances in space science, military technology and other significant scientific and technological fields. So the question remains, why is there a slowing down of the growth rate?

One reason advanced by Makarov is that people became increasingly indifferent to political and economic life. But why would that be so? Why become indifferent to an economic system that was providing them with economic security, well-being, opportunities for education, as he himself admits? Has there in fact been a development of indifference? What are its political and social roots? Is it the working class that has become indifferent, or is it the upper stratum of the bourgeois intelligentsia?

Suddenly, according to Makarov, there are fewer incentives for people to work hard or become involved in difficult initiatives. Is that really so? The building of the gas pipeline, at such a rapid pace and under conditions of U.S. imperialist hostility and obstruction--wasn't that a difficult initiative? And didn't it succeed?

Is he saying, like some of the neobourgeois economists in the USSR, the Shmelyovs and their ilk, that the working class has become lazy, indolent, etc., and therefore economic mechanisms should be employed that bring about unemployment to intimidate the workers?

What is actually at stake in all of this is the alleged problem of the erosion of socialist initiative and socialist cooperation as against bourgeois individual acquisitiveness. Yet no one in the Soviet Union has yet demonstrated that this really is the problem, that the working class has lost interest in socialist cooperation and socialist initiative and that it is their craving for greater material incentives in an individualistic, competitive way that has to be encouraged.

In fact, material incentives have been vigorously pushed, not just in recent times but beginning as far back as the Stalin period and the Stakhanovite campaign, particularly in the early 1930s. There have been several significant reforms during the period of slower growth Makarov alludes to since 1955 which steadily increased material incentives. The first was during the Khrushchev administration in 1957, and lasted until 1964. There were further reforms under Alexei N. Kosygin and under Brezhnev in 1973 and 1979. All of this restructuring also included material incentives for the purpose of raising the efficiency of the Soviet economy. There is no evidence whatever that Gorbachev at any time disapproved of them or indicated their inadequacy or insufficiency.

These reforms can be divided into several categories. Some are more important than others. Of course, any reform which reduces the heavy weight of the state apparatus and facilitates the growth of the economy is progressive. For instance, one of the first attempts at reform of the state apparatus was under the Khrushchev administration. He attempted to cut down the various government ministries. Instead of having them all centralized in Moscow, he tried to break them up into regional groupings in an effort to bring them, as was thought at the time, closer to the people. Unfortunately, this failed its objective. He divided them into agricultural and industrial groupings, which later proved to be unworkable and had to be abolished. There have been subsequent efforts to cut down the administrative staffs of the government, but they have nonetheless grown.

The real issue is whether material incentives are an effective means in a socialist economy for raising the level of productivity and the general living standards. Or do they aid the growth of social inequality, create a deterrent to socialist cooperation in the working class and restrain and limit socialist solidarity? Are they a turn back toward bourgeois norms of production?

Of course, under the first stage of socialism, work is from each according to one's ability and wages are to each according to one's work, and not according to one's needs, as is the goal of communism. This is precisely the question raised by Hewett. His thesis, and that of almost all other bourgeois economists, is that the various economic reforms which have had a decentralizing effect on the Soviet economy are welcome but they don't go far enough. What they want is a wholesale rejection of socialist planning and the abandonment of the ownership of the means of production by the working class.

A certain amount of social inequality is absolutely unavoidable in the first stages of socialist construction, as in the period immediately after a socialist revolution. But the real issue here is what is the perspective, how is it revealed in the various plans constructed for the building up of the economy? Are these plans drawn up with a view to overcoming social inequality and moving onward to the higher stage of communism?

If the economy gets bogged down in a multitude of ill-considered schemes, adventures, poor planning and bureaucracy and a mire of so-called short-term strategies, these actually have the tendency to disqualify socialist planning and the perspective of socialist equality, as has happened over a period of several decades--not counting the rigid, over-centralized and repressive system of the earlier days. This is basically the problem.

Is the solution to go backward to a market-oriented economy? The Soviet Union deliberately took a big step back with the New Economic Policy of the 1920s, but that was before there had been any socialist planning. It was necessary in order to get the economy going again after the civil war and intervention, but by 1929 the first five-year plan superseded the NEP.

The problem is not that the Soviet Union suffers from excessive socialism. It is that the Soviet Union in many respects is barely a semi-socialist state. The collective farms are not socialist, they are only semi-socialist, as is a vast sector of the so-called service or secondary economy. A good part of the Soviet economy is still based on commodity relationships. It needs to advance from that toward socialism, not go back to bourgeois market relations. Unfortunately, that is what is being proposed by the neobourgeois economists and also by some in the government.

The principal contradiction in the Soviet economy up until now was not that the productive forces had outgrown the socialized property forms, but that the productive forces were too low for socialist organization, so low they could scarcely accommodate the livelihood of the masses. But now the productive forces have become formidable. The contradiction that has arisen out of their dynamic growth is not to the socialist forms of property but to the semi-socialist character of social relations. Social relations have not advanced commensurate with the tremendous scientific and technological capabilities of the productive forces.

This is what has to be brought home. The character of social relations in the USSR is still far from being socialist. In order for the productive forces to advance further, it is necessary to promote greater socialization of the USSR. But what has really happened, which may account for the slowdown in the growth rate, is that a reservoir of bourgeois social norms in income and in social relations generally has developed.

Instead of attacking bourgeois norms, the leadership is attacking egalitarianism, "to each according to one's need," even though that is still in the future. Many workers feel they're not even getting "to each according to one's work," under present circumstances. Hence, this last formula still has a certain appeal.

The level of equality must be raised, not just as far as wages go, but in so many fields: abolish the inequality that exists between town and country, between one city or region and another, between the entire hierarchy, intelligentsia and bureaucracy, on the one hand, and the least paid among the workers.

If one is to talk in terms of economic stagnation, a certain amount of it certainly comes from bureaucratic inertia and high-handedness, which shouldn't be underestimated. But much more significant are the social privileges which create such a wide chasm between the governing stratum of the USSR and the masses.

Suffice it to say that Makarov's thesis is completely in line with not only some of the neobourgeois economists in the Soviet Union but with Hewett's thesis as well. Makarov says, in concluding his article, "As Mr. Hewett says, `The consequences of economic reform for the Soviet Union are also consequences for the rest of the world. A successful reform and a revitalization of the Soviet economy could drastically change the economic relationship between the Soviet Union and the West, with benefits to both sides.' " 7

This totally disregards the world situation as it has existed ever since the great October socialist revolution, and is a product of the euphoria created by the so-called detente with the Reagan administration and the signing of the INF treaty on June 1, 1988. Peaceful coexistence, even in its best times, has meant nothing more than a change in the form of the class war between two social systems that are based on diametrically opposed classes. If Makarov and some others captured by the present euphoric moment forget this, the Pentagon certainly has not. Secretary of Defense Frank Carlucci was quick to remind the NATO allies of this, as reported in an article headlined, "Carlucci Warns the West Not to Relax with Moscow; Secretary Wary of Aiding Soviet Economy." 8

The picture Carlucci paints is in very different colors than that of Hewett, who argues that the economic changes could benefit both the U.S. and the Soviet Union. Carlucci is said to have warned that the USSR's social and economic restructuring could ultimately make it a greater threat to the imperialists. "If the end result is that the Soviet Union modernizes its industrial and technological base and if some time in the 1990s it ends up as a society that can produce enormous quantities of weapons even more effectively than it does today, then we will have made an enormous miscalculation."

What Carlucci is saying is that regardless of these reforms, they don't go far enough. Not even an overturn of the social relations in the USSR would suffice to quench the imperialist appetites, which hunger for super-profits and military adventures.

After reading Makarov's review, one has to think hard about whether he is a friend or a foe of the socialist Soviet Union.


1. Ed A. Hewett, Reforming the Soviet Economy (Washington, DC: The Brookings Institution, 1988). Makarov's review is V.L. Makarov, "Two Views," New York Times Book Review, May 29, 1988.

2. Hewett, p. 8, fn.

3. Makarov, p. 4.

4. Moscow News, April 10, 1988.

5. Hewett, pp. 32-33.

6. Ibid., p. 33.

7. Makarov, p. 4.

8. Washington Post, June 7, 1988, p. 17.

Main menu Book menu