Communism Too Far, Too Fast?

By William R. Doerner.

The dialogue might have been taken from a sketch titled "The Case of the Frustrated Carnivore." In a blunt exchange of views with officials of a Siberian research institute in late September, Mikhail Gorbachev scoffed at statistics claiming that a typical resident of the city of Krasnoyarsk eats 156 lbs. of meat a year. Chronic shortages, Gorbachev implied, make that figure wholly unbelievable. On the other hand, he went on, anyone who travels to China reports that meat is "always in the shops, unsold."

But China too faces serious problems with its economic-reform program, despite such bright spots as a plentiful supply of most meats. The two Communist giants are floundering, and for some of the same reasons, in their efforts to modernize and reorganize their political and economic systems. Both Gorbachev's perestroika (restructuring) and Chinese leader Deng Xiaoping's gai ge (reform) face opposition. Barriers to reform in the Soviet Union are an entrenched bureaucracy and a growing indifference on the part of citizens who have yet to see a tangible return for their requested sacrifices. In China people are balking at being asked to cut back after a decade of reform- engendered prosperity. Both plans, moreover, face dilemmas on the crucial but politically explosive problem of price reform, a matter that in China recently led to the worst outbreak of panic buying by consumers in nearly 40 years.

Last week the slow pace of Soviet reform helped provoke the largest and most dramatic Kremlin shake-up since Gorbachev took command three years ago. In a meeting of the 300-member Central Committee called by Gorbachev with lightning speed, a series of retirements, reassignments and promotions swept out most of what remained of the Old Guard and strengthened the Soviet leader's control over the ruling Politburo.

The highest-ranking departee was Soviet President Andrei Gromyko, 79. In granting his "request to retire," the Central Committee cleared the way for Gorbachev to step into the office, which he did on Saturday. Gorbachev further strengthened his hand by shuffling off Yegor Ligachev, the party's former guardian of ideology and his main rival within the Politburo, to a new commission on agriculture, the quagmire of Soviet bureaucracy. According to Western observers, Gorbachev won Politburo approval of the shake-up while % Ligachev was conveniently out of Moscow on vacation.

As surprising as some of the personnel changes were, Gorbachev's major coup was pushing through a scheme to slash and rearrange the Central Committee bureaucracy from some 20 departments to at least six. That streamlining sent a clear message to conservatives that the party chief was determined to pick up the pace of perestroika and make bold changes at the very top. Said Gorbachev on Saturday, at a special session of the 1,500-member Supreme Soviet (parliament) called to ratify the party changes: "The people understand our difficulties but demand more decisive and energetic efforts."

Last week's upheaval once again underscored the sheer ambition of Gorbachev's reform plan, which aims to achieve not only the market-oriented economic restructuring envisioned by the Chinese but also fundamental political and social change. Two days before the Central Committee gathering, at a meeting with East German party leader Erich Honecker, Gorbachev responded to critics who wondered whether it wouldn't be easier to move step by step, first coping with one problem and then another. "Radical change," he said, is needed "in the party, in the state, in agriculture, in industry, in personnel policy and most of all in people's mentality." In assessing the actual progress of reform, Gorbachev can be brutally realistic. At a meeting with Soviet media leaders the previous week, he reported bleakly, "At the moment, we are going slowly, we are losing time. And that means we are losing."

The most striking success so far in the Gorbachev reforms has been the liberalization in cultural affairs, media content and public discussion known collectively as glasnost, which at present has virtually no counterpart in China. Its success in the Soviet Union may be a little too striking at times for Gorbachev, who told Soviet media officials to stop "collecting horror stories" about Soviet society. But he insisted that "we are not talking about any limits on glasnost." In fact, he seemed exhilarated by his tour through Siberia last month, when ordinary Soviets peppered him with complaints about housing and just about everything else. The exchanges, shown on national TV, may have emboldened him to act decisively last week, as if he now believed the people had matured politically faster than their leadership.

Three years after perestroika was introduced, its effects on day-to-day economic life remain meager to the point of near invisibility. Grocery shelves are even barer than they were two years ago, partly because of bad weather conditions. Gorbachev's determination to force industry to become "self- financing" -- to fund current production from the proceeds of past sales -- has run into bureaucratic snags, with central planners continuing to exert control over factory operations by placing "state orders" that effectively determine how much factories produce. Plans exist to revitalize the agricultural sector with a podryad, or contract, arrangement modeled on the highly successful family-contract system instituted by China. But this land- leasing scheme has not yet become common enough to indicate whether it will galvanize the Soviet Union's underproductive farms.

Leonid Abalkin, director of the economic institute of Moscow's Academy of Sciences, blames bureaucratic mistakes, a drop in energy prices and even high clean-up costs after the Chernobyl nuclear accident for the lack of progress. But he also points a finger at the "inconsistency, indecisiveness and halfway measures" that pervade the reform program, largely as a result of compromises with conservative foot-draggers.

Price reform has been acknowledged by Gorbachev as an essential element of perestroika and an eventual certainty on the Soviet agenda. But mindful of the disruption that such reform has caused not only in China but also in parts of Eastern Europe, he has done virtually nothing to cut back on state subsidies for everything from bread to meat and butter, which keep prices low but drain off billions of rubles annually. So far the leadership has not presented any plan for price reform, but the issue has triggered public debate. Says a parliamentary deputy: "Prices are not so much an economic category as political."

In China, which is much further along than the Soviet Union, an attempt to convert from partial to much broader free-market pricing has run into serious trouble. Last week a party plenum meeting in Beijing's Great Hall of the People approved measures designed to cool down an overheated economy and reduce an annual inflation rate that is officially conceded to be 19% but may be as high as 30%. As a result, the pace of price reform in China for the next two years is expected to slow significantly.

Beginning last spring, Beijing mandated a new push to decontrol the prices of such commodities as popular-brand cigarettes and liquor. Prices were allowed to rise from artificially low levels, often set as far back as the 1950s, to whatever the market would bear. But the plan covered only about half of all commodity prices. The rest, including those of such agricultural staples as rice and other grains, have generally remained fixed under the old rules. This two-tier approach has led to some economic absurdities: farmers, for example, must buy fertilizer at high, decontrolled prices but sell their grain crop at low controlled ones, sometimes at a loss.

To cushion consumers, authorities increased existing subsidies for many workers, supplementing their income without officially raising wages. Then in mid-August the Politburo announced that it would proceed with further commodity "floats," allowing the markets to set price levels for a majority of products. The result was a wave of panic buying and bank runs the likes of which China had not seen since prerevolutionary days. According to figures released two weeks ago, retail sales nationwide have leaped; they were 40% higher this August than last.

China's leaders reacted to the buying frenzy by ordering a classic economic dampdown. Beijing temporarily closed some banks to halt withdrawals, limited the size of some retail purchases and raised interest rates to soak up some of the money that the country has been printing at a record rate. Moreover, the Politburo, headed by party General Secretary Zhao Ziyang, Deng's handpicked heir apparent and a firm advocate of reforms, decided to abandon further price decontrols this year. Even Deng appeared chastened by the eruption. Said he: "We have been bold enough for now."

The new approach poses a dilemma for Deng, Zhao and other reformers. Not only does the change of course expose popular fears of the market-oriented direction that the economy is taking but it also underscores the leadership's inability to force the middle levels of the party bureaucracy to administer the reforms. Referring to the pragmatic Zhao's victory over conservatives in winning the party leadership a year ago, a Western economic analyst summed up, "The leaders confused the fact that they no longer had political opposition with the illusion that the country was ready for such fundamental reforms. It was not."

The real question is whether China's economy -- or for that matter any other based on Marxist principles -- will ever be ready. Optimists in China insist that the pricing setback is temporary and point out that especially broad decontrols in the southern province of Guangdong enacted experimentally in November 1987 were eventually accepted. Others are not so sure. Su Shaozhi, China's most eminent ideologist, is convinced that Communist states, as currently constituted, are "societies of scarcity of supply and excess demand." The only way to cure that dilemma, he argues, is to permit political pluralism, giving workers a voice in running the economic system in return for their sacrifices.

In some ways, China's road to reform should be less rocky than the Soviet Union's. Beijing does not have a nationalities problem as severe as the one that confronts and distracts Moscow. Unlike the Soviets, the Chinese seem imbued with a natural entrepreneurial drive. But the Soviet Union has a broader industrial base, and its people are more highly skilled and better educated.

Considering how many problems Moscow and Beijing share in bringing their reform programs to fruition, it seems appropriate that the two countries announced last week that Chinese Foreign Minister Qian Qichen would visit Moscow later this year. If Qian talks with Gorbachev, it will be the first high-level official meeting between the two countries since 1969. The move signals Beijing's approval of recent Soviet foreign policy moves, notably a reduction in Moscow-supported Vietnamese troops in Kampuchea. It also raised the possibility of a Sino-Soviet summit meeting between Gorbachev and Deng in Beijing next year. If that comes off, Gorbachev can inspect China's meat stores for himself.

With reporting by John Kohan/Moscow and Melissa Roberts/Beijing