What Is to Be Done
Feffer, John
BOOKS Catastrophes in the planning s it sinks further into recession, losing considerable ground to Europe and Asia, the United States still maintains a comparative advantage in one dubious...
...But even here, they emphasize unemployment benefits and not job retraining, market-based solutions and not coordination between government and labor...
...Some of the report's suggestions are eminently reasonable...
...But this does not justify rushing blindly to the other extreme...
...State enterprises must be privatized, government spending cut, the domestic economy internationalized, and last (and sadly least) the negative social impact minimized...
...The project that culminated in What Is to Be Done began in 1989 when a group of economists organized by Yale University turned its attention to the Soviet economy...
...Even the United States grew economically in the nineteenth and twentieth centuries by cultivating industries and agriculture behind government-established trade barriers...
...John Feffer nomic reform first to Poland and then to the rest of Eastern Europe...
...Even foreign aid, so critical in avoiding widespread deprivation, is dismissed almost categorically...
...Meanwhile, somewhat further to the east, the Soviet Union has fragmented into fifteen independent states (and counting), each new nation poised to move from centralized planning to the market...
...The results have been devastating...
...True, the economists involved in What Is to Be Done do emphasize the need for social welfare programs...
...The notion of a "ruble overhang" —an excessive number of rubles held by the population—no longer exists...
...But the call to arms is nevertheless radical...
...The post-Soviet governments can and should still regulate the economy, constructing an industrial policy that allocates resources to promising industries, negotiating favorable trade terms that permit the growth of domestic producers, establishing a progressive tax structure that minimizes large inequalities in wealth, judiciously distributing foreign aid...
...It was precisely through government support that the currently successful Asian economies— Japan, Korea—developed in the postwar era...
...Eastern Europe today is mired in a deepening depression complete with inflation, unemployment, and social misery...
...Commonweal 27 March 1992: 27 And those economists, if the recent study What Is To Be Done is any indication, have barely altered their message...
...Thus it is wrong to suggest that the post-Soviet population can survive another massive price increase by spending their excess rubles...
...It is a sad comment indeed if in place of Marshall Plans, we now only send Reaganomics...
...But like Reaganomics and the laissezfaire remedies offered to Pinochet in Chile in the I970s, the model outlined in What Is to Be Done errs not so much in the details but in its overall conception of an idealized market...
...By presenting their version of austerity capitalism as the new orthodoxy, the economists associated with What Is to Be Done are priming the post-Soviet Union for a catastrophe equal to or worse than Eastern Europe's...
...Thus do the new pundits disregard not only Keynesian insights but the very dynamics of capitalist economic development as well...
...Export it...
...Yale University Press, $12, 220 pp...
...Perhaps there is a new economic law at work here...
...With the experience of Eastern Europe so visibly negative, you might think that the postSoviet states would steer clear of U.S...
...The recent fall of communism has provided these social scientists with a vast new laboratory for experimentation...
...To imagine that the average post-Soviet will still have some money left over to buy shares in newly privatized industries—another What Is to Be Done proposal—requires even greater credulity...
...economists would be revising their models in light of the manifest problems of shock therapy...
...Like the Lenin and Cherny shev sky works from which it takes its title, What Is to Be Done reads more like a manifesto than a sober assessment...
...Repackaging their prescriptions as "shock therapy" and counting on the considerable assistance of Western governments and multilateral lenders, these missionaries of monetarism brought their brand of ecoWHAT IS TO BE DONE Proposals for the Soviet Transition to the Market Merton J. Peck and Thomas J. Richardson, eds...
...Wrong on both counts...
...Reform is to be instituted from above and no provisions are to be made for enlisting popular participation in reshaping the economy...
...So too must these new countries adapt themselves to the world economy...
...If it don't work, don't fix it...
...The state unquestionably played a ruinous role in the Soviet economy...
...Much as the proponents of trickle-down insist that welfare spending is money down the drain, these economists argue that foreign aid would accentuate rather than alleviate the problems...
...q 28: 27 March 1992 Commonweal...
...The government should play only a minimal role in the economy, insist the shock therapists: the market must be allowed to solve all problems...
...Boris Yeltsin and the new Russian government, for instance, have solicited the economic advice of the same U.S...
...When the Soviet Union instituted mild price reforms in April 1991, most of the rubles disappeared as consumers began to draw on their savings to supplement their falling wages (a similar phenomenon occurred in Poland in 1990...
...The laissez-faire school—Milton Friedman and the other progenitors of Reaganomics —exported its model to Latin America in the I970s and 1980s with decidedly mixed results...
...BOOKS Catastrophes in the planning s it sinks further into recession, losing considerable ground to Europe and Asia, the United States still maintains a comparative advantage in one dubious category: faulty economic models...
...The post-Soviet governments cannot, for instance, afford to continue subsidizing consumer prices...
...Institutions ranging from the United Nations to the investment firm of Morgan Stanley have warned of a grimmer future and consequently have urged new economic strategies for the region...
...economists peddling their wares...
...economists who developed the Polish model...
...Coming from economists, the suggestions are predictably rather dry...
...Therefore, despite the solid credentials of the participants Alfred Kahn, Alice Rivlin, John Williamson, and several international scholars—this consensus document disregards not only the theoretical flaws of rapid reform, but the contradictory evidence provided by reports out of Eastern Europe today...
...Prices should be liberalized overnight, the document's framers insist...
...Although written immediately before the August 199I coup and the subsequent dissolution of the Soviet Union, the Yale report nonetheless remains characteristic of economic approaches to post-Soviet economic transition...
...And you might think further that U.S...
...Other prescriptions, however, are simply inaccurate...
Vol. 119 • March 1992 • No. 6
