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Communism Comes to Market
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14143 |
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CURRENT ISSUES
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1 / 1988 |
2,622 Words |
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Peter Young
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Over the centuries, humankind has found no more effective measure of work than profit. Only profit can measure the quantity and quality of economic activity and permit us to relate production costs to results effectively and unambiguously. Our suspicious attitude toward profit is a historical misunderstanding, the result of economic illiteracy.
Who said that? Friedrich Hayek? Milton Friedman? Ronald Reagan? Wrong. The correct answer is Nikolai Shmelyov, an economist with the USSR's U.S.-Canada Institute in Moscow, writing in a recent edition of the leading Soviet political journal Novy Mir.
Shemelyov went on to advocate he removal of subsidies, market pricing, a natural level of unemployment, free economic zones for foreign investment, and the creation of a stock market. When Soviet economists start sounding like rabid free-marketeers, it is clear that ideological purity is no longer being maintained in the heartland of socialism.
Matching the privatization revolution in Europe and the Third World is a gradual move toward private-sector solutions in the communist world. While it is easy to exaggerate these shifts, the abandonment of communist ideology has clearly begun.
Socialism doesn't work. That is the conclusion reached by the leaders of the major communist countries. No amount of posters of shiny tractors and exhortations to toil in the cause of building communism will outstrip capitalism. So some capitalist methods must be adopted.
It is less clear whether liberation of the economies of the communist countries is compatible with the retention of power by the communist elite. Communist countries are, however, beginning to take the risk.
China the market leader
Progress has demonstrably been greatest in China. There the communist system is less entrenched, having only been instituted in 1949. Furthermore, the terrible convulsions of the Cultural Revolution leave even the leadership with little affection for totalitarianism.
The changes observed between a visit in 1979 and one in 1986 were great. While China in 1979 was clearly a more backward and totalitarian society than the Soviet Union, China in 1986 was bursting with economic activity and hope.
The results of deregulation have been impressive. China is still an agricultural society, and it is in agriculture that the changes have been most profound. Private markets for agricultural goods have been legitimized. The "production responsibility system" has replaced the old collectives, effectively recreating private ownership of small farms. Private ownership of trucks and production machinery has been permitted. Grain marketing has been deregulated. From 1979 to 1983, total grain production increased from 332.1 million tons to 387.3 million tons, an annual growth rate of 3.9 percent.
Other deregulation has had similar effects. Production of cotton during the same years increased from 2.2 million tons to 4.6 million tons, an annual increase of 20.2 percent. Livestock producers are
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