At the half-century point, Soviet communism is wracked by a great debate on economic reform that exposes its most sacred dogmas to profane probing and tinkering. The built-in fallacies of the command economy have always been known to regime insiders. Now the secret is out. The Kremlin is openly seeking remedies for admitted ailments —remedies that will not undermine the authority of the ruling party and the privileges of the New Class.

       The Soviet public, its cynicism honed by long experience, takes it for granted that every official admission of a pimple hides a boil, every admission of a boil hides a cancer. This instinct is probably sound—the managers of the communist economy are far more likely to understate than to overstate its difficulties.

       Heretical words like profit, interest, rent, market prices run through the press and speeches, not in derision as in the past but in respectful earnest. They do not and cannot mean the same thing in a totalitarian economy that they do in a free economy. All the same, it is galling to communists to have to give even the appearance of trafficking with capitalist ideas. The fact that they do so notwithstanding is proof enough of the gravity of those ailments.

       Try as they will to present them as socialist discoveries, the projected remedies come out as adaptations of capitalist practices. Profit incentives, demand and supply, money leverages, rational pricing, autonomy for individual enterprises—all had been rejected by Marx and his inheritors. Their adoption, even their consideration by the USSR, has encouraged assumptions, but only abroad, that Soviet Russia is edging toward capitalism. (196) The Kremlin, annoyed alike by the cheers of capitalist foes and the jeers of ex-comrades in Peking, makes angry denials.

       All the "reformers" of necessity devote a lot of mental energy to proving that their ideas conform with Marxism-Leninism. Whether or not they believe this, it is the condition of their being allowed to write and speak. No debate under communist aegis can be free. Several East European economists, similarly projecting reform in their respective countries, have told Westerners privately that "the plan must go." Without doubt some of their Soviet counterparts feel the same way, but they would be silenced if they tried to say so. Their job is to salvage the system, not to discredit it—and in a way that saves face for the enthroned ideology.

       In 1966 the Moscow Kommunist denounced infidel delusions: "Bourgeois ideologists are not only showing their malicious intentions but also their crass ignorance in trying to see a departure from socialism in the introduction of market values in our economy." Earlier, Pravda hit the same note. "The Soviet people," it declaimed, "indignantly reject the willfully slanderous statement by bourgeois ideologists" that the reforms under study "would allegedly lead to reintroduction of capitalist conditions." On the contrary, the paper insisted, the reform program "strengthens the centralized planning and administration of the national wealth."

       This, in theory at least, is true. If the reforms already undertaken and those under discussion succeed in bringing some order into the confusions of central command, the result would be a more effective socialist economy, not a pale imitation of capitalism. The innovations are strictly within the bounds of total state ownership and control, not intended to displace planning but to make it more effective.

       By the time a free-market concept is fitted into the straitjacket of a monolithic economy, it bears little resemblance to the capitalist original anyhow. Applying free-market principles to an unfree economic system calls for squaring the circle. Because of the compulsion to reconcile it with state monopoly, every reform has in it the seed of its own defeat. (197) The widespread belief among non-communists that the USSR—and the East European dictatorships, which are engaged in equivalent experiments—are moving toward capitalism is therefore mostly wishful thinking and semantic confusion. Though the reforms are couched in the vocabulary of rational economy (profit, interest, etc.) they leave the totalitarian substance untouched.

       Perhaps the most useful by-product of the search for remedies is that it is enabling the Soviet people and the world to see more clearly some of the facts of Soviet economic life. The Kremlin was compelled by its growing difficulties to permit public and critical examination of the economic configuration. Its discomfiture has been well summed up by an American economist, Dr. Rush V. Greenslade. In his contribution to a study of New Directions in the Soviet Economy, prepared for the Joint Economic Committee of the U.S. Congress and published in July 1966. Having dealt with slowed-up Soviet productivity, he wrote:

       "More chilling to party hopes than these economic developments is an apparent loss of faith in the economic system itself. In 1961, the system of central administrative direction of the economy under the tight rein, and driving whip of the Communist Party was unquestioned—at least publicly. Since then, first the academicians, then the economic administrators and now the highest party leaders have openly acknowledged the grave deficiencies of the

       In the beginning the leaders stood aside, merely allowing the critics to present and argue their views in the press and at academic conferences. Then, in 1964, they proceeded with a very modest test of the new ideas by instructing a number of textile and other consumer goods plants to make direct contracts with retailers and put their accounting on a profit-and-loss basis.

       At the aforementioned Party Plenum in September, 1965, called especially "for the reform of Soviet industry," Premier Alexei Kosygan in essence confirmed the diagnosis of the reformers. "The forms of industrial management, planning and incentives now in effect," he declared, "no longer conform to present-day technical-economic conditions." (198) He went on to assert that only "the supreme criteria of economic activity—profit and profitability" could "reflect the real level of work of an enterprise." In the recent past men would have found themselves in Siberia for voicing such heresies.

       Not one of the proposed innovations, it should be noted, has been originated by the party bosses or their Marxist theoreticians. The initiatives have been taken by professors and industry officials who all, while giving ardent lip-service to Marxism-Leninism, bypass its supposed "laws." The ruling shifts would prefer the existing procedures, in which they make all the decisions, except for its one disadvantage: that it doesn't work.

• Physicians and Witch-Doctors

       The regime, of course, did not succumb to a sudden attack of common sense. It has been driven by the cumulative economic costs of total planning to try to hold them within more tolerable bounds. Basically, the limited reforms in question aim to decentralize some decision-making and encourage individual enterprises to operate "profitably." Within the bounds of state targets and priorities, they would have more autonomy to organize production, and to supply specific "customers" instead of turning all their output over to the state. They would be expected to build their own investment funds, borrowing from the government when necessary and paying interest on the loans.

       Actually, the changes authorized thus far are disappointing to the reformers. Between his speech at the Party Plenum and the opening of the Twenty-third Party Congress six months later, Kosygin evidently had been under pressure from the party bureaucracy to go slow. The current Five-Year Plan, as outlined at the congress, prescribes greater authority for management in a small minority of enterprises, sales and profit guides instead of quantity control, direct deals between factories and retailers, and a few other retreats from decision-making at the center. (199)

       These the innovators consider too few, too limited, and too slow to overcome the acknowledged defects. In general, the Party Congress went only an inch on the road of "market socialism" where it has been expected to travel many miles. The extreme caution suggests that the inner party struggle on the reform issues has not yet been resolved. Brezhnev emphasized that "much has to be done before the new system of planning and economic incentives can be fully implemented."

       In particular, there was a thundering silence at the congress on the thorny problems of a more rational price system, widely recognized as the key to economic reform. The unreality of existing conditions may be judged from new wholesale prices in heavy industry that took effect in July, 1967. They will double the prices of crude oil, raise coal prices by 75 per cent, and metals from 35 to 40 per cent. Tee steep increases amount to acknowledgment that the bookkeeping in all basic enterprises has been false, resting on artificial values. It reduces to a shambles all the calculations, during decades of allegedly pragmatic planning. But the stepped-up prices are of necessity arbitrary too. They represent the best judgments of bureaucrats, not the operation of competitive processes. Assuming, for argument's sake, that they are correct now, how long will they remain valid?

       By the end of 1966, only some 700 enterprises had been brought under the reforms. As of mid-1967, by Moscow's count, 3,600 plants, involving about one-quarter of planned industry, were applying some elements of the reform principles. But already there are loud complaints from management and economists of constant interference from central officials. The habits of bureaucratic command are deep-rooted.

       The dilemma of the leadership is excruciating. While admitting that planning is in a dead-end street, it dreads changes so radical that they might downgrade the role of the party and its bureaucratic elites. The loudest opposition to change comes, not from top economists, but from leading political conservatives, fearful that relaxation in planning might weaken the grip of the dictatorship on the country.(200)

       Their fears are certainly not unreasonable. Having retreated in as vital an area as the nation's economy, the party opens itself to bolder challenge politically. In a dispatch in the New York Times in January, 1965, Max Frankel quoted an unnamed Czech economist as saying: "I do not think that our politicians realize as yet that true reform they have reluctantly accepted can succeed only if it turns into a revolution that will sweep away the faiths of a lifetime." Obviously the Soviet politicians do realize this.

       That is why the same Party Congress that decreed a few approaches to "market socialism" acted to reinforce orthodoxy, to tighten and stabilize the party and bar the way to outside claimants to authority. More forceful measures against restive intellectuals were foreshadowed. The more liberal rules for admission to party membership introduced by Khrushchev were nullified. Apparently distrustful of impetuous youth, the congress raised the age for joining the party from twenty-one to twenty-four. Right down the line the Brezhnev-Kosygin team sought to reassure its New Class that economic changes will be balanced by stringent defense of its privileged position.

       The picture that comes to mind, as one follows the debate, is of a bevy of eminent physicians gathered around a sickbed. The patient is planned economy. The doctors are famous economists, mathematicians, cyberneticists, and directors of industry. And hovering on the edges, making them nervous and afraid, are Marxist-Leninist witchdoctors sneering at the bourgeois therapies being argued, and holding tight to their ideological voodoo.

       The Soviet regime is caught between the new medicine and the old witchcraft. Everyone is agreed on the seriousness of the patient's condition. The momentum of production keeps falling, despite a stable rate of investment. The chief planning official, N. K. Baibakov, attested that "gross production per ruble of fixed productive capital has declined, in industry as well as in agriculture." The good life for the masses to which the dictatorship is committed seems as remote as ever. The disproportions between different branches of the economy become increasingly pronounced. (201) The economy is too inflexible to absorb new technological developments.

       But the proposed cures, from the vantage point of the New Class, appear as frightening as the disease. The real issue in the USSR today is no longer whether decentralization and greater initiatives at local levels are needed. It is, rather, how much reform the regime can grant without eroding its power monopoly. Speaker after speaker, at the Party Congress, emphasized the primacy of politics over economics. A new Politburo member, A. Pelshie, spoke for them all when he complained that "sometimes ideology has been supplanted by industrial training" and called for more ideological vigilance.

       If anything is clear, it is that the communist oligarchy has no intention of weakening its own position, whatever the cost in economic waste and dislocation. It will try to combine a' minimum of economic liberalism with a maximum of political orthodoxy. It will concede as little as it must, and as slowly as it can, to the demands of economic reason.

       In communist East Europe economic reform is similarly blocked by the vested interests of the political bureaucracy. On returning from an extensive tour of the region in late 1966, Paul Underwood of the Cincinnati, Ohio, Enquirer wrote with some enthusiasm of the great changes under way. Yet he concluded his dispatch by stating: "One is inclined to say there is not much hope for effective internal change until all the various party bureaucrats are forced to relinquish their monopoly of political and economic power." Which is another way of saying: until communist dictatorship goes out of existence. Without political monopoly the regimes would be doomed.

       In Czechoslovakia, where the debate is considerably more candid than in the Soviet Union, the contradictions between economic reason and political dogma have been expressed sharply by leading advocates of reform. One of the boldest is Eugen Loebel, manager of a state bank. Writing recently in Kulturny Zivot (January 20, 1967), he complained that "the micro-economy is still ruled by the macro-economy," which is to describe the domination of individual enterprises by the center. (202)

       By way of example he cited cases: prosperous enterprises being taxed to subsidize backward competitors; wage levels set by national organs that cancel out the effectiveness of incentive plans locally; managers appointed by headquarters whose technical expertise is not equal to their political influence. Loebel doubts that economic reform can be useful under these restrictive conditions. What he asks for is a genuine consumer's market, truly competitive, for all Czechoslovakia. But this is precisely what the party and economic elites fear and fight.

       And this holds true, in far more acute forms, in Soviet Russia. All of them struggle with the impossible problem of reconciling relative economic permissiveness with continuing political dictatorship. From Brezhnev and Kosygin down, everyone appears to understand that to be effective the reforms must go farther and deeper. But they are prisoners of their power structure; they can hardly renounce the ideology which is their only excuse for self-perpetuating rule. In the words of Dr. Greenslade, they face "the danger that a true transformation might disrupt the whole intricate web of centralized control levers that makes up the authoritarian system."

       Lenin faced the same dilemma after the civil war, the Kronstadt Rebellion, and the famine. He chose to gamble on the New Economic Policy (NEP), which restored private enterprise except at the so-called "economic heights." He was paying with economic freedoms for the retention of political dictatorship. He could risk it because the people were then drained of all energy and the bureaucracy was not yet strong enough to rebel against withdrawal of its new privileges.

       The leaders today are extremely unlikely to take such drastic steps. Unlike Lenin, they have to take account of the New Class, perhaps powerful enough to resist its own liquidation. Agriculture, which needs reform most, is getting the least of it. In that department, the only true reform would be the restoration of private farming. (203)

       Unlike Tito in Yugoslavia and Gomulka in Poland, who allowed peasants to leave the collectives if they wished (which the overwhelming majority promptly did), the Kremlin hierarchs are paralyzed by the knowledge that Soviet collectivization took a gruesome toll in life. They find it hard and dangerous to admit that it was all a blunder.

       We may expect that the reforms already adopted will be extended. Probably the process has passed the point of no return. But it will not be the kind of bold, across-the-board action the more optimistic advocates of ''market socialism" are recommending. The leadership will temporize, make piecemeal revisions, in the hope of muddling through with the help of Western trader-today its most urgent need— and the sorcery of "cybernetization and computerization" to take over some of the planning burdens.

• Return to Free Market?

       Can partial, timid reforms solve Moscow's economic crisis? Neither the Soviet economists behind the campaign nor Western analysts believe they can. Indeed, it is a wide-open question whether the mechanisms of a free market can be successfully superimposed on a planned economy anywhere. In Yugoslavia, where this has had the most extensive test, it is far from successful. After more than fifteen years, the country is still harassed by chaotic prices, inflation, monopoly profits in some areas and heavy state subsidies hi others, unemployment, and deadly inner-party struggles.

       Management may be ordered to go all-out for profit. But how can it obey when the costs and availability of raw materials, retail prices, and other such factors are manipulated by an all-powerful state? The true meaning of profit as a reward to owners and investors is lost. It becomes just a way of measuring the difference between the value of inputs and outputs—in effect merely a revised bookkeeping procedure. Despite some incentive bonuses (in effect even before the reforms), 60 per cent or more of the profits go to the state. (204) Interest and rent, in the same way, are accounting chips, shuffled from one state pocket into another.

       "As long as the workers are not free to bargain through organizations independent of the state over what proportion of the 'surplus value' produced is to go to them in the form of wages and bonuses," Professor Sidney Hook argued' (Problems of Communism, March-April, 1967) "so long as the industries are not given sufficient autonomy to make the basic decisions depending upon the consumers' wishes but receive their directives from a central planning source, the economy of the Soviet Union remains essentially unaltered."

       To give autonomy to some plants and not to others, to some industries and not to others, seems a prescription for additional chaos. The logic of the reforms, if followed, would extend the autonomy to virtually the whole economy, except for military and a few other priorities, and that would be the end of planned economy. A limited "market socialism" bids fair to prove itself a fatal contradiction.

       Direct links between producers and consumers normally make sense. But a national economy is so interdependent that the links would have to be forged in all directions, with the supplier of raw staffs, with the producer of machines, intermediary semi-finished goods, spare parts. "Islands of rationality" would tend to be drowned in an ocean of command bureaucracy. Prices, unless they develop in substantial independence on a demand-and-supply basis, reflect only some central planner's preferences and make hash of individual profit-planning. Dr. Greenslade has written:

       In the concrete reality of the Soviet system, the salutary, or even cosmetic, effect of a patina of market trading is unlikely to be realized. To be beneficial, markets require flexible prices, an overall reduction of excess demand, and alternative sources of supply. . . . The economic effect of the reforms can be forecast in advance. Because the reforms are so circumscribed, their net effect cannot be large, either for good or bad, but their nature is such that there are likely to be both kinds of effects.

       On the one hand, the positive incentives if they begin to be effective may lead to improved efficiency at some enterprises, and direct contracting may result in smaller stocks of unsold consumer goods and to that extent greater consumer satisfaction. On the other hand, the same incentives if they begin to be effective may lead to output mixes counter to the plan, reshuffling of supplies as between enterprises, refusal to accept unwanted equipment, layoffs of workers, and unemployed capacity. ... It can be assumed that bureaucratic interference to counteract these symptoms will appear almost as soon as the symptoms. In short, the new system cannot operate as long as the old is on the job' in full strength.

       Besides, he points out, there are the political factors: "It is difficult to picture the party and the planners presiding over the dissolution of planning.. . . Neither the economic bureaucracy nor the local party apparatus is likely to accede gracefully to its own withering away."

       The evidence, as of early 1967, supports Dr. Greenslade's prognosis. Basing himself on an analysis of the Soviet economic press, made for the Institute of Studies of the USSR and published in April, 1967, I. W. Majstrenko concluded:

       Political conservatives in the USSR warn that to give up central control of price determination is to sound the death-knell of planned economy—surrender of the country to "the anarchy of the market place," then capitalism and the end of the regime. Yet without free or relatively free pricing, most of the other reforms lose their vitality.

       At best, the reforms if carried a lot further are a guarantee of tensions between natural market pressures and the Kremlin's commitments to political objectives. Behind every factory or trust director stands a party functionary or apparatus. Is there any doubt how they will resolve a conflict between production for the consumer market and production for the state? As long as the state is the sole owner, economic operations will remain primarily politically-motivated rather than profit-motivated.

       This contradiction is dealt with in a book smuggled out of Poland and published in its original language in Paris in 1966 under the title Poland Little Known. The internal evidence is that the secret author, who used the pen name George J. Hemming, is close to his country's affairs, presumably of the communist elite. He expresses contempt for foreigners who take the economic-reform excitement too seriously. As long as a regime remains communist, he says, "they are only churning in the same vicious circle." Whether in Poland or Hungary or Soviet Russia, he believes, "there are none and there cannot be any basic changes beneficial to the economy without a change in the political system. Anything else is not even a half-measure." What happens, then, if it becomes apparent in a few years that the marginal piecemeal reforms have proved ineffective, and that a new NEP or a fundamental revision along Titoist lines is blocked by the party and economic bureaucracies? No one can know the answer. (207)

       By that time the economic troubles assuredly will have multiplied in number and dimension, piled as it were on the present troubles. The resultant crisis is likely to be deeper and more dangerous to the dictatorship than it is today.

       According to a familiar fable, especially popular in the mid-thirties, the Soviets would move gradually to "the Right," the capitalist world to "the Left," and one day they would meet in the center and live happily ever after. The fantasy flourished when Stalin, having pushed through his Five-Year Plan, seemed to be moderating his ferocity at home and seeking united-front friends abroad. Then it faded out in the blood-purges, the pact with Hitler, and intensified Soviet subversion in a renewed mood of militancy.

       In the last few years the fable has been revived, in large part because of the Soviet talk and some experimentation with free-market devices to overcome the mischief wrought by total planning. Again we hear theories about the USSR going more capitalistic as the non-communist nations become less so, and the two systems "converging" at the center. And again it is pure fantasy.

       If the current economic tinkering in Soviet Russia presages a return to capitalism, the one certainty is that it will not come gradually and peacefully as the myth-makers think. The communist masters are so deeply entrenched that they could not, even if they wished to do so, relinquish their monopoly of power—and that includes domination of the economy. Should capitalism or some approximation of it be restored in the Soviet Union, it will not be through step-by-step evolution but through some type of military or popular revolution.

       Meanwhile, from their own angle of vision, the quandary of the leaders holds a certain ironic pathos. It took their regime fifty years of incalculable travail, only to return part-way to the starting point of market principles and middle-class objectives. The plight of foreign communists is even more ironic, obliged loyally to applaud attempted revival of the free-enterprise assumptions they excoriate at home, and to profess delight over the erosion and cutting back of communism.