The East Reaches for Markets

Heretofore, Western observers of economic reform in the Soviet Union and Eastern Europe have concentrated almost exclusively on internal changes. Most of us have been fascinated by the provocative debate and by the subsequent decision of the East European governments to emphasize such concepts as profit, interest, rent and managerial autonomy and to deëmphasize centralized planning. This concentration on internal economic reforms has tended to divert attention from the equally significant changes that the East Europeans have introduced into their international economic structure.

The lack of discussion in the West about the reforms in Eastern Europe's foreign trade may be attributed to several factors. First, there has been no counterpart to the wide-ranging Liberman-type debates over internal reforms which would have drawn Western attention to the changes in the external economic activities of the communist countries. Second, because foreign trade has always entailed interaction with large numbers of non- communist traders, it has generally been assumed that some adaptation of non-communist methods was only to be expected.

Recently, however, the East Europeans have gone beyond mere adaptation. Apparently without debate or momentous pronouncements by senior officials, fundamental changes have been made in the way the East Europeans have been doing business with the West. To some extent the need for rationalization in the foreign trade sector has been necessitated by the desire to implement internal economic reforms. The East Europeans have come to recognize that they will need foreign machinery and technology to bring their productive efficiency up to world standards. For this they need foreign exchange. But the East Europeans have moved beyond the simple idea that exports are needed only to finance imports. They have also come to realize that they have forfeited valuable profit-making situations to capitalist businessmen.