Gorbachev's Challenge: Economic Reform in the Age of High Technology
The subject is not Gorbachev's challenge to the West but what he can do about the Soviet economy at a time when, by comparison with the industrial democracies, it is being left behind by the pace of technological change. The author even takes it upon himself to offer Gorbachev some quite specific advice, which probably goes well beyond the advice he is getting from his own economic and political counselors. Goldman knows well enough, and stresses in this book, the serious bureaucratic and other obstacles to reform, and he does not expect Gorbachev or any other Soviet leader to abandon what have been essential features of the Soviet system. The comparative analysis of reforms in Hungary, East Germany and China, and their possible relevance for the U.S.S.R., is worth close attention.
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Most people think that Russia's economic problems are due to the shock of fast and radical reforms. Actually, the Russian economy is not very liberalized at all, and its problems have been caused by reforms that were too slow and partial, not too sweeping. Russia suffers not from too free a market but from corruption, which thrives by preying on an unwieldy bureaucracy. Still, the outlook for the months ahead is promising. If Poland could do it, why can't Russia? The private sector got a salutary wake-up call from the 1998 collapse of the ruble, and the strength of the political center bodes well for economic recovery and social change.
Russia's popular new president is better positioned than his predecessor was to enact needed reforms. But all of Vladimir Putin's efforts will come to nought unless he can do what Boris Yeltsin never did: rein in Russia's plutocrats. These ruthless oligarchs have fleeced Russia of staggering sums, seizing control of its oil industry -- one of the world's largest -- in the process. Through payoffs and intimidation, they have insinuated themselves into electoral politics and virtually immunized themselves from prosecution. None of Russia's problems -- neither its crippled economy, nor its emaciated infrastructure, nor its wheezing democracy -- will be solved while the robber barons retain their power. America cannot afford to sit on the sidelines any longer.
The next great oil boom is on: four former Soviet republics on the Caspian Sea are sitting atop an economic bonanza. But they should remember the fate of OPEC, whose members squandered their 1970s windfall. Where did all the money go? The state took on too dominant an economic role and wasted the wealth at home in a rash of boondoggle projects and military buildups. All OPEC members came down with "quick-money fever." They became addicted to supposedly limitless oil revenues even as boom turned to bust. The Caspian states, too, risk going from riches to rags if they do not resist the temptations of petromania.
