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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Russia does not need a Pinochet, but it does need the Chilean economic model. For Russia to grow at self-sustaining annual rates of seven to ten percent for a decade or two -- the only way it can pull itself out of poverty -- it needs much more economic liberalization. Four reforms inspired by Chile's dramatic turnaround can help Russia out of its doldrums: pension privatization, tax reform, radical deregulation of coddled industries, and the replacement of the ruble with the euro. The indispensable element is not a strong four-star general but a team of determined economic policymakers who know that freedom works.
Mikhail Gorbachev's reforms have unleashed an unprecedented tide of protests and demonstrations across the U.S.S.R. in which national grievances occupy a central place alongside economic unrest. From Alma Ata to Abkhazia, from Tallinn to Tbilisi, virtually no region of this vast and complex multinational society appears immune to the rising tide of national self-assertion. Whether in the form of anti-Russian demonstrations, as in Kazakhstan and Georgia, or in the emergence of new sociopolitical movements demanding greater economic and political autonomy, such as the Popular Fronts of Estonia, Lithuania and Latvia, or in more volatile outbursts of communal violence that have resulted in a tragic loss of lives and many thousands of refugees, as in Armenia, Azerbaijan and Uzbekistan-all pose a growing threat to Gorbachev's leadership and to the future of his reforms.
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.

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