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Gorbachev the Economist

Courtesy Reuters

The Soviet Union today is a radically different place from what it was five years ago when Mikhail Gorbachev became general secretary of the Communist Party. Admittedly, Gorbachev promised then that his goal would be to reform Soviet economic and political life. But the Soviet people had heard similar promises before, almost all of which had ended up unfulfilled. No wonder few anticipated that in a few years the Soviet Union would in fact legalize the formation of such un-Soviet institutions as cooperative and private businesses, joint ventures with foreigners, and economic autonomy for several of the Soviet republics. It would have been even more farfetched to predict that there would also be glasnost, secret ballots, the disappearance of the secretariat of the Communist Party, the creation of a Supreme Soviet and a presidency that would usurp much power from the Central Committee and the Politburo, calls for regional secession and, finally, an end to the Communist Party's monopoly in political life.

Gorbachev deserves enormous credit, not only for what he has accomplished but also for the fact that he has managed to ride out these transformations-many of which have been rather tumultuous. But while his efforts at political liberalization have been extraordinarily fruitful, his attempts to revitalize the Soviet economy so far have failed. Economic reform was Gorbachev's number-one priority. He promised a radical transformation of the economy, which he eventually came to call perestroika. If it succeeded, the Soviet Union would be competitive not only in terms of conventional products such as machine tools, but also in the field of high technology. Equally important, soon after assuming power he promised to raise "the economic well-being of the Soviet peoples to a qualitatively new level."1

Unfortunately for the Soviet people, not only have they not enjoyed "a qualitatively new level" of economic well-being, their per capita real standard of living has actually fallen by what one respected Soviet economist estimates to be one percent per year.2 In addition, the Soviet

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