Editors Introduction

Recent Soviet commentaries on economic performance during the NEP period have typically been rather favorable. This is hardly surprising given the substantial reliance on market relations in the years following the abandonment of War Communism and prior to the First Five-Year plan. The significance of G. Khanin's article which opens our current issue ("Why and When Did NEP Die?") is that it presents a highly critical assessment of the NEP years. Unlike the positive appraisals which commonly stress the substantial recovery of economic growth achieved in the 1921-28 period, Khanin focuses mainly on a comparison of 1928 with the immediate pre-World War I period. His adjustments of "official" data suggest that Soviet national income in 1928 remained below the 1913 level, and that living standards of the working population at the end of NEP were "much lower" than in 1913 (although he also refers to a rise in workers' real wages over this period). The main problem, according to Khanin, was that the abandonment of War Communism was not radical enough and the political leadership continued to rely excessively on "administrative methods" in the economy. A principal illustration was the retention of the state's monopoly on foreign trade. In Khanin's view this was the main obstacle to the expansion of foreign economic ties, and without the development of such ties long-term economic growth was "inconceivable." In short, NEP failed because it did not move sufficiently toward a free market mechanism. It is interesting to observe how the current euphoria over the market mechanism affects the reinterpretation of Soviet economic history.

Editor's Introduction

This issue of >i>Problems of Economics>/i> features an article by Soviet Nobel-Prize winner L. Kantorovich and two of his colleagues. Like so much of recent Soviet economic discussion, this article stresses the problem of underutilization of available resourcesâin this case the underutilization of readily available optimizing models developed in the literature on mathematical economics. According to Kantorovich, these techniques could be of substantial assistance in solving "practical" problems associated with price fixing, determining the rational location of production facilities, and working out the interbranch balance of the national economy. But some optimizing techniques that have been available for decades are rarely applied in practice. Their utilization would require a "basic restructuring" of prevailing management methods. Hence the resistance to their introduction. Another aspect of the problem is that a "considerable proportion" of economists continue to have little, if any, knowledge of the practical applications of mathematical economics.

Editor's Introduction

If there is anything that the Russian economic literature has agreed on in recent years, it is surely the need for a transition to a market system. But the degree of sophistication exhibited in Russian discussions of a market mechanism has varied considerably. The lead article in our current issue, by M. Gel'vanovskii and A. Kriukova ("The Market: A Formula for Happiness or a Difficult Path to Agreement?"), illustrates a relatively sophisticated approach to this theme. While acknowledging the importance of creating an appropriate "market infrastructure" (banking institutions, commercial law, adequate statistical services, a competitive economic environment, etc.), the authors focus on a subject that has received relatively little attentionâthe formation of a "market mentality." Such a mentality is not simply the equivalent of an "absolute economism of thought" but an aspect of the ethical norms and cultural values that prevail in a "civilized" or "normal" market system. The authors' principal message is that a successful market system always functions in a particular cultural context, and the creation of the latter after seven decades of Marxism-Leninism is a "principal obstacle on our path." They also stress the need for a balance between "spontaneous market forces" on the one hand and agencies implementing direct or indirect state intervention on the other. Clearly, the discussion by Gel'vanovskii and Kriukova is more than a simplistic hymn of praise to the free market.

Editor's Introduction

It is difficult to find examples of explicit opposition to the general principles of marketization and privatization in the Soviet or Russian economic literature of the last twelve to eighteen months. But within this common framework there is no shortageof differing views on the appropriate rates of change in prevailingeconomic institutions and the specific forms that the changes should take. The first three articles in our current issue reflect some of the diversity of views on these matters that appeared in the literature immediately prior to the economic "liberalization" initiated early in 1992.

Editors Introduction

The title of the first article in our current issue ("A Humane, Democratic Socialism: Contours of a Modern Conception") by O. Ozherel'ev is symbolic of the type of society that much of the recent Soviet economic literature envisions for the future. But it is sometimes easier for this literature to indicate what is being abandoned than to specify the kinds of institutions that will emerge from the "genuine revolution in our country's socioeconomic development" currently in progress. Perhaps this is inherent in the nature of a revolution. Judging by Ozherel'ev's article, the elements of the old heritage that are being abandoned includeat the very leastthe following: the notion that only state property can be genuinely socialist in nature, the "totalitarian statization >i>[ogosudarstvlenie]>/i> of public life," and the monopolistic status of Marxism-Leninism in the country's intellectual life. On the latter point, Ozherel'ev acknowledges the enormous damage to Soviet society stemming from the repression of alternative intellectual traditions and appeals for an end to the "iconization" of the founders of Marxism-Leninism. There is abundant evidence that this process is well underway (see, for example, our December 1990 issue). Since Soviet economists are at a relatively early stage in spelling out the institutional structure of the future "humane, democratic socialism," it is hardly surprising that Ozherel'ev's discussion contains some ambiguities and unresolved problems in this area. For example, the reader may wonder how opportunities for "unlimited earnings" for all members of society will be reconciled with the provision of equal "starting conditions" for the offspring of different social groups. On some issues there seems to be less ambiguity. For example, reliance on particular forms of property ownership should be based on "socioeconomic effectiveness," not on ideological considerations. But it would have been interesting if the author had indicated how such effectiveness (particularly its "socio" component) will be assessed.

Editor's Introduction

The contrast between "extensive" and "intensive" sources of economic growth has often been used (both by Western and Soviet economists) to distinguish between traditional and more recent Soviet growth strategies. The lead article in this issue by Abel Aganbegian, apparently one of Gorbachev's principal economic advisers, spells out the empirical grounds for current reliance on "intensive" growth policies and suggests some of the institutional mechanisms that will be used to implement them. An unavoidable slowdown in the expansion of labor and capital inputs means that Soviet economic growth targets can only be met by substantial increases in the productivity of these inputs. Some idea of the enormity of the task is suggested by the planned increase in the annual growth of labor productivity: from 4 percent in the current five-year plan to 7 percent in the nineties. Hence the urgency of a "transition from old generations of technology to new ones, from existing to fundamentally new technological systems. â¦" One of the organizational forms that are expected to facilitate such a transition are "large-scale science-production associations," which will combine "under one roof" the functions of research, design, experimentation, and production. These are the organizational structures which are expected to promote the "integration of science and production." In effect, Aganbegian is stressing the urgency of developing institutional structures that will accelerate technological innovation, something which in the view of Western observers the traditional Soviet planning system has failed to encourage (see, for example, the interview with Abram Bergson in >i>Challenge>/i>, September/October, 1987).

Editors Introduction

In the final years of Soviet rule, Grigorii Khanin was among those economists who questioned the reliability of "official" statistics on Soviet economic performance. His own estimates suggested substantially slower economic growth rates than those commonly announced in Soviet publications. The opening selection in our current issue ("Russia's Economic Situation in 1992") suggests that Khanin has continued to function as a critic in the post-Soviet environmenta critic of the Russian government's reformist policies as well as of some of its statistical reporting. His own estimates suggest steeper declines in output and capital investment in 1992 than are implied by government figures. Khanin's assessment of the prospects for Russian economic recovery can hardly be characterized as optimistic. For example, his expectation is that the 1990 level of national income might be attained by the year 2000. It should be kept in mind, of course, that this article reflects Khanin's reading of the situation in the closing months of 1992.

Editor's Introduction

By early 1991, processes of destatization and privatization were commonly regarded as being at the very core of the economic transformations under way in the Soviet Union. But what meanings were commonly attached to these concepts? The opening selection in our current issue, by L. Nikiforov and T. Kuznetsova ("Conceptual Foundations of Destatization and Privatization"), illustrates some of the ways these concepts were used in the economic literature at the time. Destatization for these economists meant essentially the elimination of the monopoly position of the state and party in all areas of Soviet lifeâthe economy, political structures, ideology, culture, etc. Put somewhat differently, it meant a "process of transition to a civil society." But at least for Nikiforov and Kuznetsova, destatization and privatization did not imply an economy with a negligible or minimal role for the state. Not only would the state participate in providing a "system of social guarantees and social protection" but state property would coexist and compete with private and cooperative forms of property under conditions in which their relative importance would depend "only" on their "economic and social effectiveness." Thus destatization and privatization have as their objective the creation of "a mixed economy and a mixed society." At a more general level, the authors appeal for the kind of state that will be guided by the following principle: "The state should be created for the individual, not the individual for the state."

Editor's Introduction

During the years of Soviet rule it was not uncommon for Western scholars to question the reliability of official Soviet statistics in a variety of areas. For obvious reasons, similar questions could not be directly raised in the domestic Soviet literatureâat least in the pre->i>glasnost>/i> era. It is hardly surprising, therefore, that the current Russian social science literature on the Soviet period often reflects a highly critical assessment of the earlier official data. Our opening selection by V.A. Isupov ("Demographic Catastrophes in Russia") argues that the negative demographic consequences of Soviet rule were substantially understated in official population statistics. The author's own estimates of demographic trends appear to justify the title of the article, although the precise methods used to derive these estimates are not always clear. Isupov also seems concerned to stress the responsibility of the regime in power for the "catastrophes" in questionâincluding the wartime population losses.