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04/15/92

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Scholars provide gloomy assessment of post-Soviet transition

STANFORD -- Democracy is getting off to a weak and dangerous start in the former Soviet Union, speaker after speaker said at an April 10 academic conference on "The Consequences of the Collapse of the Soviet Union."

Western economic advice to the formerly communist republics also was criticized at the 16th annual Stanford-Berkeley conference on Russia and Eastern Europe. More than 200 people attended the daylong event in Tresidder Union. Co-sponsors were Stanford's Center for Russian and East European Studies, and the Center for Slavic and East European Studies at the University of California-Berkeley.

Economic breakdowns

Economist Mikhail Bernstam, who has coordinated a Hoover Institution advisory team to the Yeltsin government, said Milton Friedman was correct when he said in a recent Fortune magazine article that the worst Western aid to the former Soviet Union and Eastern Europe has been "economic advice."

"They are perfectly capable of doing all the harm by themselves," Bernstam said.

Given the initial conditions of their socialist economies, Bernstam said, decontrolling prices and wages without first instituting financial controls "created a situation of economic anarchy." Bartering has replaced cash transactions, which has massively disrupted economic production and rendered governments generally powerless to collect taxes or transfer goods to where they are needed, a panel of economists said of the Commonwealth of Independent States.

Given the situation, Bernstam said, "The economic future of Russia is Poland, and the future of Poland is Argentina," a situation he called "slump-flation."

Profit-making incentives needed to drive a legal market economy have been unbalanced in favor of negative incentives, Stanford economist John Litwack said.

Positive incentives promise individuals and enterprises greater wealth for increasing production and delivery of goods; negative incentives threaten a decline in the standard of living of those who don't. Free market economies need both, Litwack said, but the Gorbachev, and now Yeltsin, governments have succeeded only with negative ones.

A recent example is the government's decision to no longer guarantee meeting the payrolls of large, government-owned enterprises, he said. The enterprise directors have responded with "ambitious plans to alter the mix of production," Litwack said, but "they don't take much pride in this activity. The language is usually offered in the form of 'Look what these terrible conditions have forced us to do.'

"Negative incentives alone imply a greater human cost and possible political cost," he said.

Ironically, they do not provide government with the surpluses necessary to maintain a "safety net" for the poorest citizens who will be affected by the negative incentives, Litwack said.

Speaking of the former communist defense industry, Stanford political scientist David Holloway said: "The bosses there are not fit for the task of reorientation toward market and consumer demands." Production is down 80 percent in that sector, he said.

"The economic reforms in Russia have proved very controversial, and the people in the defense industry form one of the major sources of criticism," Holloway said. "What they say is very simple: The country is run by people who know nothing about industry and the economics of production."

UC-Berkeley agricultural economist Gregory Grossman said the Yeltsin government's economic decrees are meaningless because they are unenforceable. He suggested a system of payments backed by U.S. dollars, similar to the Marshall Plan, to get goods moving again among and within the individual republics of the Commonwealth of Independent States.

Democracy might otherwise be threatened by violent extraction of grain and other foodstuffs from peasants who are refusing to trade it for currency, he said.

"Some regions, unfortunately, have nothing to barter but weapons," Grossman said.

Violent extraction of food occurred in the Soviet Union in the late 1920s, and there have been reports of one such case recently in the Ukraine, Grossman said.

Reinvestment in capital assets, such as its oil industry, have virtually stopped in the former Soviet Union, Alec Nove of UC-Berkeley said. The most pessimistic estimates are that by 1993, there will be no exports of oil, he said.

"This is, by far, their most important export in terms of credits," Nove said.

If you ask leaders of former Soviet or Eastern European states about their capital investment strategy, he said, "they are likely to say: 'Investment strategy means planning. Planning is bad.' They do not learn from [the experience of] Japan."

Power vacuum

Andrei Melville, a political scientist from Moscow State University and a visiting professor at UC-Berkeley, said: "Some of the most difficult problems cannot be solved from the center in Moscow, and the Russian leadership will have to find some kind of balance between centralization and decentralization of political power. The success of the transition depends on the solution of the social and economic problems at the lower levels of society.

"Some people think this situation calls for what they call 'enlightened authoritarianism.' This is a very dangerous temptation. In Russia, power was never correlated with law, and it can very quickly degenerate into a dictatorship," Melville said.

"Other people, including myself, believe you can craft a democratic society only if you use democratic means. Comrade Stalin said that power is the key to politics, and indeed, we need power in order to solve the difficult problems we face. But the political power must be kept within legal constraints, and these do not exist yet in Russia."

Alexander Dallin, Stanford professor of political science and history, pointed out that "communism might be dead; the communists themselves are not."

Communists have established an "underground nomenclature," he said, and are reemerging as "new communists," a potential future problem.

Yeltsin "had tremendous popularity but didn't know what to do with it," He constituted an "authoritarian regime," in which he rules by decree and holds "extraordinary powers," Dallin said.

Attempts to establish new parties and political groups in Russia have failed, he said. "As the old joke says, they tried it once and didn't like it. They sure need some education in democracy."

Michael Urban, a political scientist at the University of California-Santa Cruz, disagreed.

"Barring cataclysm," he said, Russia will develop political parties within five years. Party coalitions have begun to develop, he said, around two key themes: the amount of private property and centralized governance each group wants.

Asked how the Soviet military would fit into emerging political groups, Urban said: "If the Soviet military wants to be a party, you can forget about my models."

Some republics are attempting to create their own armies because it is not clear to whom the Soviet military is subordinated, Holloway said. This, in turn, complicates the question of how to distribute the different assets of the former Soviet military, including the nuclear arsenal.

"The weapons have become political symbols in the hands of the republics. The more you talk about them, the more valuable they become," he said.

Exclusionary politics

Gail Kligman of the University of Texas and a visiting professor of anthropology at Stanford said: "The competition for limited resources helps create politics of exclusion."

"The relationship between national liberation and women's liberation is seemingly an inverse one," she said, because women have lost a substantial number of seats in most of the new state's elected parliaments.

The end of social subsidies for health and education have disproportionately hurt women and children, she said, and women are overrepresented among the unemployed.

Abortion and reproductive rights have become heated issues in Eastern Europe, Kligman said. The issue is "galvanizing women and creating a women's movement," in Eastern Europe and the former Soviet Union as well as in the West," she said.

Women's numbers may have fallen in government since communist quotas were eliminated, but those involved now are "genuine politicians" forming the first feminist movement, said Gail Lapidus, a UC-Berkeley political scientist.

She and Roman Laba of the Naval Postgraduate School at Monterey said the Russian federation faces a fundamental identity crisis that makes it more susceptible to right-wing xenophobic or neocommunist appeals. Unlike the rest of the Soviet Union, they said, Russia was empire created over many centuries, before there was a Russian nation state.

"The political elites [of Russia] do not know where its boundaries are," Laba said.

To imagine Kiev outside their country in the Ukraine is shocking to Russians because the Russian state began in Kiev, Lapidus said.

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