Buttons, Beds & Boots

In the most significant confession it had ever made of the inadequacy of its state-monopoly trade system, Communist Russia started beating the drums last week for something suspiciously like the profit motive. Pravda proclaimed that the "monopolist" position of state stores was hurting trade and lowering production. It demanded "healthy competition." Andrei Zhdanov, the Politburo's rising spokesman, said that consumer cooperatives must be encouraged. The Kremlin promptly did so, with five capitalistic incentive devices:

1) Permission for Russian cooperatives to make profits as high as 20%--and give them to their members as bonuses; 2) special tax concessions; 3) promise of over $500 million in favorable long-term credits to encourage speedy expansion; 4) freedom to fix their own prices at levels far higher than those of state stores selling rationed goods; 5) right to buy their materials direct from farms, mines and factories (hitherto a state monopoly).

With the cooperatives' new scope, the Kremlin obviously hopes to break the vicious circle of farmers lagging on their food deliveries because they get no goods in exchange--and industrial workers lagging in output because they get so little food. The expanded cooperatives would become a $1.7 billion business in 1947. This extra output will be marketed through 30,000 new cooperative stores and a host of state-licensed street vendors, who will be individual entrepreneurs like the pushcart peddlers from Naples to Nanking. Items planned for 1947: 375 million buttons, 35 million yards of cloth, 23 million pairs of stockings and 18.5 million pairs of boots and shoes, 4,000 tons of household utensils, 500,000 beds, $100 million worth of furniture. The million extra tons of food include 100,000 tons of milk, 27,000 of meat and fish, 20,000 of mushrooms, 5,000 of butter and 180,000 boxes of eggs.

Even so large a cooperatives' program will merely take the edge off Soviet hunger for consumer goods. It will provide less than an ounce of butter for each Russian--and one pair of shoes & stockings for every tenth Russian. But it will still be the biggest non-state production the Kremlin has allowed since it launched the first Five-Year Plan in 1928.

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