Power to the Managers

As regularly as the changing of the seasons, the Kremlin announces a far-reaching reform plan aimed at pepping up the sluggish Soviet economy by loosening bureaucratic controls over the production system and the managers who actually turn out the goods. But none of these plans ever seem to go far enough, and Soviet citizens continue to ask why their economy cannot soar like their spaceships. They have reason: last year, Soviet output of goods and services rose less than 2%, the smallest gain in a decade. That contrasts with a 1972 rise of 9.7%, or 6.5% after subtracting price increases, in the U.S. gross national product. Now, predictably, the Soviets are embarking on yet another reform, and this one does seem to offer more promise than its predecessors--if, and it is a giant if, the program is actually carried out as planned.

The newest reform builds on the last, which supposedly gave more authority to directors of individual factories. Over the next three years, plants that make related products are to be grouped into "production associations" that are to function roughly like large, multidivision U.S. corporations; each will have its own board of directors and research and development facilities. According to plan, top executives of these corporations will get extensive authority to set profitable production schedules, to design products and to develop markets for them.

The reform is designed to abolish much of the power of the chief supervisors, or glavki, in the 34 industrial ministries in Moscow. The glavki will be limited to setting long-term investment and technological policies. They have proved adept at sabotaging previous reforms by constantly changing production targets, setting impractical prices and otherwise meddling in the operation of faraway factories. Presumably, though, the heads of the "production associations" will have more clout in confronting the ministries than the managers of individual plants did after the last reform, because they will speak for much bigger organizations and they are supposed to be executives who have had extensive management training.

In any case, though something like the latest reform is obviously needed, it hardly comes to grips with some of the most serious Soviet economic woes. Despite vast expenditures for new plants and equipment, the average Soviet worker produces less than half as much per hour as his American counterpart. Prime reasons: some technological lags and socialist limits on rewards for individual effort. The government recently doubled individual production bonuses and created cash prizes as high as $200,000 to be divided among workers in factories that have high productivity rates. But the biggest incentive--regular wages--will be virtually frozen for the rest of 1973.

Also, consumer goods are still drab, often scarce and fantastically expensive (a compact car sells for about $8,000). The Soviet Union's estimated $570 billion G.N.P. is roughly half that of the U.S., yet the nation spends fully as much on defense and capital investment as the U.S. does. Inevitably, the pinch has come on consumption. Such goods as fully automatic washing machines are not made in the U.S.S.R. at all, and refrigerators and other household items are often so deficient in style and quality that workers see little point in laboring hard to get the money to buy them.

Even under the new reform, central planners in Moscow will continue to make many key decisions on prices, distribution and allocation of materials. The dead hand of the planner falls most heavily on agriculture, which is the weakest sector of the Soviet economy; the U.S.S.R. will again this year be forced to make massive grain purchases in the West. Though about 30% of the population is engaged in agriculture, the farm yields remain unsatisfactory, largely because of shortages in good fertilizer and such modern machinery as combines. Because the country lacks sufficient storage and processing facilities, each year about 15% of all grain, vegetables and fruit is spoiled.

A surge in East-West trade could markedly improve the Soviet economy by bringing in foreign technology--notably computers--and consumer goods. But the Soviet Union will not make the final leap to true consumer affluence until its top political leaders find some way of reconciling central planning, to which they obdurately cling as the distinguishing feature of a socialist economy, with the decentralized industrial decision making that they admire in the capitalist West.

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