Without the root-and-branch dismantling of the socialist system, any Western aid to Moscow would be wasted. With its estimated GNP of $1,900 billion—the equivalent of the U.S. economy in 1977—the former Soviet Union’s fundamental economic problem cannot be a lack of resources. Instead, it is a misapplication of those resources and the absence of proper economic incentives for individuals and enterprises. Until the new noncommunist leadership tackles those issues, no amount of Western aid will bring the economy out of its present nosedive.
Those in the West who favor aid schemes often oversimplify matters by calling for a Marshall Plan for the former Soviet Union. No legitimate parallel exists between the postwar reconstruction of Europe and Japan and the post-cold-war requirements of the former Soviet Union. The Marshall Plan—which provided $13.3 billion in aid over five years—simply jump-started the world’s war-battered free-market economies. While they needed new infrastructure and new investment capital, they already had the basic market institutions and centuries of entrepreneurial experience. In the Soviet case, markets must be invented. Private property, free prices, capital markets, experienced business managers, even personal checkbooks—none of these existed in the Soviet system. Providing economic aid before Moscow and the former Soviet republics revamp their primitive economic institutions would be like pouring water into a leaky bucket.
Even the most enlightened reformers are daunted by the obstacles to overhauling their economy. First, no country has ever undergone a transformation from a command to a market-based economy. The trillions of economic decisions made daily in a market economy had been senselessly concentrated in the endless gray buildings of the Moscow bureaucracy. Untying the proverbial Gordian knot is simple compared to the task of decentralizing the Soviet economy without triggering total chaos.
Second, powerful vested interests—the Communist party apparatus and the central bureaucracy—are not only certain to oppose radical reform but are also fully capable of sabotaging its implementation. After the August 1991 revolution, the commanding heights of the Soviet economy were conquered by the reformers. But much of the battlefield, from ministries through enterprises, still remains under the control of the economic shock troops of communism. Those who had spent their lives shaking down the system will not take kindly to those who seek to shake it up. Communists in the apparatus are on the defensive. But if they close ranks, they could paralyze even the best reform program.
Third, seventy-five years of communism have instilled a pervasive egalitarian ethic and a resistance to change in the average Soviet worker. He came to believe that each should be rewarded equally regardless of his productivity. In contrast to Deng’s economic reforms in China, which gave millions of Chinese an equal opportunity to work their way out of poverty, too many people in the Soviet Union prefer a system that guarantees them an equal share of poverty. As one of Gorbachev’s former top economic advisers put it, “Ideology has become psychology.”
While the new noncommunist leadership deserves our help in crafting a coherent reform program, we must recognize that the West cannot save the Soviet economy. Only the nations of the former Soviet Union can save themselves. The Soviet system was bankrupt, and many of the new postcommunist leaders understand the need to place it in voluntary receivership. While the reform process will involve wrenching economic dislocations, the Soviet republics must adopt the reforms that will provide the incentives for the people to work their way out of bankruptcy. We should provide whatever help they need to steel themselves for this challenge but should refrain from any assistance that would make them back away from it.
Those who patronizingly claim that nothing short of a Western bailout can save the nations of the former Soviet Union are wrong. The Soviet Union was not a nuclear-armed Bangladesh. Its natural resources, while increasingly expensive to develop, remained abundant. Its labor force, despite its poor work ethic, was highly skilled and would have responded to proper incentives. Its scientists were recognized internationally. If the new noncommunist leadership adopts the right reforms, the accomplishments of the nations of the former Soviet Union will astonish the world.
While there are scores of needed economic reforms—free prices, private property, capital markets, and others—there are two fundamental political requirements: painful honesty and strong leadership.
Yeltsin can be legitimately faulted for not fully facing up to the sacrifices that his market-oriented program will require from the Soviet people. He is not ignorant of the difficulties and suffering inherent in the transition. But his rhetoric on the free market—not unlike Gorbachev’s on perestroika in his early years in power—will foster unrealistic expectations of instant prosperity. Like most revolutionaries, he has been more effective in destroying the old than in building the new.
It is absolutely imperative that Yeltsin bite the bullet and explain to the people the sacrifices that will be necessary to transform the system—sacrifices that will stretch out over a generation. If he does so, he will increase the reserves of political capital he will need to buy time for the reforms to work. As they demonstrated in World War II, the Russian people are capable of great sacrifice and will endure great suffering if they believe in their cause. In the current economic crisis, they can only understand their cause if their new noncommunist leaders explain it to them with no holds barred.
There is a natural fear among democratic politicians to engage in such frank talk. Even when I visited the Soviet Union in March 1991, I found that ironically the greatest danger they faced was not winning elections but governing after they won. At that time, democrats who came to office at the local and republic level were rendered totally impotent by the Communist-dominated bureaucracy, which controlled virtually all factories, distribution networks, and financial resources. Those who took office did not necessarily take power. While the Soviet people understood the constraints under which democratic officials operated, their patience was beginning to fray. Today, with the leverage of the reformers increased by the August 1991 revolution, the people will set a higher standard: they expect their leaders to deliver on their promises of a better life. Only if the new noncommunist leaders level with the Soviet people will their policies be given enough time to work before a political backlash sets in.
Yeltsin’s critics have wrongly faulted him for exploiting his political advantage immediately after the coup to strong-arm Gorbachev into adopting a more radical course. But strong leadership sometimes involves arm-twisting. On the difficult road to economic recovery, the nations of the former Soviet Union do not need leadership by committee, which is no leadership at all. Instead, they need leaders who will take decisive action to break the back of the old system and lay the foundation of the new system as quickly as possible. Those who urge gradualism warn that rapid change will create economic chaos. But in the former Soviet Union, economic calamity has already arrived. A course of gradual change will allow the economic hemorrhage to continue, while an accelerated program will cauterize the wound as quickly as possible.
After a visit to the Soviet Union in 1919, Lincoln Steffens, a liberal American journalist, wrote, ecstatically, “I have been over into the future and it works.” Now, millions of people in the Soviet Union have experienced that future, and they know that it does not work. While they have turned away from communism and toward the free market, what course they will ultimately settle upon remains very much in doubt.
In this respect, the greatest contribution the United States could make is not financial but ideological. It would be a great tragedy if the newly liberated nations of the former Soviet Union gave up on freedom and turned toward democratic socialism. Soviet communism was an unmitigated evil. Democratic socialism is a fashionable fraud. The only economic success stories in the developing world have come in countries whose leaders rejected the siren call of socialism tempting them to sacrifice opportunity and progress on the altar of equality.
We must seize this historic moment—when we celebrate the defe
at of communism—to develop a strategy for the victory of freedom among the nations of the former Soviet Union. The stakes could not be higher. These nations know that communism does not work. They have great expectations that the free market will work in their countries as well as it has in the West and in much of East Asia. They have rebelled against the failed policies of communism. But if freedom fails, they will rebel against it as well.
They will not return to communism, but communism is only the most advanced form of socialism. A return to socialism of any kind—even the democratic variety so popular in Western intellectual circles—would be a tragedy for the peoples of the former Soviet Union. It would condemn them permanently to the backwaters of third world economic stagnation. The battle in the West between those who favor progressive democratic capitalism and those who favor benign democratic socialism predated the cold war and will endure after the cold war. We have won that battle in Western Europe and noncommunist East Asia. The West must now win it in the East.
Our strategy should focus on winning over the new leaders in the republics. Aid should be provided to the center of the new commonwealth only if its republics endorse and participate in formulating such a program. In addition, we should institute direct ties with the republics and help them establish the institutions needed to make the free market work. The United States should extend a helping hand to all republics that move toward a free-market system. But we should embrace only those who explicitly denounce the deadly danger of democratic socialism and formulate programs to move aggressively toward the free market. The essence of our strategy should be to differentiate among the republics, providing greater assistance to those who make the most decisive break with the past.
We must accept the fact that the first generation of Soviet revolutionaries might fail in this respect. Boris Yeltsin, for example, has said, “If from the entire spectrum of parties internationally I were to choose one, I would choose the position of a social democrat.” As a fast learner, Yeltsin may move away from this position just as he abandoned communism. He should recognize the electoral defeat of the social democrats in Sweden as a warning against the dangers of taking the socialist path. But if he does not, the West should not subsidize the failed economic theories of socialism any more than it should have funded the failed political theories of communism.
The true debate can now begin. Liberals who wanted the state to mandate economic equality tended to see the Soviet system as a model they had to defend. They no longer have to serve as apologists for the repression and aggression of the Soviet Union. Conservatives who wanted markets to generate economic opportunity were preoccupied with attacking the brutal excesses of communism. They can now direct their fire on the failure of democratic socialism. For seventy-five years, communism has distorted the battle between those who stood for capitalism and those who stood for socialism, between those who favored free markets and those who favored state-controlled markets, between those who exalted individual rights and those who put highest priority on group rights.
A century of prosperity in the capitalist West is an irrefutable argument that equality at the cost of freedom and opportunity is too high a price to pay. Today, as we join this great debate, we must do whatever is necessary and feasible to convert the newly independent nations of the former Soviet Union to our cause.
• • •
The starkest contrast between my impressions of the Soviet Union in 1959 and 1991 was in the spirit of the people. When I stopped by a public market in 1959, I could see that while Soviet citizens were obviously poor in goods, they were rich in spirit. They believed that they were on the right side, that the promises of a better life would come true, and that their system would triumph in the future. When I visited another market in Moscow in 1991, I found the people better off materially but depressed spiritually. Not angry or hostile, they instead seemed resigned to the fact that nothing worked and that their living conditions would only get worse. Sadly, they had given up not only on communism but also on themselves.
The people had invested great hopes in Mikhail Gorbachev. But he had failed to live up to them. In my meetings with the reformers, few had kind words for Gorbachev, whom they chastised for failing to go the final mile. One called him “indecisive.” Others viewed him as “ruthless” and “an opportunistic party-man.” Another characterized him as “a talker, not a doer.” In reference to the January 1991 killings in the Baltic states, still another reformer even called him “a brutal wimp.” After strongly criticizing Gorbachev’s timid economic reforms, Boris Yeltsin bluntly told me, “He is a weak man.”
Who was the real Gorbachev? He was a Communist. He was an atheist. He was a Russian nationalist who, to borrow from Churchill, desperately wanted to avoid presiding over the dismemberment of the Soviet empire. He was a shrewd politician who fought to survive. He was a highly intelligent, sophisticated, and supremely self-confident leader with the great ego characteristic of most successful statesmen.
In the period between our meetings in 1986 and 1991, Gorbachev had changed profoundly. Though he was still at the top of his game intellectually in both encounters—addressing complex issues as effortlessly as Ozzie Smith fields grounders for the St. Louis Cardinals—those five years in power seemed to have added ten years to his age. His self-confidence remained unshaken, but his characteristic optimism had waned. While spirited in conversation, his iron emotional control, which I had previously observed, had also frayed with time.
When I first met him in 1986, Gorbachev had been in the vanguard of reformers, pressing the party apparatus through the pressure of glasnost and limited democratization. By 1991, however, he had become the point man for the reactionaries, fighting to keep democratic and nationalist forces at bay. His fatal flaw throughout his journey was his unwillingness to accept the fact that a socialist economy could not work and that a centralized empire could not survive in an age of nationalism. The intended purpose of glasnost was to open up the system so that the people would support reforms to strengthen the Communist system. Instead, it opened the system up to self-destruction.
His greatest strength—his unswerving belief in his ideals—was also his greatest weakness. His commitment to his ideals was admirable, but his choice of ideals was deplorable. A devoted Communist, he neither trusted the will of the Soviet people nor understood the fundamentals of market economics. He resigned from the leadership of the party but could not abandon his faith in the party. A proud Russian nationalist, he viewed the Soviet state as a great historical achievement and could not comprehend the nationalists in the republics who borrowed from Lenin in dubbing it “a jailhouse of nations.” As President Zia ul-Haq of Pakistan observed shortly after meeting the new Soviet leader in 1985, “Gorbachev is a product of the system. He will try to improve it, but he will not abandon it.”
Like other major historical figures before him, he has found that those who plant the seeds of reform seldom reap the harvest. He missed his historical moment in 1986. At that time, he could probably have won a popular election. But he chose not to face the people. He probably could not even have polled the 25 percent that Lenin’s Bolshevik party received in the free elections for the Constituent Assembly in 1917. In fact, the only way Gorbachev could have won the presidency would have been if its powers were so weakened that he would have posed no threat to the progress of democratic and free-market reform. He learned the hard lesson that his early popularity had derived not from his personal leadership but from the hopes of the people for progress. He brilliantly adopted the rhetoric of reform. The people liked what they heard but did not like what he did. When he reversed field, the people backed others who remained true to those ideals. He thought the Soviet people wanted a reforming Communist, but what they really wanted was reform without communism.
When Gorbachev returned to Moscow after the failed coup, many of his loyal friends in the West insisted that he had “not been diminished.” This was wishful thinking. He was a resilient fighter who did n
ot just fade away as do most politicians after suffering a defeat. But he could not regain the power he tried so hard to get and keep. The August revolution not only swept away communism but also ultimately undercut the enormous powers Gorbachev had previously concentrated in his hands.
To save his nominal power, he gave up his leadership of the party, acquiesced to freedom for the Baltics, and jettisoned central control in accepting an interim confederal arrangement among the republics—the Union of Sovereign States. What he hoped would be a tactical pause turned out to be a strategic defeat. He hoped that when the republics experienced the hardships of independence, they would be forced to return to the center—and to him—for new leadership. Gorbachev’s desperate gambit demonstrated that he was being pushed by the gusts of the democratic revolution, not leading it.
In order to confirm their past paeans to Gorbachev, the instant historians have judged his actions during the coup too glowingly. Eduard Shevardnadze, Gorbachev’s foreign minister and close personal friend, has been a more objective observer. When I met with him in 1991, he provided a critical but guardedly optimistic evaluation of his former boss, chastising the Soviet president for toying with the danger of dictatorship but predicting he would soon “cross the Rubicon” on important economic reforms. After the coup, however, Shevardnadze wrote a brutally frank assessment and perhaps a fitting epitaph of Gorbachev, observing, “Now I am convinced that none other than Gorbachev himself had been spoon-feeding the junta with his indecisiveness, his inclination to back and fill, his fellow-traveling, his poor judgment of people, his indifference toward his true comrades, his distrust of the democratic forces and his disbelief in the bulwark whose name is the people, the very same people who had become different thanks to the perestroika he had begun.”
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