If there's one craggy outcrop of fact in a sea of uncertainty, it's surely that the Soviet economy is in dreadful shape. Everybody says so, most of all the free-marketeers in Moscow who are massed behind that salesman of a 500-day dash to privatization, Stanislav S. Shatalin.
But as we'll see, much of this doomsday scenario is self-interested propaganda.
Start with some basic data. The Soviet Union is the world's largest producer of crude oil and in 1989 was the largest oil exporter, too, at 3.7 million barrels a day. Since it no longer must export at deflated prices to Eastern Europe, it stands to gain an extra $24 billion or more just from oil this year.
The Soviet Union is the world's leading producer of steel, large-diameter pipe, chemicals, fertilizer, cement, synthetic rubber and aluminum. Between 1967 and 1989 its industrial production doubled, and the U.S. government estimated that between 1985 and 1989 its gross national product increased at a rate of 2% per annum, the same as West Germany's. And although there are problems with the harvest, the fact remains that the 1990 Soviet grain crop is the largest in the nation's history.
A couple of weeks ago I met my old friend Lynn Turgeon, retired this year from his post as professor of economics, specializing in the Soviet Union and Eastern Europe, at Hofstra University. Turgeon had just returned from a two-week trip to the Soviet Union, especially the Upper Volga. He's been going to the Soviet Union since 1966--11 trips in all--and so has a pretty good historical perspective.
"Contrary to all the dire reporting, supplies--mainly food but also stuff in department stores--are better than they were four years ago," he said. "I always collect farm market prices and have been doing so for many years. This time my hobby paid off. In the United States you'll see estimates of a 10% inflation rate in the Soviet Union, but in fact this increase is confined to Moscow and Leningrad, and outside those cities there was no increase in repressed inflation."
Get out of the two major cities to some-place like Voronezh, and pork is five times cheaper, Turgeon says. And those stories of bread and riots and scarcity? He thinks they are much exaggerated, to drum up support for Shatalin's 500-day plan to convert to a so-called market economy: "There's a symbiosis of interest between what I term the 'socialist bourgeoisie' in Moscow and Western reporters.
"The socialist bourgeoisie are hellbent on getting convertible rubles so they can pick up their VCRs and porno cassettes when they travel. They are anxious for the Yuppie life and you can't have that without a convertible ruble. Most Russians don't travel and couldn't care less about convertibility."
Turgeon emphasized one thing I'd noticed in Moscow a couple of years ago--the tendency of the Muscovite intelligentsia to hysteria, leaping from one puddle of gossip, half-baked information and bogus theorizing to another. They aren't to be trusted to get anything straight. Yet the "reformers" who solemnly told the U.S. Congress that CIA growth estimates were wrong by a factor of four were treated with the utmost seriousness. The Soviet Friedmanites have an ax to grind--the need for crash conversion--and will say anything, however silly and incredible, to buttress their case.
For their part, Western journalists are eager for anything negative about the Soviet economy. So the Russian socialist bourgeoisie produce stories of disaster; the journalists enlarge their significance and then the Muscovite intelligentsia quote these Western stories back as evidence of the need for crisis action.
Of course these journalists mostly stick to Moscow and Leningrad. They don't see the relative abundances of the country-side or the unwillingness of producers to ship to the two cities, whose officials largely blame political resentments and uncertainty about the ruble for such dislocation.
Turgeon argues that the existing economic program is doing better than is generally recognized, though the rate is slow and therefore infuriating to Russians waiting for magic changes. People who believe in magic will say anything, particularly if reporters are standing ready to write it all down. Shatalin admits to being a devotee of astrology, as is an increasing number of Muscovites. This is to be expected from naive worshipers of the "free market" with its "hidden hand," as is the likelihood that, if given their head, they can gravely injure a fundamentally powerful economy.