Russia: A Time for Caprice

To Kremlin watchers, things were looking up. First the All-Union House of Fashion, arbiter of Russian couture, lift ed hemlines above the knee, and along with those modest Russian miniskirts took Courrèges to boot. Then the State Committee on Prices hiked the tags on a wide array of heavy industrial products, with increases ranging from 35% on metals to 75% on coal. Finally the Agriculture Ministry announced a bumper grain harvest for 1966 of some 160 million tons, the largest in Soviet history and up 40 million tons over last year’s yield.

What the three disparate raises reflect in common is the new economics, Soviet style, which is slowly reshaping the Russian way of business. Based on the ideas of realistic-minded economists like Kharkov’s Evsei Liberman, the post-Khrushchev leadership of Brezhnev and Kosygin during 24 months in power has been nudging the Soviet economy toward a more rational system. One of its facets, as the shorter-skirted models displayed, was summed up by the fashion editor of the Ministry of Culture’s newspaper: “The time has come when the customer can choose, order, indulge in fantasy and even caprice.”

Extra Rubles. That time has not, of course, come for the ordinary Russian as yet. But the very fact that the Kremlin holds up the goal as an ideal is a remarkable turnabout in Communist ideology. So, too, is the newly christened town of Togliatti, the Russian Detroit on the Volga, where a huge Fiat automobile plant is being built as the hub of the five-year plan’s aim of boosting passenger-car output from 200,000 to 800,000 by 1970. Other consumer durables, from TV sets to washing machines, are also targeted for production in greatly increased quantities. One thing the record grain crop will do is give many Russian farmers extra rubles to buy them.

By far the most important step in modernizing Russian economics, however, was the decision to raise basic industrial prices. For years the prices of coal, steel, gas and fuel oil have been kept far below cost in order to forge a heavy industrial base. Now that Russia can afford to ogle the age of affluence, it needs not rigid central planning but the flexibility of a market economy using such Western techniques as profits to measure performance and buyers’ wants to dictate output. Kosygin has promised to switch all Russian enterprise away from rigid central planning by 1968. Already 673 firms employing some 2,000,000 workers have made the changeover, with so far a notable improvement in performance. But until Soviet prices begin to reflect demand, a truly freer economy will remain a mirage. Last week’s rises were the first step.

Ivan’s Future. The Kremlin’s gropings toward ruble sanity have not gone unrecognized in Washington. Last weekPresident Johnson, moving to ease East-West tensions, announced a dramatic liberalization of trade with Moscow and the satellites, removing hundreds of items from the list of goods that American businessmen have been prohibited from selling the Communists. Among them: machinery and equipment, whose purchase is to be financed by the U.S. Export-Import Bank, for use in the Fiat automobile factory in Togliatti. There may yet be a Ford in Ivan’s future.