Eastern Europe: The New Managers: Discovering Capitalism

While Western businessmen are traveling behind the Iron Curtain in increasing numbers, Western ideas are crossing the frontiers with even greater impact —and some of them are stirring up a kind of revolution. Beset by economic problems that stem largely from their doctrinaire Marxism, the nations of the Soviet bloc are turning to many capitalistic practices that they once roundly condemned. Last week in the pages of Pravda, Russia’s . chief prophet of the “new” economics, Kharkov University Economist Evsey Liberman, renewed his campaign for adoption of the profit motive, calling for the creation of a new government agency to spread the idea through the Soviet economy.

Liberman is also pushing for more decision making by plant managers instead of central planners, has been successful enough to announce that his ideas “will be extended next year over the whole of Soviet light industry.” But his voice is only one in a rising chorus of criticism directed at classic Marxist economics. Lately Pravda and other Soviet publications have carried articles by economists branding the Soviet system “obsolete” and advocating a more or less free market system. Sergei Afanasyev, a deputy premier of one of the Soviet republics, fortnight ago came out for “material stimuli” as a necessary mainspring of the Russian economy. Lev Leontyev, an economist of the Soviet Academy of Sciences, from which initial opposition to Liberman’s theories came, recently advocated the profit motive and payment of interest as “key instruments of economic control.”

Disgusted by Controls. Its opponents, notably in Red China, call this switch economic “revisionism,” while its backers prefer to regard it as “creative

Marxism.” By any name, it is spreading through the Soviet orbit and causing considerable ferment. Czech economists have openly attacked the Marxist economic system, and Czech President Antonin Novotny recently stressed the necessity of “material incentives” for the workers. Even more important for its potential effect on the Communist world, the new way of thinking has given encouragement to the long-suffering consumers of the Soviet bloc, who have begun to sound off loudly about the inefficiencies of a system that provides them with so few comforts.

All this has been accompanied by the gradual emergence of a new, young, and questioning breed of Communist managers. Though they remain loyal Communists, they are better educated and more pragmatic than the baggy-pants apparatchiki (party hacks) who have steered the Eastern economies since World War II. They are acutely aware of the spectacular success of Western Europe’s free market system, take professional pride in making farms and factories as efficient as possible. Perhaps most of all, they are openly disgusted at the smothering array of rules, regulations, senseless orders and excessive controls that have put Communist economies in their present mess.

Class for the Classless. The central government planners are still on top, and the new executive types have a long way to go before they can control economic policy. But their numbers are growing, their ideas are winning steadily wider acceptance, and the new moves toward capitalistic methods are giving them a chance to exercise their managerial capabilities. Quarterly performance bonuses are now widespread behind the Iron Curtain, and the Czech government has introduced “elastic price policies” tied to the market. In Poland, 36 enterprises are involved in a pilot project to determine if output and quality can be improved by pushing for a profit. Hungary has imposed a 5% interest charge on machinery and supplies to encourage plant managers to use capital more efficiently.

The young technocrats are one of the principal forces behind Rumania’s defiant drive toward all-round industrialization and economic independence from Moscow. Throughout the Soviet bloc, they have already impressed their Western counterparts as able hard bargainers. Mostly between 30 and 45, they have also managed to create a few incentives for themselves as well as for the workers. They get much larger salaries, bigger bonuses and first crack at scarce apartments, send their children to the best schools, have cars and often expense accounts. Their wives are more soignée than most—and so are their mistresses. They seem to enjoy adding a bit of class to the classless society.