East-West Hybrid Is Economics’ Mutant

For months the reform movements in the Soviet Union, China and Eastern Europe have taken the world on an emotional roller-coaster ride. Again and again our hopes have risen to the sky and then plummeted to earth. We have seen the first bloom of glasnost in Moscow and the use of poison gas against protest marchers in Soviet Georgia. We marveled at the astounding spectacle of a million peaceful demonstrators in Tian An Men Square and recoiled in horror at the cruel suppression of the protest by assault troops. Before the firing had stopped in Beijing, we were celebrating the victory of Solidarity in Poland.

Roller-coaster rides are exhilarating, but they are not the best occasion in which to evaluate the nature and direction of anything. Now that Beijing has been terrorized into silence, we might ask some careful questions about reforms in the communist world and their meaning.

As matters of economics, we know the reforms cannot succeed. There is some sense to a command economy on the old Stalinist model, more sense to a market economy in the Western style, but no sense at all to the hybrid Stalinist/market economies that China and the Soviet Union have begun to fashion.

Stalinist practice taught the world that people will work (not very well) out of fear; the West and the newly industrialized countries have taught us that people will work (very well) for the right incentives. But mixed Stalinist/market economies created by political bargaining are neither fearsome nor alluring. In a way, these hybrids bear the defects of both East and West. Everyone waits for directions from the center, which do not come, while everyone lacks the incentive to take the initiative. Whatever else they achieve, the Stalinist hybrid economies will not--cannot--deliver modernization, high technology and low-priced consumer goods.

Politically, reformers and traditionalists alike in the Soviet Union and Eastern Europe will soon grow tired of all the posturing without power. It is humiliating, a kind of bogus political circus in which the reformers must jump through meaningless hoops. The outcome of the recent elections to the Supreme Soviet showed how the system has been rigged to ensure that the Communist Party of the Soviet Union remains firmly in control. At least the Chinese authoritarians declined to force this embarrassing ballet on their students and reformers.

For the loyalists in the Soviet Union, the new institutions and procedures are annoying and dangerous. Their annoyance is obvious. They are constantly criticized. Their accomplishments are belittled. They are exposed to ridicule and hatred. Politicians everywhere despise being on the defensive like this and will do everything they can to stop it. The reforms are dangerous to the regime because they foster the impression that power is up for grabs in the Soviet Union. If this impression is allowed to continue, sooner or later reformers will try to take power, perhaps through massive demonstrations of the kind seen in Beijing and Soviet Georgia. The loyalists and the Gorbachevite reformers will fight as Deng Xiaoping and Li Peng have in China to prevent a transfer of power out of the hands of the Soviet--or Polish or Czech or East German--Communist parties.

The reforms’ most interesting development is the final and total collapse of Marxism. This truly historic phenomenon carries a number of crucially important implications for all nations. I’ll briefly sketch three:

In the industrial democracies and developing countries, the greatest risk is hubris, overweening arrogance, a defiance of faith and reason that is self-destructive. Now that no serious student of political economy can endorse the Marxist path to development, a major counterforce to market economics has disappeared. Into that void in the industrial democracies are flooding puffed-up apologists of unrestrained capitalism. The resulting conflict already shows in the polarized and paralyzed national economic debate in the United States. Congress will not cut expenditures, the President will not seek higher taxes. Meanwhile, the wealth of the country is being transferred to others. These extremes of polarization are already stalking the developed and developing world.

In the Soviet Union the greatest accomplishment of Marxism was to glue a multinational country together. While official belief in Marxism prevailed, nationalism was overwhelmed. In practice, Soviet authority may have been Russian, but in principle nationality didn’t matter. One day--on that brave Marxist day of the arrival of true communism--nationalism was to disappear. That pretense is gone. What is left except the increasingly dangerous clash of conflicting and aggrieved nationalisms?

Finally, although it may gall some Western ideologues to admit, most analysts would agree that Mao and Marx once held the Mandate of Heaven in China. In Western terms, a social contract existed. Now the contract is broken. And it is broken at a time when excesses of Mao and Marx have destroyed the old culture of China. A new political culture must be born without the old limits and restraints, under the heavy and sometimes shaky hand of an increasingly illegitimate tyranny.

Perhaps the most attractive metaphor is not a roller-coaster ride but an Indonesian shadow play. There is music and laughter. There are images on the screen. They frighten, amuse, educate. But they are only shadows of the originals. Behind the screen the sources of change and movement are hidden. It is time to look behind the screen.