THE SHIELD OF ACHILLES (103 page)

Gorbachev was a generation younger than the other members of the Brezhnev politburo of which he became a full member in 1980. His colleagues at that stage had lived through, and perhaps been formed by, the Stalinist “revolutions,” including the attacks on “left revolutionaries” and the adoption of “Socialism in One Country” that had subordinated international socialism to the improvement of the USSR. By contrast Gorbachev and his contemporaries described themselves as “children of the Twentieth Party Congress,” the congress at which Khrushchev had attacked Stalin and attempted to liberalize Soviet politics. If we may say that Brezhnev brought stability and predictability to a state that had been repeatedly jarred by Khrushchev, then we might also say that Gorbachev was eager to bring energy and innovation to a state that was widely perceived to have become sclerotic.

It was not a state, however, that was in deep economic difficulties or that was unable to hold its own in the superpower confrontation with the United States. Gorbachev's response to Reagan's challenge had more to do with his own dynamism and desire for innovation than with any particular difficulties imposed by the United States on the Soviet position. One can see this by simply comparing Gorbachev's response to American strategic initiatives in the world with those of Andropov and Chernenko, who worked in the early 1980s with virtually the same economic resources that Gorbachev had in 1985. When NATO refused to cancel its long-range theatre nuclear force deployments in Europe, Andropov abruptly withdrew from the Intermediate-range Nuclear Forces (INF) talks rather than bargain away the SS-20 forces that had prompted the NATO deployments in the first place. When Chernenko agreed to return to the talks, he offered a proposal—the so-called “zero option”—that eventually was accepted by the United States after Gorbachev had come to power. There was no noticeable difference in the strategic or economic conditions faced by the Soviet leadership under any of these men prior to 1988. The economy, which had grown at rates of 5 percent in the early 1970s, was, according to official estimates, slowing down to a rate of 2.5 percent by 1984, but this decrease was hardly unique to the Soviet Union. Growth in the United States, which had been at an average rate of 4 percent throughout the 1960s, had declined to about 2.7 percent in the 1970s and 1980s. Most Western European economies, already lagging behind the United States in per capita income, also experienced slower growth during the 1980s than the United States.

What did occur was a contraction of absolute growth in 1979 – 1982, but this was in part caused by a series of poor harvests and a drop in the utilization of industrial capacity, both temporary. In fact, grain yields rapidly improved from 1981 to 1986, apparently due to the adoption of improved agricultural technologies. Andropov's program of enhanced discipline also seems to have had a positive effect: industrial growth rebounded in early 1983. If the “core legitimation of Soviet rule was provided by the Marxist thesis that public ownership of the means of production, and the unified direction of production toward public objectives, would make a socialist economy more efficient than a capitalist one”
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and thereby enable the state better to provide for the welfare of the nation, then the contractions of the late seventies and early eighties were cause for some concern. After a long period in which the much poorer Soviet economy had grown at a faster rate than that of the richer and more developed West, it now appeared to be slowing down. This occurred, however, for so short a period and at so slight a rate that it is difficult to believe that it was in fact the source of the legitimation crisis that Gorbachev eventually found himself forced to confront. Rather, it was when Gorbachev sought to streamline the Soviet economy in order to make it more competitive strategically that his efforts inadvertently threw the Soviet state into a crisis in which his increasingly desperate measures—all efforts to copy successful Western programs to some degree—only furthered ensnared him. Partly this occurred because the piecemeal adoption of Western practices was counterproductive; partly because championing Western methods tended to enhance the prestige of the West at Soviet expense; but mainly because Gorbachev himself attempted to delegitimate Soviet practices in order to win support for his reforms—in much the same way that earlier internal revolutions had been conducted by Soviet leaders. When his program of economic reform failed, however, he himself had too greatly weakened the state apparatus for it to recover, and there was left only the residue of the delegitimation campaign he had all too successfully conducted. This climactic story began, it must be recalled, not with a Soviet program of conciliatory rapprochement with Western states, but with a pulsating ambition to compete with them.

Even before his election as general secretary, Gorbachev had warned that “[o]nly an intensive, fast-developing economy can ensure the strengthening of the country's position in the international arena, enabling it to enter the new millennium appropriately as a great and prosperous power.” When Chernenko died in 1985, Gorbachev became general secretary of the Communist Party. In one of his first speeches after assuming the leadership, he asserted that “the fate of the country and the place of socialism in the world” depended upon the Soviet Union reaching its economic objectives.

Gorbachev's first major announcement was the initiation of a strategy he termed the “acceleration” of economic growth, to be achieved by a quantum shift of resources into the machine-tools sector. This sector was directed to increase innovation and the share of new products in its output. Abrupt shifts of investment, which are characteristic of command economies, can bring about serious sectoral imbalances, slow growth, and cause inflation in the short term, but if the leading sector has been correctly identified, such investment strategies can bring competitive benefits. The Japanese approach of encouraging investment in certain identified sectors has, on the whole, been a success. And indeed the main feature of the Soviet 1986 – 1990 Five-Year Plan was a tremendous shift of investment into high technology.

For the USSR, however, the payoff of a stronger machine-tools industry never arrived because the government abruptly switched strategies. In 1987, barely two years after its adoption, the “acceleration” strategy was abandoned to the accompaniment of harsh attacks by Gorbachev on the command economy ideology that had produced such a policy. An alternative strategy of “radical economic reform” was announced. It is worth emphasizing that “radical economic reform,” far from implying a step toward a noncommunist program, was actually intrinsic to the communist system. Because the state was in charge of central planning for the economy—setting prices, allocating production targets, enforcing managerial discipline—any changes came from the top where advances in knowledge were expected to be reflected in refinements in policy. “Reforms reflected confidence in the strength of the system and its potential for improvement, and the revealing expression ‘further perfecting' was a standard part of reform decree titles. Some of the most sweeping economic reforms had been announced in the later 1950s, the golden age of Soviet society… when national income grew by more than 7 percent per year.”
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Gorbachev's new economic reforms consisted of attempts to graft market practices on to the centrally planned Soviet economy. Profit incentives were introduced and output targets deprecated. These reforms tended to undermine the authority of the command economy without actually producing the benefits of the market because they operated in isolation, without the background of the market and its free flow of labor, decentralized transactions, and demand pricing. In the Soviet environment, partial market practices either were of little effect or operated in perverse ways, as if to vindicate the microeconomic “theory of the second best.”
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Gorbachev's radical reforms brought about this contradictory environment: output targets were abolished but the state retained the right to requisition products at levels that encompassed most of enterprise output; the state renounced liability for enterprise debt but if losses were incurred, the ministry was the creditor of last resort; the ministry could no longer direct particular enterprises but was responsible for their overall performance; the “Law of the Enterprise,” which was supposed to give managers more discretion, stipulated managerial duties down to minute details.
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The economist Vladimir Kontorovich concluded of this reform agenda that

The effect was to increase inflation, which, in a command economy where prices were fixed, was reflected in worsening shortages of consumer goods. The actual economic contraction brought about by these reforms, however, was far less visible than the empty store shelves of which consumers complained.

During a series of addresses in 1986 – 1988, Gorbachev ridiculed central planning and the methods of the command economy, and called for “unleashing” the creativity of individuals, freeing them from overregulation and control and giving them a share in ownership. Compensation was to be tied to performance, not to a lock-step system that discouraged initiative. Part of the radical reform plan of 1987 provided for the election of enterprise managers by their employees. Nor was this delegitimation campaign confined to the shop floor:

More players moved into the vacuum thus created: miners went on strike, chemical and power plants were shut by environmental protests, and local authorities began to assert more independent control. The election of managers proved so costly to management control that it had to be reversed in 1990, but the collapse of managerial authority could not now be reversed.

Soviet statistics estimated the growth in national income in 1988 at 4.4 percent and in GNP at 5.5 percent (although the CIA estimated GNP growth at 2.2 percent). By 1989 there was widespread recognition that the reform agenda had failed. Most of Gorbachev's original policies had been reversed or abandoned; “acceleration” and “radical reform” were scrapped. Investment in high technology was frozen, and steps were taken to propitiate new players, the consumers and the workers. The Soviet Union had suffered other similar periods of recession but what now occurred was unprecedented: in the attempted reversal of the “acceleration” program and the “radical reform” program, it soon became clear that decrees to roll back these policies were simply being ignored and that the government in 1989 had lost control of the Soviet economy. By his attacks on the legitimacy of the system of central planning, Gorbachev had crippled the mechanisms that might have allowed him to halt the recession.

Broad public awareness of the impact of the reforms only came in 1990 when official statistics showed actual declines in GNP of 2 percent and 4 percent in national income. In 1990 military expenditures began to decline and higher priority was given to the production of consumer goods. By 1991 official data showed an extraordinary contraction of 15 – 17 percent, and the following year the rate of decline exceeded 20 percent.

There can be no doubt that the general secretary of the Communist Party played a decisive role in the collapse of the Communist system,
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as did the United States president, but these roles are often distorted. President Reagan's confrontational anti-Soviet scheme, his increase in U.S. defense expenditures—particularly on missile defense—and his program of denying the Soviet Union hard currency (by holding oil prices down and
thwarting the completion of a European pipeline) and high technology (by enforcing export controls) did not force the Soviet Union into an economic collapse. But these measures did focus attention on the superpower confrontation and challenged the complacent Soviet leadership, accustomed to détente in the Brezhnev years, to take up that challenge. This was enthusiastically done by the dynamic Gorbachev, who proceeded to mimic what he took to be the most successful strategic innovations of the West. This policy of partial strategic adaptation proved to be an economic mistake, but it only became an economic disaster when the political underpinnings of that adaptation began to be felt, because these disabled the Soviet Union from making the midcourse corrections that would have allowed it to stabilize and avoid the catastrophic economic events of 1990 – 1991. Moreover, the process of delegitimation used to win domestic support for these adaptations set in motion events on the international front—particularly in Eastern Europe—that ultimately played back into the constitutional politics of the Soviet republics and triggered the final collapse. All of these events followed the pattern of mutually affecting strategic and constitutional change described in Book I.

The Gorbachev of 1986 was hailed in many Western quarters as a conciliatory international leader; with the events of 1989 (including the acquiescence of the Soviet Union in German unification and Eastern European autonomy) and 1990 (especially the signing of the Charter of Paris) this view became the general opinion. Nevertheless, a less anachronistic description is probably closer to the truth.