East bloc dilemma: reform economy or play it safe?

Play it safe and stick to a centralized economy? Or decentralize and reform? This is the dilemma East European countries face as they strive to maintain economic growth.

It is a difficult choice. Each option carries risks: Playing it safe generates domestic discontent that, sooner or later, will explode -- as in Poland.

Reform, on the other hand, can bring with it dangerous political hazards -- again as in Poland.

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Poland, for example, had to concede the principle of workers' self-management under the pressure of the August 1980 crisis. But defining it in law poses a new threat of confrontation with solidarity, the East bloc's first independent labor union.

Whatever the outcome of the dispute over Solidarity's ultimate form, it will mark a tremendous advance beyond the rest of the bloc.

With the exception of Hungary -- the only East-bloc state thus far to opt boldly for economic reform -- unions in the East bloc remain solely a means for transmitting decisions on the economy and labor relations, with only a semblance of worker involvement.

In this own undramatic, gradualist, but effective way Hungary has shown that worker involvement works. Its latest move is toward a more open, less arbitrary selection of management, giving the factory floor a voice in all enterprise decisions.

The Polish party has produced its renewal plan, which, ifm it survives, will introduce not only self-management but also a measure of decentralization and more rational planning along the lines of Hungary's model.

Hungary has been on this track since the late 1960s and has provided some striking lessons. The Poles have begun to take notice. A good example is prices.

Three times since 1970 the effort to institute market prices for meat and other commodities has rocked the Polish leadership. It has brought down two regimes.

By contrast, Hungary hs been able to bring food prices close to market levels with no major upsets of public opinion.

But Hungary continues to face the same problems that beset its allies. Moreover, it is more dependent than they are on imports of raw materials. Consequently, it is much more vulnerable to the world recession that began in the mid-1970s.

Yet, thanks to the New Economic Mechanism, it has grappled with them mre rationally than its partners in Comecon, the East-bloc trading community. At the same time, it has created a unique degree of stability at home and won genuine economic credibility with the industrial countries of the West.

The policy has brought about a new approach to labor relations. Hungarian unions are not legally "autonomous" like Solidarity, nor do the factory councils have the kind of power over the choice of managers the Polish militants are demanding.

But political prudence, above all observance of the ideological limits set by Soviet orthodoxy, has enabled Hungary to reform its own practice in social-political life as well as the economy -- while securing Soviet approval in the process.

It explains why Budapest is now echoing Soviet charges (and its own misgivings) against Solidarity of "antisocialism" and political rivalry to the party.

The Hungarian unions are consulted extensively about appointments of directors. The regime does not foist its nominee on an enterprise if he is strongly opposed by its work force.

They are being given even more say in management in an effort to raise labor efficiency. Proposals would set higher criteria for directors and top staff, and replace the "command" system of selection through the ministries.

In Czechoslovakia many such ideas were snuffed out by the Russians in 1968. Some experimental reform has been talked of since, but with no significant results.

Romania is an industrializing country, with similar shortcomings. President Nicolae Ceausescu has talked much about worker participation in the economy's management. But the pattern has been demands for still greater work efforts -- without real concessions -- and the swift suppression of a move in 1979 for democratic unions.

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