Mikhail-nomics: Gorbachev talks radical reform, spurns Chinese path

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ASTRANGE thing happened last week. Forty of America's top journalists sat down to breakfast with President Reagan. They had an open field to ask him any question. And yet it was only after 45 minutes of the hour-long session that anyone asked about Mikhail Gorbachev, future summits, arms talks, or anything relating to the other superpower. This lack of interest in things Soviet occurred at a moment when Moscow had just completed its first Communist party congress in five years, the first congress of the Gorbachev era. It came only a few days after Mr. Gorbachev had delivered his version of a Khrushchevian speech sharply criticizing much that had gone wrong in the previous regime.

Why should leading American columnists and reporters express so little interest in the man the news media had previously catapulted to fame as the Great Communicator of the East?

Part of the answer has to do with the fascination of newer subjects: an alleged billionaire's family shopping spree in Pacific island PXs, and the question of whether Sandinista tanks might one day drive to Laredo, pushing millions of Chicanos across the border before them.

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But there is probably a deeper, less-faddish reason for the American news establishment's momentarily flagging interest in Gorbachev. Until recently he exuded the fascination of a cocky Avis or Apple -- a No. 2 superpower that would succeed by trying harder. But now the appraisals of leading Western Sovietologists have begun to sink in. And those appraisals picture a quick-witted, charming, ruthless executive whose corporate state is in worse economic condition than was generally realized -- an executive who has managed an unusually quick clearing of dead wood from his management chart but who is unwilling to order a basic restructuring of the firm.

A recent study by Vladimir Kontorovich and Boris Rumer, economists who know the Soviet planning and production system from the inside, indicates that a quarter century of official statistics have underestimated the inflation rate and overestimated the national growth rate.

Confirmation comes from a Soviet economist quoted in no less an authority than Pravda, the official party paper.

Further confirmation was implied when Marshall Goldman, associate director of the Russian Research Center at Harvard, was told by Soviet officials during a recent visit to Moscow that they had read his 1983 book, ``USSR in Crisis: The Failure of an Economic System,'' and believed its analysis was accurate.

In short, Gorbachev finds himself presiding, not over an economy that has been stagnating merely because of Brezhnev cronyism, but over one which has been stagnating because of shrinking investment in many crucial sectors of the civilian economy.

There are some indications that his answer so far is to talk about ``radical reform'' but to attempt only a change of managers, a shift from emphasis on quantity to quality of production, some further provision of pay and profit incentives for individuals and factories that innovate and succeed, and pay cuts and castigation for those that don't.

Seweryn Bialer, in a closely reasoned article in Foreign Affairs, examines the question of whether Gorbachev believes that stringent management reform is enough to get the country moving again or whether he secretly hopes to install more radical reforms (including a turn from central planning to a supply-demand market system). If the latter, Gorbachev could be either (1) biding his time till he totally dominates the political/ideological/managment structure, or (2) waiting for time to prove that a management shake-up and new discipline are not sufficient and structural changes will be needed.

Mr. Bialer quotes him as warning a gathering of East European economic planners last summer: ``Many of you see the solution to your problems in resorting to market mechanisms in place of direct planning. Some of you look at the market as a lifesaver of your economies. But, comrades, you should not think about lifesavers but about the ship, and the ship is socialism.''

Bialer, like most of his colleagues in the Sovietology business, is skeptical about the ``closet market reformer'' thesis. Perhaps the most telling evidence against any such secret intent on the Soviet leader's part has been his scorn for the socialist market systems adopted by China and Hungary. If one looks at the crucial indicators of world trade -- innovation, education, standard of living, investment, and productivity in the US, USSR, Japan, and China it is possible to draw some conclusions about what systems work well in terms of results.

Japanese companies have provided the most striking success stories. They have done so by blending (1) the American system of corporate team competition to meet citizen needs with (2) superior managerial and technological education in schools and (3) management and labor interest in innovation, retraining, and quick response to new markets.

The US, still No.1 in volume because of its huge internal market, is sensibly, if belatedly, acting like Avis in the face of Japan's stimulus. But the US effort in terms of trade, innovation, education, investment, and productivity still emphasizes reaping profits early and often, rather than plowing a large portion back to build for the future.

China, scarred by Mao's destruction of profit, investment, and education -- and wary of great leaps backward -- is adapting market incentives from the Japanese and American examples in one of the greatest economic experiments of the century. Deng Xiaoping is attempting to do on a grand scale (one quarter of mankind) the kind of radical national overhaul that Kemal Ataturk attempted with the remnants of the Ottoman Empire.

If the disinterest of the Washington columnists indicates anything, it may be a belief that Gorbachev is not going to be as bold as Ataturk and Deng.

Earl W. Foell is editor in chief of The Christian Science Monitor.

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