Breaking the grip of central planning. Czech leaders look to move economy forward
Perhaps the best way to understand the problem facing the Czechoslovak economy in the era of perestroika (restructuring) is to visit the National Technical Museum. The Skoda car from 1936 is a sleek beauty, as swift and shiny as the Mercedes and Audis displayed next to it. The 1928 Java Motorcycle stands up well beside the BMW and Harley Davidson models. There are Homolka telephones from 1895, motorized Laurin bicycles dating from 1899, and Nirodna record players from 1920.
Today's products are much less impressive. The 1988 Skoda is a chunky rear-wheel-drive monster, the Java Motorcyles look ancient compared to a modern Harley, and the museum's ``electronics'' room is closed for repairs. The only computer in sight is a Commodore knockoff called the Druzba.
``Our factories are becoming the Industrial Museum of Europe,'' worries Karel Dyba, of Prague's World Economic Institute. ``We're using machines from the beginning of the century to produce the same old stuff.''
After the invasion by Warsaw Pact troops on Aug. 20, 1968, chilling central planning accelerated the decline of what only a generation ago was an industrial powerhouse. But now, influenced by perestroika, Prague has launched its own version: pestuba in Czech.
Since last month, companies have more power to make their own decisions. More leeway has been given for private enterprise. And thousands of bureaucrats enjoying cushy positions in Prague ministries are being shifted to work in companies.
The missing ingredient is public confidence. Because the economic reforms are being proposed by the same leadership that reversed 1968's market-oriented reforms, Czechoslovaks have responded to pestuba with cynicism. For many, the reforms only mean that bureaucrats are trading one office in which they did nothing for another in which they will do nothing.
A typical joke:
``In 1948, the workers staged the revolution that brought the communists to power, and the intellectuals stared.
``In 1968, the intellectuals staged the `Prague spring' revolution, and the workers stared.
``In 1988, the communists stage a reform - and everybody stares.''
Reform means upsetting the status quo. The unspoken compact forged after 1968 was that in return for keeping quiet about politics, people could expect a steady stream of subsidized goods.
Because of Czechoslovakia's strong industrial base, little scarcity is evident here. Even if the goods are shoddy by Western standards, Prague's stores are stuffed.
To make Czechoslovak industry competitive, economists such as Dr. Walter Komarek of the World Economic Institute estimate that up to a third of the country's smokestack factories should be shut down.
The country now produces a staggering 1,000 types of machine tools; it must learn to specialize. It now produces 15 million tons of steel, using twice as much energy and manpower per ton as in neighboring West Germany.
While the government hesitates to take necessary tough decisions, Czechoslovak goods continue to lose market share not only in the West, but in the East. Under Mikhail Gorbachev, the Soviets refuse to take as many shoddy products, and unwanted goods are piling up in warehouses.
Officially, growth is sputtering along at a 2 percent annual rate. Unofficially, there is no growth. The value of unwanted goods has reached 3.5 billion dollars, more than a 2 percent increase in national income.
``Our economy is aging,'' says Dr. Ivan Angelis of the Foreign Trade Institute. ``What we actually need to do is to produce fewer goods, but better ones.''
So far, the economic and political reforms taking place in the Soviet Union have had little impact on Czechoslovakia. According to Dr. Angelis, new regulations permitting Soviet companies to negotiate joint ventures directly with Czechoslovak partners have produced only a handful of projects.
But in the long-run, the Gorbachev effect could be positive. Because the Soviet economy now is so backward, Dr. Angelis says, it drags down East-bloc countries. If the Soviets become more competitive, the improvement will advance the East bloc.
``Right now, we can't buy much of anything from the Soviets,'' he says. ``If they start producing good machine goods, then we could take some from them and produce fewer and better ones here.''
For all its problems, Czechoslovakia has one big advantage over its Soviet Big Brother as it tries to speed up its stalling economy: the tradition visible at the Technical Museum. Unlike the Soviet Union, Czechoslovaks say, history has given them a strong industrial base and work ethic.
``Gorbachev has to force people to work,'' says Jiri Dienstbier, a founder of the human rights group Charter 77. ``Here if people are given the right conditions, they will propel them to go out and do everything as well as in the West.''
Second in a series. Previous article ran Aug. 17.