January 27, 2015

1965. The Soviet Economic Reform

Creeping Capitalism
Source: "Soviet Premier Alexei N. Kosygin talks to President Lyndon Johnson at the Cold War summit in Glassboro in 1967."
September 28, 1965

It probably all started out with Ben Franklin's Poor Richard, whose Almanac reflected the hard-rock economic principles of the new and struggling American republic with sagacities such as "A penny saved is a penny earned" and "a fool and his money are soon parted." Today, such homilies are repeated mostly for the benefit of children, because in the present, free-wheeling, jet-age economy, everyone knows that Poor Richard's penny has lost most of its buying power -- that you have to "spend money to make money, "and under most corporate organizations, a businessman is foolish if he doesn't have a tax write-off to fall back on.

As our computerized society becomes more complex, there has emerged a new breed of "Poor Richards" to produce the pungent maxims which describe the philosophy of the 20th century. Currently, the most prominent economic philosopher around is the British Professor C. Northcote Parkinson. His acerbic view of the current business operations produced "Parkinson's Law," which states: "The amount of work done in any enterprise will expand in proportion to the number of people available to do it."

This year, with the tremendous expansion of the aerospace industry, some harried space scientist invented "Murphy's Law," named after some anonymous Irishman who must have been cursed by the leprechauns. Murphy's Law, as I remember it, goes something like this: "In space, anything that can go wrong, will go wrong...and furthermore, things will get worse unless they can be corrected."

All of which is leading up to today's announcement from Moscow that the communist leaders of the United Soviet Socialist Republics are making startling and historic changes in the basic theory and premises under which the giant nation has operated since the October Revolution of 1917. Premier Alexei Kosygin has pronounced that the socialist economy of Russia will be reorganized to operate on a system of profits, salesmanship, production bonuses and an open market.

It's a nation-shaking decision in one sense, a little as if the United States suddenly decided that the whole colonial uprising, from the Boston Tea Party to Yorktown, had all been a horrible mistake -- therefore, the US should rejoin the British Empire.

The Moscow announcement means that Premier Kosygin is adopting the old party practice of rewriting basic communistic philosophy, just as Karl Marx rewrote Frederick Engels, as Lenin rewrote Marx, as Stalin and then Nikita Khrushchev tried to rewrite Lenin, only to have their literary efforts officially expunged.

Perhaps there is a political theorem inherent in this communist penchant for rewriting history, a rule of Marxist behavior that may be dubbed "The Whittaker Chambers Syndrome." It might read something like this: "The longer one remains a communist, the more inevitable becomes the disillusionment."

Premier Kosygin assured the Central Committee meeting at the Kremlin that there's no intention or even suggestion of turning Russia into a "capitalistic nation," and he correctly pointed out that the State will continue to own all industry, lands, and other means of production.

But his announcement that the Soviets are changing over to the once-despised profit system will produce ideological tremors in communist cells and among fellow travelers around the world.

One of the economic keystones of the Bolshevik Revolution almost 48 years ago, which inflamed social idealists everywhere, was the pronouncement that Russian communists were going to build a classless society where every citizen would work according to his best ability, and that the combined production of such a Workers' Paradise would supply everyone with as much or more than he could use. This Marxist law read: "From each according to his ability, to each according to his needs.

To the old-time communist, profit was sinful blood money which the capitalists used as a club to beat more and more profit from the workers.

Now it appears that Kosygin and his Kremlin comrades have repealed the Marxist law against profit. And the reason for taking this significant step is a very simple one. As one of Russia's ablest administrators and an economist in his own right, Kosygin took one look at the economic mess he inherited from Nikita Khrushchev and came to a conclusion that the much-vaunted socialist system simply was not working. So he turned to the profit system for the answer.

It will be a fascinating and daring experiment to watch. For the group of communist economists and management experts in the Kremlin now leading the Soviet Union on this new path, it can also be dangerous because, if the Russian profit experiment fails, someone will be expunging and rewriting the communist history of Alexei Kosygin and friends.

This is Bill Downs, substituting for Edward P. Morgan, saying good night from Washington.