Interviewed 7 Sept 1990 in Moscow
Interviewer: Gwynne Dyer
MS: This seems to be mostly Dyer’s summation of the talk. I don’t think much of it is direct quotes.
Popov is quite a good economist. He is in favor of the idea of spending and borrowing money internally and externally in order to increase the consumer goods supply for a while, but this is just to buy some time in which to make some other adjustments. He foresees collapse unless some measures are taken to control the budget deficit, the money-printing machines. Inflation is only 4 % but the devaluation of the ruble is something like 15%, and that is the point where hyperinflation begins, is a a completely different dynamic. The velocity of money increases. The process becomes cumulative. The way ahead is to use internal and external borrowing to finance perestroika. They don’t have a very high debt externally. But they should only do this while they are financing a re=training of the labor force. They only have 3 months unemployment insurance, which is paid by the employers and not the government. They need pensions to help poor and those with many children. Their indebtedness is really quite low now, so they could double it without any trouble. They have gold reserves. They would only have to borrow for 5-7 years to pay for these reforms because, just by using the resources they already have, without any improvement in the qualifications of the labor force or any of these other factors, they could improve the productivity 1.5 times. The main thing is in agriculture. They have everything they need to have good grain production and the Chinese have shown how to do it by allowing private farms, so they should be able to feed themselves and not have any more imports of grain after 5-7 years. After a year or so it won’t be possible. People don’t have a lot of personal savings but if they increase the interest rate to 6% or so, then people would probably save voluntarily.
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They should develop a market socialism that was not envisaged by Marx or Engels. There should be just one party. Socialism is a collective form of decision-making with regard to the economy and good social security system.He is a member of the Party and doesn’t intend to quit. There are two ways of progressing — one is for the Party to do what they did in Hungary — to become the leader just because they are ideologically more zealous and become the leader just because of their authority. The other way is just to hold onto power without democracy, and they will eventually get kicked out. Most of the intellectually interesting people of the country are in the party, not outside, now — except for Sakharov.
Abalkin is the deputy chairman of this commission on economic reforms — whatever it is called, which was at that time headed by Ryzhkov. Abalkin said in the Supreme Soviet in answer to a question about why we live so poorly that we live as poorly as we work. This is not true. We live much worse than we work, although we also work very poorly. In terms of the amount they spend on the military, the military gets about 6% (?) so the consumption of what people produce is much higher. . . . . it is 30% investment, 20% for the military, and 50% consumption, as opposed to about 85% consumption for the U.S. Thus they are 50% as productive as the U.S. but they have only 25% as much consumption.
The Soviet economy of the 1920s was a very rapidly growing, efficient economy, although there were some political defects. The government was able to regulate the market to some extent by giving subsidies to some extent but then they started regulating prices, and that ruined it. The period of greatest efficiency was 1925-29, up to the time when collectivization began. The growth was much higher than in the U.S., which was also in a prosperous period before the 1929 crash.
After this tape Dyer enters some more notes. He says that afterwards, Popov was talking about why the co-ops were so widely loathed. It seems that, although they were permitted to come into existence, they were not permitted to have access to supplies and therefore they buy things on the retail market, which competes with the ordinary consumers, and this competition is resented.
The other point is a comment of a woman he heard the other day who spoke of how afraid she was of being imprisoned or something if the old lot came back to power. She said that the only thing they could do would be to cause a war outside the country, and then the old lot would be able to control things internally so long as they were fighting. This could drag a lot of other people in.
One question is about whether the people who don’t work hard fail because they have been socialized for 65 years, or whether it is because the incentive structure isn’t there to pay people for good work. He thinks it is mostly the latter. He also speaks of Stolypin’s reforms in agriculture, about 1905, which were designed to give people more independence. But Stolypin did not increase social security benefits at the same time. Had he done so, he might have succeeded. Because he did not, people were resented and had their farms burned if they tried to separate from the collective.
Why so long? Why four years delay for reforms?
He doesn’t really know. Either it is that the bureaucrats are trying to sabotage it, or there is mismanagement, stupidity. He thinks it must be the latter because he can’t imagine why people are resistant to implementing some agricultural reforms that have such obvious benefits.
The “socialist market” is different from a “capitalist market economy “ in that the decisions are made by the workers on the basis of one person, one vote. This idea arose first in Britain by a guy named Benjamin Ward. This is not found in North America, but it is found in Germany, where there are workers on the decision-making board, and it is making its way through the world now. It is used in Yugoslavia, but it’s not very effective because one can argue that this is because it is not implementing well, and not because there is anything wrong the the idea itself.
Marx never spoke of a market in socialism. Lenin did and he finally made up his mind how he felt about it when he approved the new economic policy.