Book Reviews

The counsel is timely. For with glasnost, the new Soviet style of light and openness, with the new Intermediate-Range Nuclear Forces (INF) Treaty and Strategic Arms Reduction Talks (START) with the Soviet Union, and now with perestroika, the new Soviet policy of restruc turing its economy and the title of a revealing if not subtly propagandistic book by 57-year old General Secretary Mikhail Gorbachev, America is seemingly dealt a new hand by a shrewd and dapper poker player. But is it really a new hand? I recall the New Economic Policy (NEP) of Lenin who, in 1921, so as to gain Western support and stem scarcity and popular unrest, allowed small busi nesses to operate privately and independent farmers to sell some of their produce at a profit. Stalin squelched NEP and launched the first Soviet Five-Year Plan in 1928. The rest, as is said, is history. Today, however, renewed scarcity and at least some popular unrest, especially amid So viet ethnic nationalities such as the Armenians, continue to dog the Soviet planners. Too, the planners are undoubtedly impressed and con cerned by the economic headway made by the Red Chinese who, under the leadership of Deng Xiaoping, began to adopt some Western market techniques in 1976 after the death of Mao. And so now perestroika is prescribed for the USSR.

Gorbachev confesses that under recent So viet communism: 375 It became typical of many of our eco nomic executives to think not of how to build up the national asset, but of how to put more material, labor and working time into an item to sell it at a higher price. Conse quently, for all "gross output," there was a shortage of goods. We spent, in fact we are still spending, far more on raw materials, en ergy and other resources per unit of output than other developed nations. Our country's wealth in terms of natural and manpower re sources has spoilt, one may even say, cor rupted, us. The confession goes on. Gorbachev com plains that though the Soviet Union is the world's biggest producer of steel, raw mate rials, fuel, and energy it still has serious short falls in them "due to wasteful or inefficient use." Hard-currency earnings are depleted by having to import millions of tons of foreign grain when pre-Revolution Russia was the world's greatest grain exporter.

Gorbachev tells us his rockets can find Halley's comet and fly to Venus with amazing accuracy, yet "many Soviet household appli ances are of poor quality." He concedes that at some administrative levels there emerged a dis respect for law and encouragement of "eye wash and bribery, servility and glorification," even "criminal acts." Widespread perplexity and indignation welled up in the population so that "the great values of the October Revolu tion and heroic struggle for socialism were being trampled underfoot." Problems snowballed faster than they were resolved, Gorbachev further concedes. He says: "This, unfortunately, is not all. A gradual erosion of the ideological and moral values of our people began." The national problems of alcoholism (including moon shining), drug addiction, and crime are cited. Thus was the Soviet Union by the first half of the 1980s "verging on crisis." This conclu sion was announced at the Plenary Meeting of the Central Committee of the Soviet Commu nist Party in April 1985. Then the Soviet leaders, headed by Mikhail Gorbachev who had been named General Secretary only the month before, attacked the "spend-away" economy in which managers achieved "growth" through 376 THE FREEMAN. SEPTEMBER 1988 construction of new plants and employment of more workers without reference to effective de mand.

They similarly condemned the "gross output" planning and production approach which stresses "weight" and "quantity" of goods, again without reference to market re quirements including quality and cost control. The upshot was, as noted, installation of the momentous policy of perestroika-the restruc turing of the Soviet economy. Broadly applied at home and abroad, says the General Secre tary, perhaps with a twinkle in his eye, peres troika could lead to a "nuclear-free, non-vio lent world." Sure. Yet details of perestroika are anything but spelled out. Yes, he notes that a key Law on State Enterprise has been adopted in which orders are imposed on industrial executives to align supply with demand. State businesses must henceforward, for example, engage in cost accounting. They must engage in vigorous competition. But, says Gorbachev, we refuse to give up the planned economy. So he still speaks of "socialist planning," "socialist competition,"

and even "the socialist market" - however self-contradictory the phrase. We reject the capitalist model of the West, he declares, adding that, properly implemented, "socialism can achieve much more than capitalism. " But does the rejection make sense? Are ends and means in harmony? Or, is Mikhail Gorbachev trying to save face in this extraordinary book, to save but the trap pings of socialism? Or, is he, like Lenin and the NEP before him, simply trying to buy time, to retreat two steps now so as to advance three steps later? I don't know the answers to the last couple of questions. I do know, however, following Ludwig von Mises' 1922 classic, Socialism, that a centrally planned economy isn't a viable system. Without limited government and private prop erty, socialist planners can't perform "eco nomic calculation" - the use of market prices, including relative prices and derivative prices, to coordinate and enhance roundabout produc tion. Without true market prices, in other words, socialism flies blind.

In any event, Nixon's entreaty for America makes sense: En garde. D Dr. Peterson, an adjunct scholar with The Heritage Foundation, is the Burrows T. and Mabel L. Lundy Professor of the Philosophy of Business at Campbell University, Buies Creek, North Carolina. BOOKS FROM FEE, 1988-89 A copy of our latest catalogue is being sent with the September issue of Notes from FEE. We continue to stock a wide variety of books, ranging from the easily understood works of Bastiat to the complex writings of Hayek and Mises. If you are just starting to study the freedom philosophy, you may find the Introductory Book Sets of special interest (see pages 6 and 7). If we can assist you with additional recommendations, please write to us. (If you're curious about which books sell best, turn to the inside back cover of the catalogue for a list of last year's favorites.) THEFREE IDEAS ON LIBERTY 380 Fairness and Justice: Process vs. Results Walter E. Williams In pursuit of noble goals we have stood justice and fairness on their heads.