In Moscow, Let Them Eat Cake

DURING a recent trip to the USSR, I had the opportunity to spend a good deal of time in Moscow. While there, I became convinced that Marie Antoinette's advice to the French people - to eat cake if they had no bread - may be less outrageous than it has seemed. At the hotel Sputnik, I and the other guests ate only pastries for breakfast. Our choice was determined not by a collective sweet tooth, but by necessity: Eggs, sausages, and bread - the standard fare - were simply not available.

One morning, my schedule dictated that my breakfast of pastries be followed by a meeting with a prominent scholar who is also a deputy in the Soviet parliament. After talking for several hours, my host invited me to lunch. And again, my amiable host could offer me only pastries, explaining that even if she had bread, she would have nothing to spread on it.

After this modest lunch, I and several of my former graduate students from Moscow tried in vain to make our way into half a dozen restaurants. Much to our dismay, all of the restaurants - some of which were owned by the state and some by private cooperatives - were either filled to capacity or closed. After an arduous search through several state stores, we finally gathered enough food for dinner.

During our search for a place to eat, I was surprised to see that wherever I turned, flowers, which have always been a scarce commodity in Moscow, were being sold by private businesswomen. Even more surprising was the lack of competition between them. Prices were uniformly high - three to four times higher than last year.

The scarcity of staples such as bread and meat, coupled with the wide availability of ``luxury'' items such as flowers, typifies the Soviet Union's current economic situation. The economy has deteriorated drastically in only one year.

The Soviet people's vision of their economic future is extremely gloomy. According to polls conducted in early 1990 by my hosts, the Public Opinion Center in Moscow, three-quarters of the Soviet people believe that the country's economic situation has worsened since 1989. By September, the economy had deteriorated even further, and nearly 90 percent of the Soviet people expressed their belief that tougher economic times lay ahead.

Although the bread lines that appeared throughout Moscow during September lasted only a few days, they were seen by Muscovites as confirmation of their worst fears. Similarly, the impossibility of obtaining sugar, even with a rationing coupon, sparked more resignation than anger.

This year, most Muscovites are unable to buy the fruits and vegetables that usually arrive in the fall - they can't afford them. This galls; fruits and vegetables were available last fall. Now produce is available only on the free market, where prices are 10 times higher than in state stores. Two and a half pounds of meat may cost three day's wages. Such prices permit only a minority of Muscovites to frequent the stores, and then only in extreme cases, such as when buying food for ailing children.

Muscovites are equally plagued by the scarcity of nonfood items. Store shelves are empty, and the black market, with its exorbitant prices, is the only place to find many items (jeans cost two month's salary, and video recorders cost one year's salary).

The ``wooden ruble,'' with its rapidly declining value, is avoided with growing conviction by both individuals and businesses. Taxis are practically unavailable, because drivers desperately search for foreigners or special lucrative assignments, such as those related to prostitution or speculation. More important is the growing dominance of bartering. ``Steel for Meat'' - the title of a recent article in the Soviet press - describes the exchanges that are becoming the norm in Soviet life.

As the Soviet people watch their standard of living crumble, two schools of thought are emerging on the cause of the current crisis. The first school blames the disintegration of the economy on its inability to shift from the old administrative-command system to a market system.

The second school of thought, which has more adherents than the first, argues for the existence of a plot among Stalinist apparatchiks. For many people, the nearly simultaneous emergence of tobacco and bread shortages can only be explained as being the result of deliberate actions on the part of Stalinists. According to supporters of this position, popular among leading liberals, the Stalinist apparatchiks are trying to create an atmosphere in which a military coup could be justified.

During my stay in Moscow, the struggle among various teams of economists regarding the best ways to privatize the Soviet economy nearly reached its peak. Yet, while politicians carefully tracked the battle between the programs of Leonid Abalkin, Stanislav Shatalin, and Abel Aganbegian, the Soviet people remained rather indifferent to the episode. Although they firmly believe in the advantages of a market-driven, private economy, the Soviet people are pessimistic regarding the prospects of a new economic model given the current economic conditions.

All of my attempts to highlight the significance of the new economic trends were dismissed by those in Moscow with whom I spoke. They rejected my arguments as being the typical misunderstandings of an American eager to see great progress in the privatization of the Soviet economy.

Those with whom I spoke also dismissed private cooperatives, and disregarded my praise for their successes. Indeed, as noted by my hosts, who cited a recent survey, only nine percent of the Soviet people mention private cooperatives as possible sources for obtaining necessary items, while 27 percent suggest the black market.

The transformation of state enterprises into companies held by workers/stockholders is also regarded by the Soviet people as false, since the state ``buys'' most of the stocks for itself and continues to control the business. The lack of cultural predispositions regarding effective work and the consequences of letting the market regulate economic activity (such as mass unemployment and unregulated prices) are considered major, almost insurmountable obstacles to privatization (obstacles that were totally ignored in Shatalin's famous 500-day program, considered by most professional economists in Moscow to be romantic and idealistic at best, and deceptive and adventurist at worst).

My friends in Moscow also disregarded my optimistic claims that the abundance of flower vendors was an indicator of successful privatization. Instead, they argued that the flower market is controlled by a secret cartel, which terrorizes the sellers to eliminate any competition, thus keeping the price for a modest bouquet of roses at the same high level (about one day's salary) all across the big city.

To the Muscovites, the flower situation clearly demonstrates the difficulty of breaking the grip of the apparatchiks and the mafia, both of whom are able to use privatization for their own purposes. These two groups maintain their monopolies in the harshest ways, even going so far as to kill those who disobey their orders.

The skepticism and pessimism of the Soviet people regarding their leaders' ability to save the Soviet economy from total collapse is not, by itself, an argument against the feasibility of creating new economic programs in Russia. Public opinion is always conservative during transitional periods. The great innovators in this country, for example, such as Lincoln and Roosevelt, shaped public opinion rather than followed it. Still, the skepticism of the man on the street in the USSR can hardly help Gorbachev and Yeltsin radically change the structure of the economy.

My analysis as an outsider suggests that the Soviet leaders still have a reasonable chance of introducing new rules in the Soviet economic game without pushing the country into a period of bloody riots and a conservative coup. The Russians will eventually learn how to behave as producers and consumers, as directors of businesses, as partners in deals with both domestic and foreign firms, as buyers of stocks, and so on. Whatever happens, this new experience will leave a permanent imprint on the Soviet people, and will help lead the way to the promised ``normal'' economy of the future.