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East bloc dilemma: reform economy or play it safe?

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Play it safe and stick to a centralized economy? Or decentralize and reform? This is the dilemma East European countries face as they strive to maintain economic growth.

It is a difficult choice. Each option carries risks: Playing it safe generates domestic discontent that, sooner or later, will explode -- as in Poland.

Reform, on the other hand, can bring with it dangerous political hazards -- again as in Poland.

Poland, for example, had to concede the principle of workers' self-management under the pressure of the August 1980 crisis. But defining it in law poses a new threat of confrontation with solidarity, the East bloc's first independent labor union.

Whatever the outcome of the dispute over Solidarity's ultimate form, it will mark a tremendous advance beyond the rest of the bloc.

With the exception of Hungary -- the only East-bloc state thus far to opt boldly for economic reform -- unions in the East bloc remain solely a means for transmitting decisions on the economy and labor relations, with only a semblance of worker involvement.

In this own undramatic, gradualist, but effective way Hungary has shown that worker involvement works. Its latest move is toward a more open, less arbitrary selection of management, giving the factory floor a voice in all enterprise decisions.

The Polish party has produced its renewal plan, which, ifm it survives, will introduce not only self-management but also a measure of decentralization and more rational planning along the lines of Hungary's model.

Hungary has been on this track since the late 1960s and has provided some striking lessons. The Poles have begun to take notice. A good example is prices.

Three times since 1970 the effort to institute market prices for meat and other commodities has rocked the Polish leadership. It has brought down two regimes.

By contrast, Hungary hs been able to bring food prices close to market levels with no major upsets of public opinion.


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