East bloc rings in 1980 somberly
The most difficult and disappointing year since the 1960s. That is a common assessment of the 1979 economic performance by the Communist-bloc countries of Eastern Europe.
The year ended with government leaders ruefully warning citizens -- with varying candor -- to expect little or nothing better this year and urging them not to count on much easing of acute shortages.
In several bloc countries recently, public grumbling has become increasingly outspoken and occasionally active. The grumbling may force some hard economic decisionmaking this year.
Ironically, the bloc's relatively well-off and most industrially developed countries, Poland, East Germany, and Czechoslovakia, are likely to face the hardest times.
Through the first half of the decade all had achieved substantial gains in consumer standards. Then the price spiral in energy and raw materials forced a slowdown.
But expectations as well as tastes and incomes had risen. "Foodstuffs were no problem," a Czech says of Prague's stores this past Christmas. "But the quality goods people wanted, and the luxuries, were not there."
After Poland's worst year since World War II, party chief Edward Gierek offered "no panacea" recently when he presented the perspectives for the next five years.
The East German party chief, Erich Honecker, was no more optimistic. In fact , his country faces an unprecedented 8 percent rise in defense spending this year.Even with a freeze in investment, overall state expenditures will jump 13 percent. Moreover, a scheduled 4 percent pay increase is doomed to be swallowed up before winter is over by higher prices for almost all consumer goods.
Czechoslovakia presents a similar picture, with 1979 gross national product substantially below plan; the 3.6 percent rise foreseen in it for 1980 is one of the lowest in two decades.
Only Romania, one of the bloc's two-less developed economies, has opted for still more spectacular growth, with consumer austerity continuing for at least another five years.
But between Romanian ambitions and the sober-minded approaches in Warsaw, East Berlin, and Prague, common problems point to a common gloomy outlook everywhere in the bloc.
Essentially, the problem is the chronic lack of sound management and hard work needed to produce industrial goods that can compete on world hard-currency markets, as Mr. Gierek, Mr. Honecker, and Czechoslovak Premier Lubomir Strougal all have emphasized lately.
There are also the longer-term structural problems of modernization. Other difficulties could be corrected simply by better planning.
A visitor from fruit-growing Bulgaria complains of shortages of apples and grapes on the markets through summer and fall. Here, distribution has often been to blame, as it is with the queuing that perennially makes Polish shopping a nightmare.
Yet, almost all East-bloc governments are reluctant to translate obvious needs into reforms, like removing the stifling centralization, to make way for realistic work incentives and initiative in management.
Czechoslovakia is experimenting with relative "independence" in some 150 enterprises, ostensibly for final application throughout industry. But the experience thus far suggests that the effort is halfhearted and that managements feel themselves caught between two systems and are unenthusiastic.
At this juncture, Hungary remains the only reform- minded country in the bloc , even though its nearly total dependence on imported raw materials makes it even more harmed by world recession than its allies.
Its reforms began in 1968, when its "new economic mechanism" (NEM) replaced much of the old Soviet-style centralized control system with some bold economic market- mindedness that brought rapid improvements.
NEM, unfortunately, had to be modified when it ran into worker opposition over pay differentials. Then the energy crisis came along to apply more brakes.
For 1980, however, Hungary seems to have adopted the old aphorism, "Nothing ventured, nothing gained," and, as of Jan. 1, NEM was making a noticeable comeback, with a return to some of its most basic initial principles.
They call for competitive production pricing and independence, plus profit incentives for efficient enterprises that read the market right and genuine application of wage and salary scales according to work performance.
It may well be that these and still bolder decisions later on to scale down surplus labor and to stop subsidizing faltering enterprises may again spark domestic political difficulties. It will obviously be applied with caution, but the government seems resolved to go ahead.
The "quiet Hungarians" have had considerable success with their pragmatic mix of improved living standards and easier political climate since the 1960s. There are signs, as 1980 dawns, that if the Poles, Czechs, and others are to avoid political difficulties over their economics, they may well have to decide to try a leaf or two out of Hungary's book.