Will Poland be catalyst for big changes in East Europe
The outlook for most East European economies, constricted by the straitjacket of the Soviet model and flawed by low productivity, is not encouraging. Only East Germany, which ranks in the top 12 industrialized nations of the world, shows clear signs of sustained growth in the months ahead.
Recently adopted East-bloc plans for 1981- 85 underscore the urgent need for some radical change of antiquated management methods which have largely contributed to present economic stagnation.
The world recession and rising oil prices which are only now beginning to hit home have put their economies back even further. And there is little hope of relief on the energy front.
Future Soviet supplies, at half the world price, have been pegged at current levels. This means that Russia's East bloc allies are already being forced to look elsewhere for the increased needs of the 1980s -- and at OPEC prices.
The result: a scaling down of targets for the next five years. Only East Germany, aiming for 6 percent growth this year compared with about 5 percent last year, is going for increased production. True, Romania has also set a higher growth rate, but it cannot be compared economically with East Germany, and its targets have invariably proved unrealistic.
While East Germany forges ahead, stagnation grips most East European countries. Czechoslovakia, for instance, is anticipating its lowest expansion since 1970. Poland's prospects are even worse: a third successive zero growth rate.
In the case of both Poland and Czechoslovakia, as well as with most other East-bloc states, the economies are hobbled by the lack of management efficiency and the inability to try to stimulate productivity through incentives to workers.
Yet the Polish crisis could prove something of a catalyst.
Although it is making its hard-line East European allies nervous of political change, Poland could nudge them nearer much- needed economic reform.
Most of the economic difficulties of the East bloc are similar to those of Poland and suggest that solutions like those that Poland is contemplating cannot be put off much longer.
For the moment Polish leaders can attempt only short-term remedies to cope with strike production losses, a slump in crucial Western trade, and, unless there is some moratorium, the need for even more borrowing to meet this year's repayment on its huge foreign debts.
In the longer term, the Poles are thought to have no other option but to reform through flexible planning, greater autonomy, more incentives, and much greater support for the private farm sector. Already the private farm sector puts more into the national larder than the state farms do.
Similar reforms were adopted in principle in Czechoslovakia in 1968, but were scrubbed by the Soviet intervention that spring before they could be put into practice.
Hungary ventured on its new economic mechanism the same year. The more liberal Hungarian plan had much in common with the Czech concept of a kind of "market socialism" that would remove the low productivity burden.
Unlike the Czechs, the Hungarians got away with it because there were no accompanying signs of weakening political control as in Prague. But in mid 1970 s the Hungarian gains slowed down, ostensibly because of worldwide recession. But the slowdown is now conceded to have been due to political factors more than anything else. In the end it proved to work against Hungary's own interests.
The Hungarians' 1981-85 plan reflects a bold decision to accept a lower growth rate and give new impetus to reform. One proposal is to remove subsidies from failing enterprises; another is to let world prices influence domestic markets. New projects requiring more foreign credit are being shelved, but with care not impair valuable economic connections outside Comecon, the East-bloc economic alliance.
In Warsaw, government officials say coming reforms will take Poland further than Hungary, but not as far as Yugoslavia.
Should Poland now follow the Hungarian model and make a go of it, it is bound to raise awkward questions for other East Europeans atta ched to the more rigid Soviet model.