ANDROPOV'S LIKELY STRATEGY FOR ECONOMIC CHANGE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00658R000300080003-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 29
• Document Creation Date: December 21, 2016
• Document Release Date: February 29, 2008
• Sequence Number: 3
• Publication Date: July 1, 1983
• Content Type: REPORT

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-At Vl LV1ALC Vl aecrei
Intelligence
Andropov's Likely Strategy
for Economic Change
Secret
SOV 83-10131
July 1983
519
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=1 Intelligence _--` -`
Andropov's Likely. Strategy
for Economic Change
An Intelligence Assessment
This paper was prepared by Office
of Soviet Analysis. Comments and queries are
welcome and may be directed to the Chief, Soviet
Economy Division, SOYA,
Secret
SOV 83-10131
July 1983
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aecre[
Andropov's Likely Strategy
Key Judgments Since Brezhnev's death, discussion in the USSR of changes in the planning
Information available and management of the Soviet economy has intensified. A high-level party
as of I July 1983 review of options is under way, and decisions that will have to be made on
was used in this report.
this matter over the next year or so could have important implications for
Soviet economic growth and for General Secretary Andropov's political
future.
Andropov is dissatisfied with the poor performance of the economy. He is
aware of the resulting tensions that declining economic growth and
inefficiency are generating in Soviet society, and he is convinced of the
need to combine regime firmness toward the population with significant
change in the economic mechanism.
The key constraint upon change in the economic mechanism is that
Andropov and the rest of the leadership-for compelling cultural, econom-
ic, and political reasons-will not dismantle the command economy and
replace it with some kind of market socialism. The necessity of working
within the limits of a basically command planning system, however, creates
certain contradictory tendencies both in Soviet thinking about economic
change and in actual practice. Soviet policy advisers (unlike many Western
economists) broadly agree that the USSR needs better planning as well as
greater reliance on certain market-associated practices-not only more
decentralization but also more centralization-and better utilization of
material incentives, together with skillful employment of the state's power
to command.
These contradictory tendencies are reflected in the Brezhnev legacy of
programs and proposals for change in the economic mechanism worked out
between 1978 and 1982. The Brezhnev measures contain many compro-
mises, and they have encountered varying degrees of noncompliance,
sabotage, or neglect on the part of the bureaucracy. Some high officials re-
portedly are convinced that they are deficient in principle and that more
radical initiatives are required. Nevertheless, they do provide a core
inventory of politically feasible measures.
Thus, the central issue now facing a leadership that will not and cannot
buy market socialism is to decide what direction it intends to move in
carrying out already approved policies, what to select from a menu of fairly
well-known alternative ideas, and what commitment it is prepared-or
able-to undertake in attempting to enforce its will. From the Kremlin's
iii Secret
SOV 83-10131
July 1983
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perspective these questions of emphasis pose critical choices that will have
major consequences for the stability of the regime and Soviet power in the
decade ahead. .
Andropov is likely to support many of the policies inherited from Brezhnev.
Beyond this, however, he apparently seeks to develop a more sharply
focused action program. In the labor and incentives field the program that
Andropov is likely to support will emphasize:
? Further efforts to improve labor discipline and combat corruption.
? A move to limit market forces and strengthen administrative controls in
the allocation of labor.
? Greater pressure for higher labor productivity through tighter output
norms, combined with greater wage differentiation to reward the
industrious.
? Reduction of excess demand in selected consumer markets-which
undermines labor incentives, feeds corruption, and breeds disguised
inflation-through price increases for some consumer goods (including
food) and provision of more "luxury" goods and services for the more
affluent elements of the population.
Organizationally, Andropov probably will press for:
? Reorganization of the ministerial apparatus.
? Decentralization of some authority to large industrial associations.
? A devolution of responsibilities-particularly in consumer-related sec-
tors-to provincial and-lower administrative echelons.
Finally, in defining the permissible scope of market-associated practices in
the economy, Andropov's program is likely to stress:
? Somewhat greater attention than at present to strengthening the role of
self-financing and economic levers in the economy.
? An increase in price-profit and market-based relationships within indi-
vidual farms and between farms and the rest of the economy.
? Innovations in retail marketing practices designed to force state trading
and consumer goods-producing organizations to be more responsive to
consumer preferences.
The program will probably exclude large-scale extension of private entre-
preneurial activity in the services and trade sectors.
The steps necessary to implement this agenda would probably lead to
greater stress in relations between the regime and the population. They
would also provoke resistance within the economic bureaucracy, the party
apparatus, and the leadership as well.
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The set of constituencies from which Andropov could draw support in
combating this resistance appears to be narrow and rather diffuse. At the
top level Andropov probably needs to alter the membership of the
Politburo, extend his control over the Secretariat, and build support within
the Central Committee before he can hope to carry through a program of
comprehensive economic change.
Although this political breakthrough is probably a precondition for the
program described above, Andropov's decisions regarding precisely what to
seek in the program and when are likely to affect his power significantly.
While his economic strategy is hostage to the limits of his current political
strength, it is also potentially the most important means of overcoming
these limits.
To set the stage for a new economic program, Andropov is already
initiating changes in the personnel field, in the policymaking process, and
in political-economic doctrine. But he still must decide whether to try to
push through a contentious set of measures more or less rapidly as a
package, bringing any accompanying political conflict to an immediate
head, or whether to attempt to introduce change piecemeal as he gradually
consolidates his power within the leadership.
What could happen by no means depends simply on Andropov's predilec-
tions. The interplay of power and policy in the Kremlin could necessitate
political compromise and gradualism, but it could also drive Andropov to
pursue a high-risk strategy of economic change.
If the steps likely to form Andropov's program of change were in fact
implemented, they could have a positive-if modest-economic impact.
Whatever its economic consequences might eventually be, a vigorous
commitment by Andropov to change in the economic mechanism would
almost certainly have tangible and immediate political effects, including
intensified factional struggle within the Politburo-with some probable, if
unpredictable, impact on Soviet international behavior.
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Secret
Contents
Key Judgments
iii
Introduction
1
Background
1
Nature of the Problem
1
Need for Change
2
Resistance to Change
2
Maintenance of the Command Economy: A Key Constraint
2
Implications for Change
3
Permissible Change
3
The Hungarian Model
3
The Brezhnev Legacy
4
Andropov's Outlook
6
His Assessment of the Present Situation
6
Social Discipline: The Precondition of Change
7
Andropov's Likely Policy Preferences
8
Limits to Change
8
Resource Allocation and Wage Differentiation
9
Economic Organization
9
Andropov's Probable Positions on the Hard Options
10
Self-Financing and Economic Levers
10
Organizational Changes
10
Agriculture
12
Industrial Labor Relations
13
Excess Savings and Consumer Goods Supply
14
Andropov's "Bottom Line"
15
Prospects
15
Support and Opposition
15
Andropov's Tactics
18
Rejuvenation of Managerial Personnel
18
Change in the Policymaking Mechanism
18
Possible Impact of Andropov's Likely Strategy
21
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Andropov's Likely Strategy
for Economic Change
This Intelligence Assessment discusses General Secre-
tary Yuriy Andropov's likely approach to changes in
the Soviet economic mechanism over the next several
years. The paper focuses on what Andropov himself
has said on the subject, on constraints that inhibit
action, on the positions his preferences and political
calculations might lead him to take in the ongoing
discussion of policy options, and on his prospects for
instituting policy change. The overall aim of the paper
is to discuss policy choices rather than to predict how
effective various measures likely to be adopted might
Given the tenuousness of much of the evidence on
which it is based, some judgments reached in this
paper are necessarily speculative. Tactical consider-
ations related to consolidating his own power must
influence Andropov's candor on the politically sensi-
tive issue of economic change. Nevertheless, it is still
possible to consider the main directions of movement,
bound the range of possible changes, and provide
illustrative examples of steps that might be taken. F
Nature of the Problem
The Soviet leadership has been confronted by a sharp
deceleration since the late 1970s in the rate of growth
of GNP, and is widely reported to consider the
economy its number-one problem. In 1981 and 1982,
growth in GNP averaged about 2.1 percent, some-
what above that attained during 1979 and 1980-1.0
percent-but well below both the 3.6-percent average
annual rate of growth achieved during the 1970s and
the 4-percent annual rate of growth planned for
1981-85.' In industry, serious bottlenecks persisted
' CIA estimates based on Western definitions and concepts.
during the period; shortages of raw materials, fuels,
and power hampered production in almost all
branches of industry. A marked decline in the per-
formance of the railroads caused dislocations through-
With the exception of agriculture, performance in all
sectors of the economy was worse in 1982 than in
1981. A slump in steel production, along with short-
falls in building materials, has curtailed growth in
construction and delayed the introduction of new
production capacity. The low rates of growth of
civilian machinery output-only 3.6 percent annually
during 1981 and 1982 and by far the lowest annual 25X1
increase since World War II-interfered with Soviet
efforts to modernize industry, conserve energy and
raw materials, and increase productivity. Underfulfill-
ment of productivity plans-upon which the regime
has been heavily banking-has been striking; the rise
in industrial labor productivity, for instance, averaged
only 1.4 percent a year in 1981 and 1982, far below
the 4.5-percent-per-year increase called for by the
plan. 25X1
Some of the difficulty can be accounted for by
external factors:
? The third and fourth consecutive years of harsh
weather that have depressed agricultural
production.
? Declining increments to the working-age population
that have led to labor shortages.
? The rising cost and increasing difficulty of extract-
ing and transporting energy resources and other raw
materials, which have intensified the impact of
bottlenecks already present in key sectors of the
economy.
But the key source of economic problems is clearly
systemic-the growing inadequacy of existing meth-
ods of planning and management. These methods:
? Contribute to irrational investment decisions.
? Retard scientific-technological innovation.
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? Encourage high costs and massive waste of
resources.
? Motivate producers to cut corners on quality and
assortment, and in many other ways fail to meet
customer needs.
? Stimulate widespread illegal economic activity.
Need for Change
Most Soviet authorities agree with Western observers
that lasting improvement in the USSR's economy will
be impossible without changes in the entire economic
mechanism. Since Brezhnev's death, discussion of
such changes within Soviet bureaucratic and academ-
ic circles has increased, and a high-level party review
of options, led by a new Central Committee Secre-
tary, Nikolay Ryzhkov, is now under way. The State
Planning Committee (Gosplan), the Academy of Sci-
ences, and the State Committee for Science and
Technology have been tasked with preparing specific
proposals. Soviet officials have told Westerners that
major institutions are being asked to submit their
views on desirable changes and that a Central Com-
mittee plenum will be held to confirm policy in this
area. At the June 1983 Plenum of the Central
Committee, which was devoted to ideological affairs,
Andropov declared that change in management of the
economy had become "inevitable": "This is not just
our wish, comrades, this is an objective necessity and
there is no way of avoiding it!"
Western analysts believe that what is basically wrong
with the Soviet economic system is the incorrect
information it supplies to decisionmakers at all levels,
its bureaucratization and stifling of initiative, and its
failure to structure incentives in a way that rewards
efficiency. From this perspective, a solution to these
problems-"reform"-must entail a comprehensive
transition to a market economy in which prices reflect
supply and demand and profit maximization is the
main objective of managers. Western analysts dis-
agree, however, over whether some improvement can
still be squeezed out of the existing command econom-
ic ic system.
Soviet authorities agree with much of the Western
description of the ills of the Soviet economy, and some
of them may secretly believe that the Western pre-
scription is also correct. Yet-as will be argued
below-the prudent calculation of any Soviet policy
adviser or specialist must be that market socialism is
politically not a live option and therefore simply
cannot be discussed.' "Reform" from this standpoint
must thus entail improvement in, and preservation of,
the basic features of the command economy.
Resistance to Change
Historically, attempts to effect fundamental changes
in planning and management of the economies of
Communist countries have usually encountered strong
resistance wherever they have been tried. Opposition
has arisen because of:
? A perception-often later proved correct-that a
proposed change will create more new economic
problems than it solves.
? Awareness that a change will hurt the material or
career interests of different groups of officials.
? Submergence of the issue of change in factional
struggles within the top leadership.
? Fear that change could lead to loss of control over
the intelligentsia or population at large and provoke
political instability.
? Belief that a course of proposed action does indeed
violate basic precepts of Marxism-Leninism.
? Plain institutional inertia in the bureaucracies
charged with introducing changes.
All of these factors are likely to prove sources of
resistance to any proposals for drastic change in the
Soviet Union. In particular, Andropov must take into
account the risks (but also opportunities) that changes
to which he commits himself may create for political
maneuver in the Politburo and the inevitable attempt
by lower bureaucratic echelons to deflect or not
implement unwanted changes.
Maintenance of the Command Economy:
A Key Constraint
From the standpoint of Andropov as well as other
members of the Soviet leadership, a dismantling of
the command economy is almost certainly out of the
' In a "market socialist" system, as usually proposed, the state
retains ownership of the means of production and makes key
investment decisions, but enterprises set their own plans and seek to
maximize profit, with prices being determined by supply and
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question. A formidable array of cultural, economic,
and political factors constrain their choices to
"within-system" change.
A planned economy is all Soviet leaders have ever
known. They do not understand the purely economic
rationale for markets and believe that, however effi-
ciently markets may operate at the enterprise level,
they necessarily produce chaotic results on a macro-
economic scale. Planning, by contrast, is not only
mandated by "Marxism-Leninism," but is probably
seen as a critical factor responsible for victory in
World War II and the elevation of the USSR to world
superpower status. From a purely economic stand-
point, the existing system has the outstanding vir-
tue-in comparison with hypothetical alternatives-
of being known to work, however inefficiently. The
vast scale and growing complexity, of the Soviet
economy and its need for more rapid technological
innovation imply-in their view-a need for better
overall planning rather than market forces.
The leadership also has in mind an agenda of changes
in branch and territorial proportions of the economy
(for example, accelerated Siberian development) that
it perceives as essential and that it almost certainly
believes would not be implemented in the absence of a
command mechanism. The leadership is fully aware
that in real life the economic cues to which managers
and workers respond create multiple and fundamental
divergencies between their interests and those of the
state at large (as defined by the Communist Party).
Because these divergencies cannot be bridged in the
near term, the leadership correctly holds that a strong
system of bureaucratic transmission and enforcement
of decisions is indispensable
Moreover, to a considerable degree, the substance of
policy cannot be separated from the process of manag-
ing the economy. Resource allocation priorities of
high political import (such as military production,
investment in agriculture, assistance to the Non-
Black-Earth Zone, or Baykal-Amur Mainline devel-
opment) can be adhered to and implemented largely
because purely economic calculations do not deter-
mine policy or its implementation. The capacity to
provide staple food items, shelter, and services at a
subsidized low cost is probably thought to contribute
significantly to regime stability and legitimacy. The
leadership asserts-and probably believes-that the
existing economic mechanism provides the possibility 25X1
of assuring full employment and avoiding the political
instability that might arise from decentralizing eco-
nomic decision making.
For half a century Soviet authorities have insisted
that a command economy is a necessary means for
maintaining and exercising the Communist Party's
monopoly of political power. Its experience in the Bloc
has almost certainly reinforced the leadership's pro-
pensity to believe that there is indeed a strong-if not
invariable-correlation between relaxing central con-
trol of the economy and political pluralization. The
leadership is aware that the command mechanism
provides jobs and a role in society for millions of party
and government officials who serve as political ballast
for the system, and who otherwise might well prove
dispensable. Not of least significance, the leadership
realizes that the economic command structure pro- 25X1
vides a crucial means of combating "localism" within
the multinational Soviet empire and is a key instru-
ment for assuring Moscow's economic hegemony over
Eastern Europe.
Implications for Change
Permissible Change. The cultural, economic, and
political realities discussed above dictate that the
problem the Andropov leadership must address is how
to improve the existing planned economy, not whether
to introduce comprehensive market socialism. The
latter would imply revolution, not reform, and is
simply not on the Soviet agenda. Thus, Western
discussions that equate reform of the economy with
market socialism or even free enterprise are irrelevant 25X1
from the standpoint of Soviet leadership intentions
and current possibilities. In this Western sense, there
can be no "reform" in the foreseeable future.
The Hungarian Model. Andropov's Hungarian con-
nections and reports that he ran interference in the
Politburo for Kadar's reformist "New Economic
Mechanism" have stimulated speculation that the
Soviets might opt for the "Hungarian model." Fueling
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such speculation has been the promotion in the Soviet
press of Hungarian and other East European experi-
ences by a reputed Andropov client, Oleg Bogomolov,
the Director of the Institute of Economics of the
World Socialist System, and by members of his
institute as well as other academics and officials. In
addition, there has recently been a flurry of visits to
Hungary by Soviet delegations investigating all as-
pects of the Hungarian economic system for possible
adaptation to Soviet conditions.
The Hungarian model deprives the central planning
authorities of the power to issue directive targets to
enterprises, and it involves the dismantling of the
centrally directed supply system, the establishment of
profit as the key performance criterion, and the
abandonment of centralized price setting (although
not price review). As the American economist Joseph
Berliner has argued, its attempted introduction in the
USSR on a comprehensive, system-wide basis would
entail convulsive changes and provoke concerted
resistance from most quarters of -Soviet society. Al-
though the unacceptability of anything smacking of
market socialism would appear to rule out adoption of
the "Hungarian model" on an economy-wide scale, it
by no means excludes partial introduction of "Hun-
garian" or other market-associated mechanisms in
individual sectors of the economy. Conversations of
high-level Soviet policy advisers with Westerners sug-
gest, additionally, that the Soviets have been interest-
ed not only in piecemeal application of Hungarian
market mechanisms but also in the less intrusive role
in daily management of the economy assigned to the
central party apparatus in Hungary.
Inconsistencies. Having to work within the limits of a
command system leads to opposing tendencies in
Soviet discussions of change in the system of econom-
ic organization and management. Soviet policy advis-
ers (unlike many Western economists) broadly agree
that the USSR needs better planning as well as
greater reliance on certain market-associated prac-
tices; not only more decentralization, but also more
centralization; and better utilization of material in-
centives, together with skillful employment of the
state's power to command. Many Soviet experts, for
example, strongly favor granting production manag-
ers much greater operational autonomy, while at the
same time they believe there must be more effective,
centralized direction of science and technology policy,
long-term capital investment, regional development
strategy, financial policy, labor policy, and integration
of the Soviet economy with that of Eastern Europe.
These antinomies are clearly reflected in changes in
the economic mechanism approved since 1978.
Western discussions of the reform issue often convey
an impression that Soviet leaders and policy advisers
are waiting for somebody to advance radically new
proposals for change. In fact, an inventory of pro-
grams and proposals is already available in the form
of a range of measures worked out since 1978.3 These
measures, which we shall call the "Brezhnev legacy,"
cover many aspects of the economic mechanism-
central planning, success criteria, pricing, finances,
wholesale supply, ministerial structure, agricultural
administration, operation of production units, and
organization of labor and wages, for example.
The Brezhnev legacy attempts to combine broader
employment of some market-associated mechanisms
with measures aimed at achieving more effective
planning. Thus, it:
? Expresses a general intention to extend self-financ-
ing practices in the economy further than at present.
? Approves higher wholesale prices on the output of
sectors of the economy running at a planned loss
and dependent on direct subsidies from the state
budget.
? Insists on fuller payment for resources (land, materi-
als, finance, and labor) through higher prices.
? Increases the role of bank credit and enterprise
funds in financing capital investment and inventory
accumulation as compared with grant financing
from the state budget.
? Emphasizes direct ties and contractual obligations
between enterprises.
? Encourages individual production and sale of agri-
cultural produce.
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But at the same time it seeks to improve stability and
balance in the economy by emphasizing five-year
instead of annual planning.' It also extends intersec-
toral and regional program planning, emphasizes
planning of scientific and technological innovation,
and broadens the scope of financial planning.'
Even diehard advocates of central planning are in-
creasingly aware that Moscow must give up a certain
amount of authority to lower level institutions to be
able to exercise. strategic control over the economy.
Thus, the Brezhnev legacy:
? Expresses a willingness to assign more authority to
republic and local soviets in planning and manage-
ment, especially in the areas of consumer goods
production, trade, and services (a recent Central
Committee CPSU and USSR Council of Ministers
resolution on consumer goods production has al-
ready taken a small step in this direction).
? Emphasizes the creation (or restructuring) of large
industrial "associations" (ob'edineniya), with the
elimination of intervening bureaucratic layers be-
tween them and the ministries, and the granting to
them of greater operational independence.
However, the Brezhnev legacy also provides for an
increased role for centrally set plan "normatives" and
' Soviet planning specialists believe that one important reason why
managers at all levels are not more responsive to plan mechanisms
designed to promote efficiency, quality improvement, and cost
reduction, and why disruptive bottlenecks constantly occur is that
signals are so constantly being changed in the system that nobody
can count on anything very far ahead. "The plan" ceases to provide
meaningful information about the future to a manager, when his
output plan is changed repeatedly during the course of the year, his
supply plan is regularly not fulfilled, and he knows he will be able to
wheedle a.reduction in plan targets from his ministry toward the
end of the year if he is unable to meet goals set earlier. Thus, rather
than emphasize a need for greater flexibility in planning (as a
Western economist observer might), these specialists stress as one of
and to extend the operative plan horizon.
' Soviet policy advisers assert that failure to take account in the
planning process of many financial flows and the absence of a truly
consolidated state financial plan synchronized with the physical
plan contribute to major disproportions in the economy. In this
respect they are telling the political leadership that more effective
"limits," which will constrain choices open to manag-
ers,6 and the creation of additional centralized, inter-
branch organs for managing so-called territorial-pro-
duction complexes. And it aims at increasing the use
of direct command mechanisms to force conservation
of raw materials, fuel, and energy and to limit the use
of other scarce goods.
In the area of incentives, the Brezhnev legacy implies:
? A revision of incentive systems, with an emphasis on
somewhat greater wage differentiation.
? Continued introduction of organizational structures
designed to link rewards and final output (especially
the "brigade" organization of labor in both industry
and agriculture).
? A heightening of incentives for both management
and labor to reduce the number of workers on
particular jobs by emphasizing, for example, the
"Shchekino method," under which funds saved by
releasing redundant workers are used to increase the
wages of remaining personnel.
The decrees on economic organization and manage-
ment now on the books-which incorporate the con-
tradictory impulses of the Brezhnev legacy noted
above-have encountered varying degrees of noncom-
pliance, sabotage, or neglect on the part of the
6 In contrast to so-called addressed targets which set directive goals
for specific enterprises or sectors of the economy (for example, tons
of steel production, sales of shoes), "normatives" and "limits" are
parametric goals that are mandatory for subsectors of the entire
economy without reference to any particular producer. These goals
are derived from technical calculations or from an assessment of
performance within a group of enterprises. Some targets expressed
as "normatives," for example, include parameters (ratios) for wage
funds, allocations to ministerial science and technology develop-
ment funds, volume of working capital, utilization of material
inputs, amortization deductions, retention of profit, formation of
bonus funds, payment for production funds, rent payments, and
interest on loans. "Limits" set upper bounds, for example, for
material expenditures per ruble output or number of workers and
employees by branches of the economy. There is widespread
enthusiasm among many Soviet policy advisers for normatives and
limits because they appear to promise flexibility and generality
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bureaucracy. The opposition to the decrees stems
mostly from the fact that they conflict with short-
term goals to which the regime also attaches high
priority or would introduce standards that would
reduce the income and career prospects of the manag-
ers responsible for their implementation. At least
some high officials reportedly are convinced that these
measures are deficient and that more radical initia-
tives are required.
Nevertheless, the key issue now facing a leadership
that will not and cannot buy market socialism is to
decide what direction it intends to move in carrying
out already approved policies, what to select from a
menu of fairly well-known alternative ideas, and what
commitment it is prepared-or able-to undertake in
attempting to enforce its will. From the Kremlin's
perspective, these questions of emphasis-we be-
lieve-pose critical choices that will have major con-
sequences for the stability of the regime and Soviet
power in the decade ahead. The outcome of these
choices will depend partly upon Andropov's prefer-
ences, partly upon political constraints and opportuni-
ties, and partly upon Andropov's tactical skill.
His Assessment of the Present Situation
In half a year in office, Andropov has made a number
of statements that provide the basis for a preliminary
analysis of his views on the state of the Soviet
economy and of his probable strategy for improving
its performance. The list includes a major "theoreti-
cal" statement in Kommunist, the party's ideological
journal, and a speech at the June Central Committee
Plenum-both of which almost certainly reflect divid-
ed opinion and political conflict within the Kremlin.
The content of the article indicated that it was
designed to set the stage for intensified doctrinal and
policy debate, leading to an elaboration of new eco-
nomic doctrine-probably in a revised party program
for which Andropov appealed at the June Plenum.
The debate and the doctrine would justify policy
innovation and reinforce Andropov's personal power
by strengthening his claim to be a leading Marxist-
Leninist "theoretician." '
slow improvement at best.
A number of reports and his own public pronounce-
ments suggest that Andropov is even more dissatisfied
with the poor condition of the Soviet economy than
Brezhnev was. Enormous investments have not paid
off as expected, and scientific-technological innova-
tion is lagging-with negative consequences, he prob-
ably believes, for Soviet military power. Performance,
he states, is lagging behind plan targets for the 11th
Five-Year Plan; costs are too high; there are large
overexpenditures of material and financial assets; and
labor productivity is not rising rapidly enough. Partic-
ularly serious, he says, is the gap between the expand-
ing money income of the population and the availabil-
ity of consumer goods. This disequilibrium not only
undercuts incentives, but has the politically harmful
effect-he implies-of exacerbating public resent-
ment of inflation and shortages. He notes that the
economy so far has responded very sluggishly to
remedial steps, and the thrust of his comments strong-
ly suggests that he believes the prognosis is for very
Like his predecessor, Andropov identifies several obvi-
ous constraints upon economic growth:
? Poor managers hinder improvement in economic
efficiency.
? Investment is squeezed, on the one hand, by military
spending necessitated by the "imperialist threat,"
and, on the other, by the need to maintain tolerable
levels of consumption.
? Shortfalls in agricultural production and rising costs
for extracting, processing, and distributing fuels and
raw materials have reduced growth.
' A party program sets forth the goals, tasks, and broad policies of
the party for the foreseeable future. Acceptance of its content is a
condition of CPSU membership, and training and propaganda in
the Soviet Union are tailored to the program's precepts. To date,
only three party programs have-been established by the CPSU or its
forerunners-in 1903, in 1919, and in 1961 ?under Khrushchev.F_
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But.the critical factor, according to Andropov in
Kommunist, has been the failure to implement change
in the management of the economy:
Why do we not get the proper effect now from the
huge capital investments? Why are the achieve-
ments of science and technology being introduced
in production at rates which do not satisfy us?
Many reasons may be mentioned, of course. In the
first place, we cannot fail to see that our work,
aimed at improving and reorganizing the economic
mechanism and the forms and methods of manage-
ment, is falling short of the demands made by the
present level of the material, technical, social, and
spiritual development of Soviet society. And that is
the most important thing.
Obsolete doctrines and tradition-bound thinking-he
clearly implies-have inhibited the development of
solutions to economic problems and blocked necessary
policy adjustments.
Social Discipline: The Precondition of Change
With the Polish example. freshly in mind, Soviet
leaders are well aware of the potential linkages be-
tween poor economic performance, public malaise,
and political instability-even though they may differ
over their assessment of the seriousness of the current
situation and how to deal with it. In discussing
potential political instability, Communist ideologues
prefer to couch their discussion in pseudo-philosophi-
cal code talk about "contradictions." In his Kommu-
nist article, Andropov takes a position in an ongoing
heated but esoteric debate on contradictions that has
major implications for dealing with sociopolitical con-
flict. In the context of this debate, he emphasizes the
remoteness of Soviet society from the Communist
ideal, the existence in it of substantial latent and
potentially dangerous social tension, and the conse-
quent need for regime firmness.
Central to Andropov's assessment of the present
situation is a perception that social alienation among
the Soviet population is widespread. This is a judg-
ment not reflected in Brezhnev's speeches. Manifested
in lack of discipline, shoddy workmanship, lack of
commitment to enterprise goals, theft, labor turnover,
a flourishing "second economy," and widespread cor-
ruption, social alienation saps productivity and fuels
resentment against those seen to profit illegitimately
(including-Andropov knows-party and other offi-
cials). Within intellectual circles, frustration over the
near-stagnant economy and an absence of effective
reform could-Andropov suggests-heighten recep-
tivity to democratic socialism. The outlook for a
dissipation of such feelings of alienation-he im-
plies-is not favorable in the foreseeable future. 25X1
Judging by his public statements, Andropov, like
other members of his class, evidently has a jaundiced
opinion of the ideological commitment of Soviet work-
ing people and little faith in the political reliability of
the intelligentsia. Although social alienation presents
no immediate danger to the system, it could, if
unchecked, lead to political instability.
Thus, for Andropov, the first step that must be taken
is "a consistent consolidation in all spheres of the
national economy of what Marx described as 'regular-
ity and order.' " This is Andropov's response to
existing levels of alienation and possibly foreshadows 25X1
belt tightening to come. One facet of this "consolida-
tion" is the highly visible campaign already under
way to use coercive "administrative measures" to
enforce labor discipline: "Although everything cannot
be reduced to discipline, it is with discipline that we
must begin, comrades!" 8 Discipline, Andropov ob-
serves, is an essential prerequisite for other measures 25X1
and a step that "does not require any capital invest-
ments, yet produces an enormous saving."
Coercive means, Andropov evidently thinks, can help
to improve efficiency. But he obviously believes that
these means alone cannot produce economic salvation.
Andropov recognizes that worker and managerial
behavior will continue to be determined by material
interests and incentives-a position that he
recently reemphasized at the June Central Committee
Plenum. He acknowledges, for example, that new
technology is not being introduced in production in 25X1
large part because this puts managers who do so at a
disadvantage' Effective solutions to Soviet economic
' Existing incentive systems and prices do not compensate managers
for the lost production, major inconveniences, and risks often
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problems must harness such interests rather than
suppress them. Thus the role of coercion in Andro-
pov's strategy, while significant, is limited: reinforce-
ment of order, not social mobilization in the sense of
the extraction of a vast amount of unpaid and involun-
tary labor, is its aim. However, if it became clear that
economic incentives were not going to do the trick,
Andropov might well employ coercion for mobiliza-
tion purposes-as he did in Karelia during the Second
The other facet of Andropov's strategy for strengthen-
ing social order involves public relations. Through his
speeches, appearances, and writings, Andropov evi-
dently seeks to:
? Create an impression that the regime is responsive
to popular resentment over unearned income, free-
loading, and corruption.
? Deflate any expectations of rapid improvement in
the standard of living.
? Convince the population that the leadership is level-
ing with it about economic problems.
? Demonstrate that there is now a will to act, and
follow through once decisions are taken.
? Confirm that the regime, if tested, can and will
defend the political system with whatever means are
necessary.
Andropov's purpose is essentially to shape political
attitudes, which indirectly may influence labor pro-
ductivity. He evidently does not believe that work
habits are likely to respond much to direct propagan-
da or moral suasion. The General Secretary cynically
dismisses "slogans," "persuasion and exhortations,"
and "fussing and talk," and generally downplays the
organizing of "socialist competition" among enter-
prises-undercutting the role of thousands of party,
trade union, and Komsomol officials who are engaged
precisely in such activities. The tone of his references
to these traditional "agitational" functions contrasts
markedly with the way in which they were treated by
Central Committee Secretary Konstantin Chernenko
at the June Central Committee Plenum
Andropov's Likely Policy Preferences
Andropov's speeches and his Kommunist article indi-
cate the general direction in which he hopes to turn
the discussion of economic change.
Limits to Change. First, his statements set the basic
boundaries within which change in the economic
mechanism must occur. These include:
? Maintenance of monopolistic political power, even if
exercised in new, more flexible ways.
? Maintenance of public ownership of the means of
production.
? The unacceptability of any Yugoslav-type commun-
ally owned and cooperatively managed production
units.
? Adherence to "democratic centralism."
? Retention of "a single system of scientific guidance,
planning, and management." 10
Andropov does stipulate that change must not be
precipitous but should be "carefully prepared and
realistic"; "to run ahead means to put forward unfea-
sible tasks." Yet, within well-understood limits, the
Kommunist article and speech at the June Central
Committee Plenum by implication call for broad
innovation in the .economy.
Neither serious democratization, nor comprehensive
reliance on markets in which central authorities do
not dictate quantities supplied by individual sellers
and prices, nor transfer of the basic means of produc-
tion to private ownership seems to be a live issue today
among Soviet policymakers or top-level advisers-
even though certain advisers and academics with past
ties to Andropov or his subordinates are emphasizing
the relevance of East European experiments with
partial restoration of markets by allowing enterprises
to set some prices and exercise greater managerial
autonomy generally. In this context, Andropov ap-
pears to invite rather than foreclose discussion of real-
world issues, such as the degree of centralization of
planning and administration, the role of financial
mechanisms, the organizational structure of industry
and agriculture, and the permissible bounds of indi-
vidual entrepreneurial activity.
Andropov, by encouraging creativity and relevance
under contemporary conditions, takes dead aim at
dogmatism and mindless defense of the status quo.
'? This formulation deliberately provides more scope for modifica-
tion of the planning system than the one favored by unregenerate
centralists which pictures "centralized planning" as the centerpiece
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His stress on intellectual analysis rather than slogan-
eering serves the same purpose. The General Secre-
tary's repeated support for the study of Bloc countries,
which follows the lead given by Brezhnev at the 26th
Party Congress, is unquestionably change oriented.
Finally, he implies that "political economy"-the
doctrine that circumscribes change in the principles
underlying the economic mechanism-must now be
updated.
Resource Allocation and Wage Differentiation. His
remarks on resource allocation suggest considerable
continuity with Brezhnev's positions. For example, he
would probably prefer to:
? Increase investment in mechanization of labor (and
therefore in the machine-building industry) and the
steel industry and raise somewhat the proportion of
investment going into the production of energy-
saving equipment as against the share going into
primary energy production.
? Maintain the Food Program, but with an eye to
possible savings of investment funds.
? Keep wage increases-and therefore consumer de-
mand-in line with growth in labor productivity
even though powerful pressures in the economy have
encouraged outsize wage gains-a general labor
shortage, the availability to enterprise management
of state budget subsidies to supplement the wage
fund, working conditions in Soviet enterprises, per-
missive labor laws, and long cultural .conditioning.
? Raise some prices as a step in reducing subsidies
and dealing with shortages in particular consumer
An integral-and vital-feature of Andropov's cam-
paign to reestablish labor discipline is his strong
support for linking remuneration to the contribution
of the individual worker. In his public statements
Andropov has harshly attacked leveling because it
conflicts with the priority the regime has assigned to
raising labor productivity. His tactic is to play to
popular resentment of wage abuses, while calling for
systemic changes that will in fact heighten wage
differentiation. In so doing, he openly justifies a policy
of greater social inequality in the USSR.
Economic Organization. In the area of economic
organization, Andropov has publicly-if perhaps re-
luctantly-endorsed the creation of the agro-industri-
al associations mandated by the May 1982 Plenum of
the CPSU Central Committee. He has also lent some
support to the transition throughout the economy to
the so-called brigade organization of labor. And he
has attacked "departmentalism" and parochialism,
hinted at the desirability of general reorganization,
and implied the need for a reorganization of the
construction industry.
On several occasions Andropov has spoken in favor of
greater "decentralization" of decisionmaking in the
economy. Thus, in his 22 November 1982 speech, he
declared:
A good deal has been said lately about the need to
extend the independence of associations, enter-
prises, and collective and state farms. The time
seems to have come to tackle this problem in
practice. The Politburo has instructed the Council
of Ministers and the State Planning Committee on
this score. It is necessary to act with caution here,
to conduct experiments if need be, to make apprais-
als, and to take account of the experience of
fraternal countries....
He also called for a shift in decisionmaking related to
consumer goods production from central to local
authorities. In his article on Marxism, he emphasized
the enhanced managerial role of local authorities in
connection with the formation of the agro-industrial
associations and referred to "widening the framework
of independence of industrial enterprises and state
and collective farms." "
" Andropov's thinking about decentralization is not without ambi-
guity. There is an important difference between decentralization of
authority to production units (enterprises or farms), and to "supra-
production" units (industrial associations, district agro-industrial
associations, or local soviets), where authority is now exercised by
central organs. The latter type of change is likely to imply
recentralization from the standpoint of production units. Thus, an
industrial enterprise, when incorporated with other enterprises into
a production association, loses its relative financial and operational
independence and exchanges subordination to a somewhat more
removed ministry or ministerial main administration for direct
supervision by a more proximate and interventionist association
management. Andropov talks about both types of change without
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Andropov's Probable Positions on the Hard Options
How Andropov will translate general preferences into
specific choices among difficult options will depend
heavily on how the economy fares over the next few
years and on the strength of his political position. An
assessment of these prospects must therefore be more
speculative.
Self-Financing and Economic Levers. Soviet authori-
ties agree generally that the Brezhnev line of encour-
aging an extension of "self-financing" (khozraschet)
practices and economic levers in the economy is
correct and should be pursued. (Khozraschet refers to
the responsibility of an enterprise to cover current
operating expenses out of revenues, while economic
levers refers to the use of such instruments as prices,
bank financing, and contractual relationships to influ-
ence enterprise behavior. Both terms, in a more
general sense, are understood by Soviet audiences to
refer to indirect methods of control as opposed to
direct commands regarding what to produce and how
to produce.) But sharp differences of opinion exist
over methods of accomplishing this aim.
Within the policy advisory community and among
lower level specialists the question of how to extend
self-financing and increase the importance of econom-
ic levers while retaining central planning is probably
viewed as the paramount reform issue. This certainly
is the area of policy in which the question of the
viability of a Soviet-type economic system is raised
most persistently, and the manner in which tensions
between these two objectives are resolved strongly
affects the resolution of most other questions. In the
long run, this is therefore a make-or-break matter.F
Andropov's statements bearing on this issue have left
his position ambiguous. His stress on material incen-
tives and greater local authority, his calculated failure
to endorse "centralized" planning as the backbone of
the Soviet economic system, and his criticism at the
June Central Committee Plenum of existing princi-
ples of price formation could be taken as indicating
support for a more active role for indirect rather than
direct methods of controlling enterprise behavior. On
the other hand, he firmly endorses Marx's "surplus
value theory," which creates major obstacles to
rational pricing, and strongly criticizes "individualis-
tic habits, the striving to gain profit at the expense of
other people."
Westerners have heard veiled hints from some Soviets
that Andropov might in time try to upgrade the role of
economic levers in the Soviet economy. If taken
seriously, this approach would reduce the scope of
directive planning from above, increase the role of
profits as a guide to enterprises, and prevent minis-
tries from reallocating profits from the more effective
to the less effective enterprises. It would also give
managers more authority over production decisions,
introduce sanctions serious enough to compel enter-
prises to meet contract obligations, provide managers
with real incentives to release redundant labor, and
require much greater attention to supply and demand
in setting prices. Such an approach by Andropov
would square with his appreciation of the need to
harness material interests to regime objectives and
might be seen by him as the one means of dramatical-
ly improving economic performance.
Nevertheless, there are strong reasons why Andropov
might not make economic levers the major element.of
a program to improve Soviet economic performance:
? Kosygin failed to implement an economic reform
geared to economic levers.
? Political support for it in the Politburo would proba-
bly be tenuous, and there appears to be little
enthusiasm for it within broader elite circles.
? Opinions of Soviet specialists are quite divided on
this issue.
? The kind of partial moves most likely to be involved
would probably not produce large results.in the
short term and could produce confusion.
? The levers issue probably does not arouse much
popular interest and is difficult to dramatize.
Thus, even though he might view the long-term
payoffs from upgrading economic levers as potentially
great, Andropov may well defer , serious: action unless
he is convinced that immediate steps cannot safely be
postponed
Organizational Changes. The large number of nar-
rowly specialized economic ministries offer a prime
target for reorganization. This topic has been widely
discussed by specialists, who have advanced cogent
reasons for changes, and has been under consideration
by the leadership, for years. Ministerial restructuring
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I7CClUt
reportedly may be included in a package of proposals
that will be recommended-apparently within the
next 12 months or so--to the leadership by Nikolay
Ryzhkov and his Central Committee Economics De-
partment.
Andropov's options here, of course, would depend on
the support he could muster in the Politburo and on
the political risk he would be prepared to accept in
challenging vested bureaucratic interests. Reorgani-
zation might take the form of a consolidation of
ministries, a subordination of functional or program-
related ministries to superministers (as may already
be in train), or both. At the same time, ministries
might be compelled to integrate their activities more
closely with technological programs generated by
Gosplan, the State Committee for Science and Tech-
nology, and the Academy of Sciences. Such a reorga-
nization, if it were major, would provide Andropov
with a unique opportunity to purge the ministerial
bureaucracy, install clients beholden to him, and
increase his influence over the Presidium of the
Council of Ministers-perhaps getting rid of
Tikhonov and others at the same time.
This reorganization might be combined with a prun-
ing of subministerial echelons and an all-out drive to
further concentrate operational authority in large
production associations. If he follows this path,
Andropov would accentuate the line set by Brezhnev
at the 26th Party Congress, which has encountered
obstruction and delay in some ministries. This ap-
proach would be seen as permitting a devolution of
some planning tasks, improving opportunities for tech-
nological change, and creating a better environment
for khozraschet: At the same time, it promises econo-
mies of scale in the performance of auxiliary and staff
functions and would make it easier to establish long-
term direct contractual ties between suppliers and
purchasers-thus raising the responsiveness of pro-
ducers to consumer requirements. The relative success
of the East Germans with their similar "kombinats" is
an additional argument raised by policy advisers for
moving faster in this direction. Although this kind of
ministerial reorganization would retain-and perhaps
enhance-the capacity for effective central interven-
tion in economic management where this was desired,
it would also offer the prospect of a reduction in the
burden of detail on central planners, greater maneu- 25X1
verability in production, and better coordination with
regional scientific and technological institutions. F_~
Major organizational difficulties may arise if the
leadership decides that it should take more radical
steps to improve horizontal coordination of the econo-
my at the regional level. The regime has responded to
the regional coordination problem so far by:
? Creating territorial production complexes, mainly in
eastern developing regions of the country.12
? Upgrading the regional dimension of central
planning.
? Increasing the consultative voice of regional au-
thorities in reviewing the plans of enterprises that
are located on their territory but are subordinate to
higher bureaucratic echelons.
? Devolving some power in consumer-related sectors
to local soviets.
? Calling for local planning organs to play a more
active role. 25X1
? Encouraging experimentation by local party organs
in horizontal coordination of science, technology,
and industrial production.
Further steps can be taken along these paths, but
there are severe limits to the returns that can be
squeezed from each. The question of whether or not to
shift substantial control over the allocation of at least
some resources from Moscow to the local level cannot
long be deferred. At this point, the Politburo-which
now contains five regional party barons among its full
and candidate members-will have to reconcile con-`
flicting regional, ethnic, and central interests. In his
speech at the 60th Anniversary of the formation of the
USSR (December 1982), Andropov-mindful of the
unsatisfactory experience of the ill-fated local eco-
nomic councils (sovnarkhozy) under Khrushchev and
aware of latent nationalist sentiment in the non-
Russian borderlands-gave fair warning that his
highest priority would not be regional "decentraliza-
tion." Instead, he stressed the protection of all-union
economic interests and the defense of the political
integrity of the Soviet multinational empire.
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Agriculture. Andropov will soon have to speak more
directly on the critical issue of agricultural organiza-
tion. His freedom of maneuver is constrained by the
ongoing creation of so-called agro-industrial associa-
tions at the rayon (rural district) and all higher
administrative levels-a decision taken at the May
1982 Plenum of the Central Committee as part of
Brezhnev's Food Program. The centerpiece of this
program is the rayon agro-industrial association, or
RAPO, which brings together leaders from the bot-
tom rungs of all the agriculture-related service agen-
cies and heads of collective and state farms under the
leadership of a deputy chairman of the rayon soviet
executive committee." This reorganization has en-
countered much resistance from the agencies and
parent ministries, who fear that they will lose control
of their own bureaucracies, and the shape it will take
in practice remains to be determined.
The RAPOs create serious difficulties for economic
policy that Andropov must address. Without a change
of course, RAPOs are likely to diminish still further
the operational and financial autonomy of the farms.
This will further undercut the ability of farms to
make rational decisions. Although the RAPOs were
set up to bring order to chaotic administrative rela-
tionships in the rural districts, they may actually
intensify problems of authority by placing many
agencies under dual subordination both to the RAPO
and to their own ministerial or regional superiors. A
move backward through liquidation of the RAPOs
would reestablish the lack of responsibility of the
service agencies for final results in agriculture. A
move forward to subordinate all agencies and farms to
the RAPO would create over 3,000 little rural eco-
nomic councils (sovnarkhozy), pose a major question
of how these bodies would relate to the rest of the
Soviet economy, and bureaucratize farm management
even more thoroughly.
Andropov's options appear to be limited, in part
because he probably cannot openly abandon the
RAPOs. They enjoy considerable support within the
party apparatus and do provide a needed framework
for integrating the farms, service agencies, and enter-
prises processing food and raw materials. At the same
time he probably cannot take the politically safest
course of doing nothing, since farm efficiency must be
raised to improve the food supply and reduce the
burden of agricultural spending. In some quarters
within the political elite, there is strong support for
the ideologically orthodox strategy of simply moving
ahead with the creation of more interfarm organiza-
tions and calling it a step toward "Communism."
Other officials are probably counseling Andropov to
seek a solution to the agricultural problem by promot-
ing entrepreneurial activity under the RAPO umbrel-
la.
Andropov has not yet given a clear signal of how he
wishes to proceed. Clearly he approved the decision of
the Politburo in early March 1983 to give full backing
to the so-called collective contract system of organiz-
ing and paying farm labor. This arrangement depends
upon a broadening of self-financing practices in farms
and represents a significant step toward involving
smaller groups of rank-and-file labor ("brigades" or
"links") in profitmaking activity. Yet, at the June
Central Committee Plenum, he emphasized the future
amalgamation of collective farms with the state
sector.
Andropov may well be compelled by reality to ac-
knowledge that progress in agriculture is only possible
through an extension of market practices. Should he
come to this conclusion, additional measures that he
could support might include:
? Reducing obligatory farm deliveries to the state at
fixed procurement prices and allowing farms to sell
more of their produce in collective farm markets."
? Relying more on the price mechanism and less on
directive measures to influence farm decisions on
what to raise.
? Systematically increasing commercial relationships
among RAPO member organizations.
If Andropov were to turn to Hungary for ideas to
improve any sector of the economy, agriculture would
probably be one such area. The Soviets are impressed
" The Brezhnev leadership already took one cautious step down this
path in 1982 when it allowed farms to sell up to 10 percent of their
planned procurement of fruit and vegetables on collective farm
markets and to count this volume toward their obligatory deliveries
to the state.
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by Hungarian agricultural successes, and the leader-
ship-speaking through Brezhnev at the 26th Party
Congress-has already specifically commended Hun-
gary in this regard (although not, it should be noted,
for doing' away with farm procurement quotas). If
Andropov decided to extend market ties in agricul-
ture, he would need new doctrine to provide political
cover and at the same time prevent an undesired
extension of market influence elsewhere
Industrial Labor Relations. Andropov might be in-
clined to rely more on market forces in agriculture,
but he probably will go in the opposite direction in
industrial labor relations-the field in which he has
most clearly manifested a readiness to act. The
regime's objectives are to get workers to exert them-
selves more, to improve the quality of work, to release
and reallocate surplus workers, and to prevent unde-
sired labor turnover. The root of the difficulties in
each of these areas is probably perceived by Andropov
and his advisers as the existence of a seller's market
for labor and too little planning and legal control. The
combination of these two factors leads management to
neglect labor discipline, ignore the connection be-
tween quality of labor effort and remuneration, hoard
labor, and stimulate turnover by what amounts to
competitive bidding for labor.
Soviet experts concerned with labor issues believe that
it is necessary to:
? Increase economic incentives for management to
release redundant labor (for example, by more
vigorously implementing the labor-saving
"Shchekino" method).
? Mobilize worker interest in the results of joint labor
and in reducing the number of workers performing a
job (for example, by forcing managers to organize
labor brigades that operate in fact on the basis of
self-financing and payment for their collective
production).
? Promote redistribution of labor by expanding the
role of local government organs in retraining and
reallocating labor and by paying for job retraining.
? Increase wage differentiation significantly.
? Rely more on administrative mechanisms to enforce
labor discipline.F_~ 25X1
Several measures taken by Andropov suggest that he
believes the stakes are high enough to justify the risks
of temporary unemployment and potential political
instability entailed by bearing down on the workers:
the discipline campaign initiated after his accession to
office; the posting of his client, KGB chairman Fedor-
chuk, as head of the Ministry of Internal Affairs with
an apparent mandate to strengthen law enforcement;
and the stepped-up repression of dissidents. Thus, for
example, he is quite likely to support harsh new laws
regulating discipline and labor mobility.
Andropov has personally partici- 25X1
pated in drafting a proposed new law on employee
conduct that would prevent a person who was fired
from being reemployed again for six months the first
time and possibly for a year the second time.
The practical problem with such laws in a tight labor
market (as with the imposition of higher output norms
and greater wage differentiation) lies as much in
getting managers and local party officials to enforce
them as in obtaining obedience by workers. If tough 25X1
new labor legislation is enacted, Andropov may be
tempted to assure labor quiescence and managerial
compliance by expanding the informer network and
monitoring role of the KGB in enterprises.
With regard to positive incentives, the Supreme Sovi-
et recently approved a new draft law on the participa-
tion of workers' collectives in the management of
enterprises. While the law is new, the changes-to
take effect on 1 August 1983-seem essentially cos-
metic. For example, the law gives labor very little
authority in making plant-level decisions such as the
selection of management personnel or the setting of
worker salaries. The law's first article in fact stipu-
lates that the workers': collectives must function "un-
der the leadership of the organization of the CPSU"
and that the duty of the collectives is the "unswerving
execution of the party's decisions."
? Impose higher output norms that require more work
for the same pay.
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Excess Savings and Consumer Goods Supply. Failure
of the supply of consumer goods to absorb the popula-
tion's rising monetary income has created a pool of
savings that is thought by the Soviets and many
Western observers to be large enough to undermine
labor incentives, feed corruption, increase inflation,
and-via Second Economy effects-distort regime
gap between purchasing power and the availability of
consumer goods is $100 billion. Some Western esti-
mates are substantially higher.15
The matter deeply concerns the Soviet authorities,
and, as noted above, Andropov himself has repeatedly
expressed anxiety. In dealing with this important
issue, Andropov must balance regime economic objec-
tives against social stability and in the process guard
his own political flanks. The high political sensitivity
of the issue arises from the fact that potentially
effective responses to it tend to involve a reduction in
the apparent standard of living, shifts in income
distribution and greater social class differentiation
that contradict popular notions of progress toward
"Communism," and an ideologically suspect expan-
sion of private entrepreneurial activit
On the demand side, the leadership could try to
influence the situation through changes affecting
wage policy, retail prices, savings, and taxation. Thus,
would clamp down on minimum wage hikes for
various categories of employees, use planning norma-
tives to hold wage fund increases below productivity
growth, and introduce a graduated income tax
an active price policy: a rise in retail
prices (presumably including food prices) to bring
them more into line with costs; introduction of flexible
retail prices to equilibrate supply and demand; intro-
duction of payments for some heretofore free social
services; higher rent for better housing (existing high-
ly subsidized rents are differentiated only for apart-
ments above the legal minimum size, and then only by
Ithe USSR has done
a reasonably good job of keeping growth in incomes in line with the
increase in the overall supply of consumer goods and services.
However, in some important segments of consumption (notably,
quality foods, housing, and consumer services), supply falls far short
their square meterage-not by quality or tenant
income); and increased rent and tax payments for
private land use
Ithe possibility,
although undesirability, of a currency revaluation that
would reduce the savings overhang
On the supply side, the leadership has options that
could affect the quantity and quality of goods as well
as marketing mechanisms. Kirichenko proposes prior-
ity for private consumers over producers in the alloca-
tion of fuel, building materials, metal products, and
transportation services; expanded production of con-
sumer durables; more privately financed housing con-
struction; an increase in tourism; and an ethnically
sensitive policy of regional allocation of consumer
goods according to levels of income. Other experts
suggest an expansion of direct retail sales outlets for
firms producing consumer goods, and some have even
broached the delicate subject of a greater role for
private enterprise by individuals in the service sector.
Andropov's words and behavior so far supply some
clues as to the direction in which he would like to
move. In general, he probably would go along with
proposals that have the effect of increasing social
inequality and catering to the more affluent elements
in the population. One of the first publicized Politburo
agenda items under Andropov's leadership, for exam-
ple, was the provision of repair service and spare parts
for private automobiles. Food price increases in early
1983 suggest that he will probably try to pass on more
of the costs of food production to the consumer. He
will, however, handle this volatile business with ex-
treme caution. A few Western analysts believe that
Andropov will not be able to avoid a monetary
revaluation or a freeze on the use of savings. Although
he would probably estimate that the regime could
handle any threat of disorder that such an encroach-
ment on savings might trigger, he would also have to
think long and hard about whether such a step would
in fact induce people to work harder.
Andropov could easily accept direct retail marketing
by enterprises manufacturing consumer goods, and he
might accept greater flexibility in retail prices. At the
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June Central Committee Plenum, he urged that more
attention be paid to cooperative housing construction.
But the expansion of private business activity in the
trade and services area-making legal some elements
of the Second Economy-would raise more difficult
questions. This topic does appear to be on the political
agenda for discussion, and there are good arguments
in favor of positive action. It could bring quick relief
to many consumer complaints at low economic cost to
the state, sop up excess purchasing power, and stimu-
late labor productivity. However, it would also violate
existing doctrine and could increase Andropov's vul-
nerability in the Politburo. Andropov's campaign
against corruption, his strong public endorsement of
public ownership of the means of production and
attack on "selfish considerations" and profiteering,
and his likely reading of potentially hostile public
reactions probably will lead him-at least for the time
being-to reject proposals that would significantly
expand private entrepreneurial activity in the service
and trade sectors along "Hungarian" lines.
Andropov's "Bottom Line"
Andropov, thus, is likely to support many of the
policies inherited from Brezhnev. Beyond this, howev-
er, he apparently seeks to develop a more sharply
focused action program. In the labor and incentives
field, the program that Andropov is likely to support
will emphasize:
? Further efforts to improve labor discipline and
combat corruption.
? A move to limit market forces and strengthen
administrative controls in the allocation of labor.
? Greater pressure for higher labor productivity
through tighter output norms, combined with great-
er wage differentiation to reward the industrious.
? Reduction of the personal savings "overhang"
through selective price increases for consumer goods
(including food) and provision of "luxury" goods and
services for the more affluent elements of the
population.
Organizationally, Andropov probably will press for:
? Reorganization of the ministerial apparatus.
? Decentralization of some authority to large industri-
al associations.
? A devolution of responsibilities-particularly in
consumer-related sectors-to provincial and lower
administrative echelons.
Finally, in defining the permissible scope of indirect
controls over production and resource allocation in the
economy, Andropov's program is likely to stress:
? Somewhat greater attention than at present to
strengthening the role of self-financing and econom-
ic levers.
? An increase in price-profit and market-based rela-
tionships within individual farms and between farms
and the rest of the economy.
? Innovations in retail marketing practices designed
to force state trading and consumer goods-
producing organizations to be more responsive to
consumer preferences.
The program will probably exclude large-scale exten-
sion of private entrepreneurial activity in the services
and trade sectors
Prospects
Although there are few sharp discontinuities between
the set of measures outlined above and the Brezhnev
legacy, there are new elements and important shifts of
emphasis which-if they were to be implemented-
would test Andropov's political skills to the utmost. P
Support and Opposition
Andropov's likely agenda involves action in areas that
in Communist systems have proved historically to be
fertile ground for conflict within the regime or be-
tween the regime and society: industrial labor rela-
tions, consumer welfare, corruption, entrepreneurial
activity in agriculture and agricultural organization,
and the allocation of power among the main bureau-
cratic hierarchies.
The possible strategy just described is at cross pur-
poses with the interests of both management and the
population. From the standpoint of working people,
Andropov's strategy might have certain positive fea-
tures. It:
? Responds to a currently felt need for order and
discipline and for a struggle against corruption.
? Provides an image of take-charge leadership.
? Offers less rhetoric and more "candor."
? Promises eventual economic progress.
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But it also has serious drawbacks. It would:
? Impose more coercion in the workplace.
? Mean that people would have to work harder to earn
the same income.
? Jeopardize the opportunity for job mobility that
provides Soviet workers with some leverage against
management.
? Probably increase prices for at least some consumer
goods, including food.
? Increase wage and social inequality.
On balance, Andropov's strategy would appear to lead
in the near-to-medium term to greater tension in
relations between the regime and the'populationF
Managerial personnel probably welcome Andropov's
general commitment to discipline, the work ethic, and
more rational incentive systems. They would certainly
appreciate a line that justifies greater privileges for
them as a class. But many of them may feel anxiety
for their own jobs, either because they are especially
vulnerable to charges of corruption or because they
see they may be replaced by younger and better
trained personnel.
In attempting to implement the changes noted above
in the Soviet economic mechanism, Andropov would
probably encounter widespread noncompliance and
bureaucratic obstruction. The constituencies upon
which he could draw in combating this resistance
appear to be narrow and rather diffuse. Some younger
and more technocratically inclined cadres probably
would see opportunities for policy movement and
career advancement, while other officials, irrespective
of generation and organizational affiliation, would
favor a restoration of firm social discipline. Elements
within the military-industrial-scientific sector might
see the changes as promoting more rapid economic
modernization and technological innovation. Perhaps
some territorial officials and production association-
level managers would be attracted by the idea of a
devolution of economic decision making power. Mean-
while, individual institutes and policy advisers would
perceive advantage in seeking Andropov's patronage.
Finally, various individuals in the media and, institu-
tionally, the KGB and the armed forces might support
an Andropov program of economic change.
The party apparatus remains a critical element in the
power equation. Yet Andropov's enthusiasm for the
apparatus, of which he is the titular head, appears to
be remarkably restrained. In his published statements
before June, he largely avoided mentioning the party
apparatus as a functioning institution. During his
well-publicized visit in January 1983 to a Moscow
machine-building plant, he ignored the enterprise's
primary party organization altogether-allowing Vic-
tor Grishin, the Politburo member and Moscow City
Party Committee first secretary accompanying him,
the opportunity to score political points by calling
attention to its role. Andropov also selected Nikolay
Ryzhkov, a Gosplan official and former factory man-
ager altogether lacking in any prior experience in the
party apparatus, for the key job in the Central
Committee Secretariat responsible for overseeing
change in the economic mechanism. This posting may
say something about his perception of the talent
available in the party apparatus-although factional
explanations of this unprecedented appointment are
possible. At the June Central Committee Plenum,
Andropov spoke in favor of less day-to-day interven-
tion by the party appara sin the government's
running of the economy.
The party apparatus itself would probably be divided
over Andropov's strategy. Some party officials at all
levels would no doubt gravitate naturally into Andro-
pov's orbit, drawn by direct ties with him or-more
likely-by connections with patrons who are his cli-
ents. The large number of party officials concerned
with agriculture would probably not enthusiastically
support Andropov until he displayed a greater concern
for their interests than he has apparently done so far.
Many party officials probably fear the anticorruption
campaign and are anxious about KGB intrusion on
their turf.16 Those concerned with propaganda must
sense Andropov's contempt and resent this-although
some may welcome the promised revitalization of
ideological activity. And any serious changes in the
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role of the party apparatus vis-a-vis the government
economic bureaucracy and in the role of the Central
Committee branch economic departments would gen-
erate still further controversy in the party apparatus.
While Andropov's fellow Politburo members may
have voted for him in the hope that he would get the
country moving, some of them at least probably would
be troubled by the strategy outlined above. The
confrontational nature of Andropov's posture toward
the working class, the likely shakeup of the Council of
Ministers, the toleration of more market activity in
agriculture, the possibly enhanced role of the KGB,
the uncertain status of the party apparatus-all prob-
ably would provoke unease among the likes of
Tikhonov and Chernenko, and probably others as
well. Gaining support in the Politburo for passage and
consistent implementation of such a program of
change would not be easy for Andropov~
Andropov's Power
Andropov enjoyed sufficient backing within the Polit-
buro to gain nomination as General Secretary in
November 1982, and he probably can continue to rely
on the cooperation of such key figures as Ustinov and
Gromyko. Andropov probably sought, and stands to
benefit from, the transfer of Grigoriy Romanov from
Leningrad to the Central Committee Secretariat-a
move that does, however, now place an eligible poten-
tial contender within striking distance of the General
Secretaryship. Through the Secretariat, Andropov
can strongly influence the Politburo's agenda and take
the initiative in proposing personnel, policy, and orga-
nizational changes. His access to compromising KGB
information about his colleagues probably gives him a
potentially powerful, if risky, weapon for eliciting
compliance with his wishes in the Politburo. And his
nomination at the June 1983 session of the Supreme
Soviet to parallel occupancy of the post of Chairman
of the Presidium of the Supreme Soviet not only
provided a visible demonstration to the Soviet elite of
his political momentum, but also enhanced his ability
to influence activities in the governmental apparatus.
Nevertheless, Andropov's power to institute change in
the economic mechanism is still limited by:
? His relative lack of clients within the Politburo.
? The strong personal stake of politburo members in
restricting his autonomy in order to maintain colle-
gial rule.
? The overlapping membership of three other figures
beside himself-Chernenko, Gorbachev, and
Romanov-in both the Secretariat and the Politbu-
ro, which prevents him from serving as the sole
spokesman of each body to the other.
? The presence of people wedded to the status quo in
key economic policy making posts in the Secretariat,
Council of Ministers, and Gosplan.
? His relative lack of support within many sectors of 25X1
the party and governmental bureaucracy responsible
Apparently, Andropov did enter office with a man-
date of sorts to "get things moving." This permitted
him to make several top-level appointments, to pro-
mote some personnel shifts at lower levels, and to
unleash the campaign aimed at combating corruption
and strengthening labor discipline. After a rather fast
start, however, the pace of movement appeared to
slow down in the first months of 1983. Gromyko's
appointment to the post of First Deputy Chairman of
the Council of Ministers in March 1983, following the
earlier promotion of the Azerbaidzhan party first
secretary and former KGB official, Gaydar Aliev, to
another First Deputy Chairman position, suggested
that Andropov might be seeking first to establish his
influence in the Presidium of the Council of Ministers
before tackling the Secretariat and Politburo. His
occupancy of the Chairmanship of the Presidium of
the Supreme Soviet, probable support for the promo-
tion of Vitaliy Vorotnikov to the post of Chairman of
the Council of Ministers of the Russian Republic, and
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emphasis on a demarcation of roles between the party
apparatus and state bodies (see below) also suggest a
"governmental" element to his maneuver for power.
So far, however, he has not managed to score any
major policy triumphs either abroad or at home, and
he has not been able to fundamentally improve his
power position within the Politburo-where
Chernenko and others remain strong enough to resist
his initiatives. Despite incremental gains at the June
Central Committee Plenum, Andropov did not man-
age to effect any change among full members of the
Politburo.
Chernenko's position appeared to have been weakened
by illness-real or political-in April 1983. Yet his
delivery of the report at the June Central Committee
Plenum-in which he ignored Andropov's call for a
new party program and defended the Brezhnev policy
line, while confirming the existence of a split in the
Politburo by his excessive protestation of leadership
unity-indicated that he retained substantial support
among his peers. Thus, Andropov still needs to alter
the membership of the Politburo, further extend his
control over the Secretariat, build support within the
Central Committee, and undercut bureaucratic oppo-
sition to policy initiatives
While this political breakthrough is probably a pre-
condition for undertaking a new comprehensive eco-
nomic program, Andropov's choices about what to
seek in such a program are likely to strongly affect his
prospects for radically improving his power position.
In short, his economic strategy is, on the one hand, a
hostage to the limits of his current political strength
but, on the other, potentially the most important
means of overcoming these limits. As a politician,
Andropov is probably as interested-or more-in the
power aspect of this equation as he is in the purely
economic.
Andropov's Tactics
Andropov's words and actions indicate that he be-
lieves that to carry out a significant program of
change in the economic mechanism, he must also
initiate changes in the personnel field, in the policy-
making process, and in political-economic doctrine.
He also obviously must make a choice as to whether to
pursue a strategy of phased or all-at-once change. F-
Rejuvenation of Managerial Personnel. From the
outset of his tenure as General Secretary, Andropov
made clear his intention to carry out a personnel
shakeup. His objective has been to bring a somewhat
younger, better qualified, more innovative, and, above
all, more disciplined set of officials to power in the
economic sector. While some movement is already
visible in shifts of personnel in the central economic
bureaucracy (and even more movement at lower lev-
els), Andropov's pursuit of this aim has been inhibited
by Politburo restraints on his discretion in personnel
appointments. The shifts that have been made so far
do not appear to be as dramatic as some Soviet
officials privately anticipated. Andropov, however,
appears to have significantly increased his leverage in
the personnel field in late April 1983. He relieved the
longtime secretary for personnel matters, Ivan
Kapitonov, from control of the nerve center of the
party's cadre appointment system-the Central Com-
mittee's Organizational Party Work Department-
and arranged to have the new head of this department
report directly to him
Change in the Policymaking Mechanism.
Secretary, Nikolay Ryzhkov, had been ordered by
Andropov to turn the Central Committee Economics
Department into a base for elaborating comprehensive
proposals for change in planning and management of
the economy. Once these structural changes had been
decided, the Department would substantially enlarge
the role of the Central Committee apparatus in
planning strategic economic policy. By the same
token, however, the apparatus-along lines followed
in Hungary-would be compelled to disengage from
day-to-day intervention in economic affairs because of
an alteration in the role of-or possibly, according to
one account, even the elimination of-the existing
branch economic departments of the Central Com-
mittee. Their monitoring function would be trans-
ferred to an upgraded Central Committee "Inspector-
ate," and perhaps to the KGB.
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In principle, such a reorganization might increase the
capacity of the Politburo and the Secretariat to
examine options and steer the economy more effec-
tively in accordance with broad political priorities,
rather than react to bureaucratic compromises ar-
ranged below. A reduction in the supervisory role of
the existing Central Committee branch economic
departments, however, would inevitably increase the
operational autonomy of the Presidium of the Council
of Ministers. In the process, this would generate
further pressure for the replacement of such officials
as Chairman of the Council of Ministers Tikhonov
and Chairman of Gosplan Baybakov by more vigorous
More importantly, such a shift in the role of the
Central Committee branch economic departments
could significantly reduce the capacity of the territori-
al party apparatus not only to interfere, but also to act
as an arbiter and troubleshooter in economic manage-
ment. Party territorial authority depends in no small
measure upon the ability of local party officials to
work through party channels in Moscow to influence
ministerial behavior. Far more likely than a liquida-
tion of the branch economic departments, thus, would
be a compromise solution-for instance, their recom-
bination along "program" lines (as suggested by the
recent combination of responsibility for agriculture
and the food industry into a single department). C
Doctrinal Renewal. In the Communist political proc-
ess, power and policy cannot be divorced from current
doctrine. Proposed policy changes must be rational-
ized in terms of doctrine to be defended against
attacks couched in doctrinal terms. In other words,
major policy innovation requires parallel innovation in
doctrine. Such innovation occurred in the 1930s, in
the postwar period before Stalin's death (when a
renewed major leadership purge and economic
policy shifts were in the offing), and during
Khrushchev's de-Stalinization campaign. This is all
part of Andropov's life history. His early political
experience involved potentially deadly struggles over
policy issues supported by doctrine, and his career was
closely linked for 30 years with that of Suslov-the
top Soviet leader most sensitive to doctrinal matters.
As a party official responsible for Bloc affairs, Am-
bassador to Hungary, and KGB Chief, Andropov was
continually exposed to doctrinal maneuver in Eastern
Thus, Andropov's attack on ideological dogmatism
and call for broad doctrinal change in his major
Kommunist article should not be understood as
"pragmatism" or dismissed as inconsequential, but
rather should be viewed as an integral element in
setting the stage for the economic policy changes and
increased power he seeks. What Andropov is urging is
abandonment of emotional fixation on doctrine that is
irrelevant, not abandonment of doctrinal thinking as
such. The task-as he sees it-is to consider in a
coldblooded, analytic manner how fundamental ideo-
logical premises ought to be applied under changing
historical conditions. The aim is a comprehensive,
modern, more sharply focused doctrine, not an ad hoc
"common sense" approach to economic policy making
with some admixture of Western ideas. As became
clear at the June Central Committee Plenum, Andro-
pov's objective is to incorporate such doctrine in a new
Risks and Political Will. Faced with weakness in his
constituency base and the likelihood of serious resist-
ance to strong measures from members of the Politbu-
ro, Andropov may not have the will-or the physical
energy-to push through a contentious program of
change in the Soviet economic mechanism. If he does,
two tactics seem conceivable. The first would involve
a gradual consolidation of power in which Andropov
might:
? Expand his power over the span of several years or
longer.
? Look to attrition as the main opportunity for alter-
ing the balance of power in the Politburo.
? Settle for a slow development of clientele among the
Central Committee membership.
? Introduce phased changes in the economic mecha-
nism as a consensus for them developed.
? Wait for the next regular party congress (1986) to
push for major personnel changes and authorization
of a comprehensive program of economic change.
The other tactic would strive for a quick political
breakthrough in which Andropov might:
? Play up a "crisis in the economy" or international
danger and competition with the West as the reason
for rapid adoption of a scheme of change embodied
in a new party program.
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? Use such issues (supplemented, perhaps, by charges
of factionalism or corruption) to isolate Chernenko
and other possible opponents in the Politburo and to
gain fuller control over personnel appointments.
? Obtain Politburo consent for presentation of the
program at a Central Committee plenum or special
(extraordinary) party congress.
? Exploit the plenum or congress as an opportunity to
eliminate opponents in the Politburo and convince
others throughout the party and government of the
wisdom of falling in line.
? Employ the program to spearhead a campaign of
comprehensive economic change and to neutralize
the opposition.
Both of these hypothetical scenarios have serious
weaknesses. The "gradualist" tactic, although politi-
cally safer, would delay action and mortgage move-
ment on the economic front more closely to policy
results in noneconomic areas such as foreign relations.
It also would sharply pose the dilemma of incremen-
talism: although piecemeal change evokes the least
initial resistance, it is most likely to bog down in
bureaucratic noncompliance-as the fate of various
Brezhnev initiatives demonstrates. The "all-out" ap-
proach, on the other hand, holds out the possibility of
more rapid, comprehensive results but would involve
high political risk.
Some straws in the wind suggest that Andropov might
be tempted to take the incremental path. In his
22 November speech, he said that "It is necessary to
act with caution here, to conduct experiments if need
be, to make appraisals...." The apparently regular
discussion of a'variety of economic problems by the
Politburo, the adoption of separate decisions during
the first months of 1983, and the failure to announce
innovative steps in agricultural policy at an important
April 1983 meeting of provincial and republic party
secretaries or at the June Central Committee Plenum
point in this direction.
Yet Andropov has displayed a willingness to make
unorthodox personnel appointments and to challenge
the vested interests and prestige of powerful organiza-
tions (such as the Ministry of Internal Affairs). He
has also told workers face to face that egalitarianism
is bad and that they must work harder-probably
with the aim of conditioning the population for stron-
ger and longer lasting medicine.
although Central Com-
mittee Secretary Ryzhkov intends to staff the new
Economics Department and produce proposals for
change'in the economic mechanism without haste, he,
nevertheless, has been tasked with formulating a
comprehensive attack on the problem-which is what
Andropov publicly called for at the June Central
Committee Plenum. If Andropov is as intelligent as
his Soviet boosters claim he is, and is indeed commit-
ted to changes in planning and management, he might
conclude that changes must be introduced all at once
if they are to be effective. And, on a number of
occasions, Andropov himself has displayed a talent for
concealing his intention to take decisive action by
reassuring prospective targets that nothing much is
going to happen.
Projections of future economic trends might not be
sufficiently alarmist to galvanize Andropov into con-
certed action. However, forecasts of the inability of
the economy to compete with the United States in
fielding sophisticated military hardware and pressure
from a concerned military establishment could con-
ceivably do the trick. Andropov's assessment of his
own life expectancy might also incline him to take
greater risks.
What could happen by no means depends simply on
Andropov. The interplay of power and policy in the
Politburo does not have to lead to the political stale-
mate and gradualism evident in June 1983; it could
drive Andropov to a more aggressive strategy. For
example, initial pursuit of a measured, consensual
approach to economic change could lead to little
progress and a political crisis. Faced with a showdown
in the Kremlin, Andropov might find himself com-
pelled by circumstances to shift into high gear on
"reform." Or, alternatively, a power struggle in the
leadership arising for reasons not connected with
economic issues could lead Andropov to embrace a
breakthrough strategy in the economic arena as a
weapon for defeating his opponents.
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Possible Impact of Andropov's
Likely Strategy
The Soviets themselves declare-and hope, if not
believe-that they are engaged in a protracted transi-
tion from a planned economic system focused on
quantity at whatever cost to one focused on quality
and efficiency. They imply that this shift will take
several decades to complete and acknowledge many
large obstacles in their path: the deeply ingrained
attachment of managers and party officials to meas-
urement of success according to quantity of output,
the intricate dependence. of the success of any individ-
ual change in management and planning on the
simultaneous success of many other changes, and the
difficulty of altering the economic mechanism at a
time of increasing strain in the economy.
Western analysts are divided over whether such
"within-system" change would improve economic per-
formance, and whether the Soviet view of an economy.
transiting, from. "extensive" to "intensive" growth is
simply self-delusion or propaganda. If one assumes-
as many Western economists do-that half measures
will not work, that the only medicine for what ails the
Soviet economy is market socialism or even private
enterprise, and that further "tinkering" may only
make things worse, then one would conclude that the
measures that Andropov is likely to adopt will be
ineffective. But if, as we believe, "reforms" are
divisible, treatment of the afflictions of nonmarket
economies must include some nonmarket remedies,
"reserves" of remediable inefficiencies in the system
are large, and one's definition of success includes
stabilization of the situation or marginal improvement
at a time of very low growth and large bottlenecks,
then Andropov's likely measures could have a posi-
tive-if hardly spectacular-effect.
Meanwhile, an all-out commitment by Andropov to
economic change would almost certainly have tangi-
ble and immediate political effects. In the short run,
at least, it probably would increase social tensions,
disrupt the careers of many economic and party
bureaucrats, and generate conflict within the leader-
ship-with some probable, if unpredictable, impact on
Soviet international behavior
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Approved For Release 2008/02/29: CIA-RDP84T00658R000300080003-9
Approved For Release 2008/02/29: CIA-RDP84T00658R000300080003-9