In the USSR, Eastern Europe, efforts to reform communism failed; communism fell and was replaced.

In China, communism has been reformed substantially and the Communist Party is still in power

A. History of Reform
Problems with state control of economy have been understood for decades.  Reforms have been tried many times.

• early 1920s  Lenin and the NEP
• late 1920s, Bukharin 1- 2- 3
• 1950s Tito in Yugoslavia, worker's managment, "third way," relatively liberalized economy. 1- 2
• 1956 Khrushchev's 20th Party Congress Speech, Hungary
• 1960s Khruschev and Liberman (economist)
• 1968 Czechoslovakia
• 1980s China - Deng Xiaoping, restructuring and open door
• 1980s Gorbachev's Peristroika and glasnost

B. The Reform Program generally includes:

1. Introduction of "Market Mechanisms."  This requires:

    a. concept of autonomous control (ownership) of means of production
    to decide on:
        what to produce,  what technology to use, how to market it,
        setting of prices
        how to obtain raw materials
        whom to hire and fire
            requires a labor market
       Forms of ownership:
        private, stock, local government, workers themselves (cooperative)

     b. In agriculture, Russia reforms of collective farming have come very slowly.

some attempts in Russia to un-do collective agriculture, but widespread caution/resisitance to reform
    Farmers fear that oligarchs / landlords will take over and take away their access to land.
  by early 2000s, collective farms were being privatized, complex issues of land ownership, debt, payment
       http://www.rdiland.org/OURWORK/OurWork_FSU.html
          2001 congressional report on Russian Ag

          2002--Farming is mostly collective (corporate), law to allow selling of land is discussed (BBC article)
               NYT update on this new law

China dissolved collective farming om 1982 and created the "responsibility system."

     c. freedom to set prices (despite risk of inflation)

2. Need Governmental/Political Reforms

        a. Change government from ownership and control to oversight
        b. Need to create entrepreneurial spirit
        c. Allow more freedom
        d. Need a new legal environment, government of law, not men
            i. Enables enforcement of contracts.
            ii. Needed for foreign trade.
            iii. Legal reform is very difficult to carry out in
                post communist/confucian societies.
         e. elections to give government more legitimacy
             i. Soviet Union had provincial elections
                Boris Yeltsin elected President of Russia in 1989
             ii. China started elections for rural leaders

3. "Open Door" to the global system

a. Import technology (like Meiji Japan)
b. Seek foreign capital investment
    to get technology, capital, managerial skills, access to external markets
c. Increase exports to pay for imports:
    natural resources (Russia), labor-intense manufactured goods (China)
d. Train students abroad (esp. China)
e. Absorb international culture (music, clothing, dance, democratic values?!)

        a. vigorous growth, esp true for China (1980-97)
        b. more division between rich and poor people/families
        c. more division between rich and poor regions
        d. more internal migration
 

D. Problems resulting from these reforms:

a. inflation (Russians' savings wiped out, Chinese upset by high food prices)
b. fear of unemployment
Polish miners say: "We were freer under the Communists...because now you are worried that you are going to lose your job, and if you lose your job it's going to be very hard to get another."  full text
c. fear of loss of pension and health benefits
d. stress from social differentiation ("red eye")
e. crime, gangsters, bodyguards, "Mafia"
f. public finance, tax collection, paying salaries to government employees
    (in old system, govt got profit from industry, no tax collection)
g. official corruption.
   i. price manipulation
   ii. bribery
   iii. asset ripoff by children, relatives of officials (with help of mobsters)
                example from Russia electronics industry
   iv. nepotism
h. Internal migration, cities flooded with rural migrants "floating population"
        -- gets urban wealth to country side
        -- fears of crime, labor competition, disease, political instability
i. foreign pressures:
    i. democratic values
    ii. need foreign markets, open to foreign pressures
    iii. affected by international recessions, credit runs
j. Ethnic demands for more autonomy, secession
        various Soviet republics, Chechnya, Tibet
k. does government have the legitimacy and power
        to manage these stresses?
l. government bankrupt when export prices fall (price of oil analysis)

    Would reforms weaken the old system without creating a new one?
 

            USSR:

• Gorbachev's reforms (glastnost and peristroika) weakened state and economy and failed to provide a strong substitute
• economic collapse undermined tax revenue and capabilities of central government
• US (Reagan) military spending?
• increased relative power of republics
• social movements in East Europe, Solidarity (autonmous trade union in Poland encouraged by the Pope) demonstrated that communism could be overthrown
• mass movement, lead by elected leader, Boris Yeltsin

• Student demonstrations, 1986, 1989 (in hundreds of cities, focused at Tiananmen Square)
• Joined by workers, housewives

        1. USSR collapsed into 15 countries
                along lines of pre-existing Republics
                range from western styles to substantial continuity with communist past
        2. Eastern European states moved towards western institutions
        3. China kept communist party control but has been reforming its economy

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