Soviet Economic Reform: The Longest Road

William D. Nordhaus

WDN

William D. Nordhaus

Discussants: Ed A. Hewett

EAH

Ed A. Hewett

THE STRUGGLE of the command economies to rediscover the market brings to mind the Hungarian joke: “Question: What is communism? Answer: the longest road from capitalism to capitalism.” Having spent up to seven decades systematically attempting to eradicate market forces, the Soviet Union and the other socialist countries of Eastern Europe have reversed field in an attempt to revive “the market.” The effort reveals much about both systems. My paper is divided into three general areas. I begin with an overview of the aggregate performance in the socialist countries, particularly the Soviet Union, and compare their performance with that of Western countries. Next I discuss the goals and roadblocks on the road to reform, reform plans for the Soviet Union, and the macroeconomic issues facing socialist countries. I conclude with an assessment of the prospects for reform in the Soviet Union.