The Russian Reform

     
When one thinks of the Soviet Union, the first thing that pops into
their head is Communism.  However as of January 1, 1991 the Soviet
Union announced a reform, in which they would move from a Command
System, to a pure Market economy.  Many people have doubts about
whether or not this transformation will work, because of the state
the Soviet Union is in at the moment.  However, despite many
obstacles that may stand in the path of the Soviet Union
transforming into a nation run by the citizens will in the long
run, prove to be a very beneficial step for the people.  The reform
will give the people incentives to work hard, provide competition
within industries, and yield a higher standard of living for all
citizens.  Plus the reform will reduce the amount of spending on
military expenses, ans end the Cold War between the United States
and Soviet Union.
     Over the years the most criticized aspect of the Soviet
economy was that there product efficiency was very low.  The Soviet
workers were considered to be loafers and louts, who had a "who
cares" attitude towards their work.  Low productivity from the
workers can easily be accounted for because they had no real reason
to work hard, since their incomes were already predetermined.  But
now, due to the reform people will be able to run, and own their
private businesses;  and therefore there will be an incentive to
work hard and make a higher income.  This motivation to make money,
as Adam Smith said, will act as an invisible hand to run the
economy.  This incentive for money will prove to be beneficial not
only to the manufacturer, but to the average consumer as well; 
because in order to make money producers will have to manufacture
items favourable to the consumers.  Recently some bold steps have
been taken to privatize many Russian industries previously owned by
the government.  For example the farming industry, which once was
totally run, and owned by the government has now been privatized,
so Russian farmers are free to run their own establishments, and
not to have to worry about government set quotas.  Some small
clothing, and food markets have also been sold to the highest
bidders.  Although due to Russia's high rate of inflation none of
these industries have yet started booming.  Besides all the
monetary aid being provided to the Soviet Union, by countries such
as the United States, and Germany;  many economic experts have also
been sent over to help rebuild Soviet Union.  Michael Peters, a
business specialist sent over from the United States is quoted as
saying, "I'm very excited about going, I see the Soviet Union as a
piece of clay which can be moulded in a number of various ways." 
In a few short years, the Soviet community will mould itself in
such a way that both manufactures, and consumers will be satisfied.
     Since the entire Soviet market will now be open to the
consumers, new and improved companies will slowly be emerged.  This
increase in the number of companies will result in more competition
within industries, which in turn will augment the variety of goods
and services available, and ultimately drive prices down and
improved quality.  Many Russian people like Yuri Bezotosny have
seen this reform as a blessing and have decided to start their own
business.  Mr. Bezotosny, a former factory worker has opened his
own clothing company.  Bezotosny frankly admits, "Business is not
very good at the moment, but it doesn't really matter because I
have always dreamed of owning my own company, and now people see me
as the big cheese."  Many other Russian's have started their own
business ventures with the hope that someday they will turn into
large corporations.  Due to the reform, the Soviet Union has not
only opened itself up to the people but also to the rest of the
world.  Since the time Russia announced there decision to move to
a Market system, many foreign investors have been anxious to start
up businesses there.  By starting successful businesses these
foreign investors will help this transition get off its feet.  Many
large Western companies such as McDonalds, PepsiCo, and Polaroid,
have already built high performance enterprises which will soon
prove to be very profitable.  Mr. Marquart, director of the
Polaroid plant in the Soviet Union stated, "Foreign investors must
be ready to tolerate some rough going.  The Soviet Union is in bad
shape that investors have to provide all the equipment, and
technology.  But after watching the Soviet workers in action, it is
obvious to me that they want this reform to work."  Therefore the
intense competition provided by Soviets starting up their own
companies, and foreign investors will be very advantageous to the
Soviet economy because it will prevent monopolies, keep prices
down, and provide more variety.
     Many Russian economists are finally admitting that Communism
simply does not work.  For many years the majority of the Soviet
population had to endure with very poor living conditions.  But
with the Soviet reform it is almost certain that by the time the
economy gets back on its feet, the standard of living will
drastically improve for each and every person.  It is doubtful that
the living conditions could ever compare to those in the United
States or Canada, but at least there will be no more worries about
serious food shortages or unemployment.  In a matter of time many
ordinary people will also be able to afford some of the luxuries
which were either unavailable, or too expensive to buy under the
former system.  One Russian man shows his appreciation for the new
system by saying, "This is the happiest period of my life, last
week I bought a ghetto blaster."  Although many older Soviet
citizens may not be able to see the results of the reform, and die
remembering their country as a place where even food and water were
scarce;  they will die knowing that the new generation of Soviets
will not have to endeavour the same hardships they experienced.
  Now that the Soviet Union's government will be run by the people
there will be no need to spend exclusivley on military
expenditures.  This will enable the countries money to spent on
more consumer realated goods and services.  This will eventually
lead to higher standard of living for the people beacause products
will be more affordable to the common working man, which will
result in equallity within the Soviet Union.      
     However the change that will effect both the Americans and the
Soviets, is that after many years the Cold War between the two
countries will finally be over.  This will be beifical to both
nations they are able to collaberate their resources, in fields
such as space technology, genetic engineering, and aero technology. 
The collapse of the Soviet Union will also bring to the end of the
so called hatred towards the "Commies".
     Everything in this essay is nothing more than a forecast
because regardless of one's knowledge of economics, no one really
knows for sure what is in store for the Soviet Union.  As history
has proven time and time again, an economy run by a Command system
just does not work, and whether this reform proves to be successful
or not, at least its something different, and different is good in
this case as we need some fresh blood.  But looking at other
countries, such as United States and Canada, who are run by a
predominantly Market economy it is hard to disagree with the fact
that with some time, under the free market econony the Soviet Union
will again become the super power which it once was.  Therefore by
providing the Russian workers with incentives to work efficiently,
and provide competition in the economy, it is almost certain that
the standard of living, and the effectiveness of the economy will
surely rise.           
























Biblography

Bogert, Carrol "Boris' Bet: Russian Roulette?", Newsweek
     
November 11, 1991, pg. 38.

Hoh, M. Pat "America's Feeble Aid To Russia", The Christian Science
Monitor, March 12, 1992, pg. 18.

"Red Star Falling", Macleans 
December 30, 1991, pg. 12.

Ross, Elizabeth "Former Soviets Critique U.S. Aid Program", The
Christian Sciece Monitor, May 21, 1992, pg. 7.

Stonglin, Douglas "Russia's Winter of Dicontent", U.S. News and
World Report November 4, 1991, pg. 41.





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