On Toward the Goulash

The factory manager has always been low man on the Russian factotum pole, the prisoner of planners who have dictated everything, from what he produces and where he sells it to how much he pays his men. Over the years the planners multiplied, and so did their instructions -- which only taught the manager to play it safe and aim for the minimum needed to keep Moscow happy. Last week, in a firm, 15,000-word proposal, Premier Aleksei Kosygin declared a new bill of rights for the factory manager.

Henceforth, said Kosygin, the government would sharply reduce its directives to the managers. Though the total wage fund will still be set, each factory boss may slice it up as he sees fit, handing out incentive pay and bonuses to reward efficiency. No longer will a factory's performance be measured by how much it produces but by how much it is able to sell. In a wide range of consumer industries, profit will measure a manager's effectiveness -- and a portion of that profit may be kept for use in improving production through new tools or new-products research, as the manager thinks best. To foster sounder use of funds, the plant manager would now receive his capital from the state in the form of a loan--complete with interest rate.

Supplying the Bread. If such economic devices have a capitalist ring, Kosygin was not going to admit it. Anyone who talks of Russia's return to capitalism, he said, "only attests to wishful thinking." And though Kosygin's new measures represented the largest advance yet for the Western-style reform theories of Soviet economists like Evsei Liberman (TIME cover, Feb. 12), they were balanced by a tightening of the planning bureaucracy. Kosygin announced that the regional planning Sovnarkhozy set up by Khrushchev in 1957 would be abolished, and all Russian economic life put under 20 new national ministries. Among the new creations: one for machine tools, one for oil and chemicals, one for instrumentation and automation.

In simplifying at the top and giving new scope for initiative at the bottom, the Kremlin is admitting that Russia's economic engine is painfully sputtering. Industrial growth and national income have both lost momentum since the early 1950s, now lag behind that of the U.S. Moreover, after a bumper crop in 1964, Soviet agriculture this year is again in trouble. Party Boss Leonid Brezhnev, in his speech following Kosygin's, felt compelled to assure the Central Committee that "everything has been done to assure normal supply of bread production."

Whether Kosygin's economic shake-up will get the Soviet economy moving again without a drastic overhaul of the nation's totally unrealistic fixed-price structure remains to be seen. What seemed apparent was Brezhnev's and Kosygin's continued firm grasp of power a full year after Khrushchev. Fortnight ago, rumors of an impending shake-up in the Kremlin swept through the Western world.* But if there was still any substance to the old theory of Brezhnev's support of a "conservative" rivalry with Kosygin's reform ideas, it was hardly visible in Moscow last week. The party leader fully supported the Premier's proposals, which implicitly favored consumer-oriented "goulash" Communism over the heavy-industry "metal eaters" who hanker after rigid old-style planning. With both party and government chieftains in agreement, the members of the Central Committee --and of the Supreme Soviet (Parliament)--promptly added their approval to the general unanimity.

* And caused the shutdown of American Broadcasting Company's bureau for "false reports" about the Soviet Union, doubtless because of an ABC Washington broadcast that "a flood of reports reaching Washington" suggested that big political shifts were coming in Russia's top echelon.

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