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Soviet industry from Stalin to Gorbachev: essays on management and innovation
JOURNAL
OF COMPARATIVE
ECONOMICS
15,
158-159(1991)
JOSEPH S. BERLINER, Soviet Industry from Stalin to Gorbachev: Essays on
Management and Innovation. Ithaca, NY: Cornell University Press, 1988. xi + 386 pp., index. $34.50. The success of Gorbachev’s efforts to accelerate the growth of the Soviet economy and improve quality and efficiency will depend on his ability to increase the rate of technological progress and transform the management of Soviet enterprises. This collection of essays on Soviet management and innovation provides timely background to the economic, social, and political reforms collectively known as perestroika. The book is divided into three parts. The first part, on the management of the enterprise, contains five essays. These include three classics in the comparative systems field, “The Informal Organization of the Soviet Firm” (1952), “Managerial Incentives and Decision Making: A Comparison of the United States and the Soviet Union” (1959), and Berliner’s contribution to The Soviet Economy Toward the Year 2000, the essay “Planning and Management” (1983). The second part, on technological progress, contains six essays. Two of these, “Technological Progress and the Evolution of Soviet Pricing Policy” ( 198 1) and “Prospects for Technological Progress” ( 1976) draw on Berliner’s book, The Innovation Decision in Soviet Industry. Linking the two sets of essays is Berliner’s argument that enterprise resistance to innovation is primarily the result of the incentive structure and the uncertainty over supplies facing managers. The third part draws together the main themes of the volume with an essay entitled “Continuities in Management from Stalin to Gorbachev.” Berliner’s early work on Soviet management was based in part on interviews, conducted under the auspices of the Harvard Refugee Interview Project, with former Soviet citizens who occupied management positions in Soviet industry prior to World War II. The concluding essay is based in part on more recent interviews, conducted as part of the Soviet Interview Project, with former Soviet managerial officials who emigrated during the 1970s. As Berliner points out, many of the practices that he reported and analyzed in the early essays on management proved to be enduring features of the system. Such practices include the ratchet, concealment and maintenance of production reserves, hoarding of materials and labor, storming, resistance to innovation, and production of low-quality output. To account for the persistence of some of these practices over so long a period, Berliner considers the phenomenon of shortage and the two competing explanations for its persistence: excessive tautness, as 0147-5967191$3.00 Copyrght 0 1991 by Academic Press, Inc. Ail rights of reproduction in any form reserved.
158
BOOK REVIEWS
159
the Western literature has long argued, versus the soft budget constraint of the socialist enterprise, as Janos Kornai contends. Berliner concludes, however, that the observed continuity in Soviet managerial practice over this period ultimately derives from the persistence of central planning. If the quality of Soviet management has not significantly improved since the prewar period, neither has it shown a marked deterioration. The picture emerging from Berliner’s essays is not one of an economic system in crisis or on the verge of collapse. Even so, it is possible to infer reasons for Gorbachev’s concern about the future of the Soviet economy from these essays. Not least of these is the postwar shift in the standards of competitiveness in capitalist economies. Judged against the benchmark of American management in the 1950~3, Soviet management practice did not look so bad. Ironically, these traditional American management methods are now widely held to be deficient relative to Japanese methods in the areas of quality control, cost reduction, and innovation. These are the very aspects of performance in which Berliner judged American management to be superior to its Soviet counterpart. The lesson for “USSR Incorporated,” as for General Motors, is that what was good enough in the 1950s no longer passes muster today. If practices such as hoarding and storming, neglecting quality, and resisting innovation are inherent to central planning, as Berliner suggests, then reform may be necessary simply to avert a widening of the competitive gap between the USSR and the West. In the essay “Planning and Management,” Berliner outlined four scenarios for the future of Soviet planning and management: preservation of the status quo, retrogression to a neoStalinist model, abandonment of central planning in favor of a radical, Hungarian-style decentralization, or a NEP-like liberalization of traditional restrictions on private enterprise. In light of subsequent developments, Berliner’s analysis is remarkably prescient. The package of policies and reforms emerging under Gorbachev is a paradoxical combination, critics might say a hodgepodge, of elements from all four scenarios. Using the power of the neoStalinist model, Gorbachev is trying to push through reforms that are more consistent with Berliner’s radical and liberal reform models, while retaining central planning for priority goods and services. A sure sign that the current reforms are making headway will be the abatement of the management practices that Berliner illuminates in these essays. HEIDIKROLL The University of Texas at Austin Austin, Texas 78712
OF COMPARATIVE
ECONOMICS
15,
158-159(1991)
JOSEPH S. BERLINER, Soviet Industry from Stalin to Gorbachev: Essays on
Management and Innovation. Ithaca, NY: Cornell University Press, 1988. xi + 386 pp., index. $34.50. The success of Gorbachev’s efforts to accelerate the growth of the Soviet economy and improve quality and efficiency will depend on his ability to increase the rate of technological progress and transform the management of Soviet enterprises. This collection of essays on Soviet management and innovation provides timely background to the economic, social, and political reforms collectively known as perestroika. The book is divided into three parts. The first part, on the management of the enterprise, contains five essays. These include three classics in the comparative systems field, “The Informal Organization of the Soviet Firm” (1952), “Managerial Incentives and Decision Making: A Comparison of the United States and the Soviet Union” (1959), and Berliner’s contribution to The Soviet Economy Toward the Year 2000, the essay “Planning and Management” (1983). The second part, on technological progress, contains six essays. Two of these, “Technological Progress and the Evolution of Soviet Pricing Policy” ( 198 1) and “Prospects for Technological Progress” ( 1976) draw on Berliner’s book, The Innovation Decision in Soviet Industry. Linking the two sets of essays is Berliner’s argument that enterprise resistance to innovation is primarily the result of the incentive structure and the uncertainty over supplies facing managers. The third part draws together the main themes of the volume with an essay entitled “Continuities in Management from Stalin to Gorbachev.” Berliner’s early work on Soviet management was based in part on interviews, conducted under the auspices of the Harvard Refugee Interview Project, with former Soviet citizens who occupied management positions in Soviet industry prior to World War II. The concluding essay is based in part on more recent interviews, conducted as part of the Soviet Interview Project, with former Soviet managerial officials who emigrated during the 1970s. As Berliner points out, many of the practices that he reported and analyzed in the early essays on management proved to be enduring features of the system. Such practices include the ratchet, concealment and maintenance of production reserves, hoarding of materials and labor, storming, resistance to innovation, and production of low-quality output. To account for the persistence of some of these practices over so long a period, Berliner considers the phenomenon of shortage and the two competing explanations for its persistence: excessive tautness, as 0147-5967191$3.00 Copyrght 0 1991 by Academic Press, Inc. Ail rights of reproduction in any form reserved.
158
BOOK REVIEWS
159
the Western literature has long argued, versus the soft budget constraint of the socialist enterprise, as Janos Kornai contends. Berliner concludes, however, that the observed continuity in Soviet managerial practice over this period ultimately derives from the persistence of central planning. If the quality of Soviet management has not significantly improved since the prewar period, neither has it shown a marked deterioration. The picture emerging from Berliner’s essays is not one of an economic system in crisis or on the verge of collapse. Even so, it is possible to infer reasons for Gorbachev’s concern about the future of the Soviet economy from these essays. Not least of these is the postwar shift in the standards of competitiveness in capitalist economies. Judged against the benchmark of American management in the 1950~3, Soviet management practice did not look so bad. Ironically, these traditional American management methods are now widely held to be deficient relative to Japanese methods in the areas of quality control, cost reduction, and innovation. These are the very aspects of performance in which Berliner judged American management to be superior to its Soviet counterpart. The lesson for “USSR Incorporated,” as for General Motors, is that what was good enough in the 1950s no longer passes muster today. If practices such as hoarding and storming, neglecting quality, and resisting innovation are inherent to central planning, as Berliner suggests, then reform may be necessary simply to avert a widening of the competitive gap between the USSR and the West. In the essay “Planning and Management,” Berliner outlined four scenarios for the future of Soviet planning and management: preservation of the status quo, retrogression to a neoStalinist model, abandonment of central planning in favor of a radical, Hungarian-style decentralization, or a NEP-like liberalization of traditional restrictions on private enterprise. In light of subsequent developments, Berliner’s analysis is remarkably prescient. The package of policies and reforms emerging under Gorbachev is a paradoxical combination, critics might say a hodgepodge, of elements from all four scenarios. Using the power of the neoStalinist model, Gorbachev is trying to push through reforms that are more consistent with Berliner’s radical and liberal reform models, while retaining central planning for priority goods and services. A sure sign that the current reforms are making headway will be the abatement of the management practices that Berliner illuminates in these essays. HEIDIKROLL The University of Texas at Austin Austin, Texas 78712