There is guarded hope for Hough, the sprawling ghetto in the heart of Cleveland.

In an overture to the big city riots of 1967. Hough burned for five traumatic nights in June 1966. It became a front-line battlefield in the war on poverty - a war we lost.

Together with "model cities" and a multitude of other federal programs, the war on poverty was to help make us "a Great Society." It was, as it was proclaimed by its commander-in-chief Lyndon B. Johnson, to turn our cities and towns into "an environment for man equal to the dignity of his highest aspirations."

A decade and many millions of dollars later. Hough's roughly 45,000 people are generally worse off than Clevelanders were during the Great Depression. People line up every day for free food at the area's four "hungar centers."

Many potentially attractive, tree-lined streets even look like the field of a lost battle. Rows of "carpenter gothic" houses are in ruin, their roting porches overgrown with weeds, their front yards littered with debris.

A symbol of the Trojan effort here is Martin Luther King Plaza, built eight years ago in the center of Hough. It was designed to meet two of the community's most urgent needs - for local stores and for housing - by placing 27 three-bedroom townhouses on the roof of a 50,000-square-foot shopping center.

It is a unique idea which, like so many ideas of the Great Society, might so easily have worked well, but turned out disastrously. Martin Luther King Plaza saw nothing but troubles breeding more troubles. Built for $3.4 million, the complex has applied for another $1.4 million of federal money to keep it going.

The faults are faults of design and management. The center looks awkward - a clumsy intruder in its Norman Rockwell small-town surroundings. The parking in front is inadequate while a large parking lot behind the center is all but empty; people are afraid to park out of sight of other poeple.

The exterior stores look shabby and uninviting. A large interior mall might be a covered prison yard. It is a vast, barren expanse adorned only by two pathetic plastic trees in oversized planter boxes. There is not much you can buy in this desolate shopping center. Several stores are boarded up.

It is hard to find the narrow, uninviting entrance to the townhouses and their plazas up on the roof. It seems shunted to the side, as though people don't matter. It is needlessly narrow and dowdy. It also is next to the liquor store, which means, what with sometimes messy men milling around, women are apprehensive about running the gantlet.

The houses upstairs are quite nice, but the plaza they surround is as barren as a Dali desert. Ramshackle wooden planters are unplanted. There is not a spark of joy.

In sum, these faults are the result of the basic fault, the horrendous strategic mistake of the war on poverty, the model cities program, the Great Society approach. It sought to gild the ghetto, rather than to disperse the ghetto.

The Great Society was still a racist society. It sought to bring money, services and jobs into the ghetto, that is a massive concentration of underprivileged people, rather than helping the underprivileged people out of the ghetto to where the ladders of upward mobility are. It was "separate but equal" all over again.

Thus, Hough got some federal subsidies for low-cost housing - some quite attractive and livable - until Richard Nixon imposed his housing subsidy moratorium on America's poor.

Thus, Hough, which never before had factories or other employment centers, got federal loans to launch a "community products" plant where 60 women earn a living making rubber products for automobile manufacturers.

Thus, Hough got a federal Small Business Administration loan to build Martin Luther King Plaza.

It is endemic to these federally supported favors for the poor that they look like favors for the poor. No frills. Don't waste the taxpayers' money on a bench or planter with plants in it!

It is an absolute condition of an SBA loan of the kind Hough got for the plaza that it can only be used for minority small business. The shopping center may not include what it needs most to succeed - a large supermarket and discount drugstore.

Both are, of necessity, majority-owned big businesses.

Thus Martin Luther King Plaza, Hough and all American inner-city ghettos are caught in a vicious circle: They cannot attract normal free-enterprise business because they are too poor; and they are too poor because they cannot attract - let alone subsidize for a start - normal free-enterprise business.

"We are forced to operate in the economic vacuum of a poverty area," explains Claude B. Banks, the impressive executive director of the Hough Area Development Corporation.

To break out of this vacuum, Banks and his equally impressive housing director, Hunter Morrison, have launched an experiment. They are building a cluster of "Homes for Hough," conventionally designed, conventionally financed single-family houses for lower middle-income buyers. The houses will be somewhat less expensive than similar ones elsewhere in Cleveland because they are built on urban renewal land. A $50,000 house may sell for as little as $30,000. This, the development corporation hopes, will compensate for the dubious image of the location.

On the other hand, says Banks, "only homeowners with the security of a stable middle income will demand the services to change the image." The question is whether nine houses, which is all the corporation can presently build, are enough to form the critical mass to turn even a small part of Hough around.

I think there is hope, because in Cleveland, as elsewhere, large numbers of people are ready to live in the city. Hough, between Cleveland's rundown downtown and fancy uptown University Circle, is a potentially ideal location.

But whether or not this timid approach succeeds, "Homes for Hough" is a departure from the gilding-the-ghetto strategy. That strategy only tarnished it further.