WHILE THE WEST has known for some time that the Soviet economy is in serious trouble, the full extent of its failures is only now becoming visible. A new survey published last week by four international agencies now becomes the authoritative Western analysis. A product of the new Soviet openness, it was written by economists who have been given unprecedented access to Soviet sources. They report total Soviet output to be about one-tenth the United States' -- much lower than the previous consensus -- and declining sharply. The Soviets are sliding into a real depression.
This report was commissioned to answer questions about aid for the Soviet Union, and how it might be given most effectively. The leaders of the seven industrial democracies disagreed about that at their summit meeting last summer and asked for this joint assessment by the four agencies: the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development and the new European Bank, which is being set up explicitly to provide Western help to the post-Communist economies.
Their answer is pretty blunt. Aid ought to be strictly conditioned, they say, on sweeping reforms in the Soviet Union. Not only that, but these reforms are going to have to be carried out very fast if they are to have any hope of success. There's no way to do it gradually. Easier said than done, President Gorbachev might reply, as he thinks about Poland, where the government that tried precisely that strategy has just been overwhelmingly voted out of office. Radical reform isn't a painless treatment.
In terms of aid, at present most of the West is thinking above all about food. Those photographs of empty shelves in the Moscow stores, as winter arrives, have left a strong impression. The four agencies' report concedes that food aid could alleviate distress if it could be delivered to the regions most in need of it. But rapid reform could do more.
The Soviets have had a big harvest this year, and the present shortages arise largely from gross inefficiencies in processing and distribution (and, although the report doesn't mention it, hoarding). The Soviets' food imports, it observes, are roughly equal to their wastage and loss. The food shortages alone make a powerful case for reform. Wastage of perishables accounts for perhaps 40 percent of the crop. Food prices have been held constant since the early 1960s, through a quarter of a century of inflation and rising production costs. Returns to the producer are poor, while the subsidies required to keep prices low have built an uncontrollable deficit into the state budget, speeding up the inflation rate.
This report gives excellent advice, but it doesn't help Mr. Gorbachev much. He knows that reform is urgent. But he evidently thinks that economic necessity may not be politically possible. He fears an explosive reaction if he abolishes food subsidies, as the Poles did, and lets prices float up to market levels. The real threats to the Soviet economy are not, ultimately, a matter of economics.