With its decision this week to hold a popular referendum on its unprecedented plans to switch its socialist economy to one based on market forces, the Soviet Union is on the verge of making history in more ways than one.
The decision amounts to a public confession of the massive failure of communism - a confession that cannot go unnoticed in the many small nations that have experimented with the bankrupt system to which the Soviets gave birth.The referendum will constitute a pivotal test of how much support Soviet leader Mikhail Gorbachev really has and of how much the Soviet people are willing and able to change.
Moreover, it will constitute a key test of national character.
That's because the Soviet people have little experience with a free market system and, consequently, even less understanding of how such a system operates.
And it's because of the major sacrifices that must be made during the transition period in terms of higher prices and lost jobs.
But they are sacrifices that simply must be made if the plight of the Soviet people is not to become increasingly nightmarish.
Meanwhile, there are limits to how much satisfaction the Free World can take from what amounts to its economic victory over Soviet communism. In moving to get rid of centralized economic controls, the Soviets are planning to switch not to unalloyed capitalism but to what they describe as a regulated market. Wage and price controls would be lifted gradually. Not all state-owned businesses would be sold off. Moreover, the Soviet people may not approve the change; polls show public support at around 54 percent.
Up to a point, the public reaction is understandable. Under the proposed changes, food prices would quickly double. Other prices would escalate sharply. Temporary increases in unemployment could be expected, with perhaps as many as 40 million people out of work. Hoarding and shortages could be expected.
But the shock therapy is essential.
As it is now, food is in desperately short supply in the Soviet Union because the prices of many items have not been allowed to rise since the 1950s and '60s. Indeed, some products are sold at prices below the cost of making them. These artificial restrictions have badly eroded the incentive to produce.
Wages in the Soviet Union rose 13.4 percent during the first quarter of 1990, while industrial production dropped 1.2 percent. In 1989, production of coal dropped 6 percent, oil and transportation 4 percent. Of 367 key factories due to be constructed last year, only 34 were completed.
No wonder that the standard of living in the Soviet Union is only about 20 percent of that in the United States. Or that the Soviet credit rating on international markets has dropped into the basement, at a level just below that of Pakistan.
By all means, the Soviets should switch to a more market-oriented economy even though it means conditions will have to get worse before they get better. The Kremlin could take some of the rough spots out of the transition if it would stop spending 25 percent of the Soviet Union's gross national product on the military - compared to only 10 percent for the United States - and started spending more for peaceful, civilian purposes.