It’s Not Reform, It’s a Revolution : East Bloc: The societies are discarding familiar political and economic institutions without any assurance that they can develop adequate substitutes.

We should stop referring to what’s going on in the Soviet Bloc as “reform”--as in, for example, “Gorbachev’s reforms.” It’s revolution. By revolution, I mean the overthrow of the existing political, economic and social order. Just because the revolution has so far been peaceful does not make it any less genuine. This is more than a semantic distinction. The labels we use to describe things often determine how we view and understand them.

Watching East Germans atop the Berlin Wall, it’s hard not to feel euphoria. As the principal defenders of freedom, Americans can feel especially proud. Our values are triumphant. But this is not the end of the story.

Destroying the status quo is not the same thing as replacing it; there is typically a period of struggle and uncertainty. So it is now throughout the Soviet Bloc.

Consider the Soviet Union itself. By design, Mikhail Gorbachev has weakened and discredited the Communist Party. Last spring, he staged the first contested party elections in 75 years. Many Old-Guard leaders were defeated. There’s been withering criticism of the Stalinist past, Soviet foreign policy and economic performance. But Gorbachev’s promise of a system that wins support through its achievements--not through fear--is so far unfulfilled.

The economy remains sickly. The ruble is becoming virtually worthless. In 1989, the Soviet budget deficit amounts to 13% of the country’s economic output, estimates economist Jan Vanous of PlanEcon, a Washington, D.C., consulting firm. Wage increases have outstripped production increases. Scarcities have worsened as goods are instantly snatched from shelves. Vanous reckons that Soviet consumers hold 460 billion rubles in cash and savings accounts. That’s roughly equal to a year’s consumption spending. People don’t spend because there’s nothing to buy.

“By spring, Gorbachev could have a real mess--widespread strikes, increasing boldness of anti-communist groups,” says Vanous. He thinks that the government might respond to any strikes with more wage increases. This, of course, would further cut the value of the ruble and risk hyperinflation.

Not everyone is so pessimistic. Economist Ed Hewett of the Brookings Institution thinks that the Soviets could avoid a crisis if they act quickly to soak up surplus rubles and restore confidence.

There are remedies. All are being discussed in Moscow. All would be, in one way or another, wrenching. The Soviets could raise taxes or cut state subsidies for consumer goods and wasteful enterprises; that would increase prices and unemployment. They could sell (or lease) housing, land or factories; that would constitute a basic break from the dogmas of state ownership. They could use foreign exchange reserves to buy imported consumer goods--VCRs, televisions--and absorb rubles by selling these products at huge markups. At best, this is an expensive stopgap.

Practical problems of this sort afflict all the East Bloc countries struggling with change. By listing the problems, I am not predicting failure for Gorbachev or the new regimes in Poland, Hungary and East Germany. Indeed, the very concept of “failure” is no longer clear. Does it mean a breakdown in public order? Does it mean a conservative rollback of democratic and free market policies? (In one recent Soviet poll, 40% of the respondents preferred a “return to a strong hand” and only 25% wanted freer markets.) Or does it merely signify an inability to cope--political and economic paralysis?

What I am saying is that we must grasp the enormity of what’s being attempted. These societies are discarding familiar political and economic institutions without any assurance that they can develop adequate substitutes. “Western economists know a great deal about how market economies work,” says Brookings’ Hewett, “but they know very little about how to create such economies.” Everything interconnects. Economic failure may feed political failure--and vice versa.

Straddled between state controls and market forces, these economies may be left with the vices of each system and the virtues of neither. Details matter. Without reasonably stable money, reform of unrealistic state prices becomes impossible. In turn, unrealistic official prices will merely divert more goods into the black market. As John Hardt of the Congressional Research Service puts it: “It’s great that the Soviets have cooperative (private) restaurants . . . but where do they get the food? They drain it from the regular system.”

The complexity of these problems and the dizzying speed of change ought to temper our excitement. Forces have been unleashed that are leading us in unknown directions. Popular expectations of change in the Soviet Bloc may now be beyond the capacity of any government to satisfy--with what consequences, no one can know.

The course of past revolutions belies the power of prophecy or the ability of outsiders to determine success or failure. We should not be surprised if events take further surprising twists. That’s what revolutions are all about.