Yes, We Have No Bananas

Welcome to the brave new world of market forces, Soviet-style.

Milk now costs twice as much as it did a few days ago, meat prices have tripled, TV sets, refrigerators and clothing prices have soared as much as 1,000%. That’s the bad news. The less-bad news is that the price hikes won’t immediately impact most people, because the stores still have next to nothing to sell.

Soviet shoppers have reacted with shock and despair to this week’s long-awaited, government-dictated price increases on most basic consumer items. They should know that market forces really have little to do with their current situation. Before this week, the government dictated cheap prices for most basic goods, spending tens of billions a year on subsidies. Now the government is dictating uniform higher prices across the country, without regard to local production and transportation costs and irrespective of supply and demand. In the end it’s pretty much the same old command economy, masquerading under a market alias.

The hope behind all this is that more realistic prices will help bring supply and demand into balance. But critics, pointing to the absence of incentives to boost production, predict that the only result will be huge inflation. Government-ordered pay boosts intended partially to offset the price hikes certainly will not help in that regard.

The logic behind the new policy remains enigmatic. Meanwhile, weary consumers have no choice but to go on standing in line outside largely empty stores.