MEN OF STEEL : STEELTOWN, USSR: Soviet Society in the Gorbachev Era, <i> By Stephen Kotkin (University of California Press: $24.95; 256 pp., illustrated)</i>

When Magnitogorsk was under construction in the 1930s, the huge steel-making complex, now the largest in the world, and the company town built alongside it were touted as the workers’ future. The frightening thing about Magnitogorsk today is that it may be just that.

The aging mills in this city of 438,000 at the southern end of the Urals turn out steel too low-grade to compete on the world market. The complex regularly overfulfills its plan, making it, in the fantasy world of Soviet bookkeeping, highly profitable. But production targets set in Moscow are in tonnage only, so the plant skews production toward heavier varieties of rolled steel, rather than the thinner ones its customers really need. Soviet factories turn that heavy steel into fuel-guzzling cars, tractors and tanks. The system seems doomed to make economies and efficiency impossible.

Magnitogorsk also overfulfills its plan for environmental pollution, spilling huge quantities of toxic waste into the air and water every day. Pollution poisons and shortens the lives of the very workers who produce it. Worse, it cripples many of their children even before they are born. Forty-one of every 100 children in Magnitogorsk are born with chronic illnesses and birth defects.

And there’s little chance for escape: Who would want to trade an apartment elsewhere for one in Magnitogorsk? So the descendants of the Komsomol enthusiasts and exiled peasants who built the town live on in a mood of growing hopelessness relieved largely by prodigious alcohol consumption.

Such is the depressing, yet clear-eyed view of Magnitogorsk in Stephen Kotkin’s new book. Kotkin is one of those lucky scholars who were in the right place at the right time, and he had the sense to record what he saw and heard.

A graduate student in history at Berkeley, he went to the U.S.S.R. on academic exchange in 1987-88 to study the history of the town. Glasnost was just getting up to speed, and when he was unexpectedly granted a two-month visit to use the local archives, he became the first American to spend any length of time in Magnitogorsk since the late 1930s.

As soon as word of his presence spread, he became a local celebrity and the object of warm hospitality. He could provide direct information about life in the West, from which Magnitogorsk, in the geographic heart of Russia, had long been isolated.

Two years later, in the spring of 1989, Kotkin returned for another two-month visit. These trips allowed him a unique glimpse of the progress (or more accurately, non-progress) of perestroika in a provincial industrial town.

His readable, in-depth account fills a gap in our understanding of life in today’s Soviet Union. Though American journalists began to visit provincial cities such as Magnitogorsk in 1988, they continue to live and work in Moscow, and the Western view of the Soviet Union is inevitably distorted by their Moscow perspective.

The most important force of the 1990s in Soviet politics is the yearning for economic and political autonomy, not just by the republics but even by smaller administrative units. Three levels of bureaucracy separate Magnitogorsk officials from Moscow. Most of their production is immediately siphoned off by the central Ministry of Metallurgy--but few benefits or consumer goods trickle back to the town and its workers.

Before glasnost , the citizens of Magnitogorsk had not realized how far behind the West they were. Enlightenment has been demoralizing, since prospects for real change are few. In 1988, a worker in the steel mill asked a visiting Japanese delegation, “How far behind are we?” They answered, “Forever. You’re behind forever.”

Technologically, the plant, state-of-the-art in 1930, is essentially still that. To meet pollution standards and become competitive, the whole complex would need to be closed and re-equipped with technology that the U.S.S.R. doesn’t produce and can’t afford to buy for hard currency. But there would be no reason to rebuild such a plant in Magnitogorsk, since the nearby “magnetic mountain” of rich iron ore for which it was named was used up long ago; the plant now imports both ore and coke from long distances away.

So life in Magnitogorsk, counterproductive and increasingly self-destructive, goes on of its own inertia. Attempts to tinker with the system have paradoxically only made the situation worse. Here are some answers for the reader puzzled by the lack of popular support for price hikes and “market reforms” in the Soviet Union. Fear of change, citizens’ pessimism about their own capabilities, and pervasive alcoholism are prime factors.

Kotkin provides a detailed account of the March, 1989, elections to the Congress of People’s Deputies, and helps us understand why the party apparat’s domination of both economic and political life is so resilient. Two party functionaries were curious about Kotkin’s own “party affiliation” (Democratic, it turns out). How long had he been a member? How steep were his dues? Could he leave without affecting his career? Hearing his answers, they concluded, correctly: “But that means that the Communist Party is not really a political party at all.”

The American reader is sure to draw parallels with our own rust belt, and “Steeltown” obliges with a brief section comparing Magnitogorsk with Gary, Ind. The parallels are intriguing--Gary, too, was originally a company town--and one wishes Kotkin had taken them further.

“Steeltown, USSR” provides dispiriting and overwhelming evidence for the case that economic reform in the U.S.S.R. is not likely to succeed soon, if ever.