Monetary Reform in the U.S.S.R.

I speak today with considerable diffidence. I know little about the economy of the Soviet Union or about its monetary system. My training in economic research has taught me to be skeptical of instant experts, and I want to avoid appearing as one of them. Many such experts have come to the Soviet Union. Some of their advice may be useful, some not.

There are a few things about which I feel confident. One is that there is no blueprint, road map or design for bringing an economy from central planning to the market system in a series of carefully designed steps. Second, the major steps to be taken require that institutions be changed. You must learn to trust the public, and to let their signals guide resource allocation. Private property, a market system and competition provide a means by which those signals get transmitted. Third, you are unlikely to get to a well functioning market economy by half steps. You must be willing to make major structural changes.