Eagle, I don't want to form an alliance anymore.

Chapter 12: Let the market decide the future of the alliance?

A few weeks later, Moscow finally began to thaw.

The snowdrifts on the street melted into grayish-brown mud that flowed down the curb. When Slava came out of the subway station, he stepped into the mud, cursed, wiped the soles of his shoes on the stone benches by the roadside, and then looked down at the address slip that Sherov had given him.

"Dnieper Machine Building Complex", located two kilometers north of Kutuzovsky Prospekt in the eastern suburbs of Moscow.

Okay, not a single word in their names has anything to do with the military—this is standard practice for allied defense contractors. All their missile factories, rocket factories, and nuclear weapons research institutes have some inexplicable civilian name; some are called mailboxes, some are called machine factories, and some are simply a number. You'll never find an entry for "Topol I Intercontinental Ballistic Missile Third Production Workshop" in the government's phone book, but every local knows what's being built inside that "mailbox" on that street, surrounded by a three-meter-high high-speed rail fence and guarded by armed sentries.

Director Nian didn't come with him today—she was sent by Sherov to the KGB Technical Bureau to handle procurement documents for communications equipment, which was part of their regular work.

Slava, carrying his briefcase, took the subway for forty minutes and changed buses twice before finally finding his destination in a drab industrial area.

Like all state-owned enterprises in the alliance, the factory gate consisted of cement pillars and iron railings, with a faded sign hanging above the gate bearing the factory name and the slogan: "Labor is the most glorious!"

There was also a poster next to it, depicting a muscular worker holding a wrench, with a silhouette of a rocket launching in the background—this was probably some kind of subtle hint.

The security guard checked his identification and letter of introduction, made a phone call, and then let him in.

The person who came to pick him up was the factory's deputy director, surnamed Zakharov, in his early fifties, short and stocky, with a few age spots on his bald head. The deputy director was wearing a faded blue work uniform, with a Labor Red Banner Medal pinned to his chest.

Wow, he's a model worker!

"From the KGB Technical Bureau?" He looked Slava up and down, his gaze carrying the politeness and wariness that an old industrial man would show to a leader parachuted in from above. "You're really young—the letter of introduction doesn't quite make out what kind of equipment your bureau needs."

“A portable communication encryption device,” Slava showed him the technical specifications on the letter of introduction, “mainly to get a hands-on understanding of your production capacity and technical level.”

"Then we need to go to Workshop 3. All our electronic equipment is there. Let's go."

Zakharov led him through the factory area. The factory area was very large, with rows of workshops stretching along the internal road, and in the middle were open spaces and some auxiliary buildings—a canteen, a bathroom, a kindergarten, and even a small cinema, almost exactly like the Dongdong Roman state-owned enterprises that Slava had seen in the 80s.

The large state-owned enterprise "705u.com-Reading Club First Release" in the alliance is itself a self-contained small society. From workers' eating, drinking and relieving themselves to their children's schooling, everything is done within the factory area. Some people never leave this walled community from the time they enter the factory until retirement.

From cradle to grave, the welfare system for state-owned enterprise workers can truly be summarized in these six words.

Workshop 3 is located at the far east end of the factory area. It is a three-story reinforced concrete building with gray paint on the exterior walls. Once inside, it is much brighter—dozens of workbenches and testing equipment are placed in the tall space, and engineers and technicians in white coats are busy at their respective workstations. The air is filled with the smell of solder and rosin.

Slava took a closer look. The equipment wasn't exactly advanced, but it wasn't too bad either—at least it was several levels better than the dilapidated equipment from the 1960s on the Iraqi front. The workers were also quite skilled; the welding, assembly, and testing processes were all fairly standardized.

"Are these being manufactured for the military?" he asked, pointing to a row of circuit boards being assembled.

“Yes, the signal processing module for the air defense system,” Zakharov said, picking up a board from his workstation to show him. “The precision requirements are very high; these are all qualified products.”

Slava nodded, flipped the board over to examine the solder joints—they were indeed better than he had expected. At least in the area of ​​military products, Soviet industrial standards hadn't completely collapsed.

"Can we take a look at the other workshops too?" he asked.

"Of course! Your letter of introduction says you'll be inspecting the entire factory; you can see everything you're supposed to!"

Zakharov led him out of Workshop 3 and westward along the factory road. As they passed Workshop 1, the door was ajar, several armed guards stood at the entrance, and the clanging of metal and the hum of lathes could be heard from inside. Slava glanced inside—the huge workshop contained several heavy CNC machine tools, processing some kind of cylindrical metal part, quite large, at least half a meter in diameter.

"That is--"

“Don’t ask questions you shouldn’t ask,” Zakharov interrupted him crisply. “Workshop 1 is not within your tour scope.”

Slava wisely refrained from pressing further. The items being processed in Workshop One were most likely missile or rocket engine casings; this level of secrecy was certainly not something a 'KGB Technical Bureau procurement officer' could touch.

They continued westward, passing Workshop Two—also producing military products, this time components for some kind of radar antenna. Then came Workshops Four and Five, which produced optical components and precision instruments, respectively. So far, everything was going according to Slava's expectations: a well-functioning military industrial enterprise, producing the various parts needed to maintain the Alliance's military strength.

But things changed after turning a corner.

A sign hung on the gate of Workshop Six, which didn't say anything about the Nth subsystem production line of a certain weapon system, but instead had four large characters that made Slava think he had gone to the wrong place:

"Civilian Products Workshop"

No, don't you have any companies that specialize in producing consumer goods?

He pushed open the door and went inside. On the left side of the workshop, bicycles were being assembled on a production line. The frames were welded from black steel pipes, and the wheels hadn't been installed yet; they hung in rows on racks and moved slowly along the conveyor belt. A few workers were casually tightening screws, their movements unhurried and deliberate, a stark contrast to the workers in Workshop Three who were intently assembling military circuit boards.

The right half of the workshop was even more outrageous—that's where baby strollers were being manufactured. Frames made of bent metal tubing were piled on the floor, plastic wheels and fabric backrests were stacked in several piles beside them, and a middle-aged female worker was using a rivet gun to assemble them, making a "pop pop pop" sound. The rhythm was fast but the technique was rough, and the rivets were crooked, yet she didn't seem to be reworking them.

In the innermost corner of the workshop, there was a small area where electric irons were being produced. Several young workers were gathered around a workbench, stuffing heating elements into cast iron casings, screwing on bases, attaching labels, and tossing them into a cardboard box next to them—that was it.

It's hard to imagine that the place next door is producing missiles while this place is producing these consumer goods.

"Comrade Zakharov, are these... also products from your factory?"

Zakharov's expression held a calm acceptance of such things. He leaned against the doorframe with his hands in his work clothes pockets, as if waiting for Slava to ask the question he had been asked countless times.

“It’s just a task assigned by the State Planning Commission,” he said. “Our factory’s main business is military products, but we are required to allocate a portion of our production capacity each year to produce civilian consumer goods. This year’s target is 50,000 bicycles, 18,000 strollers, and 40,000 electric irons.”

"No, why did you build it?"

“Because we have the equipment, the workers, and the raw material quotas.” Zakharov took out a pack of cigarettes from his pocket, pulled one out and tucked it behind his ear without lighting it. “Go ask the Ministry of Light Industry if they want to manufacture it themselves. They’d love to.”

But they lacked steel quotas, aluminum quotas, and qualified welders and fitters. These things were all in the hands of our military-industrial complex.

This is how Slava experienced a true command-planned economy.

The military-industrial complex controls the alliance's best industrial resources, from raw materials to personnel to equipment maintenance capabilities, while the light industry sector is at the very bottom of the resource allocation food chain, barely getting any scraps. As a result, even producing something as simple as a bicycle requires relying on the military-industrial system, using military steel, military workers, and military workshops.

This problem is by no means new.

In fact, the Union leadership had always been aware of the predicament of light industry, and it wasn't that no one had tried to solve it. Khrushchev had reformed the National Economic Council in the late 1950s, attempting to decentralize some industrial decision-making power from Moscow's ministries to the local level, allowing local authorities to coordinate the production of military and civilian goods according to actual needs.

But the military-industrial ministries almost reflexively joined forces to resist the reform—because it threatened their monopoly on resource quotas. Khrushchev's reforms essentially failed after less than three years, and when he was ousted from power in 1964, the first thing his successors did was to completely overturn his policies and start from scratch.

During the Brezhnev era, Chairman of the Council of Ministers Kosygin attempted to break the deadlock in a different way. The Kosygin Reforms of 1965 introduced limited profit targets, allowing enterprises to retain a portion of their profits for autonomous development and worker welfare, after fulfilling planned targets. This was theoretically a small step towards a market mechanism—if a factory's consumer goods sold better, it could receive more retained profits, and workers could receive more bonuses.

But Kosygin's reforms also failed to go far. In 1968, the Soviet Union intervened militarily to suppress the Prague Spring, and the "humanitarian socialism" reforms undertaken by the Czechoslovakians were crushed to pieces by tanks. Moscow's conservatives immediately seized the opportunity to declare:

Any form of economic liberalization is the first step toward the "Prague Road"!

Kosygin's reforms were subject to layers of restrictions and weakened in their implementation, ultimately rendering them ineffective. Throughout the 1970s, Kosygin lived in Brezhnev's shadow, his political status constantly marginalized, until his death in Moscow last December—just two months after Brezhnev's confidant, Tikhonov, succeeded him as Chairman of the Council of Ministers.

A man who served as prime minister for sixteen years, trying to inject some vitality into this rigid system, has passed away, taking with him a body of rejected reform plans and policy suggestions that no one paid attention to, and has entered the cemetery at the foot of the Kremlin wall.

When Slava thought about Kosygin's death, he pondered a question: What if Kosygin's reforms had been truly implemented in 1965? If businesses had profit incentives, would the quality and variety of consumer goods have been better? If light industry could retain its own profits, would it not have been so completely dependent on the military-industrial complex as it is now?

But he quickly dismissed his own idea. Even if Kosygin's reforms were fully implemented, they would only have opened a crack in the framework of a planned economy, allowing a tiny sliver of market light to seep in. As long as the entire resource allocation system remained controlled by the massive, bloated, and corrupt State Planning Committee, as long as all prices were still decided by Moscow bureaucrats on a whim, and as long as the military-industrial complex remained the largest power group in the country—that crack would eventually be closed!

“You don’t look too good, young man,” Zakharov interrupted his thoughts. “What are you thinking about?”

"Why not separate the production of these civilian products and establish dedicated consumer goods factories? That way, military factories can focus on military products, and consumer goods factories can focus on civilian products—wouldn't that be more efficient?"

Zakharov finally took the cigarette off his ear, rolled it around his lips a couple of times, and lit it with a match. He took a deep drag, and the smoke he exhaled dissipated slowly in the cool April breeze.

“Young man, Comrade Kosygin asked this question when he was alive—of course, he asked it much more subtly than you—Comrade Khrushchev asked it before, and before that, it is said that even Comrade Stalin brought it up indirectly on some occasions.” He took another puff of his cigarette. “Guess why no one has managed to do it yet?”

"Raw material quotas?"

“This is the first problem, but it’s not the most critical one,” Zakharov said, leading him into Workshop Six and pointing to the things on the production line as they walked.

“Look at this bicycle production line, what kind of steel is it made of? It’s secondary carbon steel that was rejected by our workshop for military products. The tolerance range required for military products is very low, and steel that does not meet this standard is transferred to workshop six to make bicycles. If you want to open a bicycle factory on your own, where do you get this kind of steel? Apply for a steel quota from the State Planning Commission? You’d be waiting in line until your factory goes bankrupt and you still wouldn’t get a turn—because your priority in the queue is lower than any department you can think of.”

Planning...planning...planning and queuing are indispensable everywhere. Is a production plan controlled by bureaucrats truly an ideal plan?

"Let's look at the workers. Why are the workers in this factory willing to stay? Because the military-industrial complex offers good benefits—their wages are 30% higher than those in ordinary factories, they get priority in housing allocation, and the food in the canteen is better than that in state-run restaurants outside."

"Can you afford this kind of compensation if you run your own independent bicycle factory? No. Then who would want to work there? Recent graduates would rather wait in line for a position at a military factory than go to your bicycle factory where you can't even guarantee heating."

He stubbed out his cigarette in a metal bucket and tapped his fingers twice on the rim.

"And then there's equipment maintenance. Our factory has its own mechanic team with over twenty technicians who can fix any kind of equipment. If the production line in Workshop 6 breaks down, we just need to make a phone call and the mechanic team will be there in twenty minutes. What about your independent bicycle factory? Who do you contact when your equipment breaks down? You have to report to the relevant authorities, wait for approval, wait for personnel to be dispatched, wait for parts—just this whole process can take up three months."

"So you understand now? This bicycle production line can't survive without our military factory. Its raw materials are allocated from the military quota, its workers are rotated from military workshops, and its equipment maintenance relies on the logistical support of the military system. Taking it out of the box is like cutting a fish's gills off its body, placing it on the shore, and telling it to breathe on its own—isn't that nonsense?"

...

Slava spent the entire afternoon in Workshop 6.

He also took a look at the final testing phase of the electric irons—the so-called testing was really just turning them on to see if they could heat up; if they did, they'd label them and pack them up, without caring whether the temperature control was even or if the soleplate had any burrs. He also spent half an hour in the warehouse behind the workshop. The warehouse was piled with thousands of already packaged bicycles and hundreds of strollers, with stacks of cardboard boxes reaching all the way to the ceiling.

"Why haven't these been moved yet?" he asked an old man who managed the warehouse.

The old man lifted his eyelids from the canvas chair, glanced at him, roughly judged his rank, and then said, "The transportation bureau can't get enough wagons, so we just pile them up here after we finish production. We'll take them away whenever a truck comes. Just wait."

"How long?"

"This batch? It's probably been waiting for two months already." The old man pulled his hat brim down again to cover his eyes. "Last quarter's batch took a month to be taken away—and guess where it went? To a warehouse in Novosibirsk. Does Novosibirsk need bicycles? Yes. But it's minus thirty degrees Celsius in Novosibirsk right now, comrade—"

Who the hell would ride a bicycle in the dead of winter in Siberia to suffer? After spring arrives, those bikes will have been frozen in the warehouse all winter, the rubber tires will be hardened and cracked, and damn it, they'll have to be sent back to the factory.”

Slava didn't ask any further questions because he knew that asking any more would be a bottomless pit—the products produced wouldn't be delivered to where they were needed, and even if they were delivered, it wouldn't be at the right time. If the time was right, the quality would be problematic, and the quality problems would lead back to issues with raw materials and worker motivation, and the motivation problem would ultimately be a problem with the incentive mechanism.

Every link in the chain met its planned targets, but the final result of the entire chain was bicycles covered in dust in the warehouse and long lines of consumers outside state-owned stores.

We have no choice but to change! Reform is imperative!

As he walked out of the warehouse, he ran into Zakharov at the door. The deputy factory director was coming from the direction of Workshop 1. He had probably finished dealing with some military production matters, and his expression was noticeably more relaxed than when he was showing Slava around—when you return to your main job, your spirit is indeed different.

"Finished reading?" Zakharov asked.

“I’ve finished looking at it,” Slava said, glancing at the dusty warehouse door. “Comrade Zakharov, if I may ask, do you think the workers in your factory are in the same state when they’re making bicycles as when they’re making military products?”

Zakharov scoffed: "You've seen it yourself! When it comes to manufacturing military products, it's a national mission. If the quality isn't up to par, no one can escape responsibility. If there are problems, at best you'll get a demerit, at worst you'll face a military court. Manufacturing bicycles? Who cares? As long as the quota is met—50,000 bicycles, not one less. As for the quality... well, it's worth the price."

He took out a cigarette, lit it, and took a deep drag.

"Anyway, ordinary people have nothing else to buy. Take it or leave it. If it really can't be ridden, they can fix it themselves. If they don't know how to fix it, they'll just have to accept it."

P.S.: I've always thought that the word "受着" (shòuzhe) is the greatest invention of modern Chinese in the last two years.

------

When I returned to the apartment that night, Director Nian was already there. On the table were two meals from the state-run canteen—buckwheat porridge with boiled eggs and pickled cucumbers, plus a pot of warm tea.

Slava tossed his briefcase onto the sofa and began to talk about what he had seen in the factory, from the bicycle assembly line in Workshop 6 to the dusty cardboard boxes in the warehouse. Director Nian listened while eating, occasionally interjecting. He only put down his chopsticks and took a sip of tea after Slava finished speaking.

“I also learned something today,” she said. “The people from the KGB’s Technical Directorate gave me a figure—the Western intelligence agencies estimate that military spending is between 15% and 25% of the alliance’s GDP, while the official figure is, of course, much lower. But whichever you take, consumer goods investment has never accounted for more than 15% of total industrial investment.”

"In other words, the military industry took the lion's share, while the light industry took less than a fraction."

"It's not just light industry! The bicycles you see today are made with second-grade steel that's been scrapped from military production, right? That's the food chain of resource allocation—the best steel goes to missiles, the next best to tanks, the next best to trucks, and the worst scraps are used for bicycles and strollers. From raw materials to personnel to equipment maintenance capabilities, everything is picked up first by the military, and only the leftover scraps go to consumer goods."

Director Nian put down his teacup, leaned back in his chair, and stared at the crack in the ceiling for a while with his rose-red eyes.

“You know what the most ironic thing is?” she said. “The strength of the military industry and the scarcity of consumer goods are not two separate issues, but two sides of the same coin.”

The military-industrial complex has maintained the alliance's superpower status, but it has drained all the resources needed for ordinary people to live a decent life—and the continued poverty of ordinary people is gradually eroding the legitimacy of the system. You ask the people to fight for socialism, but you can't even give them a bicycle to ride; over time, their hearts and minds will crumble.

I'm the system girl; I don't have the ideological beliefs of normal humans. I prefer to be more pragmatic—what's that saying? Poverty isn't socialism?

"Didn't Khrushchev promote something like beef stew with potatoes, which he called socialism? If the Union could really provide beef stew with potatoes to every household, it could last until at least 2091."

Slava didn't reply. He picked up a boiled egg, cracked it on the edge of the table, peeled it, put half of it in his mouth, and chewed for a while before swallowing it.

“I’ve been thinking about something all day in the factory,” he finally said. “I told Andropov that information technology could make a planned economy more efficient and reduce corruption. Is that idea right? Yes.”

Information technology can indeed provide the planning commission with more accurate data and reduce systemic data falsification, as seen in Uzbekistan. But—"

“But the information technology you proposed can’t solve the problems you see in the factory today,” Director Nian continued.

“Yes,” Slava mumbled, stuffing the remaining half egg into his mouth, “because the fundamental problem today is not that the information is inaccurate, but who decides what to produce!”

In a market economy, consumers vote with their wallets—if your bicycle is easy to ride, I'll buy it; if it's bad, I'll buy from another brand. No one needs to set quotas. But in the planned economy of the Union, this decision-making power rests with Moscow's bureaucrats. They may have never ridden a bicycle, but they decide how many bicycles the country should produce, what models, what prices, and where to sell them.

"So even if you've successfully implemented information technology—connecting every factory, warehouse, and store in the entire alliance to the network and monitoring all production and inventory data in real time—you still haven't solved a fundamental problem: what will that bureaucrat in Moscow use to decide whether to produce 50,000 more bicycles or 30,000 fewer next year, when he's sitting in his office facing millions of data points on a screen?"

Ultimately, algorithms and AI must be used to assist in decision-making, but then new problems arise—who decides on the algorithms? How can national will not be bound to algorithms?

Director Nian picked up a pickled cucumber from the table, took a bite, and chewed it with a crunching sound.

“Well, that's a bit of a tangent—many years ago, mathematician Lange said that mathematical models could be used to simulate market pricing,” she said. “But right now, computers can't even simulate the supply and demand balance of a single city, let alone an entire country. When computers are truly powerful enough to do that—”

"By then, the internet will have been invented, and the market economy and private ownership will have proven their efficiency. No one will be discussing whether a planned economy can perform economic calculations anymore," Slava said with a wry smile.

"No, it will still be discussed. After all, this thing promotes the economy in the short term and revolution in the long term! When the situation reaches a point where we can trust the wisdom of future generations, they will discuss this issue again."

They were silent for a while, the only sounds in the room being the gurgling of the heating pipes and the clanging of the trams passing by in the distance outside the window.

"Then what do we do? Just wait to die?" Director Nian was giving an answer that both of them already knew.

“Perhaps we can avoid a complete and full-scale entry into the free market and instead introduce some form of market mechanism to recover some losses,” Slava thought for a moment. “It’s not about full marketization or overthrowing the planned economy—that’s politically impossible. But at least in the consumer goods sector, in light industry and services—sectors less related to national security—let prices be determined by supply and demand, giving businesses the incentive to produce what consumers truly need.”

The military-industrial complex can continue as planned, but some civilian products will be released to the market.

"Do you know what this is called?" Director Nian asked, looking at him.

"What?"

"The Eastern and Western Roman Empires called it socialist market economy, Hungary called it Gulash Communism, and Yugoslavia called it workers' self-government—the names are different, but they are essentially the same thing: embedding more or less market elements within the framework of socialism."

Do you think this would work in the league?

“Kosygin tried and failed,” Director Nian counted on his fingers. “Khrushchev tried and failed too. Every reform touches the interests of the military-industrial complex and is then halted by the conservatives in the Politburo. Andropov understands this dilemma better than they do, but how far he can go depends on how long he can live and how many supporters he can gather.”

"Moreover, the demand for political liberalization brought about by economic liberalization is inevitable. In another 8 years, you'll know what to do."