"Why Capitalism Can't Save the Soviet Economy"

Published, NY Times: August 10, 1988

To the Editor:

''Soviet Foray Into Capitalism Begins to Show a Seamy Side'' (front page, July 25) is descriptive of the ''novel forms of corruption,'' as you put it, now being found in the new ''private sector'' of the Soviet economy. The new ''marketplace'' seems to have inspired a ''general rise in the level of greed,'' as many Russians have long feared would be the case if capitalism came to their country. Your article quotes a ''Western embassy commercial officer'' who says, ''They're in their Wild West phase.''

What most ''Western officials'' or journalists, for that matter invariably never question, however, is the underlying nature of capitalism itself. It always seems to be taken as given that capitalism means free enterprise and that it is basically a fair and open system for the distribution of goods and services and wealth. Most Americans know, at least at an intuitive level, that this is not so. The definition of capitalism, according to my dictionary, is: ''a form of economic, industrial, and social organization of society involving ownership, control, and direction of production by privately owned business organizations.'' The equitable distribution of the produced goods is not inherent in this system's model.

We in the United States have accepted a ''Let the buyer beware'' mentality. It is understood that a producer-seller is motivated by greed, and that from his point of view the price will always be whatever he can get for it. All well and good for educated consumers, but why should we have to put in such effort to resist being hustled by our neighbors?

It is ironic and tragic to see what is happening in the Soviet Union and China as they begin to embrace capitalism as a way to ''save'' their desperately stagnating economies: corruption, cut-throat competitiveness, the rise of organized crime and influence peddling. Yet we've heard for so long in this country, more so in recent years than ever, how we need to become more ''competitive'' and how the unfettered greed of corporations will ''trickle down'' wealth to the masses.

The people of the Soviet Union and China will find that there is little difference in the long run between having the party own the means of production, and therefore the wealth, and having a handful of corporations owning them. In each case, the average person will be doing a disproportionately high amount of hard work for a disproportionately low standard of living. And as the ''value'' of competitiveness becomes more and more revered, the people will find their land, their forests, their waters and their atmosphere being devoured wantonly in the name of progress!

A footnote: It is probably the ultimate irony for the United States to be bemoaning the ''unfair'' trade practices of Japan, our own protege in capitalism. Japan has become perhaps the ultimate capitalist state in the world, with people practically willing to give their lives for the good of their corporations. I don't see why American capitalists are so upset with Japan. They must believe that sooner or later Japan's wealth will trickle down to the United States! PETER V. LOFFREDO New York, July 25, 1988