BOOK REVIEW; A repair job for East and West

THE WORLD AFTER COMMUNISM A Polemic For Our Times Robert Skidelsky Macmillan, pounds 16.99
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After the punitive peace settlement following the First World War, John Maynard Keynes wrote a superb polemic entitled The Economic Consequences of the Peace. Now Robert Skidelsky has taken time out from work on his splendid biography of Keynes to write an essay on the political- economic implications of our post-Cold War "peace".

There are really two essays here. The less interesting one covers the political economy of Europe and the former Soviet Union during and after Communism. Skidelsky's analysis of the end of Communism is somewhat perfunctory. On the transition from Communism, he gives an interesting account of a debate between Jeffrey Sachs and John Gray about the virtues and failings of neo-liberal "shock therapy". He also emphasises the contrast between central Europe and the former Soviet Union.

However, the only genuinely polemical argument he makes himself is that since the outcome in Russia is so important, we should take "the gamble on the new Russia" and therefore be "very wary of attempts to expand Nato eastwards". That big bird in the bush is worth three in the hand. But this crucially important subject is raised, decided and dismissed in one paragraph as he hurries to get back to his larger theme of political economy.

This larger theme is interesting. Skidelsky locates the rise and fall of Communism within a bigger story of the rise and fall of "collectivism", which he defines as "the belief that the state knows better than the market, and can improve on the spontaneous tendencies of civil society, if necessary by suppressing them". This, he says, has been "the most egregious error of the 20th century". Its fiscal expression has been a rise in the share of GDP distributed by the state from an average of 10 per cent for a group of six industrial countries in 1880 to an average of 47 per cent for the same group in 1985.

Now the proper division of labour between state and market is indeed a central question - for all post-Communist countries, for social market Western Europe, and for post(?)-Thatcherite Britain. True to the spirit of the Social Market Foundation, which he acknowledges warmly in his introduction, Skidelsky argues that the state has the vital function of providing public goods which the market will not provide. Indeed, his real subject is less the state of the world than the world of the state. But what exactly are the public goods which only the state can provide? This is where it gets really interesting. Unfortunately, Skidelsky has spent so much time on his potted histories of collectivism and Communism that he only has space for a very sketchy answer.

What needs to be done to "repair the state" after what he calls "the ravages of collectivism"? "In Russia," he says, apparently forgetting the rest of central and eastern Europe, "this means equipping the central government with the resources to enable it to provide basic public goods of a liberal state; in Western Europe it means restoring the state's credibility as an economic manager." But isn't the latter actually the most vital task for the state in Russia? And hasn't there also been damage done to the state provision of public goods in Britain by St Margaret's neo-liberal counter-attack against the dragon of collectivism?

Anyway, what are the basic public goods? And what calculations lead him to conclude, in his last sentence, that 30 per cent of GDP should be sufficient to provide them? Here are the questions for a third essay which really would be a tract for our times, in the former Communist "East" as well as in the OECD "West". An epilogue, perhaps for the last volume of Skidelsky on Keynes?

Timothy Garton Ash