Thank you for giving me the privilege of addressing members of the Supreme Soviet. How improbable such an occasion would have seemed even two years ago. It is a measure of how great have been the changes which have taken place—both within the Soviet Union itself and between East and West.
I propose to speak frankly because that is my habit and I know no other way. Also I shall be dealing with fundamentals, with principles and policies in which I believe deeply.
But I shall also speak from the point of view of someone who wishes the people of the Soviet Union well: who wants to see reform succeed, indeed would like it to accelerate, because I believe it would bring to the people of the Soviet Union the Western standard of living to which they aspire. There is enormous interest outside the Soviet Union in the changes taking place here. And great sympathy for the Soviet people in the hardship and burdens which change on this scale inevitably entails.
It is not for me to tell you what to do. That would be intrusive and interfering. I can only tell you what I believe in; that it works; and that it brings to people in democracies dignity, prosperity and the right to choose and change their government by free and fair elections at regular intervals. [end p1]
If today you decide to learn something from British experience, it would not be for the first time. You may recall that Alexander Pushkin 's Yevgeny Onegin learned all his knowledge of political economy from us British. I quote:
“He spurned great poetry and myth But how he knew his Adam Smith! As an economist profound He understood and could expound The means by which a state gets wealthy And how its livelihood's controlled. Smith said it has no need of gold— Producing goods will keep it healthy.”
(Yevgeny Onegin, Chapter 1, Stanza 7)
So you have a good precedent and some excellent advice!
But let me start by congratulating you on how much has already been achieved.
The changes in your country and in Eastern Europe have been enormous. I believe President Gorbachev deserves great praise for his part in bringing them about.
When he and I first met at the British Prime Minister's country house—or dacha—in November 1984, we talked about the great differences between our two political systems. And indeed they are profound. [end p2]
The Two Systems
Your Communist system was based on central control of the whole economy and of society. Instructions went from the top down through the Party about everything. Our free system is based on limiting the powers of government and giving maximum power to the people.
Our system, based on freedom and democracy, has to satisfy three conditions.
First, a country is governed through the consent of the majority—expressed in free elections—which must take place regularly within a specified period. For a free democracy, there must always be a party or combination of parties sufficiently strong to replace the government of the day if the electorate so decides.
Second, freedom requires a fair and just law which applies to everybody—rich and poor, citizens, politicians and government alike. It guarantees the fundamental rights of everyone. And it is enforceable by an impartial and independent judiciary, which cannot be dismissed by government.
Third, there has to be a free economy in which state ownership, intervention and controls are minimised and in which private ownership and enterprise prevail. [end p3]
A Free Enterprise Economy
Last year in Kiev when I visited the British Trade Fair I was asked whether Britain would have trading relations with the Ukraine. But in my country that question would not be asked of government, because our businesses are free to trade the world over. Apart from military weapons and some security items, they do not have to ask government's permission.
So most of the work of industry and commerce is carried on without reference to government.
But, obviously, the goods have to be what the customer wants and at a price he is prepared to pay. Otherwise the company goes out of business. It is not the government which decides what is produced, but the customer with his buying power. This system not only gives greater freedom: it is also far more efficient.
Prices are not regulated, nor are wages.
Competition between companies determines these things.
The customer can always shop elsewhere, the employee can always seek a different job.
And, let me add, the best and most successful companies are those which please the customer and do well by their employees. [end p4]
I know that the free market conveys to some an image of economic anarchy. But the free market has never been free in the sense of not being bound by the rule of law. There are laws against fraud, laws against dangerous goods, laws enforcing contracts, laws setting standards for health and safety at work, laws protecting the consumer, laws to prevent monopolies and laws covering private property. Such laws are the essential framework of a properly operating market economy.
The Transition and Economic Reform
The transition from the command economy to economic freedom requires a whole change of attitude: taking the initiative, responding to opportunities, accepting responsibility. It is by convincing people that they can influence their destiny by their own efforts, that you get the best results. It does not come easily, especially when people have been accustomed for decades to the state taking decisions for them. That has masked—but not removed—their inherent talent.
Such great changes are bound to be disruptive. But there is no reason to lose heart. You are not being asked to do something which has never been attempted. Other countries and people have been practising free enterprise for centuries and have long enjoyed the higher standard of living which you seek.
Today's difficulties in your country arise because too much still remains of the old system. And there are too many powerful [end p5] vested interests hostile to change.
There is, I know, a wide measure of agreement about the direction of the economic reforms. But to succeed, the main elements must go forward together; for the effects of a partial reform would distort everything. The evidence from Eastern Europe is that the countries which are making the most far-reaching reforms are now furthest on the way to recovery and prosperity.
I understand, nevertheless, that there are some who would go back to central control. But if central control—even central control exercised in the most benign and enlightened way—were the answer, the difficulties of the Soviet Union would never have existed.
Devolving power to individual republics under your new arrangements is, of course, desirable in itself. It disperses decision-making, it disperses responsibility and it will liberate talent. Moreover, local loyalties will be a spur to greater effort. They will be used to unite the people around the programmes of reform.
But devolving power to the republics is not enough. It is the total power of every agency of the State over people's lives, exercised at every level, which has to be reduced. Increasingly [end p6] power has to be devolved to individuals and businesses, so they are free to make their own decisions.
Of course, in the beginning there will be mistakes. But the effects of these mistakes will be limited. They will not damage the Soviet Union as a whole. In any case, it is only by making mistakes that people and communities learn. Most of us learn best by doing.
What the West can do to help
You will justifiably ask me what the West will do to help and support the reforms which you are undertaking. Frankly, judged against the importance of your own efforts, your own decisions and your own determination, outside help will be comparatively marginal. But of course, it has a role—and a role which will become more important as we are convinced that democracy, human rights and market principles are irreversibly entrenched in the Soviet Union.
The demands on our economies for financial and economic help are inexorable: the consequences of war in the Middle East, the floods and devastation in Bangladesh, the famine which faces so many countries in Africa. But economic assistance, like our Know-How Funds, as well as loans and credits, can be made available to the Soviet Union—provided we are sure they will be applied to implement reforms, rather than to shore up the old system. [end p7]
When it comes to investment, many Western firms have, over the past few years, sought to invest in the USSR; and others have tried to find trading partners. There have been some successes. But not enough.
The initial agreements look good. But when it comes to implementing them, the trouble begins. Our industries, used to a free society, have found themselves confronted by a mass of regulations and rulings which seem to exist for their own sake. Inexplicable delays in the delivery of components and services are commonplace. Agreements are subject to unforeseen revision. All this underlines the need for wholehearted commitment to reform.
To the extent that reform is implemented, the West can also help by bringing the Soviet Union more fully into the international economic community.
Last year I proposed that a way be found to associate the Soviet Union with the Economic Summit of industrial countries to be held in London in July. I am glad to see that my proposal is now being discussed with the countries concerned. I very much hope that it will be adopted—and that President Gorbachev 's presence during the Summit will be beneficial to reform in the Soviet Union.
Progress in Political Reform[end p8]
Some people argue that it would have been better to embark on economic reform and have its benefits first—and approach democracy and freedom second. But no-one who loves liberty would deny it to others, even for material gain. Freedom is not something which governments can grant to people and take away at will: it is an inalienable right. Moreover, you need free thought and discussion if you are to find solutions to economic problems.
In the West we applaud the progress which has been made in political reform in the Soviet Union. Freedom of worship has been restored after years in which the Church suffered appalling persecution. Freedom to travel abroad, and indeed to emigrate, will broaden the horizons of the Soviet people—and rectify a great injustice. Freedom to express their national and ethnic culture is allowing people to recover their history—and restore their pride. Freedom of speech, freedom of association and free elections have brought into being the institutions of democracy. [end p9]
That other victim of past oppression—truth—has also been restored to the centre of political debate. The truth about the past—whether noble achievements or horrific crimes—is now being told. And only on the basis of truth can free politics be conducted.
Credit goes not only to President Gorbachev, but also to those who struggled and suffered so long for freedom—the brave individuals who demanded that the conditions of the Helsinki Agreement should be honoured.
Let me mention one name in particular: Andrei Sakharov, an outstanding scientist and a man of uncommon courage. And now his cause has triumphed.
The Rule of Law
So much has been achieved. But while the institutions of democracy—elections, parliament, a vote for everyone—are important, they do not in themselves provide a sufficient guarantee of liberty. Democracy, like freedom and free enterprise, has to be underpinned by a rule of law.
The rule of law has grown up over the centuries. In our country, it began with the idea of redressing grievances and of fairness, with the idea that noone could be held for an indefinite period before being brought publicly before a court of law. [end p10]
The rule of law must apply to politicians, to governments and to state officials as much as it does to private citizens. A government department can be taken to a court of law if it has exceeded its authority, as government officials in Britain are very well aware. A just law is the best defence not only against over-mighty individuals, but against an over-mighty State.
But it is not just enough to pass legislation in order to have a rule of law. People have to know that it will be enforced and upheld by independent and impartial judges. That is true of the criminal law: the citizens will not respect and obey it if they lack faith in the judicial system. It is no less true of the civil and commercial law: if companies in the West do not fulfil the terms of their contract, they can be taken to court and made to pay damages.
Some people suggest that it is only through authoritarian rule that the fundamental economic changes which are needed in the Soviet Union can be implemented. But that is not so. It is not the people or political diversity which are holding up reform. It is a bureaucracy which has acquired the habit of not fulfilling contracts and not carrying out its duties—all without penalty. Under a rule of law such a state of affairs would simply not be possible.
Progress in Foreign Relations
Ladies and gentlemen, we have seen great progress in improving [end p11] the external relations of the Soviet Union with the rest of the world, and particularly with the West. The Soviet Union is no longer exporting armed revolution across the world. And Soviet troops have left Afghanistan.
The level of co-operation between the Soviet Union, the United States, and the other Permanent Members of the UN Security Council has reached new heights, as we saw following Iraq's invasion of Kuwait.
President Gorbachev has been right to link reform within the Soviet Union to better relations with the West and to the resolution of the problems in Europe left over from the last War and its aftermath. Stability in Europe through the Helsinki Accords, the agreement on intermediate nuclear weapons, the withdrawal of Soviet forces from Eastern Europe and the quadripartite agreement on Germany: all these make it easier to pursue your reforms at home because they provide stability beyond your borders. And the converse of course is true. If ever—and we all profoundly hope not—but if ever there was an attempt to turn the clock back in the Soviet Union, then there would inevitably be fears for peace and stability in Europe. That link has to be recognised.
I believe that the Soviet Union is stronger both at home and abroad for its decision to withdraw from Eastern Europe and let those countries determine their own future. A great wrong has been put right and a way opened to building wider co-operation [end p12] based on democracy across the whole of Europe. May I add that we should not underestimate how vulnerable the new democracies of Eastern Europe feel and so how important it is to reassure them.
I know there are those in your country who believe that Soviet withdrawal and the disappearance of the Warsaw Pact weaken your security. But there is no security in holding countries against their will. There was no security in the suspicion of Soviet motives and intentions which the occupation of Eastern Europe created.
Sadly, however, some doubt remains because of the anomalous position of the Baltic States.
We in the West regard the three Baltic States as in a totally different category from the other republics. Britain and the Western democracies have never recognised the Baltic States as legally part of the Soviet Union. They were incorporated by force. Consequently, we fully support the right of the Baltic States to self-determination.
We wish to see a peaceful and negotiated solution to this problem. And we understand the wider issues of nationality which concern the government of the Soviet Union. But there is a bigger issue still: the right of those peoples, by constitutional means, to choose their own future. [end p13]
Security comes above all from confidence—confidence, in particular, that international agreements will be upheld. It is important to ensure that both the spirit and the letter of the recent CFE Agreement are honoured. That Agreement was negotiated over a long period and initialled in good faith. It must now be implemented in full. Otherwise there will be a new source of doubt at the very time when there is a need for the greatest possible confidence.
With regard to the START negotiations, I hope that agreement will soon be reached. I must make clear that, in my view, our defence forces must include nuclear weapons—even though fewer than now—because they have proved their ability to keep the peace in Europe, even in times of great political tension.
The True Revolution
The potential benefits to the Soviet Union of the new international conditions which recent changes have helped to create can hardly be exaggerated. A world in which the rule of international law is upheld, in which spending on armaments can be safely curbed and in which free economic co-operation is possible, is one where everyone in the Soviet Union has a better chance of a better life.
The peoples of the Soviet Union have embarked on a great and historic endeavour. [end p14]
History tells us of Man's striving to be free.
You may use brute force to crush a nation: but you cannot destroy its identity and pride. You can forbid individuals to employ their talents to better their families: but in the end some will be more equal than others. You can fight a war against truth by every means at your disposal: but ultimately truth will win the battle of ideas.
I believe that future generations will look back on the changes now being made as a watershed in the history of your country—and that your people will rise to the opportunity that freedom's birth affords.