This paper is the text of a presentation before the U.S. Congress Joint Economic Committee, Subcommittee on National Security, Economics and Trade, on September 19, 1987. It examines the interrelationship between the two aspects of Mikhail Gorbachev's domestic economic program: modernization and reform. The author argues, first, that economic reform and its social-political twin, democratization, are derivative values. While this does not diminish their potential significance for Soviet society, it does complicate any assessment of probable outcomes of high-level conflict over the restructuring. Second, the author suggests, the interrelationship between modernization and reform has profound implications for Soviet military and foreign policy.