LUBANGO, ANGOLA -- With paint peeling from its once grand Portuguese colonial villa and its fields gone to seed and overgrown from lack of care, the Fourth of February Farm stands as a monument to Angola's admitted failure in its experiment with the Soviet model of collective agriculture for developing countries.

Until two years ago the state-owned farm was a 2,500-acre amalgam of seven farms abandoned in 1975 by their Portuguese owners when the Marxist Popular Movement for the Liberation of Angola (MPLA) seized power. Its 400 workers cultivated tomatoes, cabbage, onions and fruit trees on a collective basis, taking pride in their work and the farm, named to commemorate a 1961 attack on a Luanda prison that began the armed revolutionary struggle.

But in 1985, according to the farm's current director, Joao Marcos, production fell off and the workers began drifting away when the state was unable to pay their wages on time. That year, the MPLA's second party congress decided to break up state farms. Five of the original seven farms were turned over to the workers for cultivation on a profit-making basis and their production has soared, Marcos said.

In contrast, the remnants of the collective Fourth of February Farm are continuing to fail. Wages are still being paid late, and the workers' morale is low, according to Marcos, a private farmer who was hired by the state to try to salvage something from the experiment.

The Fourth of February Farm fiasco is one of the more dramatic illustrations of Angola's continuing turnaround from a strict Marxist economy to a more flexible, decentralized system, with greater emphasis on a mixed economy that includes private ownership and is motivated by traditional capitalist principles of profit incentive.

The change comes at a time when Angola, its economy in shambles in the midst of a 12-year civil war with U.S.-backed anticommunist rebels, is turning toward closer ties to the West and a more pragmatic outlook.

"Socialism is not a bible. The first person to modify socialism was Lenin, with his New Economic Policy" in the 1920s, said Lopo Fortunato Nascimento, commissar for the southern province of Huila, in an interview.

Nascimento, Angola's first prime minister in the transitional government and later minister of planning, said he was not afraid of losing the confidence of the people by admitting mistakes.

"They only lose confidence if you say, 'I never erred,' especially if reality shows you to have been wrong. We are strong enough to say that we have made mistakes here and there," Commissar Nascimento said.

The commissar, equivalent to a provincial governor, recalled that immediately after independence, Angola's revolutionary leaders had talks with officials of Algeria, which at the time had a large central organization for economic planning and controlling imports and exports. By 1980, he noted, Algeria had sharply modified its system.

"The problem is, we don't learn from the mistakes of others. We have to make them ourselves," Nascimento said. Under Nascimento's tutelage, Huila Province has emerged as a laboratory for Angola's social and economic change.

It was here that President Jose Eduardo dos Santos first talked about decentralization in a 1985 speech, and then gave the province $1 million in foreign currency to establish the infrastructure needed for supplying meat to other provinces.

The thrust of the reforms currently sweeping Angola is two-pronged. The first goal is establishment of a mixed economy and the second is decentralization of planning and implementation of the government's economic policy. Both are designed to rescue Angola from economic chaos that rivals that of any country in Africa.

As a result of its failed economic experiments, falling oil export revenue and the debilitating 12-year war with Jonas Savimbi's National Union for the Total Independence of Angola (UNITA), Angola has plummeted from self-sufficiency in food production to an urgent need to import 330,000 tons of grain -- about half of its output in 1974 -- to feed its 8.3 million population.

Once one of the world's largest coffee producers, Angola now is almost entirely dependent on revenue from the offshore oil wells it shares with American companies. Because of the 1985 slump in prices, petroleum revenue -- which accounts for more than 90 percent of the country's export proceeds -- has left Angola with half of the foreign exchange reserve it had two years ago.

The currency, the kwanza, has collapsed, leaving Angola virtually in a demonetarized state. With a black-market value about 1/25th that reflected in the official exchange rate against the dollar, the kwanza is shunned in many parts of the country. Barter arrangements or payment in hard currency are common.

Workers in many factories receive part of their wages in the goods they produce and then barter them for consumer items or sell them on the black market. Many Angolans simply refuse to work because the kwanzas they would receive are practically worthless.

In addition, the economy is gradually being drained by allocations of nearly half of the budget for defense and by cumulative damage from attacks by UNITA guerrillas and the South African Army on economic targets. The U.N. Development Program estimated these losses at $17.6 billion since 1975.

Overlaying this tableau of economic disarray is a severe deficit of technical and managerial manpower rooted in a 95 percent black illiteracy rate at the time of independence and the abrupt exodus of 300,000 Portuguese, who did everything from running factories to waiting on tables. This left an untrained indigenous population with the remnants of a feudal social system.

With such a vacuum of talent in 1975, and faced with abandoned Portuguese factories and farms, the revolutionary government turned to collectivism and strong central control, adopting a series of five-year economic plans based on the Soviet model.

With industrial capacity still half what it was at independence and agricultural production failing to meet expectations, the Marxist government in 1985 made a critical analysis of its mistakes and decided to overhaul its policies, Nascimento said.

"One of the mistakes was to give smaller importance to the peasant farmers than that which they should have had. We are determined to rectify that mistake, and the state will free itself from direct production and limit itself to technical assistance," the commissar added.

As an incentive to small farmers to produce more, Nascimento has launched a program to bring imported consumer goods to rural areas and establish stores in the areas of greatest production.

"We can't increase production if those who produce don't see the results of their efforts," Nascimento said, adding that the central government has allocated his province large amounts of foreign currency with which to buy imported consumer goods and has even authorized him to negotiate directly with foreign traders.

In a further decentralization move, Nascimento said, the central government has given him increased authority in budget planning, administration of economic policy and decision-making in exporting practices.

"These are decisions now in the hands of ministers, and we believe they could and should be passed to the provincial commissars. A country as undeveloped and large as Angola cannot be controlled by a central organization," Nascimento said, voicing what would have been considered heresy 12 years ago.

He added, "It is necessary that people at the provincial level have the authority as well as the competence to make decisions. If decisions are always made in Luanda, they won't always be in accordance with reality in the provinces. Decentralization will change attitudes. People will feel more responsible."

Nascimento recalled that when the central government recently decided to tackle the problem of milk shortages in Luanda, it at first considered setting up a collective farm with 200 cows. However in the end, he said, it decided to distribute the 200 cows among a number of small farmers and give them technical assistance in producing milk.

"In theory, a big milk factory should be better, but in practice I know it wouldn't work. The level of development at my disposal is not enough to manage a factory with 200 cows. I don't have the trained personnel to make it work. Under the conditions at my disposal, I need to give the cows to a number of farmers and help them make it work," Nascimento said.