Market plan offers Soviets little but hope

October 14, 1990|By Scott Shane | Scott Shane,Scott Shane is chief of the Moscow Bureau of The Sun.

MOSCOW — Customer in meat shop: Saleswoman, can you slice 20 grams of ham for me?

Saleswoman: Certainly, Citizen, if you bring me the ham.

-- Moscow perestroika joke,

1985, 1986, 1987, 1988, 1989, 1990

Moscow--If the battle over the U.S. budget deficit can dominate domestic politics for months on end, frustrate and befuddle the public and temporarily shut down the government, then thank your lucky stars you don't live in the Soviet Union.

The Soviet Union, too, is running a big budget deficit, an economists here agree it has to be eliminated. But cutting the deficit is only a tiny fraction of the titanic task that stands before this country as it attempts to scrap the supercentralized, state-owned, state-planned, underequipped, wasteful economy built by Josef V. Stalin and replace it with a modern, efficient, competitive, consumer-oriented market economy.

Though second thoughts will be inevitable during the rock times ahead, the decision to attempt the transition has been made. That in itself is a feat most U.S. Sovietologists dismissed as impossible a few years ago.

In Moscow these days, Western economies are held up not t scorn, but for emulation. People take courses to become a "menedger" or to gain "no-khau." Novice entrepreneurs know that without "marketeenk," even a good product won't find customers. A New York Stock Exchange seminar draws more attention from the official media than a Communist Party Central Committee plenum.

Tomorrow, President Mikhail S. Gorbachev is expected t present to the Supreme Soviet a plan for the transition to a market economy cobbled together from two programs: the more radical one known as "500 Days" or "the Shatalin plan," after economist Stanislav S. Shatalin, who led the team that developed it; and the more cautious "Ryzhkov plan," named after its chief advocate, Prime Minister Nikolai I. Ryzhkov.

Both Soviet and Western media, taking cues from popular radica politicians, have sketched the standoff between the Shatalin and Ryzhkov plans as a battle of good guys against bad guys -- a choice between a plan that will work and a plan that won't.

True, Western economists generally favor the Shatalin plan True, the Russian Federation parliament, led by the charismatic Boris N. Yeltsin, has already vowed to implement the Shatalin plan no matter what. True, the growing reality that political power resides in the republics, not Moscow, is far better reflected in the Shatalin plan.

But the good plan-bad plan thinking threatens to create a serious misconception: that a parliamentary vote for the Shatalin plan, or some watered-down version of it presented by Mr. Gorbachev, will automatically set the Soviet Union on the road to market prosperity. Or that a dramatic improvement in living standards will arrive somewhere around Day 500 of the 500-day plan.

It won't, say experts of all nations and all political stripes wh have studied the Soviet economy. The Shatalin plan is a wish-list, an outline of what should be done with few details on how to do it.

"It's utopian to write down by day, week and month the course of the reform," Soviet economist Larisa Piyasheva told Komsomolskaya Pravda last week. "Economic life is infinitely complex. The unpredictability of demand, the unpredictability of consumer reactions, in the end the unpredictability of the political situation in the country -- all of it guarantees that a program of the '500 Days' type can never be carried out on schedule."

For Americans, a persuasive illustration is the budge deficit-reduction scheme in the Shatalin plan.

Right there on Page 75 of the 224-page paperbound first volum of the Shatalin plan is the bold declaration that the deficit will be cut to 5 billion rubles for the fourth quarter of this year -- from the current level of about 30 billion rubles per quarter, 120 billion rubles per year.

That's just for starters. "By March 1 [1991], it is planned t liquidate the deficit entirely," the plan says.

How? The plan lists a number of ways -- cutting defense 1 percent, cutting the KGB budget 20 percent, cutting capital investment 20 percent to 30 percent, cutting foreign aid 70 percent to 80 percent, cutting subsidies to unprofitable enterprises 30 percent to 50 percent.

But the percentages appear to be chosen virtually at random since no ruble figures are given for either the individual cuts or for their total.

Precisely what capital investment would be cut? The pla

doesn't say. Presumably not the oil industry -- critical for economic growth and hard-currency revenue -- which is already suffering declining production and is already threatened with a strike because investment has lagged.

Precisely which money-losing enterprises would lose thei subsidies? A colossal political battle to save the subsidies has already begun, with coal miners from the Ukraine arguing that the country can't survive without their heavily subsidized industry.

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