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REMAKING THE REVOLUTION : New Soviet System : Perestroika: Bold Shift in Economy

Remaking The Revolution. A Troubled Economy: Second in a Series. Thursday: What glasnost does and doesn't mean.

October 27, 1987|ROBERT GILLETTE | Times Staff Writer

Under the new Law on State Enterprises adopted in June, state orders for such necessities as tanks and turbines are to take up only part of a factory's capacity, leaving it free to manufacture goods of its own choice and design under contract to other enterprises or to the retail trade system. Buyers in turn can shop for price and quality, generating pressure on industry to seek innovation and quality.

In this way, it is hoped, consumers will regain precedence over producers.

Mandatory plan quotas are to be abolished and replaced with "suggested" guidelines from the ministries for "orienting" a factory in drawing up its own plans. The state will take its share of profits, leaving the factory to divide the rest to pay for capital investment, research and amenities for its workers such as housing.

In the hope of stimulating greater interest among workers in the fortunes of the workplace, factory directors are to be elected from a slate of candidates, who will still, however, be approved by higher authority.

Wages Tied to Performance

More important for workers, wages are to be tied to job performance--a new experience for many who take the view, as the popular Soviet maxim puts it, that "it's better to be paid 150 rubles and do nothing than to work for 1,000."

Along with autonomy comes the freedom to fail. The state will still grant loans to faltering enterprises, but now the loans will have to be paid back, with interest. Soviet leaders have promised not to permit unemployment, but it will be possible, on paper at least, for an enterprise to undergo bankruptcy and reorganization.

For all its departures from past practices, however, the new law is vague on a number of key points that reflect what one well-informed Soviet economist calls a "fierce struggle" between the proponents of radical reform and party conservatives seeking to preserve a greater degree of ministry influence over industry.

Reform proponents argue that these measures can work only if the grip of the ministries is broken and they are relegated to long-term strategic planning. The ministries' grip--and the independence of Soviet industry--in turn depends on the proportion of state orders to be imposed on factories, and the share of profits the state will extract.

Still Under Discussion

These two points were avoided in the June law and, according to Soviet officials, are still under discussion. Loginov, of the Institute of Economics, said the share of state orders probably will range, at least initially, from nearly 100% in defense and heavy machine-building plants to 20% to 30% in consumer industries, with an average share of 50%.

Should the ministries succeed in using the leverage of state orders to dictate management decisions, Loginov said, the point of the reforms will be lost. "If that happens," he said, "this will be the old (centralized) planning under a new name."

The Soviet Union, in contrast with China, has emphasized industry over agriculture, at least in the early phase of reforms. As a result, the outlines of Gorbachev's strategy for agrarian revival are less clear, and in some ways contradictory.

His initial step in 1985 was to consolidate six ministries into one superagency called Gosagroprom--a compression of "State Agro-Industry." Thousands of bureaucrats lost their jobs, but the new colossus is nevertheless coming under criticism for its ponderous inefficiency.

In an attempt to boost farm income, collective farms have been allowed to sell more of their produce on the open market, but relatively few have benefited so far, partly because they lack transportation--one reason that so much food rots in the fields.

Gorbachev's call for the revival of small-scale family farming on existing collective farms is intended to spur productivity by giving workers the same proprietary interest in state lands as they now display on the tiny private plots allotted to each family. Carefully tended--even as crops rot on adjacent state fields--these plots occupy only 3% of the arable land but produce 30% of the country's meat, milk and fresh vegetables.

The concept of "family brigades," however, has met a lukewarm reception so far. Several thousand families have signed contracts, usually for five years, to till small acreages using the equipment of their collective farms. But economists acknowledge that local officials often resist this new measure of autonomy for farmers, and the peasants themselves are hesitant about embracing a new and still vaguely defined relationship with the state.

To overcome this, a new law setting out the rights and obligations of family brigades is in preparation and is likely to be taken up by a special meeting of the party Central Committee next spring. According to Soviet officials, the law may permit lifetime leases of land, at least in areas of northern Russia with the poorest soils--the historic Russian heartland--where agriculture is in the direst straits.

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