MOSCOW — President Mikhail S. Gorbachev on Tuesday retreated sharply from a radical program to transform the Soviet Union's state-owned, centrally planned economy into a new system based on market forces and private entrepreneurship.
Gorbachev, apparently fearing social unrest from resulting inflation and unemployment, instead proposed a carefully graduated transition that would slowly ease central controls over the economy, retain many government subsidies for inefficient firms and privatize much smaller segments of industry and commerce.
Although Gorbachev maintains his commitment to the eventual development of a market economy, he would delay its achievement by a number of years and keep it within the framework of what he calls the Soviet people's "socialist choice."
Put to Soviet lawmakers Tuesday as the consolidation of seven earlier reform programs, Gorbachev's proposal brought immediate protests from those who had favored the far more radical "500-Day Plan," with its forced march to the free market.
Boris N. Yeltsin, president of the Russian Federation, the largest Soviet republic, accused Gorbachev of reneging on a commitment to the radical plan, and the Gorbachev proposal appeared to have rekindled the potentially explosive dispute between the country's two most powerful politicians over the course of its reforms.
Yeltsin, his voice thundering with anger, called upon the Russian legislature to consider "breaking out" of the program, even to the point of dividing the country's armed forces. This would amount to an economic declaration of independence if Gorbachev did not back down and accept a coalition in the central government.
Gorbachev's proposal is little more than "another attempt to preserve the administrative system so odious to the people," Yeltsin said, calling it an effort to "sabotage" the Russian Federation's own 500-Day Plan, which is to start Nov. 1.
"Realization of this new program would lead to a catastrophe," Yeltsin said, predicting that, if attempted, the effort would collapse within six months as unworkable.
Gorbachev, however, clearly feared that plunging the disintegrating Soviet economy into the melee of the market would tear it to shreds--and with it the social fabric of the country.
"The market, while providing for high economic efficiency, still needs state and political regulation--first of all, to prevent such negative developments as inflation, unemployment, excessive differences in (income), instability of production and erratic patterns of development in different regions," he said at the outset of his proposal.
Although Gorbachev had declared last month that he favored the 500-Day Plan drafted by Stanislav S. Shatalin, a member of his Presidential Council, and other radical economists, he retained only elements of it in the program he submitted to the Supreme Soviet, the country's legislature.
While declaring that "the historical decision to adopt the market system has been made," Gorbachev accepted the argument of Prime Minister Nikolai I. Ryzhkov that the transition has to be planned and managed--by the same bureaucracy that brought the economy to the point where the Soviet Union cannot feed, clothe or house its 290 million people.
And as Shatalin's goals for 500 days--a time frame that he believed long enough to achieve real change but short enough to give people the hope needed to withstand the accompanying pain--Gorbachev extends them far, almost indefinitely, into the future.
What frightened Gorbachev, it is clear from the preamble to the reform plan, its scaled-down goals and its stretched-out timetable, was the prospect of sharp increases in consumer prices, widespread unemployment, the bankruptcy of tens of thousands of unprofitable state-owned enterprises and farms and the sheer uncertainty of what would happen.
Radical economists have argued persuasively to Gorbachev in recent months about the necessity of moving swiftly into a market economy to get through the painful part and restore popular confidence in the reforms. But conservatives in the Communist Party's policy-making Central Committee strongly opposed such an approach at the committee's meeting in Moscow last week.
Working late into the night over the past week at his suburban \o7 dacha \f7 west of Moscow, Gorbachev has consequently fashioned a program that appears to be a compromise, taking Shatalin's general scheme but Ryzhkov's specifics.
The reality, radicals claimed Tuesday, was an almost total victory for Ryzhkov and the \o7 apparat, \f7 whose language of "administer," "assign," "control," "instruct," "regulate," "allocate" and "lead" permeates a document meant to develop a market economy.
"We can easily see the desire to concentrate economic power at the center--nothing has changed," said Ruslan Khasbulatov, Yeltsin's deputy. "But this concentration is in the hands of a weak and inefficient government, and it will not bring positive results."
