Soviets Allow a Little Private Enterprise--Warily
For Yuri B., the idea of opening his own very small business--an auto repair shop--is very appealing.
For him and millions of others, running an individual enterprise within the state-controlled Soviet economy will become possible next spring under a government decree designed to provide a private alternative to the heavily criticized state-run consumer sector.
Yuri, a driver with a mechanical bent, said he could enlist his two sons in the auto repair business, since family members are permitted to work together under the new decree.
In keeping with the Soviet Constitution and Communist doctrine, however, the bosses of these firms will not be able to hire anyone else to work for them. Buying the labor of even one worker is thought of as an unacceptable capitalist practice and as incompatible with socialism, where the state, acting on behalf all citizens, is the only employer. In Marxist terms, selling labor is bound to lead to exploitation of workers.
There is a great interest in the new law among people who have a skill, are close to retirement and want to earn money and keep active once their working careers are over.
Because men normally retire here at 60 and women at 55, this potential pool of recruits for mini-businesses is very large.
But Yuri--and other prospective entrepreneurs in the Soviet Union--want to have the answers to a lot of questions before they hang out their shingles.
“Where are the supplies going to come from?” asked Yuri, who is familiar with the chronic shortage of spare parts that is the bane of private motorists’ existence.
Yuri, who asked that his last name not be used, is aware that auto parts now can be bought from black market operators, but he is unwilling to depend on this source if he starts his own firm.
The decree also raises more questions than it answers about such key issues as the rate of taxation, how local governments will approve each enterprise and the prices that customers can be charged.
Only time--and subsequent regulations to be issued before the starting date next May 1--will provide clues as to how the private firms will be regulated.
In large part, the new decree would seek to impose government control over the shadow economy, which already provides a large share of such services as household repairs, private taxis and even tutoring of children for college entrance examinations.
When Muscovites move into new apartments, for example, they often find that water taps are missing, that windows do not fit tightly and doors need to be hung. They often turn to handymen who just happen to be on the scene, well aware of the shortcomings in state construction and ready to put it right for the proper amount of rubles.
Women who want more fashionable clothes than they can find in the government stores often turn to seamstresses or tailors who work at home. About half of all shoe and boot repairs are done privately, too.
Auto repairs in state-run shops can be a nightmare, taking days instead of hours, and underground garages do a flourishing business for about 40% of the nation’s growing number of car owners.
The government newspaper Izvestia recently estimated that up to 20 million workers now earn more than $8 billion a year in unofficial self-employment. These lone operators provide about half of all consumer services in the cities and as much as 80% in the countryside, according to government statistics.
Under the new law, people over 18 years of age can offer to provide specified services if they hold down a regular state job or are students, housewives, disabled or retired persons.
Ideological Concerns
The new law appears to clear the way for private taxi services, which have been a subject of intense controversy in the past. Critics say it is ideologically bad for owners of private cars to pick up passengers for two or three rubles a ride because it allows the relatively well-off persons who own cars to get richer at the expense of those who cannot afford to buy them.
This decision, however, apparently comes down on the side of those passengers who eagerly seek private taxi service, especially at night when public taxis are extremely scarce. It may be, however, that car owners will be reluctant to register with the state because they would be compelled to give part of their take to the tax collector.
Ivan Gladky, chairman of the state committee for labor and social affairs, recently estimated that up to 2.3 million workers would apply for official approval of individual moneymaking efforts.
Won’t Get Rich
Gladky, however, said it is extremely unlikely that anyone will be able to make a fortune under the new decree. The maximum Soviet income tax rate--13%--will be applied to rubles earned in this way, he implied, with even higher rates if incomes skyrocket in the service sector.
Western analysts are keeping a close watch on the novel effort to deal with the obvious deficiencies in the consumer sector.
“Very interesting phenomenon,” said one diplomat who observed that Hungary had shown how individual enterprise could bring better results for consumers in a Communist state.
The law also encourages innovation, Western analysts said, because it says that private services not explicitly forbidden may be provided. Usually, Soviet laws forbid anything that is not specifically authorized.
But few Soviet consumers expect any dramatic changes in their way of life, and the government clearly wants to take a go-slow approach at first.
As Gladky said when the decree was adopted last month: “I can tell you clearly and unequivocally, this is not private enterprise.”
