Reform Is Slow : Entrepreneurs Find a Place in Soviet Union

Down at No. 6 Revolution Street here in Western Siberia’s biggest city, a little cafe called Southern Cooking is doing a lively business.

For 2 rubles, or $3.20 at the official exchange rate, manager Ruben Balian serves up a steaming pot of adzhapsandali, a potent, garlic-laced stew from his native Georgia in the Soviet south.

Three rubles brings what may be the most tender shashlik-- shish kebob--served by the most attentive waitresses in all of Siberia--although by the grim standards of food, service and sanitation prevailing among most Soviet restaurants, this is not such a difficult feat.

As a block-long line of customers waits for a seat at lunchtime, and taped Western rock music thumps in the background, the 39-year-old Balian waves his arms in despair. “What I need is competitors,” he says. “I tell other people, go on, go on, do what I did.”

What Balian did last May, with the help and encouragement of local authorities, was to establish the first semi-private, cooperative cafe in this city of 1.3 million people.

Formally, the 60-seat cafe is associated with and monitored by the city’s government-run system of restaurants. But the distinguishing feature of Southern Cooking, apart from good food, is that its manager is free to manage: Balian finds his own supplies of meat and produce, hires his own help and decides--democratically, he insists--how much the help is to be paid, in keeping with their performance.

According to Balian, his staff of nine people is only a fifth the size of the work force at the Snowflake, a comparably sized, state-run restaurant across town, while his workers earn an average of 2 1/2 times more.

Despite higher operating costs, business at his cafe was brisk enough to pay off a 10,000-ruble start-up loan in the first four months of operation.

“We work hard, six days a week, but we have a financial motivation to do well,” he explains. “In state restaurants, wages are set. You get paid no matter what. But here, they depend on our total income and how each worker performs. That’s the difference.”

If this sounds like the normal way to run a business, it is. But in the Soviet Union it represents a bold departure from customary practice, and a principal prong of Soviet leader Mikhail S. Gorbachev’s economic reforms.

For the first time since the 1920s, the government is trying, in a controlled and measured way, to stimulate private initiative and an entrepreneurial spirit. By encouraging the formation of small cooperatives likes Balian’s cafe, and even smaller, fully independent family run shops, the leadership aims to modernize and expand the nation’s primitive consumer services.

By the end of the current five-year plan in 1990, cooperatives like the Southern Cooking cafe are to account for 3% to 5% of the country’s basic consumer services.

This, it is hoped, will give an apathetic population a sense of rising living standards and new incentive to work harder. Similarly, on collective farms, Gorbachev is encouraging a return to small-scale family farming under long-term contracts, to give workers a feeling of responsibility for the land and the incentive to grow more.

Soviet officials call this a rediscovery of the “human factor” in economic life. Sensible as it seems, resuscitating the human factor and putting it to work after half a century of suppressing it turns out to be a major social challenge.

“There must be tens and hundreds of times more cooperatives,” Premier Nikolai Ryzhkov said in July, at a time when only 1,600 had organized themselves. Since then the numbers have roughly doubled, a slower pace than the government wants.

On an almost plaintive note, Ryzhkov said in a speech that “it is important to overcome psychological barriers, years of prejudice and negative attitudes toward cooperatives and individual forms of labor.”

Many provincial officials resent the autonomy of the new shops and family farm “brigades” as a threat to their own prerogatives, while many ordinary Russians regard them as bordering on the ideological heresies of private enterprise and profiteering.

Mindful, perhaps, of the Russian proverb that “the tallest sunflower gets cut down first,” relatively few would-be entrepreneurs have stood up so far and volunteered to organize cooperatives, open family shops or take on the risks of family farming.

As a result, Soviet authorities in more enlightened provincial areas like Novosibirsk have found it necessary to reach out and recruit volunteers in a kind of pump-priming operation to start the engines of entrepreneurship.

Balian, for instance, was a warehouse manager when local authorities came to him last spring and suggested that he organize a cooperative cafe. They arranged for the premises (a former state-run cafe) and new equipment, provided the loan and sliced through the inevitable red tape.

Since he opened his pioneering cafe last spring, only about a dozen similar cooperatives have organized themselves in Novosibirsk, and not all of them are in business yet.

In a similar spirit, Yuri F. Bugakov, the tough and independent chairman of the Bolshevik model collective farm, 50 miles outside Novosibirsk, reached out and tapped the Kozhukov brothers three years ago to show what can be done when a small family unit takes responsibility for farming its own tract of state land on contract.

Like Balian’s cafe, this was a departure from usual practice on Soviet farms, where no one is a farmer any more in the Western sense.

Some workers plow the fields and are “paid by the odometer,” as the saying goes, not by the quality of their work. Others come along and sow the seed. Others fertilize. Still others later on will reap the harvest. If it is bountiful, next year’s quotas are raised. If much of it spoils, the workers still get paid.

Although it too follows this practice, the Bolshevik farm is clearly no ordinary farm, as the full-color, bilingual brochures it hands out to visitors (printed by Intourist, the state travel agency) attest. Nor is chairman Bugakov an ordinary manager. He produces twice as much grain per acre as the regional average and entertains scores of delegations from other collective farms to show how he does it.

As Bugakov explains it, the secret of his success is simple: He knows how to run a farm and he doesn’t let anyone else--notably government ministries--meddle in his affairs. “Nobody interferes in my work,” he growls. “Sometimes they try, but they give up. You can’t frighten a Siberian.”

When he tapped the Kozhukov brothers to form a family farming “brigade” three years ago, it was to be a demonstration that would not fail. Still, they hesitated. Even if they succeeded, they feared, others might resent their success.

“The chairman told me that he would give us 1,000 hectares (2,470 acres) of land,” Vladimir Kozhukov, 36, recalled as the season’s first snow pelted down on muddy fields that stretched to the broad Siberian horizon. “He would give us the technology, some training. We would do all the work. He told us to think it over for a couple months.”

“At first I didn’t believe it. I talked it over with my brother, a combine operator, and our father, who’s a retired mechanic. They didn’t believe in the idea either. After all, we’re not speculators. But we decided to take a chance.”

The first season, in 1985, brought middling results. But last year, their grain yield shot up to 25 centners per hectare (2,230 pounds per acre) and this year it hit 32.3 centners. The five members of the family group--Vladimir, his brother Leonid, a cousin and two wives--made up only half the collective farm work force that formerly tilled the same land, but they had managed to grow 19% more per acre than the Bolshevik farm as a whole.

The demonstration appears to have been a smashing success. The average income of brigade members has soared to 600 rubles a month--three times the average national wage. The Kozhukovs have moved into a modern, four-family house on the farm, bought cars and motorcycles, done some traveling.

Last June, Gorbachev singled them out for praise in a speech to the party’s central committee. Earlier this month, Bugakov’s telephone was ringing off the hook with congratulations for the Order of Lenin and the title of Hero of Socialist Labor the Politburo had just bestowed on him.

Yet for all of this, there has been no stampede to emulate the Kozhukov family. Soviet officials say that no more than a few thousand family farming brigades have been organized in the country as a whole. On the Bolshevik farm, out of a working community of 850 people, only three other families have signed up.

“It’s true, we’re not alone any more,” Kozhukov says. “But some people are still doubtful about the whole thing.”

This hesitation has come as no surprise to the reformers, who say it may take years to convince people that individual initiative and earning a higher income than one’s neighbor earns are no longer to be condemned as bourgeois profiteering.

The editor of a Soviet economics journal puts the problem this way:

“After 50 years of ironing people flat, the surprising thing is not that we have so few people who want to do this sort of thing, but that anyone at all wants to do it.”

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