Premier Asks OK for Soviet Cooperatives

Premier Nikolai I. Ryzhkov called Tuesday for legislation that will allow Soviet citizens to break out of the rigid, state-controlled Soviet economy and form private, profit-making cooperatives that would spur economic development.

Ryzhkov, addressing the spring session of the Supreme Soviet, the Parliament, described the cooperatives, previously forbidden as a return to private ownership and capitalism, as a major element in the Soviet leadership’s ambitious program of political and economic reforms known as perestroika .

Once approved, the legislation will give Soviet citizens their first real chance in more than 50 years to work for themselves rather than the state, and the government hopes that the lure of being one’s own boss and taking home the profits will encourage an entrepreneurial resurgence in the long-stagnant economy.

But while the leadership pressed for economic reforms, it again demonstrated that it did not want the pace to go too fast. The Parliament unanimously voted to oust Boris N. Yeltsin from the assembly in the latest setback for the staunch proponent of reform. Yeltsin, 57, had maintained that reforms should be pushed faster than envisioned by Soviet leader Mikhail S. Gorbachev.

Yeltsin was dismissed last year as Communist Party chief in Moscow in a confrontation with Gorbachev over the pace of reform, and also lost his post as an alternate, or non-voting, member of the ruling Politburo. The motion to remove Yeltsin said that he did not have time to serve on the Parliament’s Presidium, or administrative body, because of his duties as a deputy minister dealing with construction.

Law’s ‘Enormous Significance’

In calling for adoption of the law on cooperatives, Ryzhkov declared: “The significance of draft law for the present and future of our society is enormous. In a short period of time, cooperatives can solve the most acute problems of perestroika .”

The government hopes that the cooperatives will play a major role in making and selling consumer goods, particularly those in short supply, so that the average citizen will feel that the reform program is improving his life.

The Soviet leadership also believes that such market-oriented enterprises will force state-owned companies, long impervious to reform, to compete for business rather than face closure, and that this competition will help revive the stagnant economy.

More than 20,000 cooperatives have been formed, including 6,000 in the past three months in anticipation of the new legislation. Their activities range from manufacturing clothing to running restaurants, from building houses to operating trucking companies. The workers put up the initial capital, have a voice in running the business, set their own wages, usually at two to three times those in state enterprises, and then divide the profits.

Critics of the legislation have warned that the proposed tax rate--90% for the most profitable cooperatives--will discourage many entrepreneurs, but Ryzhkov said that, in practice, the new ventures will be taxed at levels low enough to provide incentives.

Equal Standing

The legislation will give cooperatives equal legal standing with state enterprises, so that they can buy raw materials, rent commercial or industrial space and get bank loans.

The law, expected to be approved this week, is also intended to protect the cooperatives from local officials who view them as a step back from socialism--and a threat to state enterprises under their direction.

“It is very important that the cooperative sector, along with the state sector of the socialist economy, become really equal and active partners in perestroika , “ Ryzhkov said.

The legislation will also launch an agricultural reform meant to reverse some aspects of the collectivization of agriculture carried out under Josef Stalin in the 1930s.

Expansion of Family Farming

The trend toward family farming, under which individual farmers and their families take over collectively owned land on a contract basis, would be expanded. Farmers, working on a cooperative basis, would be allowed to keep more of their profits and sell more of their produce on the open market, and they would be freed increasingly from state controls.