Stock in Marx Plummets as Moscow Takes a Wide Turn Onto Wall Street

In as bold a break as the Kremlin’s reformers have yet made with classic Marxism, the Soviet government is authorizing the country’s enterprises to issue stock and sell bonds, Finance Minister Boris I. Gostev said Thursday.

The primary purpose of the sales will be to give workers a greater personal stake in the enterprises where they work, letting them benefit directly from increased profits, Gostev told the Supreme Soviet, the country’s Parliament.

“Working people would have a share of the enterprise and would become part owners of the enterprise,” he said, praising the increased productivity and profits from what until now had been a limited and controversial experiment. “This will help overcome the alienation of the working people and make them real masters of production.”

But companies can also sell shares to domestic investors, either individuals or other enterprises, to help raise capital and finance their expansion, Gostev added in a subsequent interview.

“This means that we shall have a stock market,” he said.

A decree by the Soviet Council of Ministers provides for two types of shares--those to be bought by employees of an enterprise, with dividends to be decided at a general meeting of the workers, and those to be sold to other enterprises, including the quickly proliferating, privately owned businesses and to banks, with the dividends to be determined by the enterprise’s management in relation to bank interest rates.

Bonds may also be issued with fixed or variable rates of interest in order to raise funds for capital investment.

All this is anathema in traditional socialist thinking because stocks and bonds, dividends and interest represent a return on invested capital, often defined as “unearned income” even in capitalist terms, rather than pay for actual work.

But the new Soviet decree envisions the new securities as an important element of the “socialist market” that economic reformers are attempting to establish here, and Soviet officials anticipate a small but quite real stock market will evolve as companies begin to sell shares.

Guidelines have been established to limit the value of the shares that a worker will be allowed to buy (not more than 20 times his monthly wage); the workers’ share in an enterprise (not more than 30%); and the role of outside investors in a company (an equal voice with other shareholders, whatever the relative size of their holdings).

“Shares must have some real collateral, and not simply represent whatever someone else is willing to bid,” Gostev commented in the interview. “And the level of this income should be rather close to the interest we are paying at the savings bank, say between 3% and 4%.”