Soviets Retreat on Reform, OK Price Controls

Soviet lawmakers, concerned about the growing public anger over rising prices, Monday approved an emergency package of price controls and production quotas, reversing key reforms intended to move the country to a market economy.

Deputy Prime Minister Leonid I. Abalkin, the official in charge of the economic reforms, justified the move as a temporary measure to stabilize the consumer market, where soaring prices and empty shelves are rapidly turning people against perestroika.

The government’s retreat on such a key aspect of its economic reform, along with its inability to put together a full package of reform legislation for adoption this year, dramatizes the difficulty that President Mikhail S. Gorbachev is facing in moving perestroika from political to economic restructuring.

Gorbachev, speaking to a student congress here last week, said again that the fate of perestroika , as his reform program is known, will be decided in the next 12 months. And Abalkin told reporters that the next six to nine months will be crucial as the Communist Party prepares for a policy-setting congress.

“We need to buy time,” said another economist who is outside the government but who has advised Gorbachev recently. “If that means price controls and production quotas, so be it. Everything is at stake--absolutely everything. If we can’t stock those stores and drive prices down, then we can forget about not only economic reform but also democracy. . . .

“The people are losing patience. They are not just asking ‘Why are things not better?’ but they are asking, now demanding, ‘Why are things getting worse?’ People say, increasingly so and worryingly so, ‘Do something, do something, do something!’ ”

Under the emergency legislation brought up Monday by Abalkin, Soviet enterprises producing foodstuffs, basic consumer goods and many types of semi-finished goods will lose their right to set their own prices and to draw up their own production plans.

The law, which goes into effect immediately and continues through 1990, was approved with little debate, 371 to 35, by the Supreme Soviet, the country’s Parliament.

But the lawmakers rejected without a vote a far more radical proposal put forward by Andrei D. Sakharov, the human rights campaigner, to introduce severe, nationwide rationing of all basic items at fixed prices. Various cities and regions now ration scarce commodities to ensure that their residents are adequately supplied.

The approved legislation also restricts the export of electrical appliances, fish and other marine products, foodstuffs and furs in order to ensure larger supplies for the domestic market.

In practice, the legislation restores the power of the government to require state enterprises to produce specified quantities of certain products at fixed prices and profit margins for sale through state stores, again at fixed prices.

The enterprises will be required once again to comply with government orders that determine what they manufacture, what prices they sell at, what raw materials they receive, how many workers they employ and what wages they pay them, and virtually every other element of their operation, down to how many minutes a seamstress will work on a piece of clothing.

Stepan A. Shalayev, chairman of the Central Council of Trade Unions, said the government’s first goal must be to “saturate the market” with goods that are now in short supply through rigid production quotas. Reforms, he implied, must not come at the expense of the country’s worker-consumers.

Many enterprises, which were authorized in the first phases of the reforms to draw up their own production plans and set their prices according to the principles of supply and demand, had stopped producing inexpensive goods--though many of them are basic necessities. Instead, they had switched to higher-priced, more profitable products and even to export sales.

Describing the rise in prices and the shortage of goods as “one of the most acute subjects in our life,” Abalkin said Monday that the government felt “an absolute need to remove the sharp tension from society,” particularly after earlier attempts to stabilize the economy failed.

Abalkin, outlining a six-year program of integrated, phased reforms, acknowledged last week that a recent public opinion survey conducted for the government had shown that 54% of those questioned rated their first priority as “introduction of strict discipline and order.” At the same time, 40% said they wanted to tighten, not relax, price controls.

Abalkin long has been a critic of the old government and Communist Party bureaucracy and of the commands through which it tried to run the Soviet economy. He justified Monday’s measures as the only way to pull the country out of its deepening crisis--which, by reducing living standards, has begun to erode popular confidence in perestroika and endanger the whole reform process.

“The adoption of this resolution is intended to show the ability of the government and the Supreme Soviet to act resolutely and energetically,” Abalkin said.

The intent of the legislation, he said, is to “stop this negative economic process, halt the decline in living standards and protect those with low incomes” until further reform measures--tax laws, anti-monopoly legislation and monetary controls--are in place to stimulate production and allow market forces to operate.

The government introduced a major legislative package at the start of the Supreme Soviet’s current session in September, but none of it has been adopted so far.

This has allowed certain segments of the economy to surge ahead and has held others back, with the consumer forced to pay increasing prices for diminishing supplies of daily necessities. Contention has sharpened among radicals, conservatives and those who support what Abalkin calls the “progressive center.”

On Monday, radical deputies persuaded the Supreme Soviet to reject the government’s proposal for devolving some economic decision-making from Moscow to the Soviet Union’s 15 constituent republics, on the grounds that it did not go far enough.

Abalkin praised the measures as “an enormous step forward, one that would have been difficult to imagine two years ago.” But radicals, led by deputies from the three Baltic republics, argued that it did not go far enough.

The Supreme Soviet voted, 211 to 149, to require the government to draw up a new version of the bill in conjunction with parliamentary committees.

“The vote shows that not just the Baltic deputies but those from Russia, too, are against this excessive centralization,” Kazimira-Danute Prunskiene, a Lithuanian deputy and economic adviser to the government, said. “Many deputies from Russia also want sovereignty and the right to run their own economy.”