Tighter Controls to Aid Soviet Economy Sought

Prime Minister Nikolai I. Ryzhkov, attempting to pull the Soviet Union out of its deepening economic crisis, asked the Soviet Congress on Wednesday to approve tough measures tightening government control of the economy for the next three years before gradually loosening them in a period of renewed reform and liberalization.

Ryzhkov said that only by taking firmer control of the economy and, in effect, postponing the development of “market socialism” could the government ensure increased supplies of consumer goods and reduce by at least three-fourths the $193-billion budget deficit that now consumes 10% of the gross national product.

Speaking to the Congress of People’s Deputies, the national assembly, Ryzhkov said that the “rigid directive measures” will allow the government to pump $106 billion in additional consumer goods into the market next year, nearly four times the average annual increase in recent years, and to expand the overall production of consumer goods by 38% over the next three years.

If the acute shortages of food and consumer goods are not solved quickly, Ryzhkov warned, the already widespread and explosive social discontent will grow and endanger perestroika , President Mikhail S. Gorbachev’s program of political and economic reforms.

Ryzhkov said the government also needs more time to work out the complex reforms--new wholesale prices, tax laws, investment plans, credit controls and other economic policies--that will be used to guide the country during a three-year transition from central planning and state management to a market-oriented mixed economy, starting in 1993.

The two-phase program, the result of intense debate and political in-fighting within and outside the government over the last six months, was immediately denounced by radical deputies as a return to the rigid system of state planning that brought the Soviet economy to the point of collapse.

“This economic program should be rejected as anti- perestroika ,” said Gavriil Popov, chief editor of the journal Economic Problems and a co-chairman of the Inter-Regional Group of Deputies. “In the first stage, we are told to accept just a few more administrative measures and then we will switch to the market mechanism, but that won’t do. Administrative measures can continue for years, even forever.

“If we are going to approve these measures, we need guarantees that they are all a bridge to the market economy. Without that, we won’t agree.”

But Ryzhkov had already rejected most of the radicals’ proposals for the transformation of the Soviet economy into one based largely on the market forces of supply and demand, with entrepreneurship and even private capital playing major roles.

He flatly ruled out the introduction of private ownership, including the ownership of land and capital equipment and the large-scale privatization of state enterprises.

And he deferred price reform, probably the most crucial element in any full transformation of the Soviet economy, until 1991 for wholesale prices and 1992 for retail prices.

The Soviet economy’s state-set prices waste enormous resources by charging too little for goods that are expensive to produce or scarce, but Ryzhkov observed that so far every plan for price reform has drawn opposition.

“Proposals for a free market will only bring us back to capitalism,” said Nursultan Nazarbaev, the Communist Party leader in the Central Asian republic of Kazakhstan, reflecting some of the conservative sentiment within the Congress. “This would lead to a fantastic growth of prices, and that would push us under.”

Even in 1995, at the end of the program’s second phase, consumer demand still would not shape Soviet decisions about design, production and distribution, under the future reforms outlined by Ryzhkov.

“Does this mean we abandon planning? Of course not,” he said of the planned transition. “We have to leave free to the market only that part of production that would not lead to unbalancing the economy.”

Kazimeras Antanavicius, a Lithuanian economist and deputy, sharply criticized Ryzhkov’s plan as backward-looking and based on reforms that have “failed in all socialist countries.” He called instead for the privatization of large portions of the Soviet economy and the immediate legalization of private ownership of enterprises and land.

Ryzhkov’s distinctly conservative line appeared to reflect the rising fear within the Soviet leadership that unless the shortages--which range from meat, potatoes and vegetables to soap, gasoline and cotton cloth--are quickly ended and consumer demand satisfied, the whole reform effort will be in serious jeopardy.

The government’s quandary, Ryzhkov asserted, is that it has no means, other than the old centralized planning and management system, to respond to the country’s economic crisis. “Market socialism” remains an ideal, but it lies years in the future.

Ryzhkov’s program did include some elements of the future system, including the creation of government bonds, higher interest rates and the long-term leasing of state-owned assets to cooperatives and individual entrepreneurs.

The prime minister also said that Moscow wants to overhaul the Council for Mutual Economic Assistance, the Soviet-led, 10-nation trading bloc known as Comecon, to make it “a united market of socialist countries,” although no longer based on integration of their planned economies, but rather on sales and purchases at international prices for convertible currencies.

“These two principles (adherence to world prices and payment in convertible currency) should eliminate disproportions and direct losses that are inflicted mainly on our country,” Yuri Maslyukov, chairman of the State Planning Commission, told a press conference.

The program also transfers some of the state planning and management away from the central government in Moscow to the country’s 15 constituent republics and even down to regional governments.

But this was far from enough to persuade the radical deputies that the government was not abandoning perestroika in the face of its economic problems.

“Five years ago, we said it was a choice between five-year plans and perestroika , and unfortunately, it turns out that the five-year plan has won,” Pavel Bunich, another radical economist, told newsmen after Ryzhkov’s speech.

Debate over the program promises to be stormy. Within an hour, more than 300 of the 2,250 deputies signed up to comment. The Inter-Regional Group of Deputies plans to put forward an alternative program. And even the Communist Party and government officials speaking Wednesday in favor of Ryzhkov’s proposals criticized some aspects of them.

So conservative was the program, in fact, that it left unclear the position of Deputy Premier Leonid I. Abalkin, who is overseeing the economic reforms and had urged a more delicately balanced but faster replacement of the present system with elements of the market economy.

Abalkin only last month had argued persuasively for a “radical-moderate” approach to the current crisis, a compromise that would have continued most of the government’s fundamental reforms while using the present “administrative command structure,” as the planning and management bureaucracy is called, to deal with the severe shortages of food and consumer goods.

The radical deputies and their allies hope they can push the Congress, the country’s highest body, to take up key pieces of economic legislation, including new laws on property and land ownership, to press for faster reforms, but they failed Tuesday to place these on the agenda of the current, 10-day winter session.

Popov contended that the government’s moves toward a market economy are vague and fragmented, dooming them from the start.

“Enterprises are drowning, not because they don’t know how to swim, but because the center has tied their hands,” he said.