No More ‘Shock Therapy,’ Gorbachev Tells Workers : Soviet Union: He visits an industrial city to calm fears about planned economic reforms.


Soviet President Mikhail S. Gorbachev, acknowledging that workers’ “patience is at its limit,” promised Wednesday that there will be no “shock therapy” to pull the country out of its economic crisis and that the people will be consulted before consumer prices are raised.

“Your cries of alarm are reaching us,” Gorbachev told angry factory workers in Sverdlovsk, a major industrial center in the Ural Mountains, where he arrived on a trip aimed at calming fears about planned economic reforms.

“Some people say that those at the top are planning to raise prices all in one go, to perform a ‘shock therapy,’ ” he said. “Don’t believe it.”

Gorbachev, who in the face of worker protests over probable price increases and unemployment is retreating on his earlier determination to push through bolder economic reforms at a faster pace, said that major changes will be deferred six to eight months and that there will be extensive discussions before any decisions are made.

“You have known for a long time what the government has planned,” he said, “but now we have reached a stage when we will begin to submit proposals to you, and before setting things in motion, we will discuss them with you. So don’t worry.”


Gorbachev’s comments, televised nationwide, confirmed his decision to refrain, at least temporarily, from plunging the state-managed Soviet economy quickly and forcefully into the maelstrom of market forces.

Some of the president’s closest advisers had touched off a near-panic with proposals that the Soviet Union follow Poland into an overnight, forced transition to a market economy, with resulting price increases, plant closures and widespread unemployment. Conservatives quickly mobilized resistance to moves that they fear would bring an end to socialism here.

Thus, what began as a debate over economic reforms, which have overwhelming popular support, quickly turned into a political struggle over the course of perestroika, as the program of reform is known.

The country is now in a precarious balance, Gorbachev acknowledged, because of the uncertainty over the reforms, the impact they will have on everyday life and how they will reshape the Soviet system.

He said that the Presidential Council had considered government proposals for this next stage of economic reforms--a broad sweep of measures that would put prices on the basis of supply and demand, privatize many state-owned enterprises, shift workers out of unprofitable industries. But, he said, it ordered substantial revisions because of the massive social impact of such changes. These will be reviewed about May 10.

Prime Minister Nikolai I. Ryzhkov, meeting with workers at a Moscow radio factory Wednesday, encountered complaints similar to those Gorbachev heard.

“We cannot launch a program that would make the standard of living decline. . . ,” he responded. " . . . We must avoid taking a road that would lead to serious instability in the economy. Before we move forward, we must look into every step that we are going to take.”

Ryzhkov said he hopes to be able to present a package of economic measures to the Supreme Soviet, the country’s legislature, in May, but added that their implementation and the transition to a “regulated market economy” will come only in 1991.

The legislation was originally scheduled to be introduced and voted upon this month, with the first laws coming into effect May 1 and most of the rest on July 1. Soviet officials said earlier this week that most of the legislation will not be considered before autumn, thus delaying the program until after the Communist Party holds a pivotal congress in July.

As he was pelted with questions and complaints, first by Sverdlovsk workers on the street and factory floor and then by plant officials and trade union representatives, Gorbachev was clearly embattled in defending his reforms from the people whom they were supposed to help.

“What we have in mind is a sharp turn . . . and we cannot allow ourselves to realize this all at once,” he said. “We shall do as we promised--we shall consult the people. . . .”

Speaking with workers at the giant Uralmash Integrated Works, a machine-building complex about 900 miles east of Moscow, Gorbachev frankly acknowledged the critical level of social discontent in the country, attributing it in part to the mounting economic problems but also to disappointment in his reform program.

“It can already be seen that people’s expectations are at their limit, and their patience is at its limit,” he said.

Uralmash, which was managed by Ryzhkov before he came to Moscow, employs 50,000 people and produces equipment ranging from excavators to oil-drilling rigs to home appliances. Although it is one of the country’s leading enterprises, with an output valued at more than $1 billion a year, its profits are so low that it has not been able to modernize and consequently finds itself less and less able to compete on world markets.

Gorbachev, addressing this problem, said he remains convinced that the Soviet economy, which is sinking deeper and deeper into a profound recession, must be transformed quickly through the introduction of the market forces of supply and demand, entrepreneurial management and new technology.

“This is not the market for the sake of a market, nor technology for the sake of technology, but changes in the situation for the better--and faster,” he said.

Sverdlovsk residents have demonstrated over living conditions several times in recent months. One protest, just before New Year’s Eve, was over the shortage of champagne and vodka, and it led to the ouster of the local Communist Party leader by party members and his replacement by a more progressive official.

Most of the complaints center around the shortages of food, including rationed items such as meat, butter and sugar. Uralmash workers asked Gorbachev why there were no televisions and no refrigerators in local stores, not even the consumer products that their factory produces.

And a television correspondent noted that although Sverdlovsk ranks second in the Russian Republic in terms of production, the city of 1.4 million is only 40th or 50th in terms of housing, medical care, education and cultural facilities.

“Everything that worries you worries me, too,” Gorbachev answered. “Many problems have accumulated. We must resolve them properly, all together. We are approaching that now, introducing structural changes and including every enterprise and every person in the economic reforms.”

“We, therefore, must act more wisely, and you here must work more wisely. Otherwise, nothing will come from all this.”

As a key center in the Soviet defense industry, Sverdlovsk is generally closed to foreigners, and correspondents were denied permission to accompany Gorbachev to the city.