Market Economy Feared by Many Soviets : Restructuring: Conservatives and workers envision higher prices, unemployment--and even civil war.

President Mikhail S. Gorbachev’s push to establish “a full-blooded market” to resolve the Soviet Union’s economic crisis appears to be frightening many people even more than the country’s present crisis. To them, “market” means higher prices, unemployment and, ultimately, a renewed class struggle that could bring civil war.

“The people’s attachment to socialism goes very deep, and it is rooted not in ideology but in our history and our national character as Russians,” Alexei A. Sergeyev, a prominent conservative economist, argues. “If we change this, we put everything at risk, for the market will bring costs so high--social and political as well as economic costs--that the people will refuse to pay. . . .

“In a word, the people will rebel, just as they did in 1917 in the Bolshevik Revolution.”

That warning, made with increasing urgency as the Soviet leadership debates fundamental economic reforms, has been scoffed at by liberal economists, who have all but convinced Gorbachev that only the abandonment of state ownership and central planning will save the Soviet Union.

The country’s deepening crisis, the liberals maintain, stems from the collapse of the socialist system as it has been developed here over the past seven decades. And, they say, only the development of private enterprise and the reliance on the market forces of supply and demand can save the nation.

But the strong anti-market protests by Soviet trade unionists last week on May Day, the international workers’ holiday, dramatized the growing opposition to the development of a mixed economy by incorporating major elements of capitalism.

“Food Is Not a Luxury!” the May Day placard carried by one worker declared. Others beseeched: “Prices Under Control of the Unions,” “Real Pay for Real Work,” “We Want to Live, Not Just Exist!”

The leaders of the Soviet labor unions, long subservient to the Communist Party but now challenged by emerging independent unions, are taking the lead in criticizing plans for the radical transformation of the country’s economy.

The move, originally planned for early summer, was to begin with extensive price reforms, privatization of many state enterprises and reduction of their staffs and virtually unrestricted foreign investment. Protests have led to stretched-out implementation of the program but no changes in the basic strategy so far.

“The idea that we can simply turn to a market system for salvation is a gross delusion,” Sergeyev asserted in a recent interview. “We do not have enough capital to work with, we do not have enough entrepreneurs to manage what we do have and we do not have any of the sophisticated systems, including tax laws, banking procedures and market information, on which such a modern economy would depend.

“If we rely on private enterprise to become the motor of the Soviet economy, we will need not just one or two decades but a whole century to become competitive with Western economies.”

Such views have been so out of political fashion in recent years that Sergeyev, a professor of political economy at the Higher School of the Trade Union Movement in Moscow, and like-minded economists have been attacked as opposing Gorbachev’s whole reform program.

“We are condemned as conservatives, as dogmatists viewing life through the quotations of Marx, Engels, Lenin and even Stalin,” said Sergeyev, once an acknowledged member of the country’s economic Establishment who broke with it over what he calls the “anti-socialist nature” of the reforms it was recommending to Gorbachev. “In fact, we are the realists.

“We think that the economists advising the government now do not understand what great inflation their proposals will bring, what large-scale unemployment will mean in terms of social unrest, how the restoration of private ownership will affect the working class.”

Sergeyev’s predictions are dire: Riots over increased food prices, attacks on stores that have goods that consumers can no longer afford, seizure of factories by laid-off workers, assaults on the new capitalists and, ultimately, even uprisings against the government.

“Russians are like wet firewood,” he said. “We resist the flame, but once ignited we burn until only ashes are left.”

Of particular concern, Sergeyev said, should be the growing militancy of coal miners, oil-field workers and others in strategic industries and the country’s transportation services.

The conservatives do not dispute the need for fundamental reforms in the Soviet economy, including price reforms, the closure of unprofitable enterprises, the need for a mixed economy and many elements in the liberals’ program.

But they differ sharply in political philosophy, including their belief in socialism, and on such strategic issues as the relationship between central planning and market forces, between state ownership and private entrepreneurship.

Thus, the conservatives’ focus is on ways to correct today’s problems and make those ideas work. Among the major elements of their proposals, now under wide discussion here, are the following:

* Monetary reform that would require people to exchange their savings for new rubles on a ruble-for-ruble basis in an effort to reduce the size of the country’s huge black market.

Up to 10,000 or even 20,000 rubles--which is $16,000 to $32,000 at the official exchange rate, or as much as six years’ wages for the average urban worker--would be changed without question. Beyond that, the source of the money would have to be declared, its legitimacy proved and taxes paid.

Although as much as $240 billion might be squeezed out of the black market this way, Sergeyev said the main purpose “would be to show ordinary people that economic restructuring is carried out in their interest and not that of our underground millionaires.”

* Progressive income and inheritance taxes to limit the wealth that is being rapidly accumulated by entrepreneurs who run cooperative businesses, which often are really private companies with scores of employees.

“Our people cannot see how anyone is really worth more than 1,000 rubles a month ($1,600) in our society, and when someone earns 20,000 or even 50,000 a month, as it happens now, they see it as exploitation,” Sergeyev said.

* Higher pay for workers at state enterprises so that increases in output would be directly rewarded; at present, increased production usually leads to higher quotas and then to diminished bonuses.

Sergeyev and other conservatives envision a mixed Soviet economy developing from these and other measures. Strategic industries, such as energy production and machine tools, would remain state-owned and under a five-year plan; most light industries producing consumer goods might be state-owned or operated by cooperatives and controlled by an annual production plan, and service enterprises could be owned by cooperatives, families or individuals.

“To close the gap with the United States, Japan and West Germany, we need to concentrate our resources on strategic directions,” Sergeyev said. “No single enterprise, no industry, can do this alone. Central planning remains a must for us. We do need firms run by entrepreneurs with venture capital--but capitalism will not pull us out of this crisis.”