Soviets Vote to Accelerate Market Reform

The Soviet legislature voted Wednesday to accelerate the development of a market economy based on the principles of supply and demand with limited government direction, thus ending the state ownership and central planning that for seven decades has been the basis of socialism here.

After agonized and often angry debate, the Supreme Soviet approved by wide margins eight parts of the government’s program for the difficult transition. It gave Prime Minister Nikolai I. Ryzhkov until Sept. 1 to prepare “a concrete program of interlinked measures, beginning this year, for the creation of the structure and mechanism of a regulated market economy.”

But a vote on the government’s controversial proposal to triple the price of bread, which constitutes a fifth of the average person’s diet, was postponed until today in order to win unhindered passage of the basic program.

“The most important thing is that we can now start to work,” Leonid I. Abalkin, the deputy prime minister overseeing the country’s economic reforms, said after the vote. “The government has a colossal amount of work to do now.”

The government’s plan calls for sweeping price reforms, starting in January, to begin the transformation of the Soviet economy from one in which the central government has attempted to orchestrate all economic activities down to the planting of potatoes and the manufacture of buttons, to one in which entrepreneurs try to meet market demands and where profits are the measure of efficiency.

Described as a series of “conceptions” when they were introduced last month by Ryzhkov, the program ends the monopoly that many state enterprises now enjoy by introducing competition in virtually all industries.

It calls for the establishment of a banking and credit system resembling that in the capitalist West and foresees the bankruptcy of uncompetitive enterprises. It also envisions massive shifts of resources out of unprofitable undertakings and anticipates that millions of Soviet workers will have to be retrained for other jobs.

Under the plan, the government will gradually give up its role as owner and manager of all enterprises, planner and financier of all economic undertakings and producer and frequently the buyer of most goods.

It plans to sell off or lease 40% of state property within two years and 60% by the end of three years, in a move that will shift tens of thousands of factories, stores, farms and services into the market system, officials said Wednesday.

The program will require extensive legislative action, and the Supreme Soviet in its vote Wednesday authorized President Mikhail S. Gorbachev to speed its introduction through executive decrees, starting July 1.

Introducing amendments proposed by legislative commissions that had reviewed the program, Deputy Alexei Boiko urged the other lawmakers to approve the package as “this government’s last chance, its very last.”

“We have to act quickly,” Boiko said. “Time will not wait. The situation in our economy gets worse every day.”

Ryzhkov, speaking before the vote was taken, said that the creation of a market economy might appear to end socialism as it was developed for decades in the Soviet Union, but it is the only way to revive the country’s rapidly declining economy.

“I am convinced that this is the road that we must take, whether it is a Ryzhkov government or some other that does it,” the prime minister said.

The program had aroused strong emotions when first introduced, largely because it would double food prices, increase the price of most consumer products, raise rents and lead to a sharp increase in unemployment.

Members of the Supreme Soviet attacked the program for five days, and the criticism continued when legislative commissions reviewed it for a further two weeks.

The debate grew so sharp that there was speculation that Ryzhkov might be forced to resign and that Gorbachev would appoint a non-Communist prime minister in his place. There was also a proposal, quickly killed by Gorbachev, that the whole package be submitted to voters for approval in a nationwide referendum.

Out of the debate, however, came a series of compromises calling for the careful introduction of the expected higher retail prices to minimize the impact on consumers, as well as a process of “consultations” intended to win support for the changes.

The lawmakers did order the government to reduce its large budget deficit through cuts in capital spending, defense and the bureaucracy and by the sale of surplus materials.

Ryzhkov said that he supports the changes but added that the government will have trouble meeting the Sept. 1 deadline the lawmakers set for detailed plans.

In a final compromise, it was also agreed to separate the vote on higher bread prices--an issue that continues to arouse deep emotions here--from consideration of the whole program, and then to phase in the new prices after workers have been compensated for the increases.

“The grain situation is now critical,” Yuri Maslyukov, the chairman of the State Planning Commission, told the deputies as he defended the proposed price increase. “Around 40% of this country’s grain is imported. That means in effect that more than a third of each loaf is paid for with hard currency. Our prices are artificially low.”

But deputies asserted angrily that most families, already finding it difficult to find food they can afford, need the customary subsidy. An ordinary, 1-kilogram (2.2 pounds) loaf of bread costs the equivalent of 37 cents, the same as it did 30 years ago.

“Some people are so poor that bread is their main food!” one deputy shouted at Maslyukov. “Name me a single country where the government has tripled the price of bread so quickly.”

“I will,” Maslyukov bellowed back, “when you name me one country where bread prices have not risen since 1962.”

Other deputies piled on their criticism as the tumultuous debate raged for most of the afternoon.

“You go on about the people wasting bread when the state is really the biggest waster,” one deputy declared. “Over 30% of grain is lost because of bad harvest and storage.”

In the minds of the lawmakers were the frightening scenes of panic buying in Moscow, Leningrad, Kiev and scores of smaller cities after Ryzhkov introduced the program May 24.

But the lawmakers went no further Wednesday, expending all their energy on the issue of bread prices while approving more fundamental changes by large margins and with little further debate.

Radicals had initially argued that Ryzhkov’s original plan did not go far enough in dismantling the old system of central controls, and conservatives had accused him of abandoning the socialist ideals for which so many here had fought.

Gorbachev, responding to the conservatives, contended at a meeting of regional Communist Party leaders here last weekend that the introduction of a market economy is not, in fact, a retreat from the ideals of the 1917 Bolshevik Revolution.

“I am convinced of one thing--there is no return to the command system in the economy, nor can there be,” Gorbachev declared, making clear that, whatever the present difficulties, the Soviet Union cannot go back to its old economic system.