2 Gorbachev Aides Fear Shock to Soviet Economy

Two leading economic advisers to President Mikhail S. Gorbachev warned today that the Soviet leader’s plan for introducing a market economy would cause severe inflation and unemployment.

Abel Aganbegyan told Soviet lawmakers in a one-hour report that preliminary steps toward a market system have already created an “inflationary spiral,” particularly for prices of meat and dairy products.

He warned that hyper-inflation is likely despite measures in the Gorbachev plan designed to combat runaway prices, such as restricting the nation’s money supply and retaining state price controls on some items.

Aganbegyan and another economist, Oleg Bogomolov, spoke to a meeting of several committees of the Supreme Soviet legislature before a full legislative session Friday, when Gorbachev is to formally present and defend his plan.

Bogomolov said the Gorbachev plan fails to identify potential victims of the transformation. He also said it should have established that no Soviet citizen’s standard of living would be allowed to drop more than 25%.

Bogomolov predicted that the reforms are likely to halve the value of the ruble and force people to dip into their savings. Soviets have an estimated 500 billion rubles in savings because many necessities are subsidized by the state and few consumer goods are available.

Both economists said the success of the Gorbachev plan hinged on cooperation from the 15 Soviet republics. The largest, Russia, has already rejected it and renewed threats to implement its own more radical program.

Gorbachev’s main political rival, Russian President Boris N. Yeltsin, has called the plan a “catastrophe” and said it would fail within months.

But Aganbegyan said during a question-and-answer session with lawmakers that Yeltsin was criticizing Gorbachev’s politics rather than his economics.

“He made a political speech and would have spoken this way regardless of what we had proposed,” said Aganbegyan, who headed a 24-member commission that drafted one of the many economic reform plans considered by Gorbachev.

The commission was appointed after the government’s first proposals caused panic buying last spring and had to be scrapped.

Aganbegyan also said Yeltsin’s predictions could cause political instability resulting in millions of rubles of losses.

He did not specify how that might happen.

Gorbachev has set no timetable for his reforms but states other countries have achieved similar economic reforms within 18 months to two years.