Gorbachev Seeks Shortcut to Market Economy : Reform: It’s investment capital that Moscow wants most, along with Western know-how.

To the West, Soviet President Mikhail S. Gorbachev will be seeking tens of billions of dollars--maybe $100 billion, maybe $200 billion all told--to revamp his country’s collapsing economy when he meets this week with leaders of the Group of Seven in London.

To his increasingly angry critics at home, the Soviet president will be selling off the country’s wealth, mortgaging its natural resources for Western credits and, in the process, abandoning the ideals of socialism for crass capitalism.

In his own mind, however, Gorbachev will neither be looking for huge handouts nor selling the family farm--but seeking a shortcut to transform the Soviet economy so that market forces and entrepreneurship replace central planning and state ownership.

Of all the strategies that Gorbachev has used over the last six years to promote political and economic reform, few have been as complex or controversial as this appeal to the West for what he simply calls “economic cooperation.”

The rationale, in fact, is straightforward: to force the Soviet economy, still the world’s second largest by most measures, to work according to the market forces of supply and demand, it must be integrated into the world economy.

After decades of state-dictated prices and subsidies that now consume a huge proportion of the country’s national income, Soviet enterprises must be able to buy and sell at world prices to understand their own costs and set their own prices.

And Gorbachev will be seeking capital from abroad because his country has very little money with which to modernize such key industries as oil, gas, coal, transportation and information technology. As one of his aides put it lightly, “A country without capital can hardly go capitalist.”

Although direct assistance would certainly be accepted and long-term repayable credits would be useful, investment capital is what Moscow wants most. Why? Because with it would come the technology, know-how, skilled management and profit incentive that the country needs as much as the money.

With foreign investment and the resulting competition, the privatization of state-owned enterprises will go much faster, and with that will come an end to the crippling state monopolies. The government’s myriad economic organizations would quickly fall under the pressure of competition, according to the calculations of reform economists.

“Everyone sees the way out of today’s situation . . . in an accelerated--I would not use the word forced-- transition period through the introduction of the market mechanism,” Vladimir I. Shcherbakov, deputy prime minister for economic reform, said last week. “That is the basis of it all.”

The reasoning is again straightforward: The decades of the country’s long economic isolation had served to preserve and strengthen its Stalinist system, politically as well as economically, and the fastest, surest way to break that system down is to integrate the country into the world economy.

Market forces cannot be legislated into existence, the Soviet leadership has found, and their development could take as long as 10 or 12 years, if the country moves through its reform program stage by stage, relying on its own resources and maintaining political stability.

“This is more than our losing money on every ton of coal that we produce because the domestic price we set for coal is absurdly low,” explained Pavel Bunich, a leading reform economist. “This is a matter of changing the system that sets the price, that keeps it there and resists all change. . . .

“Yes, we can change by ourselves, as many in the West insist that we do, but that will take years and years and years. We are too big an economy, too powerful a military power and really too fractious a country to go into ‘shock therapy’ as Poland did. So, we are looking for help from the West.”

What Gorbachev will be seeking under the rubric of “economic cooperation” will be equal access to Western markets for Soviet products, an end to the restrictions on the Western technology Moscow may import, advice on how to manage a modern free-market economy and investment capital.

Gorbachev said he hopes that, as he lays out the Soviet Union’s plans to the Group of Seven for further political and economic reforms, including a detailed program for the next year, he will persuade the other leaders that his country’s rapid but peaceful transformation is very much in the world’s interest. At the same time, increased turmoil here and the Soviet Union’s possible disintegration would endanger the stability Europe is just now achieving.

“We are talking about a sufficiently convincing disclosure to the West of the reciprocal benefits and advantages they would be able to gain as a result of our entering the worldwide market, as a result of the fact that such an immense country becomes a normal, civilized partner,” Deputy Foreign Minister Ernest Y. Obminsky explained. “If we are talking about philanthropic works, they would not respond--they would turn us down. It’s not philanthropy, it’s not aid for someone who has lost his way and doesn’t know how to get back on track.”

This is the basis of the “Grand Bargain” that Soviet economists worked out in May with American advisers--the swift transition of the Soviet Union into a democratic society with a free-market economy underwritten by Western assistance of $15 billion to $20 billion annually for five years.

But the plan that Gorbachev will present to the Group of Seven has evolved far beyond that, incorporating the government’s program to halt the Soviet Union’s economic decline and adjusted to reflect the political realities here and internationally.

“There will be no manna from heaven,” Yevgeny M. Primakov, Gorbachev’s principal foreign policy adviser, warned his countrymen as Britain, Japan and the United States responded negatively to the proposed “Grand Bargain.”

Criticism has come from Soviet conservatives as well, sharpening the national debate again over economic reforms.

“We should clearly realize the main goal of the United States is to see political and economic changes in the Soviet Union that will be advantageous to the West,” a commentator in the conservative Communist Party newspaper Sovetskaya Rossiya warned.