COLUMN ONE : Chaos on Capitalist Frontier : Business pioneers in the Soviet Union are in hostile territory. But they endure mistrust, inefficiency, even danger to chase the dream of economic freedom.

For all the headaches of daily business life in this chaotic land, Roman Nicolaev didn’t feel especially put upon--until a mysterious bomb set his shop on fire.

On that day last April, Nicolaev came to see the true challenge of being a Russian entrepreneur: “You can’t call it business, what’s going on in the Soviet Union,” said the store manager, 39, whose neatly trimmed goatee and shaded wire-frame glasses give him a vaguely bohemian look. “We’re just moving toward a civilized level.”

The Wild West endures in 1991, thousands of miles to the east inside the Soviet Union, where the business frontier is a place of chaos, mistrust and, occasionally, even violence.

Telephone calls often go dead--or are interrupted by strange, confused voices--domestic flights commonly run 10 hours late or more, office space and basic supplies can be maddeningly scarce, laws are vague or nonexistent and confidence in the future is plunging. Wary bureaucrats, organized crime and a public that remains deeply suspicious of capitalism round out the hostile picture.

“They don’t even have checkbooks yet,” said Alex Lyudmirsky, a Soviet emigre in the Sherman Oaks area of Los Angeles who continues to do business in his homeland. “Most of them carry cash in bags.”

Yet for all the frustrations, a growing cadre of home-grown entrepreneurs has emerged to chase new opportunities and test the blurry boundaries of economic freedom. Their uncertain fate, some argue, has taken on poignant meaning in these tortured economic times, symbolizing no less than the fate of reform--and perhaps even the survival of their country’s shaky economy.

Today, their longstanding struggles are reaching a critical moment, as Russian Federation President Boris N. Yeltsin battles to cut back the bureaucracy and let market forces spread through the troubled nation.

“We believe only entrepreneurs may save Russia,” declares Mikhail V. Kouriatchev, acting chairman of the U.S.S.R. Chamber of Commerce and Industry.

They are people like Tatiana Pakina, 43, the cheerful, blond-haired manager of a beauty parlor whose skirmishes with the bureaucracy almost got her fired a few years ago. “Now we work, we earn money--and we’re free people,” she said, as haircutters snipped away in the next room of her salon. “And free is the key word.”

Vladimir A. Naroditski, 36, is another. The Moscow investor has teamed up with Lyudmirsky and others in a project to harvest sea urchins in Russia’s Far East and market them to sushi enthusiasts in Japan. “Millions of dollars” can be made in the coming years, he says of the quest. “Not one, not two, not even five.”

And they are stoic souls like Nicolai Krupnikov, a merchant whose clothing rack includes a pair of “Live” Strauss & Co. jeans made in Thailand, along with Turkish sweaters, running shoes, calculators and other items not easily found in state-owned shops. “Absolutely wild,” is how he describes the Soviet marketplace.

Wild, but also increasingly popular. In just the last few years, tens of thousands of enterprises with at least partial private control have cropped up throughout the Soviet Union, with many concentrated in Moscow and other major cities.

While the majority of entrepreneurs labor in modest shops, restaurants and service firms, at least a few may be striking it rich. This fledgling elite drives new cars and owns expensive Western clothes and electronic gadgetry, unlike the vast majority of Soviets. There even is a “young millionaire’s club”--ruble millionaires, that is--composed largely of commodity traders who are creating a private alternative to the state’s broken system of distribution.

“It’s not that difficult to earn a million rubles (more than $21,000) in this country,” maintains Victor M. Gurdin, 24, a broker at the private Alisa commodity exchange. “It’s more difficult to prove you earned it in a decent way.”

The vast majority of business people only fantasize about such difficulties, however. Just to survive in the primitive Soviet marketplace is their overarching concern. Krupnikov, for instance, is trying to open a second retail shop, but the carpenters he relied on are more than four months behind in installing counters and shelves.

The lack of contract law and agreed-on standards of business behavior, not to mention a shortage of building materials, leave him little choice but to wait.

“I get promises every day,” lamented the tired-looking merchant, 41, in an apartment over his store, which is just a 10-minute walk from the Russian Parliament.

At least he has space: The largest country on Earth has a decided lack of it. With laws protecting property rights unclear, and an undeveloped commercial real estate market, firms must scramble for property any way they can. Naroditski, the investor, got his office through a personal tip--the wife of a friend ran an enterprise that had unadvertised space to lease.

“All official ways (of getting space) are absolutely ineffective,” said the intense, bespectacled financier who worked for 12 years as a computer programmer before joining a software cooperative in 1989, where he got his first taste of private business. “People obtain commercial space through personal connections or very high bribes.”

A business person who manages to solve problems of space and furnishings still must deal with the question of what to sell. Obtaining products can be a Catch-22, because the Soviet Union has not developed a private wholesale network to replace the old system, in which bureaucrats governed the flow of products and supplies.

“I have to look abroad” for goods to offer, Krupnikov explained. “But to buy things abroad I have to have currency that no one sells (legally) in the Soviet Union.” His own solution is a “commercial secret,” but Krupnikov lets on that some vendors turn to smuggling, the black market or complex barter schemes in order to stock their shelves.

To be sure, Soviets with high-level connections, and foreigners with hard currency, can avoid some of the jagged edges of business life. Satellite communications, charter plane flights, modern hotel rooms (in a few cities) and other conveniences are often available for a price.

But for many of the small operators, such concerns are secondary: At its essence, Soviet business is about freedom of choice, freedom that has barely taken root in this long-oppressed society.

Tatiana Pakina’s beauty parlor, known as the Salon on Bronnaya, provides a typical story.

Until last year, the salon was under the thumb of a prodigious bureaucracy: The beauty shop belonged to an association of hairdressing services, which was part of a larger network of hairdressing associations, which fed into a citywide organization of beauty parlors--all of which fell under the control of a government ministry.

The salon was powerless to choose its products, set prices or determine the pay of employees. Instead, bureaucrats made basic choices, and they made clumsy ones, according to Pakina. “We were sent red dyes that weren’t in fashion, and we didn’t get what we really wanted--say, blonde, Scandinavian colors,” she recalls.

At various meetings in the late 1980s, Pakina antagonized her higher-ups by demanding more autonomy for her shop, especially to set pay. “We were fed up with feeding them,” the veteran haircutter says of the numerous bureaucrats who dictated how her salon should be run. And they were fed up with Pakina, announcing her firing on two occasions, although never following up on it.

In 1990, her salon was granted semi-independent status under a new economic reform affecting small enterprises. Today, Pakina and her 20 co-workers select supplies, although they often must pay steep retail prices. They set the hair-cutting fee, which remains competitive with state rates. And they still have managed to hike wages to levels higher than those of state-run beauty parlors.

As for unwanted old dyes, hair brushes, scissors and curlers--they’ve been tossed in the closet and forgotten. “Mr. Gorbachev early on helped us a lot,” Pakina said. “He gave us the spirit to struggle.”

The struggle isn’t over, even in a time when Yeltsin seeks to speed up economic reform and chop down the walls of bureaucracy. State agencies still own much of the equipment and land used by the newer firms and often have turned down requests to rent or sell it. While a curtailment of the bureaucracy appears imminent, the precise outcome isn’t certain.

The bricked-up windows behind Roman Nicolaev’s fire-damaged shop are a permanent reminder of the struggle.

When he launched the enterprise earlier this year, Nicolaev had a seemingly inoffensive vision: one-stop shopping for a whole range of household repairs, from broken VCRs to torn suitcases, malfunctioning umbrellas to worn pocketbooks. He dubbed the business Dolphin.

“The idea was to do everything for the customer,” the manager recalled recently, as some of his 11 employees hammered at renovations in a back room and a radio blared. “He could stay here and get some food and entertainment while we repair something.”

Someone--the police never decided who--didn’t like the idea. The blaze, which struck just as Dolphin was turning profitable, did 17,000 rubles worth of damage, a few hundred dollars at current exchange rates but a major setback for the unestablished repair shop, which had yet to start up the cafe.

Nicolaev suspects the bureaucracy itself: Entrenched officials lose influence as new-style firms are given power to make decisions formerly dictated by those same officials. The newer ventures further threaten the bureaucratic domain by drawing customers from state enterprises.

Nicolaev and others also speculate about a government role in the beating last May of a local politician who had championed entrepreneurs in their neighborhood.

“They lose their control and they lose their profits,” he said of the enemies of new enterprise.

Yet the bureaucrats’ loss becomes the gain of an emerging business class: Up to 7% of all Soviet employees now work in nontraditional enterprises, according to Moscow labor authorities, where they are learning about personal initiative and freedom of choice.

“People have gotten a taste of freedom,” said Nicolaev, who predicts that public support of business will grow. “They believe they can work for themselves and make a profit. That’s the major thing.”

But nobody said it would be easy. Lyudmirsky, now of Sherman Oaks, offers a unique perspective, based on his current effort to harvest sea urchins off Sakhalin Island in the Soviet Far East. The project is complicated by the slower pace of the Sakhalin participants, such as when they take weeks to answer requests for wet-suit measurements or explain where the Americans should deliver a new truck.

“I cannot figure it out,” he says at first, but then points out that Soviet society has never established a business culture, at least in the Western sense. Even now, basic bookkeeping and management skills are alien.

Despite the worries, Lyudmirsky, 41, hopes the project will help his adopted country establish a business presence on Sakhalin and bring jobs to his homeland. “I was born there. I want to help them get back on their feet.”

The lack of a business tradition also is evident inside Pakina’s salon, where the price of freedom is keeping the balance sheets, fending for supplies without steady suppliers and worrying about tax bills and other new-found concerns.

Few of capitalism’s newest practitioners are complaining, though. “We have problems we never imagined before,” Pakina said. “It’s very difficult to be an owner. But it’s much, much better.”