Reforming Soviet Economy: It's Moderates vs. Radicals

THE Soviet parliament and the parliaments of all the union republics must now choose between two clearly differing paths to a market economy. The government program is a self-described ``moderate-radical'' plan. The more radical ``500-day program'' is the product of a joint group under economist Stanislav Shatalin.

Here are the basic features:

Economic relations

Under the Shatalin plan, the republics are economically sovereign, but designate certain powers to the center, such as defense and price regulation. It also gives republics the exclusive right to possess, use, and dispose of all national wealth, including raw materials, in their territories.

The government plan divides powers similarly, but insists on supremacy of union law over republics and rejects the notion that union property become the property of republics.


The Shatalin plan creates central banks in the republics, which together form a Federal Reserve-modeled banking system, with the power to issue currency and regulate the monetary system. All state-owned banks will be transformed into commercial banks through the sale of stock.

The government plan maintains the existing state bank.


The Shatalin plan freezes the prices of 100 to 150 basic goods and services till the end of 1991 to protect consumers from inflation. By the end of 1991, 70 to 80 percent of all sales and purchases will be at market-determined prices, with controls remaining through 1992 on a small selection of items.

The government plans a one-time administrative rise in prices equal to 135 billion rubles, mainly to raise revenue. Price deregulation will not begin till 1992, with a target of freeing 75 to 80 percent of prices.


The Shatalin plan immediately privatizes small business, especially services, and offers some housing, land, and other state property for sale to citizens.

The government talks about ``de-statization,'' removing enterprises from direct control of the state, and at a slower pace. Privatization of land is limited.


The Shatalin plan eliminates all central industrial ministries as of Jan. 1, making all enterprises free entities.

The government would maintain the state planning and management structure and carry out their gradual reform.

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