The Soviet Union is hurtling toward capitalism, chaos or probably both. Boris Yeltsin, head of the Russian Republic, urges a "500-day" program to create a market economy. Soviet President Mikhail Gorbachev wants a popular vote on whether or not to allow private ownership of land. Either way, communism is doomed. It will be formally discarded or collapse of its own weight. And either way, the Soviet Union faces more economic turmoil.

Shortages of bread, meat, cigarettes, medical syringes and other consumer goods are already widespread. Continuing communism guarantees that things will get worse. But switching to a market economy won't mean instant bliss. "There will be massive unemployment due to bankruptcies of companies," predicts economist Steven Rosefielde of the University of North Carolina, a Soviet specialist. "There will be rapid price inflation. There will be a dramatic inegalitarian shift of income distribution."

If the Soviet Union survives the transition, it will be stronger. The trouble is that it may not survive. There could be massive unrest and strikes with dramatic political consequences. The fall of Gorbachev? The evolution of the Soviet Union into a confederation of 15 republics, similar to the European Community? Or the country's total disintegration? No one knows.

Soviet leaders must solve three economic problems:

Create a Sound Currency: The depreciating ruble destroys work effort, ensures scarcities and threatens -- if price controls are lifted -- massive inflation. Soviet consumers and businesses hold an estimated 200 billion to 500 billion in excess rubles as cash or savings accounts. This sum (equal to at least 20 percent of Soviet gross national product) represents the money people would spend if they could. Goods in stores vanish immediately. Why should people work hard if their money won't buy anything?

Convert Communism to a Market System: A market system spontaneously sets prices and matches buyers with sellers. In the Soviet system, bureaucrats have traditionally set prices and matched buyers and sellers. (Enterprises receive state production orders and supply allocations.) Scrapping communism would doom many enterprises that are now protected by artificial prices, captive customers and state subsidies.

Shift from Defense to Civilian Production: The country is starved for consumer goods. It produces only 1.3 million cars a year, reports the consulting firm PlanEcon. By contrast, annual U.S. auto sales are about 10 million. The Central Intelligence Agency puts Soviet defense spending at 15-17 percent of GNP, but Rosefielde estimates 25 percent. As a result, consumer spending accounts for half or less of GNP. (U.S. defense spending is about 6 percent of GNP and consumer spending 64 percent. Investment and other government spending accounts for most of the rest of GNP in both countries.)

The "500-day" plan embraced by Yeltsin would soak up excess rubles through sales of housing, land, shops and state enterprises. The big government budget deficit -- the main source of excess rubles -- would be reduced. Ministries would be shut and bureaucrats fired. Many economic powers would be transferred to the republics. Companies would be privatized. After July 1991, most enterprises could buy and sell as they pleased. Most price controls and subsidies would end, though some (most crucially, for meat and milk) would remain.

If some form of the "500-day" plan is adopted, as seems likely, it will face huge practical problems. Economist Marshall Goldman of Wellesley College doubts there will be enough buyers for shops, land and businesses to absorb excess rubles or ignite an entrepreneurial revival. "There are only 20,000 private farms in all of the Soviet Union, and 12,000 of them are in Georgia," he says. "People are afraid to set them up."

Converting military to civilian production is no cinch. "The equipment and machinery {for military production} don't lend themselves to other things," says Rosefielde. Defense cuts, he thinks, will initially lower Soviet GNP. The growing tensions among the Soviet republics will also cause inefficiencies, he argues. Each republic will try "to protect itself and become self-sufficient," and this will cause waste and duplication.

Economist Kathryn Zeimetz of the Agriculture Department offers a vivid example of the disruption that could be caused by ending price controls. Today's system tries to encourage grain farming in less fertile regions by paying higher prices for grain and providing cost breaks for farm equipment and fertilizer. The disappearance of these subsidies would doom many farms.

"Perestroika" promised to revive the Soviet economy, but Gorbachev found that piecemeal reform is impossible. The problem is that his reforms and rhetoric undermined communism without creating a replacement. In 1987, one reform tried to mimic the market by giving factory managers more freedom. They could sell output in excess of state quotas and had more leeway to set wages and prices. The result was higher prices and wages -- not higher production. Meanwhile, central planning was weakened.

Communism's coercive power is also gone. Gorbachev's political liberalization means that the system can no longer intimidate. "There's no means of enforcing labor discipline {in companies}," as Soviet economist Valery Puz puts it. Nor is there a graceful way of reconstructing communism. If surplus rubles aren't absorbed by the sale of state property -- that is, by permitting private property -- they will continue to create shortages and destroy work effort. The other ways of absorbing the rubles would be massive price increases or, in effect, confiscating the rubles through a "monetary reform." Either step could trigger unrest.

Nothing may work. All the daunting problems are compounded by the rising nationalism of the republics. No one knows what plan will be adopted or how it will be implemented. Soviet specialist John Hardt of the Congressional Research Service thinks that a good "market" program might cure the worst food and consumer shortages in a year. That's the best prognosis. The worst is an ongoing economic crisis that leads to a political breakdown with tragic, if unpredictable, side effects.