MOSCOW, FEB. 3 -- Cafe 44, a peaceful new restaurant on the Leningrad highway, stages subdued jazz at night and serves a mean bowl of borsch. It is also a scene of revolution.
Cafe 44 and hundreds of other cooperative ventures that have been opening steadily here in the past year are a focus of Mikhail Gorbachev's attempt to inject a bit of free-market vitality into a moribund socialist economy. Not since the New Economic Policy of the 1920s, when Vladimir Lenin tried to rebuild an economy ruined by civil war, has the Soviet regime allowed -- much less encouraged -- so much individual initiative.
The Soviet entrepreneurs of the 1920s would have been proud of Cafe 44. It resembles the ordinary Soviet restaurant only insofar as it has a floor and tables.
Nowhere to be found are the usual elements of a meal at a state-run establishment: the glaring disco lights, the ear-splitting band playing cheesy versions of western rock, the waiters chatting away in the corner as they blithely ignore their customers. All of that is gone.
Moreover, Cafe 44's 29 partners operate in a mixed economic framework. With shareholders, hired labor and some independence from the state's economic planners, the new Soviet cooperatives bear a resemblance to small western corporations.
"You could call it a socialist operation or you could call it a capitalist operation. What do you call it? Nobody knows," says Cafe 44's director, Mark Portnoy. "Call it what you like."
Such cooperative ventures have often found that even a limited experience in the market can be cruel. Many cooperatives have already come and gone, victims of poor planning or woeful attempts to find the necessary supplies.
Portnoy started out with "great ambitions" and a romantic idea of running a place that would be for modern Moscow intelligentsia what Les Deux Magots was for Parisian bohemians. In a city that all but shuts down at midnight, Portnoy wanted to run a 24-hour cafe, "not just a place to eat."
Since its opening Dec. 29, there have been evenings of poetry, jazz, drama and art shows at Cafe 44, but when drunks and drug addicts started making trouble late at night Portnoy began closing the door at 11 p.m.
"But in general I'm not worried. We'll succeed," Portnoy said.
Then he knocked on wood.
A year ago the ruling Politburo endorsed a plan to encourage cooperative ventures. The idea was to expand goods and services, to make a few state-run operations feel at least a spark of competition and to legalize some businesses that were part of the huge black-market economy.
The best known of these ventures are Moscow's 70 cooperative restaurants and cafes. So far the state has not permitted cooperative ventures for large-scale businesses and heavily controlled enterprises such as publishing. Last spring a group of prominent writers, including novelists Fazil Iskander and Bulat Okhudzhava, tried to set up a cooperative called News that would publish 25 or 30 books a year including masterpieces rarely found in bookstores here. But that project has not been allowed to proceed.
"The official government explanation for not having any cooperative publishers is that there is a paper problem and machine problems," said novelist Andrei Bitov. "But it seems to me the problem isn't paper. It's that they are afraid of losing control."
Bitov said that the lack of cooperative publishers "is keeping our younger writers from being heard."
Still, the cooperative experiment encompasses a broad range of smaller enterprises offering services that were previously impossible to find.
An operation called Technika repairs video equipment. A Gypsy family in the western Siberian town of Tyumen runs a welding operation. In Byelorussia some resourceful artisans make jewelry using bones from a meat market.
"These cooperatives are doing all sorts of things," said historian Roy Medvedev. "The other day I had a knock on my door and someone offered to sharpen all the knives in the house. They hadn't been sharpened in 20 years. There was no place to get that done."
Although the government demands that any prospective cooperative apply for a license, Medvedev said that 90 percent of them do not bother registering.
And yet the government is so eager for cooperatives to succeed -- at least as an example of what can be done in the years ahead -- that it has issued start-up loans at interest rates of only 1 or 2 percent. Cafe 44 began with a $60,000 loan.
The cooperative program has been a year-long test of the Soviet people's willingness to tolerate a reform movement that must give up a degree of equity to gain some badly needed efficiency. Sometimes the voices of resistance have been shrill.
The idea of individuals operating with relative independence and possibly getting rich for their efforts runs against the grain for many. As Victor Pichugin, a worker from the Sverdlovsk area, wrote to the government newspaper Izvestia, "such bourgeois stuff is not for our country."
People are especially worried about the prices at food cooperatives. In Leningrad a retired woman, Lidia Shirina, complained that a cooperative had opened where her usual eating hall had been and that the same meal that had once cost a dollar was now $4. "Help us," she wrote to the local paper.
The prices get a great deal higher than that. Lunch for three the other day at Yakumanka, an Uzbek cooperative in Moscow, cost $60.
Last March the first cooperative restaurant opened at 36 Kropotkinskaya St., in the former residence of Prince Trubetskoy. The menu was decidedly royal: soup, suckling pig, salad and coffee. So attentive was the management to good service that it soon fired one waiter for being "tactless."
The cafe was a sensation not only for the well-to-do Soviets and foreigners who could manage the dual feats of getting in the door and paying the check, but also for ordinary people who heard about it in the press. There were rumors of fantastic profits being made and charges of "speculation." The Communist Party newspaper Pravda asserted that the new system allowed some people to make "significant sums that did not correspond to their expended labor."
Portnoy, for his part, said that he is now earning nearly $1,000 a month, double what he was making as an assistant manager in a state-run plant and at least triple what most workers in Moscow earn.
Tatiana Zaslavskaya, one of the key architects of Gorbachev's economic restructuring plan, has tried to calm people down, saying, with a notion alien to the economic ideology that existed under Joseph Stalin and Leonid Brezhnev: "Our fear that someone will earn too much can become a truly restraining factor."
After the restaurant on Kropotkinskaya Street had been operating for several months, Pravda reported that the cafe was grossing at a rate of about $750,000 a year and yet was taxed at only 3 percent. "That's really absurd," the paper said.
The Soviet government is expected to begin taxing cooperative profits at a much higher rate, probably beginning in April. Some co-op directors have heard the tax rates may shoot up from 13 to 90 percent on profits that exceed $1,600 a month.
But the leaders of the reform want to encourage the new breed of entrepreneur. U.S. economist Ed A. Hewett, editor of the American journal Soviet Economy, said in a recent interview, "One of the things the Soviets must come to terms with in any reform is that some people are going to get rich. And some will get rich just by getting lucky. The point is, they need more millionaires, not fewer."
Cooperatives are one of several New Economic Policy-like plans that Gorbachev is trying. To win ideological support, the Communist Party is expected to rehabilitate Nikolai Bukharin, a supporter of economic liberalism and a victim of Stalin's purges. The party's ideological journal, Communist, published Bukharin's 1929 essay "Lenin's Political Testament" this week.
Portnoy is the picture of the new Leninist entrepreneur: "Look, I can understand how someone feels when they're making $300 a month and they hear about cooperatives. But these are new times."