MOSCOW, OCT. 19 -- The Soviet legislature today endorsed President Mikhail Gorbachev's cautious economic reform plan to begin a gradual transition toward a free-market economy in place of the discredited system of central planning.
"The time has come to make a responsible choice. We cannot postpone the decision any longer," Gorbachev told the legislators, winding up a debate that has raged inside and outside the Supreme Soviet for the past three months on how to dismantle the economic system constructed by Joseph Stalin.
The document approved in principle by the Supreme Soviet today by a lopsided margin of 356 to 12 is designed to set the world's first socialist country on a long and tortuous road to a Western-style mixed economy. But, rejecting more radical suggestions, Gorbachev and his senior advisers warned that it could take many decades before the Soviet Union achieves its final goal.
"To create a real market, deep changes will be needed in the structure of our economy, the military-industrial complex and psychological stereotypes. All this will require at least 10 years, perhaps an entire generation," Deputy Prime Minister Leonid Abalkin told a news conference. "But if the Soviet Union wants to be a great power, respected in the world, it has no alternative but to go down this road."
Although practically all Soviet leaders now agree on the strategic shift toward a market economy, there is sharp disagreement over tactics. Earlier this week, the president of the giant Russian republic, Boris Yeltsin, denounced the Gorbachev plan as a recipe for "catastrophe," saying it preserves too many elements of the old command-administrative system.
In his 50-minute address, Gorbachev accused Yeltsin of "playing political games" and trying to escape responsibility for the economic hardships that would inevitably accompany the transition to a market economy. He rejected his rival's call for a coalition government in which the Communist Party would share power equally with representatives of the radical opposition, saying he would not bow to "ultimatums."
The plan approved today combines features of a government program for gradual reform with a radical plan favored by Yeltsin that promised to create the foundations of a market economy within 500 days. It relaxes the forced-march approach of the 500-day plan, maintaining a wide range of price controls and prolonging subsidies to loss-making companies through most of next year.
On several key points, such as the right of the federal government to raise taxes and retain control over export revenues, the final document represents a victory for Prime Minister Nikolai Ryzhkov. Denounced by the radicals as a spokesman for the vast state bureaucracy, Ryzhkov has conducted a tenacious and ultimately successful rear-guard action over the past two months to preserve some powers of the central government.
Back in early September, after Gorbachev said he favored the 500-day plan, the prime minister seemed a lonely, abandoned figure on the verge of resignation or dismissal. Today, however, he had regained a jaunty self-confidence, boasting to journalists that his "principled position" had paved the way for a sensible compromise.
"If the government had thrown in the towel and said, 'Whatever you want,' we wouldn't have had today's document, but rather the document I still think is unrealistic," Ryzhkov said.
The principal author of the 500-day plan, Stanislav Shatalin, put the best face possible on the political turnabout. After earlier insisting that the two rival plans could not be merged, and that he would not participate in "a farce," he claimed today that the final document contains many of his original ideas.
"For me the most important thing is the emphasis on free enterprise and private ownership. This has remained," Shatalin told journalists. Private ownership was long denounced by Marxist ideologues as tantamount to exploitation of fellow humans and therefore unacceptable under socialism.
Paradoxically, the initial phase of Gorbachev's plan is likely to witness several steps away from a free market rather than toward one. In "If the government had thrown in the towel and said, 'Whatever you want,' we wouldn't have had today's document."
-- Prime Minister Nikolai Ryzhkov
his address to the Supreme Soviet, the president warned that the Soviet economy is now in such a chaotic state that "administrative methods" -- a euphemism for central direction of the economy -- will be required to avoid a drastic slump in production and complete economic breakdown this winter.
"The situation on the consumer market has worsened catastrophically. The reason is clear . . . . We have begun to print money at several times the rate of previous years. We have lost control over the financial situation in the country," said Gorbachev, in a stunning acknowledgement of the economic mistakes made during his first five years in power.
The Soviet leader cited the growing budget deficit -- officially estimated at more than 10 percent of the gross national product -- as one reason why it was impossible to implement the 500-day plan in its original form. He accused the Russian republic's legislature of compounding the country's financial problems, and giving a further twist to the inflationary spiral, by raising procurement prices for meat by 50 percent last month.
Like the 500-day plan, the Gorbachev proposals promise to slash the budget deficit by more than 50 percent as a prerequisite for serious economic reform. How this goal will be achieved is, however, unclear. While the latest plan promises to consider such measures as cutting expenditures on foreign aid, defense and the KGB security police, it fails to set precise targets.
The president's chief economic adviser, Nikolai Petrakov, said in an interview that Gorbachev has "several measures up his sleeve" to cut the budget deficit. "Journalists should not know about them, as they could create an explosion in society," he said.
According to Deputy Prime Minister Abalkin, the government will soon announce plans to centralize control of foreign exchange revenues under a new committee representing the republics. In a related move, Gorbachev raised the possibility of requiring that any future foreign assistance to the Soviet Union be channeled through the central government to ensure that aid is properly used.
Designed to be implemented over the next 18 to 24 months, the Gorbachev plan envisages a four-stage timetable for the recovery of the Soviet economy. Unlike the 500-day plan, it does not set precise time limits for each stage. First Stage: The budget deficit will be slashed through cuts in public spending. An independent central bank will be established to control the money supply. Prices on luxury goods will be freed. Some state property will be privatized and land distributed to peasants on long leases. Existing economic ties between enterprises will be maintained.Second Stage: Tight monetary control will be maintained to allow prices to be freed on nonessential goods without risk of hyper-inflation. Fixed prices will be maintained on at least one-third of all goods, including oil and raw materials. Social security measures, including income indexing, will be introduced to protect living standards.Third Stage: A housing market will be developed to help soak up the vast supply of excess rubles. A labor market will be established. The government hopes to fill shops with consumer goods, but will maintain centralized controls over exports of raw materials until the end of 1992.Fourth Stage: Further privatization will provide the groundwork for a self-regulating market in light industry, food production, agriculture and services. Foreign companies will be allowed to reinvest their ruble profits in the Soviet Union. Full external convertibility of the ruble will take several more years.