Decentralization and diversification in the reorganization of non-agricultural production in the Soviet economy : 1987-1990

The reformation of Soviet enterprises over the period from 1987 to 1990 represents the rejection of the "command economy and marks the first step toward the “destatization" of productive property in the Soviet Union. This process is important because it will set precedents for future economic development, determine the receptiveness of Western capital to the Soviet market and eventually be the catalyst for the formation of a new social contract between individual and state. This paper examines the first stages of economic reform by looking to the production level to gauge the extent and nature of change that took place over this period and to measure the effectiveness of the reforms. Chiefly, this is done by examining new forms of enterprise organization: Cost-Accounting and Leased enterprises, Small Enterprise, Concerns and Joint-Stock Companies. Each enterprise type is treated separately but according to identical criteria: the case for application of each type of organization; the nature and calibre of legislation governing each type of enterprise, and; the experiences of enterprises with these new forms of organization. It is found that poor quality legislation and the enlistment of state agencies to implement reform measures designed to weaken them consistently demonstrated a lack of will or vision by the state to enact "radical reform. Despite this, it is demonstrated that producer initiative for reform preempted state measures in all but one instance and that producers themselves were the greatest forces behind reform. Because many enterprises aggresively sought autonomy their actions indicated not simply perestroika but novostroika in that producers were forging new links amongst each other. Economic perestroika, then, was becoming not only active but interactive. Finally, because the reforms were clumsily handled by the state and obstructed by state agencies, it occurred that perestroika as given was most attractive to the economy's strongest enterprises while leaving those most in need of reform more attached to a weakened administrative system. Consequently, the reform process has been brought to a critical juncture: perestroika has demonstrated the promise of reform among its best producers but falls far short of actively and postitively enlisting all producers in the process of self-restructuring.