Five-Hundred-Day Plan

FIVE-HUNDRED-DAY PLAN

Proposals for reform of the Soviet economic system began to emerge during the 1960s, and some concrete reforms were introduced. All of these efforts, such as Alexei Kosygin's reforms in 1965, the new law on state enterprises in 1987, and the encouragement of cooperatives in 1988, basically involved tinkering with details. They did not touch the main pillars of the Soviet economy: hierarchical command structures controlling enterprise activity, detailed central decision-making about resource allocation and production activity, and fixed prices set by the government. The need for reform became ever more obvious in the "years of stagnation" under Leonid Brezhnev. When Mikhail Gorbachev came to power in 1985, reform proposals became more radical, culminating in the formulation of the Five-Hundred-Day Plan, put together at the request of Gorbachev and Boris Yeltsin by a group of able and progressive reform economists headed by Academician Stanislav Shatalin and presented to the government in September 1990.

The plan fully accepted the idea of a shift to a market economy, as indicated by its subtitle "transition to the market," and laid out a timetable of institutional and policy changes to achieve the transition. It described and forthrightly accepted the institutions of private property, market pricing, enterprise independence, competition as regulator, transformation of the banking system, macroeconomic stabilization, and the need to open the economy to the world market. It specified a timetable of steps to be taken and provided draft legislation to undergird the changes. One of its more radical elements was its acceptance of the desire of the republics for devolution of central power, and it endorsed their right to economic independence. This feature of the plan was fatal upon its acceptance, as Gorbachev was not ready to accept a diminution of central power.

Parallel with the Five-Hundred-Day Plan, a group in the government worked up an alternative, much less ambitious, proposal. Gorbachev asked the economist Abel Aganbegyan to meld the two into a compromise plan. Aganbegyan's plan accepted most of the features of the Five-Hundred-Day Plan, but without timetables. By then, however, it was too late. Yeltsin had been elected president of the Russian republic and had already started to move the RSFSR along the path of reform envisioned in the Shatalin plan. This was followed in August 1991 by the abortive coup to remove Gorbachev, and in December 1991 by the breakup of the Union, ending the relevance of the Five-Hundred-Day Plan to a unified USSR. But its spirit and much of its content were taken as the basis for the reform in the Russian republic, and many of the reformers involved in its formulation became officials in the new Russian government. The other republics went their own way and, except for the Baltic republics, generally rejected radical reform.

See also: aganbegyan, abel gezevich; command administrative economy; kosygin reforms; shatalin, stanislav sergeyevich

bibliography

Aslund, Anders. (1995). How Russia Became a Market Economy. Washington, DC: Brookings Institution.

Yavlinsky, G. (1991). 500 Days: Transition to the Market. Trans. David Kushner. New York: St. Martin's Press.

Robert W. Campbell