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Cooperatives, Law on


The Law on Cooperatives (hereafter the Law) was adopted in May 1988 to offer greater clarity about the direction of private economic activity during the early period of perestroika. This was necessitated by the fact that the earlier Law on Individual Labor Activity, which went into effect in May 1987 as the first step toward creating a legal private sector, was ambiguous as well as limited in its provisions for privatization. Private economic activity, embodied in organizations called "cooperatives," quickly evolved beyond the provisions of the 1987 Law, and the new Law was intended to reflect the reality of the growing cooperative movement.

In general, the Law liberalized the way in which cooperatives operated. The legal basis for private enterprise was changed, and cooperatives were accorded the status of "basic units" in the economy and were thus placed on an equal footing with state enterprises. No longer was the size of a cooperative or the amount of its assets limited. Cooperatives could now engage in any economic activity, except for those prohibited by law. Financial arrangements also moved in a new direction. Shares in a business could be issued. There was no limit on income, the size of which could be based either on one's financial contribution to the cooperative or on the amount of work one performed there. Cooperatives still had to be registered by local authorities, but these administrative organs no longer had the right of approval or disapproval of its activities. Cooperatives were made formally independent of the state sector, and the latter was forbidden to give compulsory state orders to cooperatives. Cooperatives were given the right to form joint ventures with foreign companies. In essence, the Law made cooperatives indistinguishable from capitalist enterprises.

See also: capitalism; economy, post-soviet; liberalism; perestroika


Hansen, Philip. (1988). "The Draft Law on Cooperatives: An Assessment." Radio Liberty 111/88, March 15.

Jones, Anthony, and Moskoff, William. (1991). Ko-ops: The Rebirth of Entrepreneurship in the Soviet Union. Bloomington: Indiana University Press.

William Moskoff

Carol Gayle

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