July 20: The "500 Days" program—a plan for the USSR's transition to a market economy that was never adopted
On July 20, 1990, the main theses of the “500 Days” program, a project for the transition of the USSR’s planned economy to a market economy that was never adopted by the government, were ready for publication.
Time is running out. Within a relatively short period of approximately 500 days, during which the country's leadership can still receive a mandate of confidence, reforms must be implemented that will pave the way for the development of market relations and ensure tangible improvements in the economy and in people's lives.
The crisis and the authors of the program
By 1990, the Soviet economy was in deep crisis—fixed wages, fixed prices, and a total shortage of just about everything that Gosplan estimated should be produced to meet citizens' needs: from sausages and books to coats and boots. A team of economists led by Grigory Yavlinsky and Stanislav Shatalin developed a fundamentally new doctrine for the USSR: the transition to a market economy. Moreover, this transition was to be funded by the state, not by the people.
For a long period, a fundamentally anti-people policy was pursued: a rich state with a poor people. The state concentrated enormous resources in its hands, practically all ownership of the means of production. Resources were thoughtlessly spent on gigantic and ineffective projects, inflated military might, and ideologically motivated foreign policy adventures, although all of this had long been beyond our means.
The program sets the goal of taking everything possible from the state and giving it back to the people. There are serious grounds for believing that returning a significant portion of property and resources to the people under various conditions will ensure their much more efficient use. All government spending, including those hidden from the public, must be drastically reduced.
And only when all the opportunities and resources devoured today by the gigantic state machine are directed towards the needs of the people, only then will the country's leadership have the right to appeal to the people to show patience, to endure possible hardships in the name of the Motherland, in the name of their future and the future of their children.
The program proposed several revolutionary measures at the time: privatization of state property and decentralization of economic management, as well as allowing free pricing and creating conditions for private enterprise.
Our sad experience shows how dangerous a person who has nothing to lose is for society, for its normal life and development.
One hundred days for privatization
Privatization was to be the first stage of the program's implementation, with 100 days allocated. The authors noted that the state should not give away its assets for free—"property must be earned." Meanwhile, some state assets were proposed to be considered already earned by people and given away for free or for a nominal fee (small apartments, garden plots, etc.).
To begin with, they planned to conduct an inventory of all national assets—gold and foreign exchange reserves, strategic reserves, unfinished construction, the property of the Armed Forces, state dachas, etc.
Local councils assess the value of retail businesses, service providers, local industries, and small and medium-sized enterprises in other sectors. After analyzing the financial condition of these enterprises, lists are published in the press, indicating the terms and conditions of privatization.
Why the plan never worked
The second and third stages—price liberalization and market stabilization—were allocated 150 days each. Another 100 days were allocated for the final phase, the "beginning of the recovery."
In September, the program and 20 bills necessary for its implementation were submitted to the Supreme Soviet of the USSR for consideration. At the same time, the Council of Ministers prepared an alternative plan for overcoming the crisis. Gorbachev, the first and last president of the USSR, hesitated to attempt a radical, "market" experiment and, as a compromise, proposed combining both programs. It didn't work. At the end of 1991, the Soviet Union ceased to exist. Market reforms, however, began in Russia just a few days later, in January 1992—they went down in history as "Gaidar's."
