500-Day Program

Background

The program was drawn up and presented between August and September 1990. The working group was formed on the initiative and joint decision of Gorbachev and Yeltsin, and the program itself named them as the initiators of its preparation, stating that it could be carried out only with their joint support. In August 1990 the group issued its 400-page report, and by 1 September 1990 the "500 days" program and 20 draft laws for it were prepared, approved by the Supreme Soviet of the RSFSR, and submitted for consideration to the Supreme Soviet of the USSR. The primary text is dated 1 September 1990 and was published in Izvestiia on 4 September 1990. Russian-language accounts note that sole authorship is often mistakenly attributed to Yavlinsky, whereas the program was proposed by Shatalin and finalized by his working group. The authorship list comprises 14 names: Aleksashenko, Bayev, Vavilov, Grigoryev, Zadornov, Martynov, Mashchits, Mikhailov, Petrakov, Fyodorov, Shatalin, Yavlinsky, Yarygina and Yasin.

The program's Introduction framed its doctrine as movement toward a market "above all at the expense of the state, not at the expense of ordinary people", with the task "to take everything possible away from the state and give it to people"; its title was "Man, Freedom, and the Market". The Introduction also diagnosed society as having fallen into a deep crisis through many years of domination by a totalitarian social and political system, and defined privatization as the transfer of state property to citizens, "not an act of revenge but the restoration of social justice" and "a form of codifying a person's right to his share of the country's accumulated national wealth".

Content

The program divided the 500 days into four stages. The first stage of 100 days covered privatization of housing, land and small enterprises, corporatization of large enterprises, and creation of a Reserve system on the basis of the USSR State Bank. The second stage of 150 days was price liberalization, the third of 150 days market stabilization, and the fourth of 100 days the onset of recovery. It called for a competitive market economy, mass privatization, market-determined prices, integration with the world economy, and a large transfer of power from the Union government to the Republics. The August 1990 group report was titled "Transition to the Market" and was based on Yavlinsky's earlier "400 Days" project.

Privatization was to be "absolutely voluntary", and virtually everyone, even without substantial initial capital, was to be able to obtain a share of the national wealth through diverse forms (lease, credit purchase, joint-stock acquisition). The design aimed to prevent privatization from becoming a means of "legal and excessive enrichment of the few". The program assigned the principal role in implementing the transformations to republic governments and local bodies of power, stated that it was "impossible to conduct the economic reform on the basis of directives from the center", and was based on respect for the republics' declarations of sovereignty.

Failure and legacy

In parallel, on the instruction of USSR Council of Ministers chairman Nikolai Ryzhkov, an alternative project, "Main Directions of Development", was drafted. Ryzhkov said he would resign if his were not adopted, and as a compromise Gorbachev proposed merging the two into a single program of the President of the USSR. Gorbachev asked the economist Abel Aganbegyan to meld the two proposals into a compromise plan; Aganbegyan's plan accepted most features of the Five-Hundred-Day Plan but without timetables. By then it was too late: Yeltsin had been elected president of the Russian republic and had begun moving the RSFSR along the reform path envisioned in the Shatalin plan. The plan's acceptance of devolution of central power and its endorsement of the republics' right to economic independence "was fatal upon its acceptance, as Gorbachev was not ready to accept a diminution of central power". In his 1995 retrospective Gorbachev described the central confrontation as the polemic between the government's Ryzhkov-Abalkin program and the Shatalin-Yavlinsky program known as "500 days", noted that by then no significant political force openly opposed the market and the struggle concerned paths and methods, and recorded that he was accused from both sides of having first supported then discarded the 500-day program.

By the program's own account, its working group relied on information from ministries and departments under 21 requests signed by Shatalin. Banks (Promstroibank, Sberbank, Gosbank, Agroprombank, Zhilsotsbank), Goskomstat, the MFA and the State Commission on Food and Procurement provided full information, while Gosplan, Vnesheconombank, the Ministry of Defence, the CPSU Central Committee, the Komsomol Central Committee and the AUCCTU provided none, and others provided partial or secondary materials; the group's Introduction conceded the program had shortcomings, citing a one-month working limit and missing information.

After the Union's breakup the program's main provisions, namely large-scale destatization and privatization of state property, foreign-economic transformations, housing-utility reform and land reform, were in fact implemented in the absence of other reform concepts. Its spirit and much of its content were taken as the basis for reform in the Russian republic, and many of the reformers involved in its formulation became officials in the new Russian government. The other republics, except for the Baltics, generally rejected radical reform.

Assessments

English-language accounts call the plan a "shock therapy" program intended to change the USSR comprehensively in under two years and present it as ultimately a factor leading to the Soviet Union's collapse. Against this, experts cited in the Russian article and a Yabloko-side account hold that the program's aim was to preserve the USSR as a single economic space through an Economic Union of Sovereign Republics and that it would have preserved the Union had it been implemented. The Yabloko account further claims Yavlinsky was the principal author, that his program would have had milder consequences than Gaidar's policy, and answers critics who blame its authors for today's economic crisis and the collapse of the USSR. A second assessment, from Oleg Bogomolov (2005), holds that the program envisaged an economic union of the republics with a single currency, single legislation and defence, that the liquidation of the Council of Ministers and expanded republican autonomy was "the main reason for torpedoing the program", and that Gorbachev yielded to the Soviet military-industrial complex and withdrew support. The dating of the USSR Supreme Soviet's rejection to October 1990 is not established: only that the program was not adopted and was abandoned around the autumn of 1990 is stated here.