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World

LVOV — The P/O conveyor plant is a
medium-large industrial enterprise of 4,000
workers, located on the outskirts of this
western Ukrainian city, which has for the
past year been at the heart of a sharp and
portentous debate over the future direction
of the Soviet economy and social system. In
January 1988, this factory became the
USSR’s first “shareholding society,” an
experiment which prompted a storm of con-
troversy and renewed the old speculation
that socialism and capitalism are “converg-
ing.”

The situation is certainly one of multiple
complexities and contradictions. But at the
bottom of this debate around the Lvov
experiment, as well as many of the other
novel economic forms being tried nowa-
days in the Soviet Union, is a nearly univer-
sal realization that the old bureaucratic
system, which saw everything as anonym-
ous “state property” and ran the whole
economy from a central control panel in
Moscow, has reached its limits of growth
and the end of its tether.

The grand challenge is now to come up
with fresh approaches that will engage the
creativity and initiative of workers, intro-
duce more effective mechanisms of eco-
nomic regulation, and set in motion an

- accelerated technological dynamic without

violating the democratic and human-
centered values which are, ultimately, the
essence of socialism’s claim to superiority
over the capitalist marketplace. The search
for such new approaches is certain to be

Success Sells Lvov worker share plan

Canada-Soviet polar ski team honoured

Members of the Soviet-Canadian Transpolar Ski Expedition, who made the historic trek across the north pole last year,
were honoured in a special ceremony in the Kremlin Jan. 9. Nikolai Ryzhkov, chair of the USSR Council of Ministers,
presented the team with awards for their trek, known as Polar Bridge. They reached the north pole on April 26 after setting
out from Severnaya Zemlya Archipelago enroute to Cape Columbia on Ellesmere Island.

FROM
MOSCOW

protracted, uneven and, without doubt,
ideologically disruptive.

Now meet Valentin Vologzin, general
director of the P/O conveyor plant
who — at least in his own little corner of
the economy — thinks he’s found a satis-
factory answer to all that.

“Two years ago our plant was placed on
hozraschot (cost accounting),’ he says.
“But we realized that we could go deeper
and tap all of the resources of our collective
by involving people directly in the life of the
enterprise.”

Vologzin, who was trained as an econo-
mist, and others worked out the idea of
selling shares to the employees, both as a
means of raising capital for needed plant
modernization, as well as stabilizing the
work force and increasing its stake in the
efficient operation of the enterprise.

The idea met with tough opposition, par-
ticularly from the middle layers of state and
party administration, Vologzin says. But
finally special permission came from Mos-
cow for the P/O plant to try shareholding as
an experiment.

The scheme works like this: employees
buy shares in the enterprise from a branch
of the state bank located on the premises.
The shares come in denominations of 50
roubles, and each worker may purchase
only a certain amount based upon his or her
skill-rating and seniority in the plant, with
an overall ceiling of 10,000-roubles worth
for everyone.

The shares come in two varieties. The
first may be bought and sold freely at the
bank, within each worker’s established
maximum, but the second type may only be
purchased using dividends from the first,
and may not be sold until the worker is
leaving the enterprise. Only employees at
the enterprise — and retired employees —
may be shareholders. Shares may not be

transferred or held by outsiders. If a share-
holder dies, his or her heirs must imme-
diately sell them back to the enterprise at
their face value.

Dividends are calculated quarterly,
depending upon the current profitability of
the plant. They are presently running at a
healthy annual rate of about 20 per cent.
Most workers, Vologzin stresses, are choos-
ing to put their profits back into new shares.

Some positive results from this scheme
seem undeniable. First, the enterprise has
undertaken considerable re-capitalization
using the funds generated by share sales.
The plant, which produces industrial con-
veyor systems and a range of consumer
goods, has been able to purchase new
machinery and equipment without creating
any external debt, and has also bought up a
number of important patents. Moreover, it
has invested some of the money in construc-
tion of a new housing subdivision, compris-
ing 500 extremely attractive split-level
bungalows, which shareholding workers
will soon begin moving into.

Even more significantly, attitudes appear
to have changed radically. ‘Losses due to
theft, waste and negligence are way down in
the past year,” says Vologzin. “Workers are
showing far greater interest in work results,
conserving resources, lowering production
costs. They take a direct interest in the work
of the plant, in the work of other workers,
and speak out about it in meetings. I would
say the situation has turned right around.”

There is a council of shareholders whose
role is to allocate the funds raised by share
sales, but this year at least, this council has
waived its functions to the general council
of the work collective. The governing prin-
ciple is important: every employee in the
enterprise, whether a shareholder or not,
has one vote as a member of the work
collective. The number of shares owned
does not affect one’s status or political rights
as a worker.

The implementation of this approach has
raised the plant’s profitability by 40 per cent
in one year, says Vologzin, and created a
self-sustaining momentum of growth. As
for the workers who have put their roubles
into the plant, “they will be paid back many
times over. They are virtually guaranteed a
second pension.”

There is, however, a down-side. Some 86
per cent of the workers have become share-

holders, yet a significant minority have
obviously chosen not to take the effective
wage-cut that share-buying represents in
return for paper profits and future benefits.
For these workers, who watch all good
things increasingly being linked to share-
holding, the objective pressures are plainly
to buy in or clear out.

Indeed, Vologzin confidently predicts:
“Come back in a year and I'll bet 100 per
cent of our workers will be shareholders by
then.”

Taking into account experiences like this
experiment in Lvov, the Soviet government
decided late last year to legalize worker
shareholding societies for the entire coun-
try. To date, well over 200 enterprises have
adopted the system.

Regulations spelled out in the decree
from the USSR Council of Ministers are

this one in Lvov, a variety of consumer and
producer co-operatives, contract leasing in
agriculture and some 150 joint ventures —
so far — with big western corporations. All
have already shown themselves capable of
generating new wealth — and new ques-
tions.

On the horizon may be shareholding
banks and — good grief! — even a Soviet

stock exchange to facilitate the transfer of

capital between enterprises.

Superficial comparisons with capitalism
are inevitable, but tend to evaporate when
the details and socio-legal bases of these
projects are examined up close. So perhaps
everyone should just hold off on ideological
judgments while these experiments unfold
and their results assimilated by Soviet
society?

Listen to director Vologzin: “We were a

a

There is a multiplicity of new forms being tried in the
Soviet economy ... all have shown themselves capable
of generating new wealth — and new questions.

quite strict, and seem to preclude any con-
centration of shares being able to develop or
the translation of shareholding into political
advantage.

No worker may own more than 20 times
his or her monthly salary in shares, up to a
universal maximum of  10,000-roubles
worth. Only employees in a_ particular
enterprise may own shares in that enter-
prise. The total value of shares may not
exceed 30 per cent of the enterprise’s fixed
and current assets. A new law will also
make it possible, in special circumstances,
for enterprises to buy shares in each other.

Is this capitalism? It is certainly a startling
new approach to socialist property, one
which recognizes that the relationship
between worker and means of production is
an intimate and complex one which has
never been satisfactory in a system where
state property was said to “belong to no
one.”

There is a multiplicity of new forms being
tried in the Soviet economy these days,
within the framework of strategic central
planning, which are aimed at overcoming
the paralysis of bureaucratic socialism.
These include shareholding societies like

profitable enterprise long before sharehold-
ing, but we now have the highest productiv-
ity and best results ever. Many of the
chronic organizational and personnel prob-
lems we had in the past have virtually dis-
appeared. We can see that the whole
mechanism has begun to work better.”

As I was filing the above story, there
came news of the second disastrous earth-
quake in as many months to strike the
Soviet Union — this time in the mountain-
ous central Asian republic of Tadjikistan.

Future historians will no doubt ponder
over the savage coincidence of so many
catastrophes hammering this land just at the
moment when it has been undergoing a
profound and delicate social transforma-
tion. For now, however, there is nothing to
be done but to mobilize more resources,
volunteers and materiel and set about the
grim task of rescuing as many as possible
and begin to reconstruct better and stronger
than before. This effort went into motion
virtually the moment the news came in.

And we promise that the Tribune will be
there, covering this and all the multi-sided
of Soviet life as best we can, with human
understanding and sympathetic vision.

Pacific Tribune, February 6, 1989 « 9