Why The 500 Days Program Was Never Adopted

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Why The 500 Days Program Was Never Adopted
Why The 500 Days Program Was Never Adopted

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The "500 Days" program was an attempt to smoothly move from a planned economy to a market economy, while maintaining strong ties between the economic entities of the disintegrating Soviet Union. However, the program was never implemented for objective reasons.

Why the 500 days program was never adopted
Why the 500 days program was never adopted

The essence of the "500 days" program

On August 30, 1990, an initiative group of economists represented by S. Shatalin, G. Yavlinsky, N. Petrakov, M. Zadornov and others created a document, the main idea of ​​which was to preserve the republics within the Soviet Union under conditions of soft entry into the free market and granting them sovereignty … He proposed a four-step transformation program:

Stage 1. During the first 100 days (from October 1990), it was planned to privatize state land and real estate, corporatize enterprises and create a reserve banking system;

Stage 2. In the next 150 days, price liberalization was to take place - the state is gradually moving away from price control, while the outdated state apparatus is eliminated;

Stage 3. Another 150 days, during which, against the background of privatization, free circulation of goods on the market and liberalization of prices, the market should stabilize, the state budget should be filled and the convertibility of the ruble should increase;

Stage 4. In the last 100 days, all previous actions should lead to an economic recovery, the arrival of effective owners and a complete restructuring of the state structure. By February 18, 1992, this program was to be completed.

So, the creators of the program planned to lay the foundations of a market economy within 500 days. They understood that in such a short time it was impossible to turn the clumsy economy of a huge country to face the market, therefore they created a very soft version of reforms at the expense of state, not private resources. However, instead, the citizens of the USSR experienced shock therapy. And there were several reasons for this.

Reasons for not accepting the "500 days" program

1. Inconsistency of political and economic actions. Not realizing the need to implement urgent reforms, the Supreme Soviet of the USSR delayed the discussion of the program, as a result of which all measures planned until the end of 1990 were postponed. Instead of starting with a financial recovery, the government carried out a price reform, and as a result, the transition to the market did not go through the stabilization of the ruble, but through hyperinflation.

2. Destruction of allied government bodies. The lack of unity in the actions of the RSFSR and other union republics led to the fact that it was impossible to implement the program with the participation of all economic entities. The republics took a course towards secession and, in fact, boycotted the implementation of reforms and the creation of a new economic union, which would become a full-fledged replacement for economic ties between parts of the USSR, without giving the necessary information about the real state of affairs in the country. As a result, economists were unable to develop the correct stabilization measures. The "500 days" reform program could only be implemented with the unanimous participation of all the republics.

3. Missing the moment. The growing crisis tendencies against the background of inaction of the country's leadership brought the economy to the point of no return - the situation itself dictated the need for decisive action. That is why even the adoption of the program would no longer have saved the economy - the time for gradual reforms was lost.

So, the parade of sovereignties, the release of prices, the strongest inflation, the confrontation of political forces - all this did not allow realizing a soft transition from a planned to a market economy and creating strong ties between the republics. As a result, an urgent resuscitation of the economy was required, which was called shock therapy. However, part of the developments of the "500 days" program formed the basis for further reforms.

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