Law on State Enterprise

The Law on State Enterprises, enacted in the Soviet Union in 1988, was part of Mikhail Gorbachev's reform agenda, known as perestroika. This law aimed to decentralize economic decision-making, granting more autonomy to enterprise managers. It encouraged competition between state-owned businesses and newly legalized cooperatives, and protected enterprises from arbitrary demands from superiors. The law also signaled an end to "soft" credits and subsidies, introducing the possibility of bankruptcy.

However, these reforms faced significant obstacles. Chronic shortages persisted, and prices were slow to adjust. While the intention was to reduce central planning, state orders (gos-zakazy) still covered a substantial portion of many enterprises' output. Ideological conflicts with traditional Marxist views and resistance from the Communist Party bureaucracy also hindered progress. Ultimately, central economic planning lost its meaning as enterprises operated with reduced government oversight in an economy lacking established market mechanisms.12