(FORTUNE Magazine) – LIKE Christopher Columbus, Mikhail Gorbachev set out for one place but reached another and never quite knew where he was when he got there. What he did do, however, was change the world. The goals he set were hugely ambitious. He inherited a hated political party -- and tried to make it lovable. He took on a corrupt economic system -- and tried to make it prosperous. He failed in both attempts but succeeded in something much deeper, and that will insure his place as one of the great men of the century. It was Gorbachev who showed that even the most stringent authoritarian system could produce a leader for whom morality meant more than communism, and that ultimately the human spirit is stronger than the harshest totalitarianism. Now what? Unfortunately, the liberator of Eastern Europe leaves behind a rapidly disintegrating country of 290 million angry people. He set out to woo foreign investment, but the chaos he has passed on is working hard against that objective. The economy has gone from bad to impossible. In just two years, industrial output has fallen nearly 30%. The U.S. economy shrank some 50% in the Great Depression. Inflation is around 100% -- and rising. The government-owned foreign exchange bank, Vnesheconombank, regularly denies requests for withdrawals. Though the cash drawers are bare, no one wants to close the bank because that would mean defaulting on nearly $85 billion of foreign debt. Gorbachev's rival, Boris Yeltsin, president of the Russian Republic, set out on his own journey to the unknown in December when he organized a commonwealth to replace the staggering Soviet Union. The new union, known as the Commonwealth of Independent States, is a minimalist affair that would bring together former Soviet republics in a loose economic and political alliance. Borders between them would be open, but there would be no central government. Gorbachev immediately denounced the idea, but not everyone around him did. His foreign minister and longtime ally, Eduard Shevardnadze, welcomed Yeltsin's initiative, noting correctly that by agreeing to keep borders open, the leaders of the republics had at last reversed an escalating economic war among themselves and expressed a willingness to cooperate. There are signs aplenty that Yeltsin's bare-bones union is full of internal conflicts and might not last. Despite the public show of unity, the newly independent country of Russia seems destined to dominate the commonwealth, and Ukraine seems destined to leave it. Yeltsin began pulling together the commonwealth by persuading Ukraine and Byelorus to join Russia in a Slavic union. Moldova and Armenia responded favorably to the idea, as did the five Central Asian republics. But if the Slavic core doesn't hold, it's hard to see how Yeltsin can keep the whole thing intact. The commonwealth agreement commits the republics to coordinate economic policies. Yet while Yeltsin's aides in Moscow were telling reporters that Ukraine was dropping plans for its own currency, Ukrainian President Leonid Kravchuk was announcing in his parliament that the new currency, to be known as the hryvnia, would be issued next fall. If that happens, Russia would probably have to bury the ruble and establish its own currency too. Otherwise, rubles would flood in from Ukraine, further fueling Russian inflation. On the military front, all is not well either. Only a few days after pledging to support a unified military command, Kravchuk named himself commander-in-chief of the 1.2 million soldiers stationed on Ukrainian soil. Yeltsin, meanwhile, was not behaving any better. While Kravchuk was nationalizing his army, Yeltsin was telling U.S. Secretary of State James Baker that Russia -- and Russia alone -- wanted the Soviet Union's seat on the United Nations Security Council. The U.S.S.R. has been one of five permanent members, with the U.S., Britain, France, and China. Each has veto power over any council action. Western experts are split over the implications for investors. Some, including many Western diplomats in Moscow, argue that any new investment should be minimal until stability returns. Says Sune Wejstorp of Tetrapak, a Swedish food-packaging company that has $60 million invested in three Soviet plants and is negotiating for a fourth: ''We think it will take five to seven years before we see an improvement in the economy.'' But other longtime Soviet hands, including PepsiCo's former chairman, Donald Kendall, who began doing business in the Soviet Union in 1959, are still optimistic. Says he: ''The move toward a commonwealth is a positive one. I still urge American companies to go over and get established, to do business. Because if they don't, later it will be too late.'' No doubt instability remains a serious impediment. Yeltsin has vowed to introduce economic shock therapy, including price decontrol, in January. But nobody knows how Russians will react to rising prices, especially since so many Russian families already live below the official poverty line. Yeltsin has promised to create a social safety net and has raised the minimum wage from 200 rubles a month to 340. Gorbachev and many others fear that Yeltsin's dramatic gamble could send people out into the streets in an apocalyptic riot that would bring an end to six years of experiments with democracy. Says Anatoli Sobchak, the undaunted reform mayor of St. Petersburg: ''If you take a look at our press, you will see that everything is being done to convince people that they made a mistake in electing democratic leaders and a democratic future. Things weren't so bad under Brezhnev, they say.'' Then he adds, ''If we don't overcome the current economic situation, social shocks will be unavoidable.'' It is also possible that the Russians will rise to the occasion, falling back on a centuries-old ability to perform well when confronted with challenges or threatened with extinction. ''Look what they did to Hitler once he invaded,'' says Peter Fischer, vice president of the U.S.-U.S.S.R. Trade and Economic Council. ''Their best qualities come out in times of adversity.'' For now, Yeltsin is still cooperating with the other Slavic states. If shock therapy succeeds in Russia, the commonwealth will give him a stable -- and huge -- consumer market. If the commonwealth does not take hold, he has made it clear that he will push on with economic reform alone. The big question is, Can Yeltsin exhibit the same courage in pushing economic reforms as he did in climbing atop a tank last summer to face down the coup plotters? The answer is hardly clear. Already the starting day for price decontrol has been moved back three times. Says one senior Western diplomat in Moscow: ''What they're talking about doing is the moral equivalent of dropping an atomic bomb. It will get the job done, but you have no idea how many casualties you will get.'' HARVARD PROFESSOR Jeffrey Sachs, who helped design the program that turned around the Polish economy, has begun commuting to Moscow to advise the Russian government. He thinks the Yeltsin plan will have a fast payoff in one area. After a few months of sharply rising prices, he expects prices to stabilize and stores to fill up with goods, ending the long lines. But he also predicts that the country will remain in deep recession for a long time. Says he: ''Industry was built for noneconomic purposes -- for the military. Industrial production will fall, and it will remain lower, because much of the industrial output will not be needed by the new market economy.'' In addition, he points out that the Russians still do not have a strong banking structure in place; thus it will be hard to control the money supply -- a key inflation-fighting measure. Sachs adds, though, that private business could develop rapidly, ''if the reforms go through in as radical a way as they should.'' Despite Yeltsin's dramatic initiatives, for Western investors the country we knew for so long as the Soviet Union remains in many ways what it has always been: a potentially vast market hampered by more obstacles than a World War I mine field. Gorbachev's greatest contribution is that for all his economic mismanagement, for all the inspired chaos known as perestroika, he managed to prepare the ground for the kinds of sweeping changes that are now so necessary.