Property to the People: The Struggle for Radical Economic Reform in Russia

The Struggle for Radical Economic Reform in Russia

Julie Nelson, Irina Y. Kuzes

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781315287515
• Edition: 1
• Topic: Política y relaciones internacionales
• Subtopic: Política

This text sets Russia's current economic transformation in the context of economic and political change, and provides an overview of issues central to the economic reform debate in Russia. It also highlights the human dimension of large-scale economic change through case studies and interviews.

1
Introduction

The Gorbachev era ended with only polite notice at the end of 1991, and Boris Yeltsin's path was suddenly clear, for the moment, to radically redirect Russia's economic course. Elected president of the USSR's Russian Republic by a large margin earlier in the year, his public support had been further enhanced by his compelling challenge to the leaders of the August coup. Yeltsin's approval ratings were impressive, his backing among legislators extraordinary, and his team of advisers talented and determined to pursue rapid economic reform. Repeatedly, during the months that followed, Yeltsin's cabinet members emphasized their aim of dealing a fatal blow to the command system in the process of fashioning a market economy.

A year later, the Russian economy was on the verge of collapse according to most indicators; it appeared that Yeltsin had lost much of his public support; and the Congress of People's Deputies, which had earlier handed him broad administrative powers to pursue his program for radical reform, removed his chief economic adviser from office and was decidedly unhappy with Yeltsin as well. The following March he narrowly escaped impeachment, and in April 1993 he was fighting for his political life.

The issues that had precipitated the August 1991 coup were predominantly political. Gorbachev's opponents did not want the central command structure to be gutted by the new Union Treaty, which would have decentralized authority among the republics of the Soviet Union. It was scheduled to be signed on August 20, 1991. The coup intervened.

The chief issue that began eroding Yeltsin's authority in 1992 and produced the crisis of early 1993 was economic reform. The government's program called for massive and comprehensive changes that would have profound implications for every aspect of Russian society. No country had ever before tried to reorient such a large and complex industrial economy so decisively and quickly. In the course of pursuing these objectives, legislated and decreed from the center, officials began uprooting mainstays of the Soviet way of life—from the economic security provided by the state to the ideology of classlessness promoted by the party. Even the collectivistic thinking which had predated communism in Russia was exposed to critical scrutiny.

The principal players on this stage were often suspected of camouflaging their true intentions with misleading gambits and of working against the people's interest. When Yeltsin heatedly proclaimed "democracy," he was sometimes accused of maneuvering to acquire unbridled personal power. When "centrist" Arkadii Volskii calmly insisted that "a single leap" to the market was a Utopian dream, critics charged that he wanted to take two steps backward for every step toward dismantling the state planning system.

Before the end of 1992, Yeltsin's increasingly vocal opponents were charging that he was approaching the Russian economy with a bludgeon when a scalpel was needed, and that a continuation of his radical reform program would be ruinous. Yeltsin countered that his detractors wanted to restore the communist system and that he was Russia's only real hope for democratic and economic reform. The drama that would revive the specter of a revitalized communism in Russia and pit Yeltsin against the supporters who had recently hailed him as a hero began to unfold with the November 1991 announcement of price liberalization. This study is a critical narrative and analysis of the 500 days that followed.

The Study’s Analytical Focus

The period of Yeltsin's brief tenure as the indisputable leader of Russia, with unique authority to fashion a new economic course, was charged with significance for the country's future. Yeltsin had a mandate to initiate broader and more comprehensive changes than any twentieth-century world leader had ever enjoyed in peacetime. No Western heads of state in the 1990s had so much power relative to other branches of their governments. None were so free to carry out their political agendas. In some ways, this period was one of those times Charles Tilly speaks of, when it seems that "what we need most is a clear understanding of the singularities of a particular historical experience."¹

Agreeing with Tilly that "there is no such thing as social change in general,"² and sharing Theda Skocpol's "respect" for "the inherent historicity of sociopolitical structures,"³ we also recognize along with Tilly and Skocpol that specific events beg for some measure of theoretical coherence, and that explorations of uncharted societal terrain can benefit from familiar conceptual guideposts. Such markers, however, could not be definitive. We were persuaded that hypothetico-deductive explanations, which impose rigid theoretical order on complex historical phenomena, would be unsatisfactory for the research problem at hand.⁴ Recognizing a "strong tension between the demands of doing justice to the explanation of a particular case and the search for generalizations,"⁵ in Barrington Moore's words, we found Paul Feyerabend's solution to this dilemma appealing. An explanation "has to have some content," he notes, ". . . otherwise it would be useless. But it must not have too much content, or else we have to revise it every second line."⁶ Fernand Braudel's work Civilization and Capitalism exemplifies the fruitfulness of maintaining this fine line. His preference is for interpretation that aims at making sense of historical developments without, at the same time, introducing serious distortions: "I have ... tried to see things and to present them in such a way as to understand, that is to verify. But I have done so with some insistence."⁷

A useful frame of reference for our study was the research tradition that attends to the primacy of the state in initiating some types of social change. A key concept in this stream of inquiry is "state autonomy," which is typically conceived as the significance of class relations to political decision making in a country.⁸ Our concern was both with the extent of state autonomy—recognizing, of course, that autonomy is always relative—and with "the embeddedness" of Russia's economy "in changing transnational relations."⁹ In addressing external challenges to state autonomy, we focused particularly on influences of Western consultants and financial institutions on the Yeltsin government's economic reform program and the course of reform in the country.¹⁰

It is clear that the Yeltsin economic reform program and the pattern of its implementation were "not simply reflective of the demands or interests" of powerful constituencies in the society.¹¹ The degree of a government's insulation from such interests is always relative, however, and the new struggle over power and privilege in Russia was intense. As sociologist Tatiana Zaslavskaia framed the problem, "There is one line of thought" that the new class of entrepreneurs "should be formed from the nomenklatura, and then there is another line—a democratic one. This latter view is fighting for the class to be made up of the most energetic and talented people, regardless of the social group to which they belong." This, she concluded, is "a real struggle for absolutely real assets," a struggle "for property and power."¹²

"The new class" of which Yugoslav communist Milovan Djilas had written in the 1950s—bureaucratic elites who controlled and enjoyed the "fruits of the revolution" because of their administrative positions¹³—was being challenged, it seemed, by one of its own. Among Yeltsin's chief declared objectives was to break up the expansive state bureaucracy, which had brought him to power and where most power had resided since the beginning of the Soviet period. It is sometimes argued that governments always enjoy a significant degree of functional autonomy,¹⁴ but the purposive enhancement of governmental autonomy in Russia during this time, for the explicit purpose of transferring assets controlled by the state into private hands, was unique in its magnitude and scope. In requesting, and receiving, special powers that insulated him from legislative oversight in critical areas to facilitate implementation of his reform ideas, Yeltsin's team was orchestrating from the center a program they claimed would sharply reduce the center's monopoly control over the Russian economy.

In describing prominent features of reform programs in communist countries, Robert W. Campbell states that they "do not start out being advertised as the abandonment of socialism and the restoration of capitalism."¹⁵ In Russia, however, Yeltsin and the Russian legislature came very close to doing just that, beginning in 1990. Yeltsin proclaimed his economic "shock therapy" intention even while the Soviet flag still waved above the Kremlin, and only four days after the USSR officially ceased to exist, a Yeltsin decree outlined the principal features of his program to accelerate the dismantling the command system now administered by his own government.

In exploring Russian economic reform in this study, we wanted to illuminate structural connections and clarify decision-making processes that could inform our understanding of statedirected change under conditions quite different from those that have characterized several other inquiries into the state as a causal force. The economic reform initiatives of the Russian government in the early 1990s illustrated several features of the process Ellen Kay Trimberger describes as "revolution from above,"¹⁶ but this characterization is not entirely appropriate. Most obviously, the Yeltsin government's actions in 1991 and 1992 do not qualify as an "extralegal takeover of political power"; nor is Trimberger's focus on military bureaucrats in radical top-down change appropriate for the Russian case.

The momentous transformation under way in Russia at the beginning of the decade has some components of the "charismatic breakthrough" described by Reinhard Bendix, following Max Weber's analysis of revolutionary charisma in Economy and Society.¹⁷ The movement set in motion by radical reformers in Russia proposed to disrupt "rational rule as well as tradition altogether"¹⁸ by interjecting alien visions of economic and political organization. We do not want to overstate, however, the strength of the radical reform movement or the similarity of perspectives among reform supporters. As Vladimir Mau points out, there were conspicuous "contradictions in people's thinking about the rationale and purposes of market-oriented reform."¹⁹

Revolutionary charisma need not be inspired by a single leader,²⁰ and Russia's was not. It is true that Yeltsin's populist tendencies meshed well with the profound restiveness among Russian people at the time, and the ideas he articulated about economic reform comfortably fit the growing public support for a market economy. Although Yeltsin was the most prominent public representative of this new mood, especially after the August 1991 coup, he was more a symbol than a bellwether. Indeed, the height of Yeltsin's public support would not come until a year after economic reforms in the RSFSR began noticeably outpacing those in the USSR.

Weber points out that "it is the fate of charisma, however, to recede with the development of permanent institutional structures";²¹ and in the routinization that characterizes this new stage of change, self-interest considerations tend to predominate.²² In the case of Russia, the permanent institutional structures were already in place, and the plan of radical reformers was to use those structures, plus some new ones that had been recently added, to strip away much of the power that these same structures had commanded for most of the Soviet period.

In Bringing the State Back In, Skocpol hypothesizes that one "feature of all autonomous state actions will be the reinforcement of the prerogatives of collectivities of state officials,"²³ If her hypothesis should be broadly supported in the Russian situation, then Russia's program for top-down redistribution of resources was doomed to deviate sharply from its announced course. Exploration of this question is a central focus of our study.

Two periods within the eighteen-month span of Yeltsin's prereferendum reforms are important to this part of the analysis. In the reform program's first phase, reforms were approved and started with the encouragement of many officials whose personal control over resources was threatened by the measures. In the second phase of Yeltsin's administration, a substantial number of officials began voicing increasingly urgent opposition to the program. Can the pronounced shift in the perspectives of these leaders, which reached a crisis point in December 1992, be better explained as a consequence of the reform program's failures or as confirmation of Skocpol's hypothesis? We trace interrelated aspects of this question in several chapters that follow.

Although Yeltsin's economic reform program was unprecedented in its scale and scope, in some ways the course of change from 1991 to 1993 was not new to Russia. This most recent attempt to encourage entrepreneurship and legislate privatization was not Russia's first experience of spinning radical change out of conservative tradition and drawing creative energy from the ashes of tired ideologies. Forced analogies with the past, however, would be misleading. Likewise, the upheavals throughout Eastern Europe can be usefully compared, if not too closely. The differences here are instructive—a subject to which we will return in the fifth chapter.

Data

We drew material for this study from a variety of sources. Research projects carried out at the Moscow Institute of Sociology in 1991 and 1992 (codirected by Lynn Nelson and Liliia Babaeva)²⁴ provided valuable interview and questionnaire data. In addition, these studies facilitated the identification of themes for further inquiry.

For research on political and economic issues in the post-Gorbachev era, Russian periodicals are a valuable source of data, provided that researchers carefully follow adequate guidelines for assessing the evidentiary status of such documents.²⁵ Periodicals were a rich source of data for this study, as were government publications that include texts of pertinent laws and statistical information. In the mass media, as in many oth...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication Page
• Contents
• Acknowledgments
• A Note on Transliteration
• Chapter 1 Introduction
• Chapter 2 From NEP to Yeltsin
• Chapter 3 Russian and Western Voices on Radical Economic Reform
• Chapter 4 April-December 1992
• Chapter 5 "The Smooth Reformist Period Has Ended..."
• Chapter 6 New Money, New Business
• Chapter 7 The Anatomy of Privatization: Structure, Pace, and Scope
• Chapter 8 Perspectives from the Work Force
• Chapter 9 Politics and the Promise of Economic Reform
• Appendix A Technical and Supplementary Material
• Appendix B Tables
• Notes
• Index
• About the Authors