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The Peoples of the Soviet Union

What Is the Country Like?

What Was the Bolshevik Revolution?

How Is Russia Governed?

What Is the Communist Party?

How Much Personal Freedom in Russia?

Is There Freedom of Religion?

What Is the Soviet Economic System?

Can Russians Own Personal Property?

What Is Russia’s Foreign Policy?

Are They Realistic in Foreign Affairs?

What Was the Third International?

Will Russia Share in Reconstruction?

Does the US Get Along with Russia?

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But how can these opportunities for advancement amount to much, some people ask, if extra earnings cannot be translated into property? For the abolition of capitalism in Russia has been taken by many Americans to mean that the Russians cannot own any personal property whatever. That is not true. The Soviet leaders draw a sharp distinction between ownership of capital for private gain, and ownership of various forms of personal property—houses, books, domestic utensils, clothes, furniture, automobiles, and the like—for private use .
What a Russian cannot do is accumulate money from his wages, put this money into a private enterprise, even a small shoeshop or stationary store, and then hire people to work for him as an individual. This is strictly forbidden. Everyone is encouraged to save his money, however, and deposit it in government banks or buy government securities. The financial resources thus accumulated are managed solely by the state and are invested by it in various enterprises—from steel mills and tractor factories to the stores in which people buy their shoes, clothes, and furniture.
A Russian can use his wages to buy himself a house in town or a place in the country. He can buy as much in the way of furniture, clothes, books, and bric-a-brac as he can afford or—what is more important—can find in the shops. Theoretically, he could buy an automobile, a washing machine, a refrigerator, and so on—if such things were on the market for private purchase.
Actually, however, the Soviet government has long concentrated the country’s industrial resources on production of heavy equipment, especially for war purposes, and has drastically cut down production of consumers’ goods. The USSR had been preparing-for-war for many years. The steel and other materials that might have gone into private automobiles went instead into tanks, airplanes, and all the articles of war that the Russians have been using so effectively against the Germans.
The shortages of consumers’ goods in Russia—even such ordinary things as soap and toothbrushes—have not been caused by the desire of the government to prevent people from owning private property. The reason lies rather in the government’s wish to prevent diversion of the country’s resources from the production of war and other capital goods to the production of consumers’ goods. Once the shadow of war is lifted and Russia’s productive forces can be applied to peacetime needs, Soviet leaders hope that every man, woman, and child in the Soviet Union will have as many of the good things of life as possible.
A Russian may also purchase government bonds with whatever part of his income he does not spend on consumers’ goods. He receives interest on these bonds. He may also transmit his house, furnishings, books, etc., to his children by inheritance.
Personal property for the peasants What we have just said about the ownership of personal property by factory wage earners or salaried office and professional workers is also true of peasants working on collective farms: In the Soviet Union, land is the property of the state. The number of individual farms (all operated on state land) has been reduced to less than 1 percent of the total. Most Russian peasants, then, are members of collective farms (also operated on state land). They share in the net profits of the farms as a return for the tasks they perform—whether these be plowing, milking, harness mending, or clerical work in the farm administration. These profits are paid in part in cash and in part in the produce of the farm.
In addition, the peasant can own his own house and can have a plot of his own, in which he is free to raise vegetables, pigs, fowl, and the like. He can sell his share of the collective farm output as well as the vegetables, eggs, and chickens from his own garden in what is called the “free market.” That is, he can take them to the nearest town and sell them to the townspeople without having to pass through government-operated stores. The right to hold land for a garden and sell the produce of that garden was a concession the government made to the peasants after collective farming had become an accepted thing.
Thus, theoretically at least, the Soviet citizen has the right to own personal property in a way which does not greatly differ from our right to own personal property.
Primary source documents from 1944–46
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From Wikipedia, the free encyclopedia
Post-Soviet reforms of the Russian economy in the 90s
This article needs additional citations for verification . Please help improve this article by adding citations to reliable sources . Unsourced material may be challenged and removed. Find sources: "Privatization in Russia" – news · newspapers · books · scholar · JSTOR ( September 2011 ) ( Learn how and when to remove this template message )

^ Hoffman 2001 , p. 185.

^ Jeffrey Sachs (May 1992). "Privatization in Russia: Some Lessons from Eastern Europe" (PDF) . AEA Papers and Proceedings.

^ Freeland 2000 , p. 73.

^ "A Way with Words - katastroika" . 11 July 2004 . Retrieved 27 June 2015 .

^ Milne, Seumas (16 August 2001). "Catastroika has not only been a disaster for Russia" . The Guardian . Retrieved 17 September 2011 .

^ Interfax; Interfax (2014-12-29). "Most Russians are negative about outcome of Yeltsin's presidency - poll" . www.rbth.com . Retrieved 2021-12-15 .

^ Jump up to: a b Michael Parks (August 27, 1988). "Reforms to End Soviet Farm Collectivization" . Los Angeles Times . Retrieved July 26, 2016 .

^ Bill Keller (June 4, 1987). "New Struggle in the Kremlin: How to Change the Economy" . New York Times . Retrieved July 26, 2016 .

^ "Law of the Union of Soviet Socialist Republics on state enterprises (amalgamations) [LS 1987 - USSR 1]" . June 30, 1987 . Retrieved July 26, 2016 .

^ William J. Frenkel (May 1989). "Union of Soviet Socialist Republics: Law on Cooperatives". International Legal Materials . 28 (3): 719–753. doi : 10.1017/s0020782900021902 . JSTOR 20693328 .

^ Jeffrey M. Hertzfeld (1991). "Joint Ventures: Saving the Soviets from Perestroika" . Harvard Business Review .

^ Hoffman 2001 , pp. 177–178, 182, 184.

^ Hoffman 2001 , pp. 183–184.

^ Nellis, John (June 1999). "Time to Rethink Privatization in Transition Economies?" . Finance & Development . 36 (2).

^ Appel, Hilary (December 1997). "Voucher Privatisation in Russia: Structural Consequences and Mass Response in the Second Period of Reform" . Europe-Asia Studies . 49 (8): 1433–1449. doi : 10.1080/09668139708412508 .

^ Privatization with Government Control: Evidence from the Russian Oil Sector, Daniel Berkowitz and Yadviga Semikolenova

^ Privatization in Transition Economies: The Ongoing Story - ed. Ira W. Lieberman, Daniel J. Kopf, p.112

^ Hanson, Philip. "The Russian Economic Puzzle: Going Forwards, Backwards, or Sideways?" International Affairs. 83(5), p. 876-877.

^ Sputnik (7 December 2010). "Medvedev orders regions to adopt privatization plans by July" . Retrieved 27 June 2015 .

^ "Medvedev: Privatizations Should Be Carried Out Regardless Of Mkt Volatility", Wall Street Journal, May 21, 2012.

^ "TASS: Archive - Medvedev confirms course towards privatization of state property" . TASS . Retrieved 27 June 2015 .

^ "Russia's improving economy leaves privatization out in the cold" . Reuters . 27 October 2017.

^ Sputnik (21 October 2010). "Russian government approves 5-year privatization plan" . Retrieved 27 June 2015 .

1 February 1931 – 23 April 2007
1st President of Russia (1991–1999)

Privatization in Russia describes the series of post- Soviet reforms that resulted in large-scale privatization of Russia 's state-owned assets , particularly in the industrial, energy, and financial sectors. Most privatization took place in the early and mid-1990s under Boris Yeltsin , who assumed the presidency following the dissolution of the Soviet Union .

Private ownership of enterprises and property had essentially remained illegal throughout the Soviet era, with Soviet communism emphasizing national control over all means of production but human labor. [1] Under the Soviet Union, the number of state enterprises was estimated at 45,000. [2]

Privatization facilitated the transfer of significant wealth to a relatively small group of business oligarchs and New Russians , particularly natural gas and oil executives. [3] This economic transition has been described as katastroika [4] (combination of catastrophe and the term perestroika ) and as "the most cataclysmic peacetime economic collapse of an industrial country in history". [5]

A few "strategic" assets, including much of the Russian defense industry , were not privatized during the 1990s. The mass privatization of this era remains a highly contentious issue in Russian society, with many Russians calling for revision or reversal of the reforms. [6]

In the late 1980s, as part of the perestroika reformation movement, legislation championed by Mikhail Gorbachev —who pledged to build a " mixed socialist economy" [7] —effectively transferred some controlling rights over enterprises from the government to the employees and management. In 1987, over the opposition of some of his allies, [8] Gorbachev succeeded in passing a "law on state enterprise" through the Supreme Soviet of the Soviet Union , which granted work collectives a greater role in running enterprises. [9] In 1988, the Law on Cooperatives legitimized "socialist cooperatives," which functionally operated as private companies and were permitted to directly deal with foreign companies, and reduced reliance on central planning. [10] Later that year, private Soviet farmers were permitted to rent land from the state, purchase equipment, and hire workers, a significant step away from mandated collective farming following decades of dominance by state-owned agricultural concerns. The new regulations were seen as an effort to break state farms into smaller units and address critical food shortages in the Soviet Union. [7]

The legislation also enabled these enterprises to withdraw from associations on their own, which led to the process of so-called spontaneous privatization in which control over some industrial assets was acquired by their managers. However, this accounted for only several thousand enterprises, a small fraction of the Soviet industry . [ citation needed ]

In September 1990, the Soviet parliament granted Gorbachev emergency privatization powers, including the authority to transform state enterprises into joint-stock companies with shares offered on stock exchanges . [11]

One of the largest privatization efforts during the Soviet era was the transformation of the Ministry of Fuel and Energy into a joint stock company known as Rosneftgaz in September 1991.

In the months before the dissolution of the Soviet Union in December 1991, soon-to-be president Boris Yeltsin began assembling a team of economic reformers led by Yegor Gaidar , then a young reformist economist, and including Anatoly Chubais . The reform team initially considered Swedish social democracy as a model for Russia, but Gaidar opted instead to study Hungary as a template and was influenced by Poland 's use of shock therapy . Both Gaidar and Chubais were convinced that despite Russia's uniquely non-capitalist economic history, a market economy could successfully take hold in the country. [12] Following the August 1991 coup d'état attempt , the economic situation in the country dramatically worsened and an acute food shortage emerged. In October, Yeltsin delivered a speech in which he declared that price controls would be lifted on January 1, 1992, over Gaidar's recommendation that no specific date for the freeing of prices be given. [13]

Privatization took place on a much wider scale in the early 1990s, when the government of Russia deliberately set a goal to sell its assets to the Russian public. Upon the Soviet Union's collapse, the new government was forced to manage the huge state enterprise sector inherited from the Soviet economy . Privatization was carried out by the State Committee for State Property Management of the Russian Federation under Chubais with the primary goal being to transform the formerly state-owned enterprises into profit-seeking businesses, which would not be dependent on government subsidies for their survival. To distribute property quickly and to win over popular support, the reformers decided to rely mostly on the mechanism of free voucher privatization , which was earlier implemented in Czechoslovakia . The Russian government believed that the open sale of state-owned assets, as opposed to the voucher program, would have likely resulted in the further concentration of ownership among the Russian mafia and the nomenklatura , which they sought to avoid. Nevertheless, contrary to the government's expectations, insiders managed to acquire control over most of the assets, which remained largely dependent on government support for years to come. From 1992 to 1994, ownership of 15,000 firms was transferred from state control via the voucher program. [14]

Thus, although several of the initial objectives had not been fully achieved by the end of the vouchers program, a great deal of assets did fall into private ownership remarkably quickly and worked to provide some basis for market competition. Voucher privatization took place between 1992-1994 and roughly 98 percent of the population participated. The vouchers, each corresponding to a share in the national wealth, were distributed equally among the population, including minors. They could be exchanged for shares in the enterprises to be privatized. Because most people were not well-informed about the nature of the program or were very poor, they were quick to sell their vouchers for money, unprepared or unwilling to invest. [ citation needed ] Most vouchers—and, hence, most shares—wound up being acquired by the management of the enterprises. Although Russia's initial privatization legislation attracted widespread popular support given its promise to distribute the national wealth among the general public and ordinary employees of the privatized enterprises, eventually the public felt deceived. [15]

Privatization of the oil sector was regulated by presidential decree No.1403 approved on November 17, 1992. Vertically integrated companies were created by joining some oil-producing enterprises and refineries into open-stock companies. Starting in 1994 many former state oil companies were privatized. This privatization had been partial because the federal government had obtained ownership positions in several companies and had also retained full control over the transport of oil to lucrative world markets. [16]

In 1995, facing severe fiscal deficit and in desperate need of funds for the 1996 presidential elections , the government of Boris Yeltsin adopted a "loans-for-share" scheme proposed by banker Vladimir Potanin and endorsed by Anatoly Chubais , then a deputy prime minister, whereby some of the largest state industrial assets (including state-owned shares in Norilsk Nickel , Yukos , Lukoil , Sibneft , Surgutneftegas , Novolipetsk Steel , and Mechel ) were leased through auctions for money lent by commercial banks to the government. The auctions were rigged and lacked competition, being largely controlled by favored insiders with political connections or used for the benefit of the commercial banks themselves. [17] As neither the loans nor the leased enterprises were returned in time, this effectively became a form of selling, or privatizing, state assets at very low prices.

From 2004 to 2006, the government took control of formerly privatised companies in certain "strategic" sectors: oil, aviation, power generation equipment, machine-building and finance. For example, the state-owned defense equipment company Rosoboronexport took control of Avtovaz, the primary producer of Russian cars. In June 2006, it took 60% control of VSMPO-Avisma, a company that accounts for two-thirds of the world's titanium production. In 2007, United Aircraft Building Corporation , a company that is 51% government controlled, combined all of the Russian companies producing aircraft. [18]

In December 2010, Russian President Dmitry Medvedev had ordered regional governments to decide on privatization of non-core assets by July 2011. Arkady Dvorkovich , then a top Kremlin economic aide, said regional privatization proceeds could amount to several billion rubles in 2011, and regional authorities must prioritize the sale of utility companies, financial institutions, manufacturing and transportation assets and the media. [19]

In May 2012, after becoming prime minister, Medvedev said Russia should carry out its privatization program regardless of market volatility . [20]

After a session of the World Economic Forum in October 2012, Medvedev said "It is vital for our country to continue the course towards privatization". He stressed that had assured participants in the World Economic Forum session that "does not want to see an economy totally controlled by the state". [21]

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