Privatization in Russia - the Road to a People's Capitalism?

By Clarke, Simon; Biziukov, Petr | Monthly Review, November 1992 | Go to article overview

Privatization in Russia - the Road to a People's Capitalism?


Clarke, Simon, Biziukov, Petr, Monthly Review


Boris Yeltsin's government has been issuing a succession of laws and decrees on privatization whose scale and ambition make Margaret Thatcher's "sale of the century" look like a village jumble sale. While this is meant to impress the IMF that Russia is firmly on the road to capitalism, most of the publicized examples of the privatization which has already taken place more resemble a mafia benefit night. However, as we might expect, the reality of privatization in Russia is rather different and more complex than either of these images would suggest.

There have certainly been some well-publicized cases of privatization in Russia which have been nothing more than asset-stripping exercises. There have also been examples, particularly in smaller enterprises in Moscow, in which privatization has been a means by which the enterprise administration has sought to seize control of the enterprise for its own advantage, grabbing the bulk of shares for itself, and issuing non-voting fixed-interest shares to workers. However, these forms of privatization have been well-publicized precisely because they have provoked opposition, both from competing factions of the new elite, and from the workers in the enterprise, as a result of which they have frequently been blocked.

Our experience of privatization, outside the Wild West environment of Moscow, is rather different from this picture. Many well-placed individuals, particularly former Party and Komsomol officials, have found comfortable positions in new commercial and financial structures, and in land speculation and property development, but the opportunities for profiting from the privatization of industrial enterprises are much more limited, not least because the workers in those enterprises, while they may not be effectively organized, have their own expectations of privatization. In many enterprises privatization plans have been bogged down by workers' opposition, which has often legitimated bureaucratic obstruction.

Those enterprises which have privatized most successfully seem to be those which have sought to respond to the workers' aspirations. In this framework privatization is not so much a vehicle of change, as a means of preserving, or even strengthening, most of the essential features of the Soviet enterprise as a "state within the state", giving the enterprise the independence and the resources to resist change. This pattern appears very clearly in the experience of privatization in the Kuzbass mining region, where about thirty industrial enterprises have been privatized. The Vakhrusheva mine in Kiselovsk is one of the most interesting, because the administration claims that privatization is providing the opportunity to experiment with the building of "people's capitalism".

When the then Prime Minister Ryzhkov visited Prokopevsk in the Kuzbass he broke down and wept, proclaiming that not even animals should have to live in such conditions. If he had driven out of Prokopevsk to the neighboring town of Kiselosvk his display would have carried more conviction. Kiselovsk is a small town of impermanent and decrepit buildings almost swamped by a moonscape of open-cast mines and slagheaps. The pithead of the Vakhrusheva mine has a strange beauty in such a landscape, for it stands in a clearing in one of the few remaining bits of forest, with the sun playing on the crumbling administration building, opposite which stands a beautiful, elaborately decorated, wooden "prophylactorum", a large building provided for the workers to rest. Although the mine is privatized, the administration has not thought to build itself a post-modern block to define its new corporate identity, although signs by the front door indicate the direction to the office of the commercial bank and the commodity broking firm, while opposite an old store has been converted into the commercial shop, stocked with Western goods.

The Vakhrusheva mine was a pioneer of privatization. …

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