Privatization in Russia:
Phases and Effects
Victor B. Supyan
Privatization in Russia has prompted profound changes in the socioeconomic life of the country -- including fundamental shifts in society, capital, and political power. Efforts to achieve the declared social goals of privatization will, in many aspects, determine socioeconomic and political conditions in Russia not only during the contemporary transitional period but also far into the future. Thus, the social objectives of privatization serve as one of the principal priorities among all of Russia's socioeconomic reform efforts.
More concretely, one can say that Russian privatization -- which is unprecedented in economic and human scale -- has entailed complex social and economic consequences. Among them are the emergence of a new social structure based mainly on the distribution of formerly state-owned property; the formation of a new income structure with much greater differentiation than under the former regime, with incomes derived from private capital that never previously existed; the development of a new relationship between employees and management; and changes in work motivation and managerial practices. Anticipated economic consequences of privatization include productivity gains, structural changes in the economy, and investment growth, which together promise to accelerate the rate of economic expansion.
Privatization as both proclaimed and practiced posits definite socioeconomic goals and priorities. In implementing the first privatization program in 1992, Russian leaders envisaged a substantial increase in economic efficiency through the decentralization of formerly state-owned enterprises into the hands of private owners. The principal social goals of the first privatization program included distributing former state-owned property on the basis of social justice and creating a massive middle class based on private ownership, which was widely perceived as necessary for social and political stability. I argue in this chapter that the process of privatization and its preliminary results reflected not only these declared socioeconomic objectives but also, to a considerable extent,