Who Will Inherit the "Workers'
Paradise"?: Worker Ownership and
Enterprise Efficiency in Russian
John Logue and Daniel Bell
A central feature of Russian privatization has been the transfer of ownership of the means of production from the state to the employees of the enterprises. Beginning with the resurrection of cooperatives in 1986, continuing with leasing and experimental privatization in 1987-1990, and culminating in the mass privatization through vouchers under the 1992-1994 law, worker ownership was the predominant method of Russian privatization. It is estimated that about 90 percent of all Russian firms privatized through July 1994 did so through majority employee ownership. 1 Employee ownership continued to play a role, though a less substantial one, in subsequent privatization in 1994-1995. Despite considerable erosion of employee ownership since then, Russia continues to have more direct employee ownership than any other country.
At the same time the desirability of direct worker ownership of the means of production in Russia has been hotly disputed. The initial enthusiasm of the Gorbachev years and Boris N. Yeltsin's first economic reform team under Russian Federation deputy prime minister Maley in 1991 for worker ownership at the enterprise level gave way under Yegor Gaidar and Anatoly Chubais, who took over in November 1991, to strong ideological opposition to employee ownership. For Gaidar and Chubais, who together set the tone for Yeltsin's economic policy from late 1991 until the 1998 financial crisis, worker ownership was accepted only as a necessary political compromise for a short transitional period until the "real owners" emerged; Western and international aid agencies supported this position. In the enterprises themselves, ownership and control issues were at the core of continual battles between workers and managers as many enterprise directors sought to become the "real owners."