Kapitalizm: Russia's Struggle to Free Its Economy

Rose Brady
Copyright Date: 1999
Published by: Yale University Press
Pages: 320
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  • Book Info
    Book Description:

    As Moscow bureau chief forBusiness Weekmagazine, Rose Brady was on the scene during the fall of the Soviet Union and the key early years of Russia's transformation from a socialist state to a market economy. Brady interviewed scores of major political and economic figures, entrepreneurs, and ordinary Russian citizens, all of whom confronted enormous changes during the first five years of economic reform. In this compelling book, Brady provides one of the first accounts of Russia's transition period written by an observer without a personal stake in the reform efforts' outcome. The author takes readers into the factories, stores, banks, impromptu markets, homes, and schools of Russia, as well as into the corridors of power, to explain how the country's own brand of capitalism has evolved.The book describes the shock to citizens when Boris Yeltsin's government liberated prices in 1992; the early entrepreneurs who scrambled for position as state assets were privatized; privatization chief Anatoly Chubais's crucial compromises, which altered the shape of Russian capitalism; and the development of an oligarchical system dominated by a handful of financial-industrial conglomerates. Some people have been left behind in poverty, sickness, and confusion as Russia has lurched toward capitalism, Brady concludes, yet by 1997, with private-sector domination of the economy, Russia had achieved an essentially successful economic transformation.

    eISBN: 978-0-300-12762-1
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Preface
    (pp. ix-xvi)
  4. Chronology of Events, 1991–1997
    (pp. xvii-xxx)
  5. 1 Images, Voices
    (pp. 1-6)

    Babushki.Grandmothers. A conga line of babushki stood shoulder to shoulder outside the railway station.¹ Their feet stamped in the slush and mud. Their blank eyes gazed into the distance. Their rough hands held out bottles of vodka, loaves of bread, Ukrainian sausages, Chinesemade handkerchiefs, T-shirts, used boots, old cameras . . . all for sale.

    Hundreds of grandmothers stood at a makeshift market at the Kiev Railway Station on the south side of Moscow. Or a few miles away at Belorusski Vokzal. Near metro stations on the outskirts of town. At Luzhniki Stadium. And at train stations and stadiums...

  6. 2 The Shock of Economic Freedom
    (pp. 7-43)

    “There is no meat and there won’t be any!”

    Propped on the counter in a Moscowgastronom,the sign captured the dire mood perfectly. No meat, no hope. It was the fall of 1991, and Russians were in a panic over food shortages. At stores across the country, long lines formed by seven o’clock in the morning, and there people stood, sometimes for five hours, before receiving their piece of subsidized beef or sausage. Although the stores set limits on purchases of beef (two kilos), sausage (one kilo), cheese (three hundred grams), and cooking oil (one liter), the shelves and...

  7. 3 The Rise of the New Russians
    (pp. 44-62)

    The liberalization of prices shocked most ordinary people. But one group of Russians was poised to take advantage of it. For them, economic freedom represented the chance to start or expand businesses, to make and spend money, to break away from the sullen, gray monotony of Soviet life.

    These were Russia’s early entrepreneurs.

    They were an odd collection of former black-marketeers, intellectuals, and Communists. Some were renegades who rushed to set up cooperatives—small private companies—when Mikhail Gorbachev allowed them to do so in the late 1980s. Others were students and researchers who got their start through Komsomol, the...

  8. Photographs
    (pp. None)
  9. 4 The Battle for Russia’s Wealth
    (pp. 63-154)

    Freeing prices was just the first step. Just as important for Yeltsin and his reformers was rolling back the state’s control of property. In early 1992 the state owned nearly everything in Russia, from diamond mines and oil fields to food stores and hairdressing salons. No modern country had experienced such comprehensive state control of its economy for so long. And even though the system had begun to break down under Gorbachev’s rule, federal ministries and bureaucrats as well as local politicians across the country still actively interfered in the economy. Property and power had been tightly intertwined; inevitably, selling...

  10. Photographs
    (pp. None)
  11. 5 Capitalism Versus Communism
    (pp. 155-183)

    Politics and economics have always been tightly intertwined in Russia, but that was never more true than in 1996. The country was transfixed by the prospect of presidential elections in June. The victory of Communists and nationalists in the December 1995 elections, plus Yeltsin’s poor popularity rating early in 1996–8 percent versus 20 percent for his Communist rival, Gennady Zyuganov—played on the nerves of government officials, businesspeople, and Western observers a1ike.¹

    Would the elections go ahead, or would Yeltsin find a reason to delay them (thus extending his presidency)? If the elections went ahead, would Yeltsin find a...

  12. 6 The Wary Westerners
    (pp. 184-202)

    Russians weren’t the only ones discovering pockets of wealth in the changed Russian landscape. Westerners were, too, but for them the new territory seemed especially confusing and dangerous. For Western businesspeople, the Russian market promised a wild ride: high expectations often met with dashed hopes, unbelievable hassles sometimes masked extraordinary rewards. It was not a market for the fainthearted. Robert Strauss—businessman, Democratic Party bigwig, and U.S. ambassador to Russia from 1991 to 1993—put it bluntly: “The Russians are constantly complaining about the lack of investment, the lack of American capital coming to Russia. I tell them, ‘Our people...

  13. 7 Kapitalizm Reborn
    (pp. 203-243)

    “Let us not divide the country into victors and vanquished,” Yeltsin told voters in a short, pretaped victory speech broadcast on television on July 4,1996. He looked tired and spoke slowly. “We argued a great deal. Each of us asserted his position. You have resolved this dispute. I am sure that there will be room in the new team for all of those in whom you placed your trust.”¹ The next day, campaign manager Anatoly Chubais was more exuberant at a packed press conference at the Interfax News Agency. Still looking boyish in spite of all his political battles, Chubais...

  14. Postscript
    (pp. 244-248)

    Much more than a financial cloud cast its shadow over Russia in the spring and summer of 1998. An economic hurricane ripped through the country, destroying much in its wake. The backwash from the Asian currency collapse and a slump in global oil prices combined with Russia’s still-unresolved structural economic problems to plunge the country into its own financial crisis.

    All through the spring and summer of 1998, the Russian government had struggled to cope with its mounting short-term debt problems. Still living beyond its means, Russia had become hooked on borrowing through its GKO or Treasury bill market to...

  15. Appendix: A Statistical Portrait of Russia’s Economy
    (pp. 249-256)
  16. Notes
    (pp. 257-270)
  17. Recommended Reading
    (pp. 271-274)
  18. Index
    (pp. 275-289)