The task of
privatization in Russia surpassed by far the scale of privatization
of certain branches of industry undertaken in some Western
capitalist countries, such as Britain under Prime Minister Margaret
Thatcher. Russia had inherited an economy in which the share of
state property was the highest in the world – 95.4 percent.
state property in the USSR was described as public property; that
is, in theory, all citizens were regarded as equal owners of state
assets. In reality, the government and party elite, which actually
managed public property, came to regard it as belonging to
themselves. They came to see national assets as their nomenklatura
property. Naturally, they were reluctant to give up
power and the assets they controlled, and they had many
opportunities to delay and obstruct any real privatization or to
conduct it on their terms.
The process of
the creeping, unofficial “nomenklatura privatization” had
started already under Gorbachev. Between 1987 and 1990, when the
Soviet system began to disintegrate, the ruling elite was suddenly
confronted with the prospect of losing everything it possessed. To
prevent this, a series of all-union and then republican laws were
enacted that carved up state property and put it under all-union,
regional, and municipal control.
The new laws
divided state assets further by transferring full control over them
to different groups of the nomenklatura, such as the heads of
various economic ministries, company directors, and collective- and
state-farm managers. As a result, state assets were “hidden,” as it
were, from the claims of the rising masses. Instead of one
impersonal owner in the form of the state, it acquired numerous
“custodians,” whom any future potential claimants, wishing to
dispute their ownership rights, would have to fight separately.
The essence of
what happened is best illustrated by the change in the status of
directors of state companies. Formerly, directors were state
employees on state salaries, which they could not legally increase
by a single ruble. Now they were the de facto owners of their
enterprises and had legal rights to dispose of assets and make money
any way they wanted. They could now personally set the level of
wages paid to workers as well as their own remuneration.