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Journal of Political Ecology:
Case Studies in History and Society
VOLUME 5 (1998)
Privatizing the Russian Economy, 1997, by Joseph R. Blasi, Maya Kroumova,
and Douglas Kruse. foreword by Andrei Shleifer ; with the research assistance
of Daria Panina. Ithaca, NY: ILR Press, xix, 249 pp.
Reviewed by Dr. Tatyana G. Bogomazova, Researcher, Peter the Great Museum of Anthropology and Ethnography (Kunstkamera) of the Russian Academy of Sciences, St. Petersburg, Russia.
The authors of this excellent,
clearly written and approachable volume evaluate the privatization process
in Russia from 1991 to 1996. Privatization is presented in the broader
context of Russian economic reforms that took place in the period after
"perestroika." Specialists and common readers will find this
book particularly valuable, whether seeking a better theoretical understanding
of privatization in Russia or specific details of this most recent history.
First author Joseph Blasi served
on a US Agency for International Development advisory team from Harvard
University's Institute for International Development. Andrei Shleifer,
author of this volume's Foreword, had a unique chance to work with Deputy
Prime Minister Anatoly Chubais--the cabinet minister responsible for privatization--and
his deputy, Dmitry Vasilev. From this lofty vantage point, Blasi and his
colleagues were allowed to observe policy making around the process of
privatization. Their appointments also provided an unusual opportunity
to form a research program analyzing the transition process. Maya Kroumova
and Douglas Kruse helped with the analysis of the evidence. The result
is a very important documentary source for economists and decision makers.
At the outset, useful background
information is presented concerning the political and economic context
of the postcommunist period. A "Chronology of Major Events"
is presented to help render more coherent the whirlwind of history. The
introductory chapter follows, and it is of particular value for its assessment
of the reasons of privatization, its program, and how it worked. Here
one can find interesting details lifting the veil that masked the privatization
backstage. A summary of "The Russian Business Economy and Companies"
presents a considerable wealth of statistical data, and serves as an excellent
overview to the emerging private sector.
The discussion then moves to questions
specific to the period of privatizing under conditions of a newborn market
system. Special chapter-length emphasis is given to discussions of "Ownership,"
"Power" and "Restructuring." The second chapter is
dedicated to the initial division of ownership, how the struggle for it
unfolded, and finally, an analysis of how property has actually been distributed
to private citizens. One of the main points of the chapter concerns the
attitude of Russian citizens toward voucher privatization: "The Russian
public became more cynical about privatization . . ., Russians increasingly
questioned privatization" (p. 76). These inferences are based on
the results of series of surveys that allowed the authors to conclude:
". . . limits of citizen participation in the new economy were supplemented
by a host of the other problems that complicated the public's perception
of privatization." The authors properly point out that the share
of property given to citizens must be viewed in the context of the declining
living standards of many Russians.
Chapter 3 reviews the circumstances
of initial transition, governance in 1996, and the status of workers as
shareholders and employees. But the most interesting part of the chapter
is a section entitled "The Mafia as a Corporate Power." Evidence
concerning this "grey eminence" of privatization in Russia is
scarce, and for obvious reasons it is difficult to substantiate folk wisdom
holding that criminal elements are linked with corrupt members of the
"nomenklatura" in dividing the country into spheres of influence
(p. 119). But the authors are careful not to exaggerate the criminal elements'
influence over the Russian economy. They assume there are three areas
chiefly controlled by the Russian mob: (1) smaller privatized and start-up
businesses, (2) smuggling and transportation of valuable commodities;
wholesale and retail outlets where products can quickly be turned into
cash, and (3) some portion of very profitable large enterprises that produce
commodities or have some access to them (p. 119). The authors believe
organized crime wants risk-adjusted return, so large, privatized, unprofitable
firms are out of criminal control. Here I would argue with the authors,
as an unprofitable weak company may cut employees, reduce capacity, and
confront serious cash-flow problems, while its director actually might
be one of the most affluent persons in a given region. It may be to his
advantage to promote an unfavorable image of his company and appeal to
the contemporary social mood of overall crisis. This is especially relevant
in the post-Soviet economy, in which information concerning corruption
is widely suppressed, leading to artificially low official rates.
A central point, to which the authors
devote a separate chapter and return repeatedly, is restructuring. "What
is true restructuring?" they ask. Their answer relies on an analysis
of business operations, management and control, social services for employees,
access to capital, and so forth. In other words, their analysis of the
barriers to restructuring and the emergence of private capital markets
focuses not only on the official planning discourse, but on real problems
around real changes. The analysis is convincing, as it relies on relevant
statistical data from a range of reliable sources.
The book's last chapter is devoted
to the future of reforms. It sounds especially interesting now, with the
old Russian government having been dismissed and our society experiencing
recurrent governmental crises. From this perspective, the title of the
issue "The Reality From Which There Is No Escape" is particularly
intriguing. "The harsh reality is that there is no alternative to
far-reaching changes in most of Russia's enterprises" - this observation
seems to be the most obvious and perspicacious conclusion in the final
analysis. We may just hope the current situation would be the start of
a new period of reforms. That they are needed is brightly proved by Kremlin
Capitalism and its authors.
Indigenous Organizations and Development, edited by Peter Blunt and D. Michael Warren. Intermediate Technology Publications, London (1996), xxii, 253 pp. (IT Studies in Indigenous Knowledge and Development.)