Russia's Search for Liberty: Part V. From Purges to Perestroika

Russia industrialized during the 1890s and lagged far behind the Western economies. Although a small percentage of the population controlled most of the assets, private and state capitalism flourished. As railway construction and factory productivity expanded, government support for private sector capitalism evolved until the 1917 communist conquest. Rather than legislating improvements, Soviet industrial policy authorized forcibly seizing and collectivizing property its citizens rightfully owned. As quasi-official policy, for more than ten years the government vigorously persecuted kulaks (wealthy peasants).

Collectivization led to a more urban culture; most cities were unable to accomodate these new inhabitants. "Legal residents" of Moscow must be born there or be married to someone whose family has influence there. To solve the vagrancy problem, the Soviet regime temporarily disregarded the legal residency requirements and constructed very slapdash communal housing. After the 1962 Novocherkask workers' riots, a commission led by Nikolai Bulganin concluded that as many as two or three families (five to nine people) were crammed into residential units consisting of at most three rooms. Six years later Moscow State University sponsored a study that found an occupancy rate of ten to twelve people per communal housing unit.

In 1965 Soviet state capitalism altered slightly. General Secretary Leonid Brezhnev instituted the concept of Libermanism. Named for the Rostov economist who created it, this policy revised a purely state mandated economy and allowed factory managers more control of their quotas. Although Libermanism lessened (albeit slightly) the role of the state to solve impending consumer goods shortages, it was not the proper solution to the widespread chaos that conquered the Soviet economy. By 1985 the communist leadership realized their best plan was to introduce what Aleksandr Yakovlev (the mastermind of perestroika) called "socialism with a human face". This program led to clammor for democracy and subtle suggestions of capitalism. When the sudden end to Soviet communism came, political reform took precedence to economic issues despite the inflationary status of the ruble. Democratic reforms commenced, but many Russians regard the economic reforms as a blatant failure.

That strategy may prove the death knell of democracy and entrepreneurial capitalism in certain regions of the former Soviet bloc. An official process of distributing economic responsibilities to individuals and provinces continues, but these policies also support large-scale state capitalism. Russia likely will not abandon the privatization process entirely, but to make such predictions now when the process of economic federalism is still quite incomplete would seem to exceed the boundaries of reason.

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