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August 9, 2007

What kind of capitalism?
August is often an eventful month in Russia. In August of 1610, Moscow swore allegiance to Prince Wladyslaw, who was invited to be Russia's tsar, and the Poles seized the Kremlin.

In 1939, the Molotov-Ribbentrop pact with Nazi Germany was signed; in 1968, Soviet troops marched into Czechoslovakia; and 1991 saw an attempted coup against Soviet leader Mikhail Gorbachev. Also in August, we have had a foreign-debt default, the burning of the Ostankino Television Tower, and the sinking of the Kursk submarine. The list goes on.

There is, however, another important event that is all but forgotten. In August of 1992, President Boris Yeltsin signed a decree introducing a system of privatization vouchers. This was a historic decision that launched a mechanism for reforming Russia.

Fifteen years have passed since the new express train named "Russia" departed on its journey. What is its destination - the capitalist El Dorado in the West or the communist City of the Sun in the east? I asked Anatoly Chubais, an adviser to President Yeltsin and the father of the voucher privatization, to answer this question in 1992. "I don't have any doubts on this score: the entire civilized world lives under capitalism."

Privatisation vouchers were supposed to be the first step towards the construction of a capitalist society. All Russian citizens received vouchers worth 10,000 rubles entitling them to a piece of government property. They could exchange vouchers for shares of their factories, buy securities in voucher investment funds or simply sell them.

Chubais claimed that each voucher could buy two brand-new Volga cars. In reality, it appeared that they were worth two bottles of vodka. True, some people were lucky. During the voucher privatization and subsequent loans-for-shares auctions, top-rank Communist Party officials, Young Communist League leaders, government officials and Mafiosi took over the controlling interest in plants and factories. They became the first capitalists and ended up running the whole show instead of the middle class that the authors of the reform expected to emerge as a result of privatization.

Only naive people could count on becoming millionaires in a couple of years. Yet 80% of people hoped that economic reforms would change their lives for the better. A recent poll by VTsIOM (the National Public Opinion Research Center) showed that 38% of Russians polled believe that their life is worse now than before privatization. Ironically, 58% are confident that the course towards a market economy was correct. But almost two-thirds object to the way it was done.

When asked which era they would most like to live in, four percent chose Stalin's, 26% (mostly seniors) Brezhnev's, one percent Yeltsin's, and 52% prefer the present time. We may go on arguing about what type of capitalism we are building, but one thing is clear: the majority of people prefer the kind that we have now.

During these last 15 years few representatives of the Russian elite have dared express themselves with such clarity. Even the word "capitalism" was almost deleted from the public lexicon. Policymakers and even economists preferred to use euphemisms - market relations, reforms, and a transition period. Nobody talked about the social system, which the Soviet political economy defined as a "socioeconomic formation based on the private ownership of the means of production and the exploitation of hired labor by capital."

Having looked through Russian presidents' economic speeches, I haven't found a clear-cut definition of the route we are taking, either. Some five years ago, Vladimir Putin put an end to the eternal domestic dispute by saying: "Russia is not going to follow any special path." He specified that democracy was our political goal, and market relations were the economic target. The last few years have shown that he has his own interpretation of both.

Federation Council Speaker Sergei Mironov was one of the first to ask the question point-blank. He said recently: "I think we should start with a simple explanation; we must clearly tell our people what we are building in this country. What kind of society? What goals do we have?"

Today, the leader of the Fair Russia party has opted for socialism and is reluctant to "build, or rather complete, the construction of capitalism in Russia."
But what kind of capitalism does he mean? The latter comes in a wide variety of forms: government-controlled, liberal, oligarchic and wild, Western and Latin American. The same is true of socialism: we had "mature" socialism; the North Koreans are building what they call "chuchkhe" (self-reliance); there is also the Scandinavian model; finally, there is the Hugo Chavez-directed Venezuelan version and Leopold Senghor's "lyrical socialism" in Senegal.

But the terms we use are probably not that important. The most important thing is to prevent people from being sacrificed to abstract development schemes and to make their prosperity the goal of any reform.

RIA Novosti political commentator Maxim Krans
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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