Let a thousand Nizhnys bloom - Nizhny Novgorod, Russia; fostering a market economy in Russia - On the Scene

National Review, Oct 24, 1994 by Gareth Williams

Anyone familiar with Maksim Gorky's autobiographical My Childhood and My Apprenticeship will have a clear idea of pre-Revolutionary Nizhny Novgorod: a great, noisome, bustling entrepot that amply demonstrated both clauses of the old dictum, "Where there's muck there's brass." Its famous fair attracted merchants and goods from throughout the Empire, from the Black Sea to the Baltic, from Siberia to Poland.

After seventy years of Soviet rule its impressive mercantile architecture is still intact, confidently perched on a hill overlooking two of Russia's great rivers, the Volga and the Oka. The inhabitants of the villas and palaces of trade, though, are long gone: Gorky, as the Soviets renamed the city, was a sleepy provincial backwater, the involuntary abode of political exiles such as the Sakharovs.

Now, however, the feel of a trading metropolis has returned. Market stalls abound, as do new Russian entrepreneurs. Almost as abundant are American consultants, largely from the International Finance Corporation (IFC). They were invited into the city by the disconcertingly youthful-looking regional governor, Boris Nemtsov, to help organize its ambitious privatization program. In many ways, Nemtsov is the model of the progressive regional politician: a Western-looking, sharply presented free-marketeer. At any rate, his recipe seems to have found favor with the electorate. Bucking the national trend, he was comfortably returned in last year's elections.

The region's latest privatization venture is perhaps its most courageous. Having sold off the state retail outlets and distribution network, it is now confronting the breakup of the collective farms. Despite the widespread emergence of private farmers in Russia - around 300,000 at last count - the system of behemoth collectives still dominates the countryside. For both economic reasons (the collectives are disastrously inefficient) and political reasons (they are highly reactionary), reformers desire their demise.

But the issue of land ownership is one of the most emotive in Russian politics. It lay at the heart of the greatest of nineteenth-century reforms, those of the Tsar-Liberator Alexander II, who belatedly abolished serfdom. It provided the fuel for Russia's revolutions of 1905 and 1917, and for Stalin's brutal collectivization of the peasants in the early 1930s. In the 1990s land reform has again become one of the most contentious of political issues. It is stubbornly resisted by the former rural elite through its political grouping, the Agrarian Union, aligned with those champions of rabid reaction, Vladimir Zhirinovsky's Liberal Democrats.

The IFC plan seeks to use existing Russian legislation to auction off the collective farms, land and assets to their members. Each person living on the farm will receive an entitlement to land which can be used at the auction to purchase land lots. Those actually working on the farm will also receive entitlements to purchase the working capital, such as seed, stock, machinery, and buildings.

Such auctions have gone ahead in five collective farms in the pilot project, gaining national media coverage and making front-page news in Russia's biggest pro-reform paper, Izvestia. The paper read the event as the belated fulfillment of the post-October 1917 promise to give the land to the peasants who worked it, made by Bolsheviks desperate for rural support. However, since each person's land share of about 12 acres will be insufficient to farm at a profit, they will have to combine in one way or another. Various forms of farming enterprises have emerged, including the Russian equivalents of joint stock companies, farm partnerships, and individual family farms.

Some of the latter have been of considerable size. One has been set up by a particularly enterprising family, the Kasyanovs, who managed to lease a large number of pensioners' land entitlements. At over 865 acres, it is the sort of substantial family farm that has not been seen in Russia since the kulaks were "liquidated as a class" in Stalin's day.

Should the process be replicated throughout Russia - and Prime Minister Viktor Chernomyrdin has hailed it as a model for the rest of the country - revolution in the countryside could be in the offing. But the prospects of its spreading rapidly are doubtful given the danger it poses to local apparatchiks. The local stalling of reform has consistently been a stumbling block for Yeltsin's government, but the recent spasm of government reaction provides little hope that such stalling will be faced down. Other privatizations have been implemented, but these have been urban.

Breaking up the collective farms is laudable, but one has only to travel around Russia's countryside to realize that although perhaps a necessary condition for economic revival, it is by no means sufficient. Bezdorozhe (roadlessness), a traditional curse of Russia, is still very much a problem. Decades of underinvestment mean that whole villages become inaccessible at least once a year, when the spring thaw turns unpaved roads to mud. Driving around the Russian countryside in winter is less like the invigorating, bell-tinkling sleigh rides of Russian literature and more like the Paris-Dakar rally in its later stages.