Trip to the market - private enterprise in Russia

Reason, August-Sept, 1993 by Cathy Young

"Well, you can see for yourself how we live," several people tell me during my April visit to Moscow. The trouble is, they're not all saying the same thing: Some mean that things obviously aren't so bad; others, that anyone can plainly see how awful things are.

"Just imagine--I work two jobs now, and my husband works and gets his pension benefits, and my daughter works, and it's just enough for us to buy food!" says Faina Goncharova, the mother of my old classmate Inna, laughing almost merrily at the absurdity of it all. Goncharova, who has worked for years as a shop manager at a state-owned paper-products factory, doesn't like Yeltsin and regrets the breakup of the Soviet Union. But she wishes Russia had gone capitalist much sooner: "If only this had started when I was 20 years younger, I'd have started my own business. All the things I could have done!" Her second job is with a new company (owned by a really nice couple") that makes construction materials.

Younger people in particular are defecting in droves to the private sector. Yuri, a 28-year-old trained as a physicist, makes 40,000 rubles a month ("Well, it's only $50," he concedes impatiently) as vice president of a furniture manufacturing business run by his older brother. They recently started working on an order from a French customer, their first from the West.

One of the main complaints about private business in Russia has been that "they don't produce anything, they just buy and sell"--partly a reflection of the old Soviet prejudice against "speculation," partly a legitimate criticism. But while many biznesmeni are essentially get-rich-quick artists with no goals beyond making a fortune playing rubles and dollars off against each other, a growing number have made enough money in trade to start investing in production. The other complaint, that the lines between the private sector and the criminal underworld are often bluffed, remains a valid one: A day does not pass without new business-related shootings, car bombings, arson, or at least an unexploded grenade found near a store.

Still, there are signs of progress, such as shops with colorful signs--Western-sounding ("Exodus"), proudly Slavic ("Yaroslavna," named for a legendary 11th-century princess), or descriptive ("Udachnoye Priobreteniye": "Lucky Buy")--that are definitely a cut above traditional Soviet names like "Ovoshchi" ("Vegetables") or "Obuv" ("Shoes"). The vending stalls with their chaotic assortment of almost invariably imported goods--cigarettes (a bargain at about 50 cents for a pack of Marlboros), liquor bottles, Milky Way candy bars, crotchless lace panties, deodorant, canned pineapple, neon-colored plastic digital watches--are not only more numerous than last fall but also generally a bit more civilized: cleaner and neater, some sporting signs and logos and even occasional decorations such as Christmas-tree lights. They also display, almost without exception, "No Returns" signs; civilized trade still has a long way to 90.

One would think few Russians could afford to shop at these kiosks--25 cents is a lot to pay for a candy bar when your monthly salary is $25--but they stay in business anyhow. Even the $1.00-a-pound bananas find their buyers, judging from the number of banana peels on the sidewalks (trash cans and nascent capitalism apparently do not go well together). Which is not to say that things aren't tough for the average person, and even tougher for single mothers or retirees living alone.

I watched as an elderly man in a food store realized that he didn't have enough money to pay for the fish the saleswoman had weighed for him, and with obvious discomfort had to ask her for a smaller one, only to come up short yet again (he succeeded on the third try). Yet several people, not at all from the nouveau-riche class, told me that they like things better the new way: At least if you have money, you can buy something without hunting for it and without standing in line.

Many kiosks have "Will Buy Voucher" signs posted in their windows. Would-be buyers of the vouchers that can be exchanged for shares in state companies going private are also seen in the street spots where free-lance traders who can't get a stall or a table ply their business. The interest in buying vouchers may indicate a growing confidence in the privatization plan, though the vouchers are still selling below their face value of 10,000 rubles (inflation notwithstanding). Most people to whom I spoke were holding on to their vouchers, but I did meet one investor: a mathematics professor in his 60s who had deposited his voucher in a "mutual fund" run by two young men renting desk space in the neighborhood barber shop. He had already received his first dividend of 1,000 rubles.

Vassily Selyunin, one of Russia's most radical market economists (see "Russia's Real Radicals," April 1992) and an adviser to the pro-Yeltsin Democratic Russia coalition, says that the government's privatization effort "has gotten off to a pretty good start." Over half of the country's small companies--service establishments, shops, restaurants--have already been privatized, a total of about 60,000. The privatization of large enterprises (most notably, the ZIL auto factory) is starting as well, though in some areas local bosses, emboldened by Yeltsin's apparent weakness earlier this spring, have suspended the open sales of shares for vouchers.