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Article Excerpt
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PRIVATIZATION IN CONTEMPORARY RUSSIA MOST OFTEN HAS BEEN understood as part of the post-Soviet transition, a step on the path to market coordination of the economy after 70 years of communism. But the massive property transfers of the 1990s in postcommunist Europe were not particular to postcommunism. They involved, above all, enclosure of the commons--the redefinition of public goods as private, followed by the introduction of fees to be paid to new owners for the use of those goods. This shift in the meaning of property was part of a global phenomenon at the end of the twentieth century, in which goods and services that for decades or centuries before been provided by the state were privatized. Privatization in Russia after the collapse of communism--of the apartments in which people lived, of their transportation, of the factories and farms in which they worked--was not a phenomenon distinct from the privatization of water, military and security services, and plant genomes that occurred in the West at the same time (Allina-Pisano, 2008: 2-3; and Verdery and Humphrey, 2004). Similar ideological currents, market pressures, and political incentives arguably underpinned both postcommunist privatization and expansion of the private sector in the capitalist world: for economic entrepreneurs, the point was the creation of excludability, and the means was the redefinition of communal property as "mine," rather than "ours."
Questions of distributive justice, as well as the challenge of wresting profit from new ownership regimes in the context of open markets, led to resistance to privatization. If resistance manifested itself elsewhere in the world primarily through social mobilization against the neoliberal economic policies that came to be known in the vernacular as "globalization" (Sommier, Fillieule and Agrikoliansky, 2008; Tarrow, 2005), in post-Soviet countries that resistance was expressed primarily through the state bureaucracy at the regional and local level. Some of that resistance was principled or practical (Allina-Pisano, 2004), but public servants overseeing state property also had an incentive to retain control over that property in order to charge fees for its use (Verdery, 2002: 18)--or, in another formulation, to obstruct market entry in order to maintain monopoly rents (Hellman, 1998). In the 1990s, organized public resistance to privatization as such was virtually absent in Russia, though public anger at those who had obtained public assets through plunder or closed auction was palpable and expressed at the ballot box--most famously in the 1993 and 1995 Russian parliamentary elections, where the policies of President Boris Yeltsin were roundly rejected in favor of communist and nationalist candidates. Such electoral choices expressed, among other things, profound public anxiety about the nature of business entrepreneurs' control over productive assets (see Woodruff, 2009: 150).
In recent years, the struggle for control over productive assets in Russia once again has come to involve the state, and political actors have used companies and business associations as vehicles for enacting state policies (Markus, 2007). The response from scholars and political commentators alike has been to express renewed concern about the rule of law in Russia and the threat of state encroachment on private property rights. Questions regarding contract guarantees and state claims to ownership have become central to contemporary debates about property rights in the Russian Federation.
Some observers have treated the Kremlin's acquisition of controlling stakes in many major Russian companies as evidence of back to the future, Soviet-style political development. This position has been most explicitly articulated with respect to the differential price regimes that the corporate gas giant Gazprom offers to Russia's neighbors and to European Union markets. The idea in both popular discourse and in debates among social scientists is that the company is using the supply of a commodity as an instrument of geopolitics. However, as Woodruff (1999) argues, Gazprom may very well be pursuing a commercial rather than a political logic by selling a product at prices that reflect the seller's idea of what a given market can bear. The Russian state's renewed administrative capacity, in other words, has been accompanied by a profit-driven logic (Woodruff, 2007).
Woodruff's argument suggests that we might exercise caution in interpreting corporate behavior as expressing a statist bias. Further, we might reexamine the notion that the apparent reemergence of a Soviet-like juggernaut is a product of recent politics in Russia. The consolidation of state ownership is not solely the result of political machinations in the Putin and Medvedev years. As has been acknowledged elsewhere, the economic incentives that led to nationalization in the Putin era were born in the 1990s. Relatively unregulated privatization processes led to the formation of private monopolies and oligopolies. In following years, businesses encountered market pressures that drove the formation of vertically integrated companies. This consolidation of firms and resources significantly reduced transactions costs for the state actors who subsequently took over or purchased those rights on the market (Allina-Pisano, 2009). Current trends may represent not so much a reassertion of Soviet-era state coordination as Russian elites' mastery of market logic and rules--a phenomenon not entirely distinct from the creative financial machinations in the United States housing and energy markets during the same period.
The fact that the Russian state in the Putin and Putin-Medvedev era has been successful in reinstating control over a variety of private companies also suggests a certain measure of implicit public support. The state's ability to renationalize companies arguably proceeds in large part from public dissatisfaction with the way in which industrial privatization was conducted in the 1990s; the lack of public legitimacy for ownership acquired in the early days of postsocialism made state reacquisition of property a few years later more palatable, and even welcomed, by the population.
Partly in response to the apparent circle of privatization and recapture of assets by state actors in post-Soviet space, some observers of Russian property rights development (for example, Barnes, 2006) have underscored the teleological quality of many analyses of postcommunist redistribution. They argue that rather than thinking about privatization as an end state in a transition from communism from capitalism, we ought to conceptualize the reconfigurafion of property as a continual process.
It makes sense to characterize certain forms of property in Russia as continually alienable and transferable, and there are analytical advantages to doing so. First, such approaches free the researcher from the constraints of the conceptual frameworks that parsed the "transition" from Soviet power. Second, the fact of repeated iterations of sale suggests that despite the oft-made charge that property rights in Russia are not secure, some parties are indeed free and willing to enter into contracts. This raises a number of questions, including how and why this occurs, and by what mechanisms and with what incentives people are included or excluded from the process.
Nonetheless, the reframing of property redistribution as continual contestation requires an important caveat. It is true that in the Russian Federation, the battle for control over production factors is ongoing. However, competition for ownership of major assets involves an ever-smaller circle of players. For a variety of by now well-documented reasons, asset reassignment in post-Soviet privatization led to the consolidation of ownership control in the hands of the managers of productive assets. This occurred at the top of labor hierarchies: factory directors and collective farm chairmen who had been stewards of socialist property became owners of that property under capitalism. In recent years, that property has continued to circulate among those managers and political players at the regional and national level.
Furthermore, the vast majority of Russians lost their stake in this competition in the first decade of post-socialism--notwithstanding more recent efforts to create mass ownership through investment in narodnye (people's) IPO shares in a handful of state companies (for example, Vedomosti, 2007; Pan, 2008). While consolidated assets can and are changing hands, the game is over for large-scale division of production factors: outside of a small circle of capitalists, most people are not free to enter into contracts nor do they have an incentive to accept the high transactions costs involved.
This essay offers a critique of approaches to property rights in Russia that center on rule of law as the central problematic. Such approaches tend to conceptualize privatization in terms that emphasize Russian exceptionalism and often focus on competition for resources among a small group of actors who may have both state and business identities. Because their object of analysis is the circulation of...
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