New Ruling Class from Old

The devolution of the Soviet economy towards destatification was already well under way before Yeltsin and even Gorbachev took power. The perpetrators were leading members of the already-existing ruling bureaucracy. Here is one description:

By the 1980s the local managers of the state economy were well on their way to becoming de-facto owners -- “stakeholders,” the academic literature delicately calls them. Meanwhile, society as a whole was becoming less closely controlled. A shadow economy was growing strongly, outside state controls. Virtually all Russians bought private goods and services “on the left,” that is, through a black market of friends and connections. There were already underground millionaires, and mafia gangsters to prey on them....

The second revolutionary event was the massive transfer of wealth from the state into private hands. In the space of a few years -- roughly beginning in 1988 -- literally hundreds of billions of dollars flowed from state properties to private entrepreneurs and companies, most of them connected in some way with the previous state enterprises and ministries. A class of super-wealthy individuals and conglomerates sprang up overnight. Never in human history, perhaps, has there been such a dramatic and sudden transfer of wealth, other than through military conquest. (Thane Gustafson, Capitalism, Russian-Style, pp.18, 26.)

Another account:

When Russia began privatizing its state industry in 1992, the rules were fixed so that the factory bosses were assured of being able to buy their own factories cheaply. This meant, in practice, that little changed when a factory was privatized, except that managers had more of a free hand to strip it of cash and assets that caught their fancy. Many who had been managers under the Communist regime became rich. (Robert Cottrel, “Russia: Was There a Better Way?”, New York Review of Books, Oct. 4, 2001.)

These descriptions (and numerous others) demonstrate that the bureaucratic rulers were metamorphosing into a bourgeoisie, not defending nationalized property as the Pabloite theory predicted they must do.

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