Privatization or Grabification?

Union Frameworks
Union Frameworks
Privatization or Grabification?
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Partial Transcript
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In 1985 Mikhail Gorbachev was promoting glasnost (“openness”) and perestroika (“restructuring”) in an attempt to overcome the Soviet Union’s economic stagnation and stunted growth. These initiatives promised the “utmost respect for the individual citizen and favorable consideration for protecting one’s personal dignity.” By creating a dependable and effective mechanism for accelerating economic and social progress, Gorbachev hoped to encourage initiative and creative endeavor.

As General Secretary of the Communist Party of the Soviet Union from 1985 until 1991 and as that country’s de-facto head of state from 1988 until 1991, Gorbachov gained authority to create joint-stock companies out of state enterprises. The shares became available on stock exchanges. Gorbachev was instrumental in diminishing the role of the Communist Party in governing the state. The party’s official role was ultimately removed from the constitution, in a way that enraged some and inadvertently led to crisis-level political instability with a surge of regional nationalist and anti-communist activism. A failed coup attempt in August of 1991 was followed by an acute food shortage. On December 26, the Soviet Union was dissolved.

There were then fifteen new countries, of which the Russian Federation was only one. Roughly 45,000 state enterprises had been controlled by the Soviet Union. Upon its dissolution the planned economy was displaced by a market economy. The large scale privatization of state owned assets flowed primarily to form the financial, energy, and industrial sectors.

Opposing forces insured that Perestroika had more than one unintended consequence. As Russia’s planned economy transitioned from one in which the means of production was held by the state, to one in which work collectives gained a greater role in running enterprises, the country stumbled. It experienced what The Guardian newspaper described, on August 16th 2001, as “the most cataclysmic peacetime economic collapse of an industrial country in history.

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