The first wave of street protests swept the country from Omsk in Siberia to the centre of Moscow. They were carried out under slogans that could have been written in the editorial offices of Moskovskie novosti: ‘No democracy without socialism; No socialism without democracy’. Yegor’s heart and the hearts of the Soviet intelligentsia swelled with pride and hope. ‘I am certain that Soviet workers value democracy over goods… It is true that there still are terrible shortages, but you would not believe how Glasnost has changed the way workers think,’ Yegor told Stephen Cohen a year later.22
Yet under the slogans of democracy and Glasnost, people all too often meant ‘clothes’ and ‘sausages’. In fact, democracy and sausages were seen as part of one package: once the country had freedom of speech, sausages and clothes would follow and Russia would miraculously turn into a nice-smelling Western-style country. Unlike China, which kept the ideology and reformed the economy, Russia changed the ideology but did not reform the economy.
Food shortages had an important moral dimension. An article about queues in Moskovskie novosti, by the writer Alexander Kabakov, had the headline ‘HUMILIATION’ set in large, bold type. ‘Queuing for everything – from sausages to razor blades – has become a necessary part of Soviet life. For the citizens of a country which built atomic power stations and space shuttles, queuing for a bar of soap is humiliating,’ he wrote.23 It was not just about the inability to sate one’s needs, it was also about wasting one’s precious life in queues.
The need to move to a free market and to liberalize state-controlled prices was obvious to almost everyone in the Soviet government. But Gorbachev dithered. Raising or deregulating prices would mean breaking the social contract that implied that food was affordable even if it was not available.
The memory of the riots in Novocherkassk in 1962, which were provoked by a sharp rise in meat prices and a reduction in real pay, outweighed any arguments about the current situation. ‘I know only one thing,’ Gorbachev told one of the free market proponents, ‘that after two weeks, this “market” would bring people out on the streets and sweep away any government.’ As it happened, a few months later, people were out on the streets anyway, but the economy was in a much worse state. Instead of deregulating the prices, Gorbachev effectively liberalized politics and loosened control over state property.
The ideologues of Perestroika, those who concentrated around Moskovskie novosti, had not thought through, any more than had Gorbachev, the nature of the Soviet failure and had assumed that Leninism was a pure doctrine morally, as well as one that could be the spine of a governing class. Consumed with inner party struggles, they missed the point that the system was unravelling and the governing class itself was fast abandoning the ship. By the late 1980s the ghost of Stalinism was just that – a ghost; nobody had an appetite for repressions. The likes of Nina Andreeva were sidelined, if not marginalized.
In May 1988 the government passed a law allowing the setting-up of private co-operatives. The word and the idea of a co-operative were, once again, borrowed from the 1920s New Economic Policy. The hope was that the spirit of private entrepreneurship and small-time trade would help revive the Soviet economy as quickly as it had done in the mid-1920s. The difference was that in 1925 only eight years had passed since the Bolshevik Revolution; in 1988 the distance was measured in generations.
In everything but name, the co-operatives of the late 1980s were private firms which were allowed to set their own prices for anything they produced. The only problem was that most of them did not produce anything. Instead they bought goods from state enterprises at subsidized prices and sold the same goods at market prices, keeping the profit or splitting it with a state manager.
‘The co-operator’s job was to legitimize the black market which the corrupt bureaucracy did not want to see legitimized, and to destroy the prejudices which the communist power structure did not want to see destroyed.’24 Thus spoke a chronicler of the co-operation movement and himself a successful ‘co-operator’, Vladimir Yakovlev – Yegor’s son. At the same time, by loosening control over state enterprises – all strictly in the spirit of the 1960s reforms – the government allowed state managers to participate in these schemes. The vast majority of these co-operatives were attached to state plants and enterprises and affiliated with their management.
If that was not enough, a number of state Soviet oil refineries were given special licences to export their oil products and keep the revenues, bypassing the state export monopoly. This gave rise to people like Gennady Timchenko who worked for the ministry of foreign trade and who, along with his partners, lobbied a state-owned refinery near Leningrad to set up an in-house trading arm that hired them to export some of its products. A few years later, this ‘trading desk’ was sold, turning Timchenko and his partners into private oil traders. Fifteen years on, under Vladimir Putin, Timchenko emerged as one the biggest private traders of Russia’s state-owned oil, and, critics say, a symbol of crony capitalism and the corporatist state. In 2014 he was designated as a member of Putin’s inner circle by the US government and was subjected to sanctions. According to the Wall Street Journal, he was also investigated for money laundering, which he denied, by the US prosecutors. Yet he started his career at the same time, and in the same city, as that in which Andreeva wrote her letter. ‘My luck started there,’ he said.25
Many of Russia’s first businessmen, including Mikhail Khodorkovsky, the future oil tycoon turned political prisoner, emerged from the ranks of the Young Communist Party League. Komsomol activists were young, cynical and ruthless. They had none of the idealism or the baggage of their fathers and all the frustrations of a hungry elite constrained by the doldrums of Soviet ideology. They could not care less for Bukharin or the New Economic Policy and they embraced with a vengeance the opportunity offered by Perestroika. None of the names, which a few years later would make up a Forbes Magazine list of billionaires, those who would shape Russia’s economy and politics over the next decade, featured on the pages of Moskovskie novosti, even though some placed advertisements in the paper.
The reason for this was not censorship, fear, or lack of professionalism. These events and these people simply did not fit into the picture of the world that Moskovskie novosti had created for its readers. They did not even enter its field of vision. The paper carried on arguing about socialism, the benefits and disadvantages of the market and the legacy of Lenin and Bukharin when a large part of the party corps was already making its millions.
In 1990, Nikolai Ryzhkov, the head of Gorbachev’s cabinet, posed a question: ‘Are we building socialism or capitalism?’ By that time, the question had long been answered, not only by the co-operators but also by a large number of the red directors who had begun the transfer of state property into their own hands well before the official privatization of the 1990s. The signs of this major shift of economic power from the central government to the Soviet managerial corps were out there, but few, including Ryzhkov, understood the consequences.