Privatization in the Soviet Union : the beginnings of a transition

This paper was completed before the events of August 1991. But the analysis of recent modes of privatization in the Soviet Union is still important for understanding the evolving situation. The"present"All-Union regime, was the first regime to implement wide-scale privatization. The process may take different courses, being initiated from"above"(for example, by ministries), orfrom"below,"by enterprises. Recent measures of the All-Union authorities, the author contends, had the effect of restricting any real role in privatization to the social and economic elite because, in early 1991, monetary and price reform wiped out a significant part of household savings. Leading international corporations are still interested in getting a stake in top Soviet performers; in those few cases it will be possible to negotiate terms more advantageous than those dictated by the dwindling value of the ruble. The All-Union government has been anxious to prevent"wild"foreign participation at any cost. That cost may prove excessive, however, as confidence in the ruble and in the Soviet economy weakens. In the meantime, the economic initiative has passed from the center to the republics. Some republics have already moved from legislation to implementation of their own divestiture policies. This trend appears likely to continue, but one cannot exclude other scenarios. However, it is unlikely that the processes of privatization identified in the study will be stopped.