The Berlin Wall fell eleven years ago, and nine years have passed since Boris Yeltsin launched the Russian economic revolution by abolishing state control over prices. Although minuscule in historic terms, the time elapsed still furnishes a wealth of data for a provisional analysis of the key factors that shaped the political, economic, and social character of post-Communist nations. The same structural variables may help gauge the future—at least in the short to medium term.

Such an exploration is especially useful in the case of Russia. Obsessive coverage of minutiae by legions of journalists and experts—often to the exclusion of other post-Communist nations—has created an impression of the uniqueness of the Russian situation. Neo-Kremlinology has contributed to the distortion by reducing the vastness and complexity of interacting causes to plots of palace intrigues and epic plays with the casts of millions to third-rate melodramas.

Much in the emergent political and economic arrangements of all post-Communist nations has been shaped, and continues to be shaped, by interaction between the following nine structural factors: the velvet revolutions; the simultaneity of democratic and free-market revolutions; the onrush of modernity; the suddenly unprotected economic assets of the state ("the beached whale"); and, from the legacy of Communism, the institutional and normative vacuum; obsolete economies and "surplus" labor; poverty; corruption; and the miserable state of social services, especially health care.

Outlined below, these variables provide a structural context for some of the key political, economic, and social developments of post-Communism. The remainder of the essay is devoted to the discussion of these developments and how the interaction of the structural factors caused or affected them.

The Velvet Revolutions. The 1989-1991 revolutions across East Central Europe and the former USSR were rightly acclaimed for their velvet, nonviolent character. In most revolutions the old elites are killed, jailed, exiled, or at the least barred from public life. Apart from the so-called lustrations in Czechoslovakia (and later the Czech Republic), where former high-ranking Communist Party functionaries, collaborators with the secret police, and members of People’s Militia have been barred from senior posts in civil service, post-Communist countries have neither purged the former nomenklatura from the local or national governments nor placed any restrictions on its political and economic activities.

A third of the apparatchiks in positions of power in 1988 occupied the same offices in 1993 in Hungary, Poland, and Russia,[1] the nations where the initial anti-Communist sentiment among the leaders of transition was among the strongest. As late as January 2000 a critic charged that even in the Czech Republic, which had begun as another fervently anti-Communist regime, "the current political system . . . [is] based on an unspoken condominium with significant relics of the former Communist establishment."[2]

In the long run, however, the velvet revolutions’ greatest impact was on the nature and pace of the economic reforms. The primary, and often decisive, actors were the industrial nomenklatura, or the "red directors," who had administered the economy for the socialist state and at the state’s demise found themselves in effective control (and often in de facto possession) of most of their countries’ economic assets. When the music of Communism stopped, they kept the chairs.

Simultaneity of Democracy and Early Capitalism. In the antitotalitarian revolts of 1989 to 1991, the political (democratic) and economic (free-market) revolutions coincided. For the first time in history, the foundations of the market economy and capitalism were being laid in a fledgling and preliberal, but real, one-person-one-vote democracy—with multiple and critical consequences for both democracy and capitalism.

In Russia the emergence of a market economy coincided with and was profoundly influenced by the results of seven national polls after the August 1991 revolution: two presidential, three parliamentary, and two referendums. The turnout was 70 percent and 69 percent in the two presidential contests and never dropped below 61 percent in the three national legislative elections.

Modernity. After decades of premodern economic and political systems, most post-Communist nations acquired all key elements of modernity: consumer choice; abundant and fresh food accessible to the majority of the population without ration coupons, multihour lines, or an informal network of connection and exchange; de facto (and often de jure) convertibility of the national currency; travel abroad; freedom of speech; newspapers, books, art, and foreign broadcasts free of government censorship and jamming; freedom of religion; the end of state anti-Semitism and discrimination against Jews in employment and education; the opportunity to start a private business, to sell, and to buy; the freedom to vote for opposition candidates in local and national elections; and immeasurably greater transparency of political and economic power and decisionmaking.

Gone are such archaic and universally hated modes of forced mobilization and public allegiance to the regime as compulsory weekly classes in political education, participation in official meetings and demonstrations, membership in young Communist organizations (Pioneers and Komsomol) and annual trips to the countryside to harvest potatoes.

Having opened the door to opportunity, competition, and mobility, modernity also introduced job insecurity, unemployment, uncertainty and personal responsibility to the societies where all these phenomena had been extinct for generations because of complete dependence on the state’s measly but predictable and secure economic largess. Exhilarating and richly rewarding for some, modernity proved difficult, painful, even tragic for others.

Modernity has shaped the political and economic dynamics of post-Communism in innumerable ways. Two such instances seem especially relevant.

1. Perceived economic well-being. In all post-Communist nations, price liberalization and unshackled private economic activity initially reduced the average income of the population and increased income inequality. Change in people’s perception of their relative economic well-being may have had a more lasting impact, however.

Modernity has affected this perception in at least three ways. First, from the exclusive privilege of the upper crust of the political and economic nomenklatura, travel outside the socialist camp became the pastime of millions. Unhindered access to Western television, books, newspapers, and magazines deepened a sense of relative deprivation. Millions of people learned that they were poor.

More important still were the transparency and the monetization of wealth. Under Communism the nomenklatura consumed secretly behind the tall walls of exclusive housing complexes, rest homes, and dachas. Its wealth was not in salaries, but in a vast elaborate system of nonmonetary rewards: privileged access to quality goods and services, including exclusive hospitals, clinics, and pharmacies; hidden and guarded food depots; gourmet food "rations" and "parcels" sold at negligible 1930s prices; comfortable and spacious apartments; travel abroad; and first pick of the best books, plays, and concerts.

By contrast the new elite was brash, indiscreet, and often vulgar. It consumed most conspicuously. Both its wealth, which could be measured in dollar amounts that seemed astronomic to the impoverished majority, and its lifestyle were now displayed daily. The massive and systemic poverty and the inequality inherited from Communism were brought into a much sharper relief by the post-Communist press and television, which, like their Western counterparts, put a commercial premium on negative news and sensations and were relentless in the pursuit of the new rich.

2. "Demographic losers." The pace of change has been dizzying. After price liberalization, millions, like immigrants, awoke in a different world. As with immigrants everywhere, age, along with education and marketable skills, became the most important predictor of adaptation and success. Compared with younger men and women, most of those older than fifty were markedly worse off—if not always in material, then certainly in psychological terms. As a voting bloc, the demographic losers became one of the most important actors in the post-Communist politics.

Beached Whale. No longer sustained by the monolithic cohesion of the political elite and shielded by police terror, the state’s ownership of the national economy was challenged both by the enterprise managers and the outside entrepreneurs. Like a beached whale, the socialist state’s huge assets suddenly became vulnerable, and corrupt bureaucracies controlled access to the beach with licenses, quotas, credits, and rigged auctions.

The Legacy. The legacy of Communism permeates social, political, and economic lives of post-Communist nations. Only five legacy factors are included here.

1. Institutional and normative void. Unlike all previous democratic revolutions and free-market transformations, little, if anything, in political and economic systems of the ancien régime could serve as a foundation or even the seed of a new order—and a great deal was antithetical to liberal capitalism.

The patrimonial state, which had owned the economy and the livelihoods of the entire population, had destroyed the key elements of the infrastructure of modern capitalism and had done all to prevent their reemergence: the sanctity of the contract, the impartial court, the transparency and accountability of commercial organizations, banks as a source of capital, and stock exchanges. Most important, private property, the keystone of capitalism, was missing. As a leading economist suggested, Russia continues to be poor because of "the absence of any secure private property rights at all—a result of eighty years of Communism."[3]

The void in which the post-Communist political and economic transformations unfolded was not just institutional but normative. Private economic activity had been stigmatized and criminalized for generations. The voluntary associations that promote and monitor the habits of self-governance, personal responsibility, self-restraint, peaceful reconciliation of interests, and law-abidingness—the church; the trade association, guild, and profession; the neighborhood; the charitable organization; the club; or even the family—had been extirpated, co-opted, compromised, or corrupted. As a result, civil society was weak, profoundly demoralized, and largely incapable of even minimal self-policing and enforcing of rules. For millions, compliance with law was a product of terror and fear, rather than an internalized necessity.

2. Obsolete economy and surplus labor. Upon assuming office in 1985, Gorbachev’s first prime minister, Nikolay Ryzhkov, was shocked to learn that the country he considered an industrial world power "imported everything" of quality: from medicine and computers to furniture, rolling ball pens, and pantyhose.[4] Every third loaf of bread in the Soviet Union was baked with imported grain.[5] All that the Soviet Union could sell in the world market in sizable quantities was oil, gas, gold, and weapons.

Huge segments of Communist economies were not just backward but outright obsolete. Antimodern, politically driven, value-subtracting or "virtual," with the value of inputs of labor and raw materials less than the value of the finished products, they were doomed to extinction. Precisely that happened once both the police protection and giant subsidies extended by the state ended (or were substantially reduced), markets became open to competition from vastly better and cheaper products, and post-Communist economies began—half a century behind the West—a fundamental shift from manufacturing to services, or from an economic "system of production" to one of "consumption."[6]

Nothing illustrates this process better than the initial steep decline of the GDP in all post-Communist nations. Among the Central and East European nations, the fall ranged from 13 percent in the Czech Republic in 1992 to 33 percent in Bulgaria in 1997, with Poland (18 percent in 1991), Hungary (19 percent, 1993), Slovakia (24 percent, 1993), and Romania (25 percent, 1992) in between.[7]

After four decades of Communism, the average GDP reduction in these nations was 22 percent. By contrast, after almost seventy years of a state-owned economy (except in the Baltic states and Moldova), the drop in the former Soviet nations averaged 50 percent: from 20 percent in Uzbekistan (1995) to 77 percent in a war-torn Georgia (1994). Among other USSR republics, Estonia declined by 36 percent (1994), Belarus by 37 percent (1995), Kazakhstan by 39 percent (1995), Russia by 44 percent (1998), Lithuania by 46 percent (1994), Latvia by 39 percent (1995), Ukraine by 61 percent (1999), and Moldova by 69 percent.[8]

Relative to the population size at the time, the surplus labor produced by post-Communist economic revolutions is comparable only with that during the Western European transition from the medieval to modern (that is, mass production and capitalist) economic systems, when—in the eighteenth and nineteenth centuries—the artisans and subsistence farmers were made increasingly obsolete by the innovations of the capitalist Industrial Revolution and by the ever-stronger tendency toward large-scale farming and the privatization of communal lands.

The "taming of the agrarian sector"[9] was accomplished in a brutal and often horrifying manner. For instance, in the space of thirty years, at the end of the eighteenth and beginning of the nineteenth centuries, the leader of the Industrial Revolution, England, forced off the land eight of ten farmers and starved to death, branded, hanged, or shipped to overseas colonies tens of thousands of dispossessed peasants and urban poor.

In the post-Communist leap to modern capitalism, the peasantry was supplanted by, among others, workers at the obsolete—thirty- to sixty-year-old—plants (steel mills in Poland and Russia; docks in Poland; mines in Poland, Romania, Russia, and Ukraine; and breweries in the Czech Republic); employees of the bloated state bureaucracies; pensioners, whose already meager remittances were delayed, sometimes for months, and reduced by rampant inflation; and millions of "scientists" in hundreds of "scientific research institutes" (in 1991 the Academy of Sciences in Bulgaria, with a population of 8.5 million, employed 29,000 "scholars").[10]

Yet, unlike their peasant and artisan counterparts at the dawn of modern capitalism, the surplus workers of post-Communism were not silenced, suppressed, and forced into oblivion. Because of the coincidence of the democratic and capitalist revolutions, they became a major, often decisive force in the politics of their nations.

3. Poverty. While even the wealthiest of the Communist nations—the German Democratic Republic, Czechoslovakia, and Hungary—were poor compared with their western neighbors, the poverty in Albania, Bulgaria, Rumania, and most of the Soviet Union was often barely distinguishable from the Third World.

In the case of the Soviet Union, in 1988—the last year of relative stability before an economic collapse—43 million people, or 17 percent of the population, had incomes less than the "official" poverty level of 75 rubles a month ($7.50 on the still illegal currency exchange).[11] Another 80 million Soviet citizens (nearly one-third of the total) earned less than 100 rubles a month and, commented a Soviet journalist, "hardly made ends meet."[12] Post-Communist Russia started out in 1992 with 34 percent of its citizens below the official "subsistence level." (By 1997 the number declined to 21 percent and then grew to 23 percent after the financial crisis of August-September 1998.)[13]

One-third of the Soviet Union’s pensioners in the city and eight of ten in the village received less than 60 rubles a month.[14] Russian villages were full of older women (mostly World War II widows) who received pensions of 10, 6, or even 4 rubles a month. A needy family with many children received assistance in the amount of 4 rubles a month for the fourth child and 6 rubles for the fifth.[15]

The Soviet Union ranked seventy-seventh in the world in personal consumption.[16] When the Kuzbass miners struck in July 1989, their demands included 800 grams of soap for after-shift wash up. In the summer 1989, of 211 "essential food products," only 23 were "regularly" available in state stores.[17] People spent on an average 40-68 hours in lines monthly. In most cities meat was sold twice a year-around May Day and the anniversary of the revolution on November 7; the vile sausage, if available, could be purchased only with a monthly ration coupon. Outside Moscow, milk was available only occasionally and often after queuing for hours. Millions of children grew up without ever seeing an orange. By 1989 even in Moscow not only meat and butter but every major staple could be purchased only with a monthly rationing coupon.

One hundred million Soviet citizens (almost 40 percent) had less "living space" than prescribed by the official "sanitary norm" of 9 square meters per person.[18] Half of Soviet schools had no central heating, running water, or indoor toilets.[19]

4. Corruption. Forced to function within a wasteful, illogical, and consumer-hostile economy of public shortages and private privileges and to submit to a police state that criminalized private initiative (whether economic or political), generations of citizens and officials of former Communist nations participated in and perpetuated a vast and deeply ingrained culture of corruption. Theft and venality became almost a reflexive part of the behavior of millions from Prague to Ulan Bator.

Inheriting the deeply corrupt society of the tsars, Soviet Russia became a hotbed of thievery and graft. "[We] stole from ourselves, took and gave bribes," Ryzhkov wrote in his memoirs.[20] In a superb primer on Soviet corruption, USSR: The Corrupt Society, a former leading Soviet lawyer and legal scholar called the Soviet Union "a land of kleptocracy."[21] Publicized by glasnost, official corruption, along with the nomenklatura privileges, was one of the most powerful mobilizing themes of perestroika. A leading Russian journalist described Russia in the fall of 1991 as "a country depraved to the core, a state rotten from top to bottom, a great power of fast thieves and bribe-takers."[22]

5. Health care. Like the rest of their economies, the public health care systems of Communist countries were backward and plagued by the absence of modern diagnostic equipment, drugs, and procedures. Lack of equipment and training, for instance, made heart bypass surgery, which saved hundreds of thousands men and women in the West, exceedingly rare.

Behind most of its Central and Eastern European neighbors, the Soviet Union in the second half of the 1980s not only suffered from shortages of modern drugs and equipment but did not have enough of the most elementary paraphernalia: aspirin and rubbing alcohol, scalpels, gowns for patients, sutures and bandages. Disposable syringes were luxuries.

According to the Soviet minister of health, 1.2 million hospital beds (or 35 percent of the total) were in facilities without hot water; 30 percent of Soviet hospitals d id not have indoor toilets; and every sixth bed was located in a hospital without running water.[23] Behind Barbados and United Arab Emirates, the Soviet Union had a higher rate of infant mortality than forty-nine nations.[24]

The structural factors of post-Communist transitions outlined above interacted in many ways. Several interrelations have contributed to the emergence and perpetuation of some of the defining features of post-Communist politics and economy.

Post-Communist Politics and Economic Policy: Capitalism by Majority. The democratic revolutions supplied a political framework in which economic reforms were attempted. The Left electorate was surplus labor and "demographic losers": those whose age was a barrier to adaptation and whose economic self-perception was deeply affected by the new transparency of both the outside world and their own economic and political elites. Preserved largely intact by the velvet revolutions, the industrial nomenklatura and the ancient regime’s bureaucracy coalesced into powerful antireform lobbies, while the equally unmolested political apparatus of the Communist parties became the organizational base and the purveyor of political cadres for the opposition.

1. Politics. In the main the political dynamic of the first years of post-Communism has recurred often enough in different countries to be considered standard. Following the first structural reforms—price liberalization, deep budget cuts, and privatization—the electorate turned sharply left. Neo-Communists—social-democratized or unreformed—won pluralities or majorities in almost all national legislatures. In Hungary, Lithuania, Poland, and later Rumania they were given executive power as well: the presidency or the prime ministry. This past February, in the parliamentary election in Moldova, the Communists trounced the proreform alliance, securing 71 of 101 seats in the national legislature, which elects the president. (Only the hard-line Left’s inability to unite behind a single candidate prevented it from capturing the Ukrainian presidency in November 1999.)

Until 1999 the most conspicuous deviation from this pattern was the Czech Republic. Yet following several years of economic stagnation, by 1999 the reactionary Communist Party of Bohemia and Moravia (KSCM) surged in the opinion polls, surpassed the Social Democrats, and reached parity, about one-fifth to one-forth of the electorate, with the country’s most popular party, the center-right Civic Democrats.[25] In a November 1999 national survey, only slightly more than half the sample said that they "approved of the fall of Communism," while 32 percent "regretted the demise of the Communist regime."[26]

By early 1999 nearly half the respondents in a national poll said that President Václav Havel, who had led the velvet revolution ten years earlier, should resign.[27] "He gave people hope, but did not fulfill it," a Czech worker told an American reporter.[28] When his presidential term expires in January 2003, Havel is likely to leave office unpopular in his country. Of the only other two self-consciously, openly, and vehemently anti-Communist leaders of the post-Communist transition, Boris Yeltsin enjoyed popularity in the single digits at the time of his resignation December 31, 1999, and the former Polish president Lech Walesa received less than 1 percent of the vote in the October 2000 presidential election.

Even in the former East Germany, whose post-Communist transition has been smoothed by the softest velvet of all—the equivalent of $900 billion in direct assistance (or $53,000 for each person)[29]—the overnight transformation of its worthless currency into the mighty deutsche mark, and immediate access to perhaps the richest welfare state in the world, between one-fifth and one-fourth of the voters chose the Party of Democratic Socialism (PDS) of the former East German Communists in the most recent September 1998 national parliamentary elections. A year later a national survey found that only 38 percent of East Germans "liked living in a democracy" and one in seven wanted to restore the Iron Curtain.[30]

2. Economic policy. After the initial revolutionary breakthroughs, both the pace and the substance of economic reform were shaped by political imperatives forged by the significant and well-organized voter bloc opposed to major elements of radical liberalization. Not a single post-Communist country has simultaneously and consistently implemented the four components of shock therapy widely accepted as the key to a relatively quick, successful, and lasting transformation: the elimination of subsidies and credits at below-inflation rates; the end of price controls; freedom of entry into the market and a competitive free-trade environment; and privatization.[31]

Instead the reformist regimes that came to power immediately after the anti-Communist revolutions picked, chose, and compromised along the twists and turns of democratic politics and often found themselves severely constrained and even immobilized. Widely recognized as the leader of the transition, Poland postponed most privatization of industry, particularly in such bankrupt but politically sensitive areas as coal mining and shipbuilding. Virtually untouched by privatization, they are kept afloat with expensive state subsidies. As late as 1996, 59 percent of Poland’s medium-size and large enterprises were still in the state’s hands—as compared with 4 percent in Estonia, 25 percent in Lithuania, and 34 percent in Russia.[32]

Another initial front-runner, the Czech Republic, could not enforce fiscal discipline as wages grew much faster than production and the state was reluctant to push for restructuring or bankruptcy of nominally privatized but still inefficient enterprises. Most damaging, the unreformed state-owned banks continued to subsidize money-losing firms through low-interest loans, most of which were never repaid.

The Russian Version. The distortions left behind by the state-owned economies were the deepest and hardest to right in the former Soviet Union, especially in Russia and Ukraine, where depredations of Stalinist industrialization and collectivization were the worst and the era of an autarchic and politically driven economy the longest. Toward the end of Soviet rule, an estimated 30 percent of inputs of the labor and raw materials lost value during production because of the shoddiness and the substandard quality of finished products.[33] In the first year of its existence, post-Communist Russia spent 39 percent of GDP on industrial subsidies.[34] (The subsidies were slashed to 15 percent in 1994.)

1. Surplus labor. The minister of economy, Yakov Urinson, revealed in 1998 that according a secret study commissioned by Mikhail Gorbachev in 1989, the end of state subsidies for industry would result in the unemployment of 40 million people, or more than two-fifths of all Russian adults, within one year.[35] One of the most authoritative foreign surveys of the Russian economy concluded in 1999 that 50 percent of all Russian industrial enterprises, which employed 30 percent of the work force, were "not worth upgrading because they [were] either sub-scale or rely on obsolete technology."[36] Leading Russian economists found that in 1999 about one-fourth of the country’s enterprises could not sell manufactured products at prices that exceeded production costs.[37]

According to the first deputy prime minister, Oleg Soskovets, 35 percent of all Russian enterprises were "technically bankrupt" in 1996.[38] Millions of workers became in effect unemployed, even as most continued to go to work and collect their meager and often delayed salaries.

The thorough militarization of Russia’s economy engorged its surplus labor. Including family members, the livelihood of between one-fourth and one-third of Russians depended in one way or another on the military-industrial complex. In addition to the millions of blue-collar workers, engineers, and enterprise managers, these included scientists in both fundamental and applied research, which was almost entirely funded by the defense sector, and, of course, hundreds of thousands military officers and their families.

Foreign Minister Evgeniy Primakov stated in 1998 that 70 percent of Soviet GDP had been "spent on defense and defense-related projects."[39] Beginning with the 92 percent cut in defense procurement by the Yeltsin-Gaidar government in 1992, the radical demilitarization by the Russian government reduced defense spending to less than 5 percent of GDP. Even with assuming exaggeration by Primakov and placing the defense expenditures closer to the Western consensus of 25-30 percent of GDP, the reduction was huge and traumatic for millions of Russians.

2. The politics of economic reforms. The combination of surplus labor, demographic losers in the rapidly aging population, and the hard-line Left forged the key political dilemma of the Russian transition between 1992 and 1999: how to construct a free-market economy in a democracy where 30-40 percent of the electorate supports parties opposed some of the most basic structures of modern capitalism.

Despite the consistent reluctance of most Russian voters to give the Left carte blanche in politics and economy, the infighting among proreform parties and movements and the splintering of their electorate on the one hand and the unity of the Left opposition and its superior organizational base on the other resulted in a leftist plurality in the Supreme Soviet (1990-1993) and the Duma (1995-1999). The consequences have been momentous for both the nature of reforms and the consistency and pace of implementation.

In October 1993 President Yeltsin signed the decree that gave former collective farmers legal title to the land and property shares of the kolkhozes and allowed land sales by private citizens. In March 1996 he signed another decree confirming the peasants’ right to dispose of their land in any way they wished, including selling, mortgaging, leasing, and deeding as a gift. The Duma refused to confirm either of the decrees into laws. Instead it passed the Land Code, which prohibited the sale of land in any form. Yeltsin twice vetoed the code and called it "the most reactionary" measure. In both instances his veto was overridden by the legislature.

In 1997 the Kremlin brought to the floor of the Duma a tax code that would slash the number of taxes from more than 300 to no more than 5 and would significantly lower tax rates. The legislature resisted for three years. The new code, which reduced the top marginal rate from 30 percent to 13 percent, was finally passed in summer 2000.

The industrial lobby used its unparalleled clout in the Duma successfully to gain increased subsidies, tax relief, and outright bailouts for money-losing enterprises, whether state-owned or nominally privatized. In the few years leading up to the financial crisis of August-September 1998, the government extended a total of $10 billion in soft loans to enterprises.[40] (In comparison, Russia’s entire 1998 federal budget was around $100 billion.)

Supported by the federal budget either directly through the payment of salaries and state-guaranteed loans or indirectly by tax-forgiveness and a free supply of electricity and gas by state-controlled monopolies, by the year 2000 plants and factories had accumulated debts equaling 65 percent of the country’s GDP.

The enduring mementos of the Supreme Soviet’s 1991-1993 industrial policy are the enormous fortunes made overnight in arbitrage between domestic and world oil prices and in below-the-inflation-rate borrowing. In one of the most vivid examples of the law of unintended consequences, the Left’s opposition to decontrolling domestic energy prices and to fiscal and monetary austerity laid much of the foundation for the "oligarchic," "robber baron" capitalism that the Communists so stridently and assiduously decry today.

Nomenklatura Privatization. Perhaps nowhere were the cultural, social, and political underpinnings of post-Communist economic policy more vivid than in privatization: the absence of modern commercial codes; corrupt and ineffectual courts, incapable of protecting minority shareholders’ rights, enforcing contracts, or initiating bankruptcy procedures; public skepticism, indifference, or hostility toward the sale or giveaway of state possessions; unparalleled economic and organizational resources invested by the entrenched industrial nomenklatura in shaping the outcome; and democratic politics that placed no restrictions on the deployment of these resources.

In the end, privatization through sales to individual outsiders was politically feasible and widespread only in Hungary and Estonia. Other nations, if they undertook large-scale privatization at all, relied heavily on insider management and employee buyouts, case-by-case equity offerings, and vouchers distributed to the entire population at nominal prices.[41] The dominant outcome was nomenklatura privatization or, as the Russian pun has it, prikhvatization (from the verb prikhvatit’, "to snatch"). A Prague worker’s cri de coeur could be heard in every post-Communist nation: "I believed [Václav Havel] would bring . . . justice but he really disappointed me. All the Communists who stole were allowed to keep their wealth, and today they are captains of industry."[42]

Rent-seekers rather than profit-maximizing entrepreneurs, most new owners—whether management or the "workers’ collectives" subservient to them—perpetuated incompetence, bloated payroll, and fierce resistance to innovation and competition. Foreign investors were routinely swindled or forced out, as were Western shareholders of the Czech Republic’s most popular private television station, TV Nova, who found themselves cut out by their local partners. "If our recent experience as principal investor in the Czech Republic’s most successful broadcasting company is any indication," the shareholders stated in a full-page advertisement in the Washington Post, "Czech business, regulatory, and legal practices fall woefully short of international standards."[43]

In Russia the best compromise the proreform government could get from the Supreme Soviet was a privatization law that allowed managers and workers to buy 51 percent of the voting equity in the enterprises at a nominal price (the so-called Option 2). Four years later, outsiders were majority-owners of only one-fifth of Russian enterprises.

Insider buyouts diluted or utterly subverted all benefits that theoretically were to result from the change from state to private ownership: greater efficiency, lower cost of production, and greater competitiveness. After managing the state-owned economy for decades, most red directors behaved like corrupt civil servants, not private entrepreneurs. In a 1995-1996 survey, two-thirds of the Russian managers sampled said that they and their workers would oppose selling a majority of the shares of their enterprises to outside investors even if such outsiders brought all the capital necessary to modernize and restructure the firm.[44]

The result has been a slow and uneven growth; an economy badly unbalanced and cash starved; barter; tax- and debt write-offs; and a rigid market that discouraged the reallocation of resources and labor from less to more efficient enterprises and industries.

Corruption. In the short run, massive devolution of state control or ownership of the economy increases venality everywhere. Graft has been and remains a key political issue in Mexico, Brazil, Argentina, India, Taiwan, South Korea, and Turkey—the countries where privatization and deregulation have approached the post-Communist scale. The world’s leader in embezzlement, bribery, and smuggling, semicapitalist authoritarian China has "punished" 130,000 officials in 2000 alone and executed a number of them, including the vice-chairman of the National People’s Congress. Official venality was a focus of the 1989 mass protests on Tiananmen Square.

The normative wasteland and institutional vacuum, in which the venal and badly underpaid bureaucrat in possession of pieces of the beached whale meets the newly empowered and hungry entrepreneur, has made corruption one of the defining characteristics of post-Communist economy, politics, and public opinion. According to a prominent Czech critic, at the height of the Czech free-market reforms "corruption [was] engulfing Czech public and business life."[45] In Sofia in spring 2000, the banners of Bulgarian protesters featured corruption alongside poverty and unemployment as the country’s major social ills.[46] Bosnian leaders have been charged by an U.S.-led international anti-fraud body with stealing up to $1 billion in foreign donations.[47] The government of Croatia, under President Franjo Tudjman, reportedly stole several billions of dollars from the state’s Treasury,[48] making this country of 4.5 million the world’s per capita embezzlement champion.

In Ukraine—the fourth largest recipient of direct U.S. assistance after Israel, Egypt, and Columbia—property and economic crimes (including theft, swindling, extortion, and bribery) increased by 250 percent between 1988 and 1997.[49] In 1998 a shadow economy accounted for 60 percent of that country’s GDP.[50] A 1999 World Bank newsletter bemoaned "the omnipresence of corruption" and called the "alliance among former Party elite, members of the law enforcement and security apparatuses, and gangs of organized criminals . . . the most pernicious element of the crime phenomenon in Ukraine."[51]

While the economic and political liberalization vastly increased the sums involved and made official malfeasance apparent to the outside world, the pervasiveness of corrupt practices suggests deep roots. In 1997-1998 surveys, citizens of the Czech Republic, Slovakia, Bulgaria, and Ukraine were asked if their compatriots were likely to seek unofficial contacts with an official to obtain what they were entitled to by law. Between 76 percent (the Czechs) and 90 percent (the Ukrainians) answered in the affirmative; 44-81 percent thought that money or an "expensive present" was also likely to change hands.[52]

While many respondents blamed "greedy" officials and a government that "does not pay officials properly," half of the polled Czechs and Slovaks put most of the blame on people "desperate to buy favors." Nearly half (46 percent and 47 percent) of the Czech and Slovak respondents also felt that "the use of money, presents, favors and contacts to influence officials" was "a permanent part" of their countries’ culture.[53]

In this context, to account for Russia’s post-Communist corruption, one needs to recall only that nowhere else in the post-Communist world was the beached whale larger or the moral foundations of civil society scorched deeper and longer.

Decrease in Male Life Expectancy. The adjustment to the responsibilities and insecurities of modernity have been traumatic, especially for men in their fifties and sixties, most of whom found themselves in the surplus labor group and among the demographic losers. In some countries this period coincided with the rise in male mortality in the revolutionary decade extending from the last three years of the ancien régime before the Gorbachev liberalization, 1983-1985 to 1994-1997.

Several factors seem to explain much variation in life expectancy. First, residual (historic and cultural) differences help account for the divide between the northwestern nations of the former Soviet Union, where male mortality rose, and most of the post-Communist countries of East Central Europe, where it decreased: healthier diets, less consumption of hard liquor, and somewhat better medicine. Second, the stresses of adjustment appear considerably less lethal in the countries with primarily agricultural economies regardless of the speed and depth of reforms. Thus Moldova, Uzbekistan, Armenia, Turkmenistan, Azerbaijan, Georgia, and Kyrgyzstan have posted increases of 0.2-2.1 years.[54]

Perhaps most significant, however, have been the contrasts in the post-Communist experiences: the countries that inherited a proportionately smaller share of a surplus work force, recycled it faster after more radical and consistent economic liberalization, and created more jobs in the private sector have been more successful in mitigating the new stresses. Male life expectancy increased by 1.0-3.2 years in Hungary and Estonia (0.1 year for both), Slovakia (1.4 years), Croatia and Poland (1.7 years for both), the Czech Republic (3.0 years), and Slovenia (3.2 years), while shrinking in Rumania (1.4 years) and Bulgaria (1.2 years), both of which have lagged in reforms.[55]

Figure 1: Life Expectancy of Males in Russia

Sources: World Health Organization, "Basic Health Indicators, Country-Reported Data," found March 2001 at www-nt.who.  int/whosis/statistics/reported/reported.cfm?path+statistics,basic,reported7language+english; U.S. Bureau of the Census, International Data Base, "Infant Mortality Rates and Life Expectancies at Birth, by Sex," found March 2001 at www.census.gov/ipc.www/idbprint.html.

The combination of these three variables accounts for the steep rise in male mortality in the industrialized countries of the post-Soviet nations with the largest share of surplus labor and demographic losers and the record of inconsistent, slow, or nonexistent free-market reforms: Kazakhstan (-3.7 years), Ukraine (-3.7 years), and Russia (-3 years).[56] Their decrepit and backward public health systems were ill equipped to handle the novel strains and pressures, most damaging of which were job insecurity, competition, and personal responsibility for the well-being of one’s family in very much traditional, "patriarchal" societies. There followed an upsurge in the leading killer of middle-aged males: heart disease.

In the Russian case these factors were aggravated by the most pernicious legacy of rampant alcoholism, unleashed by doubling the production of cheap vodka between 1958 and 1984.[57] The sale of alcohol became one of the largest sources of income for the Soviet state, accounting for 14 percent of revenues.[58] As Ryzhkov wrote in his memoirs, "The country was drinking itself into the ground. [People] drank everywhere. Before work. After work. In the obkoms [regional Party committees] and in the raykoms [district Party committees]. At construction sites and on the shop floor."[59] Fifteen million drunks a year were arrested and placed in the overnight sobering-up stations (vytrezviteli). Premature deaths caused by alcohol accounted for one-fifth of all deaths in the USSR. Between 1964 and 1980, the male life expectancy in the USSR plunged from sixty-seven to sixty-two.[60]

As figure 1 shows, male life expectancy went up sharply between 1986 and 1988, when the sale of vodka was restricted, prices were raised, and the number of alcohol-related fatalities decreased significantly, if temporarily. Coinciding with the apex of the stresses brought about by the revolutionary change, inflation, and massive job insecurity, the years 1991-1993 saw not only the return of vast quantities of cheap—and often low-quality—alcohol but also a surge in violent crime, especially murder, whose victims are disproportionately men. This phenomenon is common to all postauthoritarian nations in the first decade of transition from police control and residence restrictions. (Spain and Portugal experienced the explosion of deviance in the 1970s and South Africa in the mid-1990s.)

Yet the most damage in Russia was done by a ghastly bill that had come due when the thoroughly poisoned generation born between 1930 and 1940 and addicted during the two-and-a-half decades of a state-sponsored national alcoholic binge of 1960 to 1985 began to reach their mid-fifties and sixties.

After the 1993 nadir, male life expectancy began to recover, increased by two years by 1998, and came within a year and seven months of the prerevolutionary 1983-1985 estimate of 62.8 years. Most likely the upward trend reflected a decrease of stress of the adjustment as well as a steadily increasing market share of alternatives to vodka: good, affordable, and available wines and beer, which for the first time surpassed vodka in the amounts consumed in 2000.

The World Health Organization and the U.S. Census Bureau project a steady growth in Russian male life expectancy, which will reach a seventy-year life span by 2025: seven years above the pre-Gorbachev Soviet level and five years over the apogee reached during Gorbachev’s anti-alcohol campaign. (Even with this significant progress, male life expectancy in Russia will equal Asia’s average but lag behind Western Europe by eight years, Japan by nine years, and the United States by six years.)[61]

Decreasing Fertility and Population Decline. For better or worse, women of the former Soviet bloc are joining their modern sisters in Western Europe, where the fertility rates have been below replacement levels for decades. Between 1980 and 1998, fertility and the projected population size have declined dramatically in all post-Communist countries without exception. The number of births per woman dropped on average by 37 percent for both the East Central European and the former Soviet nations.[62]

Some of the sharpest reductions in fertility have occurred among the leaders of the transition: 39 percent in Poland, 40 percent in Estonia, 43 percent in the Czech Republic and Slovenia, and 45 percent in Latvia. The likely reasons are the speed of change, the stresses of modernity, employment uncertainty (especially in the surplus work force), and the new choices available to women, who no longer have to resort to abortion as the de facto sole reliable means of contraception.

Among the former Soviet countries, Russia’s drop in fertility (37 percent) was average: larger than in Moldova (29 percent), Lithuania (30), Kazakhstan (31), Kyrgyzstan (32), Belarus (35), and Ukraine (35) but lower than in Azerbaijan (37), Tajikistan (39), Estonia (40), Turkmenistan (41), Uzbekistan (42), Armenia (43), Georgia (43), and Latvia (45).

In the Russian case the causes of this demographic trend are no different from those behind the fertility changes in ECE. Compared with the Soviet days, the economic and social upward mobility of younger, urban, and college-educated Russian women has been astonishing: from the multiplicity of women drivers in the streets of Russian cities to their presence among top television and newspaper journalists, analysts, political commentators and columnists, campaign managers for leading national candidates, bank managers, and entrepreneurs. Women own 40 percent of Russia’s 890,000 registered private businesses.[63] (The corresponding number for the United States is 38 percent.)

According to a leading Russian demographer, parents in Russian families were once much younger, on average, than their Western counterparts; almost one of every five children was born to a mother younger than eighteen. Yet today, "young families postpone the birth of the first child. There has been nothing like this either in the czarist Russia or in the USSR."[64]

Typical of the generation that came of age after the fall of Communism, a thirty-year-old Moscow travel agent told a reporter that she would postpone childbirth until she reached "a certain status, a certain situation in which she could afford [children]."[65] Similarly, a thirty-one-year-old real estate agent intended to remain single because he could not "bear a responsibility"[66] of supporting a family. Such reasoning was rarely heard in Communist Russia, where severe limits on private initiative and opportunity badly eroded personal responsibility.

By the year 2050 the populations of all industrialized post-Communist nations are projected to diminish significantly in Estonia (35 percent), Latvia (32 percent), Hungary (26 percent), Slovenia (25 percent), the Czech Republic (24 percent), Ukraine (23 percent), Lithuania (20 percent), Belarus(19 percent), and Russia (18 percent).[67] According to the Federal Statistical Office of Germany, the population of eastern Germany is projected to decrease 18-35 percent by the year 2050.[68] (For comparison, the population of France will contract by 18 percent, Japan by 20 percent, Germany by 30 percent, and Italy by 32 percent. Because of immigration and a higher fertility rate, the number of people in the United States will grow by 49 percent.)[69]

Expanding the Field of Vision. An analysis of key developments of the post-Communist nations in the first decade of their existence reveals a number of patterns common in one or another version to most them. On a closer examination, what is often portrayed as uniquely Russian is often part of the post-Communist transition. To a large degree the latter is shaped by the three factors: the legacy of Communism, the national political and economic culture, and the clash of both with the sweeping changes introduced by modernity.

Placing Russia in this larger context may help inculcate both Western policymakers and experts against the temptation of making dramatic and final judgments and of anthropomorphizing complex economic, social, and political processes by reducing them to the villainy or incompetence of malefactors in high places. With Russia’s load the heaviest among the common burdens of post-Communism, comparison with other newly liberated nations counsels patience and careful attention to detail in both scholarship and policymaking.

1. John Higley, Judith Kullberg, and Jan Pakulski, "The Persistence of Post-Communist Elites," Journal of Democracy 2 (1996): 135-36.

2. Z. A. B. Zeman, "Václav Havel and Civil Society," Times Literary Supplement, January 7, 2000, p. 15.

3. Robert Skidelsky, "The Wealth of (Some) Nations," New York Times Book Review, December 24, 2000, p. 8.

4. Nikolay Ryzhkov, Perestroika: istoriya predatel’stv (Perestroika: a history of betrayals) (Moscow: Novosti, 1992), p. 236.

5. A. Sizov, "Sverim tsifry" (Let’s check the numbers), Kommunist 15 (October 1989): 63.

6. Anders Åslund, Building Capitalism (Cambridge: Cambridge University Press, 2001), chap. 4, p. 19.

7. UN Economic Commission for Europe, Economic Survey for Europe 1 (2000): 205.

8. Ibid.

9. Barrington Moore, Social Origins of Dictatorship and Democracy (Boston: Beacon Press, 1967), p. 429.

10. Michael Wyzan, "The Making of the Middle Classes," Transitions, March 21, 1997, p. 20.

11. A. Chernyak, "Edoki po statistike i v zhizni" (Food consumers according to statistics and in real life), Pravda, September 1, 1988.

12. "Vadim Krichenkov’s Debut: Goskomstat Provides Food for Thought," Moscow News, August 20, 1989.

13. "Main Socioeconomic Indicators of the Living Standard of the Population," Goskomstat at www.gks.ru.

14. Yu. Rytov, "Kak zhivut pensionery" (Living as a pensioner), Izvestia, August 20, 1988.

15. M. Berger, "Ekonomicheskoe obozrenie: skol’ko stoit odet’ rebyonka?" (Economic survey: how much does it cost to cloth a child?), Izvestia, September 23, 1987.

16. V. Radaev and O. Shkaratan, "Vozvrashchenie k istokam" (Returning to the roots), Izvestia, February 16, 1990.

17. Vasiliy Selyunin, "Soviet Reformer Fears Collapse of Economic House of Cards," Glasnost 2 (January-March 1990).

18. Interview with the director of the Research Institute of Housing, Literaturnaya Gazeta, August 31, 1988.

19. G. A. Yagodin, speech at Nineteenth Party Conference, Pravda, June 30, 1988, p. 9.

20. Ryzhkov, Perestroika, p. 33.

21. Konstantin Simis, USSR: The Corrupt Society (New York: Simon and Schuster, 1982), p. 248.

22. Ilya Mil’shtein, "Neudachnik na trone" (A loser on the throne), Novoe vremya 2-3, January 23, 2000, p. 23.

23. Zoriy Balayan, "Kogda bolezn’ obgonyaet lekarstva" (When the disease is faster than medicine), Literaturnaya Gazeta, February 3, 1988.

24. Ibid.

25. RFE/RL NewsLine—Eastern and Central Europe, October 22, 1999, p. 5.

26. RFE/RL NewsLine—Central and Eastern Europe, November 17, 1999, p. 4.

27. RFE/RL NewsLine—Central and Eastern Europe, February 10, 1999, p. 4.

28. Steven Erlanger, "Havel Finds His Role Turning from Czech Hero to Has-Been," New York Times, November 4, 1999, p. A12.

29. William Drozdiak, "Eastern Germans’ Bittersweet Liberty," Washington Post, September 27, 1999, p. A13.

30. Ibid.

31. See, for example, Oleg Havrylyshyn and Donald McGettigan, "Privatization in Transition Countries," Post-Soviet Affairs 16 (3) (July-September 2000): 264.

32. Ibid., table 4, p. 270.

33. Robert Conquest, Reflections on a Ravaged Century (New York: Norton, 1999), p. 103.

34. Åslund, Building Capitalism, table 9.5.

35. Yakov Urinson, "Vsyo, chto effektivno dlya ekonomiki, boleznenno dlya obshchestva" (Everything that helps the economy is painful for the society), Moskovskie Novosti, May 17-24, 1998, p. 10.

36. McKinsey Global Institute, Unlocking Economic Growth in Russia (Moscow: October 1998), p. 8.

37. Stragegiya Razvitiya Rossiyskoy Federatsii do 2010 goda (The strategy of development for the Russian Federation to the year 2010) (Moscow: Center for Strategic Planning, June 2000), p. 57.

38. Joseph P. Blasi, Maya Kroumova, and Doublas Kruse, Kremlin Capitalism (Ithaca, N.Y.: Cornell University Press, 1997), p. 178.

39. Evgeniy Primakov, "Russia Must Be a Star Player on the World Arena," speech at the conference of the Council of Foreign and Defense Policy, March 14, 1998, Information Department, Embassy of the Russian Federation, April 14, 1998, p. 10.

40. Mikhail Zadornov, "Vlezaem v dolgi?" (Are we assuming too much debt?), Moskovskie Novosti, June 7-14, 1998, p. 6.

41. Havrylyshyn and McGettigan, "Privatization," p. 269.

42. Erlanger, "Havel Finds," p. A12.

43. "Think Twice Before You Invest in the Czech Republic," Washington Post, November 8, 1999, p. A13.

44. Blasi, Kroumova, and Kruse, Kremlin Capitalism, p. 179.

45. Zeman, "Václav Havel."

46. "Bulgaria: Thousands Protest," New York Times, March 23, 2000, p. C4.

47. Chris Hedges, "Leaders in Bosnia Are Said to Steal up to $1 Billion," New York Times, August 17, 1999, pp. A1, A6.

48. R. Jeffrey Smith, "Croats Find Treasury Plundered," Washington Post, June 13, 2000, pp. A1, A31.

49. Peter H. Solomon, Jr., and Todd S. Foglesong, "The Two Faces of Crime in Post-Soviet Ukraine," East European Constitutional Review, summer 2000, p. 72.

50. "Can Ukraine Avert a Financial Meltdown?" World Bank’s Transition Newsletter, June 1998, p. 2

51. Ibid., p. 1, and Louise I. Shelly, "Organized Crime and Corruption Are Alive and Well in Ukraine," Transition Newsletter, January-February 1999, p. 1.

52. William L. Miller, Åse B. Grodeland, and Tatyana Y. Koshechkina, "Victims or Accomplices? Extortion and Bribery in Eastern Europe." Paper presented at the Sixteenth International Symposium on Economic Crime, Jesus College, Cambridge, September 13-19, 1998, p. 2.

53. Ibid., p. 4.

54. World Health Organization Statistical Information System, Basic Health Indicators (Country-Reported Data), and UN Statistics Division, Social Indicators, www.un.org/ Depts/ unsd/social/health.htm. The life expectancy figures for Tajikistan and Georgia include the data for 1995 to 2000.

55. Ibid. The 1983-1985 data for Yugoslavia and Bosnia-Herzegovina are not available.

56. Ibid.

57. Vladimir Treml, "Gorbachev’s Anti-Drinking Campaign: A Noble Experiment or a Costly Exercise in Futility," RL Supplement, March 18, 1987, p. 8.

58. Interview with Oksana Dmitrieva, Moskovskie Novosti, February 15-21, 2000.

59. Ryzhkov, Perestroika, p. 94.

60. Treml’, "Gorbachev’s Anti-Drinking Campaign," p. 8.

61. U.S. Bureau of Census, World Population Profile: 1998. Report WP/98 (Washington, D.C.: U.S. Government Printing Office, 1999). The projection for Japan is to 2025 (table A-10, p. A-52).

62. World Bank, 2000 World Development Indicators, table 2.16: "Reproductive Health" (www.worldbank.org/data/ databytopic.html).

63. Paul Starobin and Olga Kravchenko, "Russia’s Middle Class," Business Week, October 16, 2000, p. 84.

64. "Ne do sem’i" ("Not a good time to start a family"), Moskovskie Novosti, April 18-24, 2000.

65. Masha Gessen, "Pervyi raz v sredniy klass" (Into the middle class—for the first time), Itogi, April 21, 1988, p. 15.

66. Ibid.

67. United Nations Population Division, World Population Prospects: The 1998 Revision.

68. Alanna Balaban, e-mail from Reinhold Zahn, Federal Statistical Office of Germany, January 24, 2001.

69. U.S. Bureau of Census, World Population Profile: 1998. Report WP/98 (Washington, D.C., U.S. Government Printing Office, 1999).

Leon Aron is a resident scholar and the director of Russian studies at American Enterprise Institute.  The author wishes to thank his research assistant, Alana Balaban, for obtaining and preparing vast amounts of demographic data.