Russia. A History

The impoverishment of the many and enrichment of the few had a profound, polarizing impact on society. Whereas the Soviet regime engaged in egalitarian ‘levelling’ (especially in the post-Stalin era), the post-Soviet order was unabashedly anti-egalitarian. One index of economic stratification, the decile ratio (comparing the income of the top 10 per cent with the bottom 10 per cent), leaped from a relatively egalitarian 4 : 1 (1990) to 15 : 1 (1994) and remained at that level for the rest of the 1990s. Another measure is the Gini coefficient, with 0 being total equality, 1.00 total inequality; analysts regard 0.20–0.30 as relatively egalitarian, and anything over 0.40 a sign of growing income disparity and inequality. In Russia’s case, the coefficient jumped from 0.26 in 1991 and climbed to 0.40 in 1999. Although increasing inequality also characterized Western societies in the 1980s and 1990s (the Gini index, for example, rising to 0.31 in Western Europe and 0.43 in the United States), the differentiation in Russia was both more extreme in scale and more compressed in time.

The minuscule élite of wealthy Russians—derisively called ‘new Russians’, a pejorative for the uncouth nouveau riche—

were in fact not so new: approximately two-thirds of them, especially the first wave, used their party, especially Komsomol (the communist youth organization), connections to acquire assets and amass capital. They went from party cards, not rags, to riches. Mikhail Khodorkovskii, at one point the wealthiest billionaire in Russia, began in the Komsomol organization, where he used its connections and resources to start a computer business that eventually turned into a huge financial and industrial empire. Much the same was true of the other tycoons. Apart from buying political influence and special privileges, such ‘entrepreneurs’ often had ties with organized crime—an association admitted by some 40 per cent in one poll, with the real rate doubtless being much higher. Ironically, Soviet criminalization of the black market forged a natural link between economic and ordinary criminals, producing a close nexus between the new market economy and organized crime.

But it was a corrupt state, not the Komsomol or organized crime, that enabled the richest to appropriate state property on a massive scale. In most cases, the new economic élite relied heavily upon insider connections, especially during the ‘shares-for-loans’ in 1996–8. Not that the chief officials were unaware of what was happening. Anatolii Chubais, the architect of privatization (which earned him approval abroad and opprobrium at home), told an interviewer in 1997 that the oligarchs ‘are stealing absolutely everything …. But let them steal and take property; they will become owners and decent administrators of that property.’ Beneath the Olympian heights of the ‘seven oligarchs’ was a small stratum of lesser winners who occupied key positions and profited accordingly. The proliferation of luxury imports (more top-of-the-line Mercedes being sold in Moscow than in Europe), the construction of palatial mansions, and the flood of spendthrift Russians to élite shops and resorts in the West all attested to the fabulous wealth of the ‘new Russians’.

Well below them was a small middle class, with modest resources and incomes but a few times the average wage—though light years removed from the élites. It was partly on the basis of cultural, occupational, and educational descriptors that they imagined themselves to be part of a ‘middle class’. However, compared with those on subsistence wages, this middle class enjoyed access to Western goods unimaginable in Soviet times. Private car ownership, while increasing in the 1970s and 1980s, doubled in the 1990s (jumping from 63.5 to 128.1 per 1,000 residents) and included vast numbers of imports. Still, this ‘virtual middle class’—in terms of sheer size, assets, income, and political influence—bore scant resemblance to its peer in Western Europe.