The Future Is History: How Totalitarianism Reclaimed Russia

Yeltsin asked Gaidar to figure out how the country was going to survive. Gaidar was the thirty-five-year-old scion of a privileged Soviet family, grandson of two of the country's most venerated writers and husband of the daughter of a third.* Save for a short stint as an editor, he had worked only at research institutions. He assembled a team of like-minded economists, starting with half a dozen and later adding a few more. All of them were roughly the same age and came from academia. They had no experience in government or administration of any sort, and with the exception of a few recent short trips to the West, they had never seen a market economy outside of a textbook. Their predicament was not unlike that of Levada's sociologists trying to devise their first actual survey, except this group of theoreticians was asked to prevent famine and a total collapse of the infrastructure while also reinventing the country's economy.

The group spent the fall of 1991 holed up at a government dacha outside Moscow. In the first few weeks they learned that the situation was even more dire than they had imagined. The country had no currency or gold reserves—most had been spent and the rest appeared to have been plundered. Because consumer goods had been in short supply for years, and also because prices for all goods were set by the government without regard for cost or demand, people had accumulated a lot of unspent rubles—there was no telling exactly how many. Between that and the inability of the Russian government to control the supply of rubles in the economy—because the neighbors could print them too—there was little to no hope of being able to stem inflation if consumer goods became available and price controls were lifted. But the only way to make consumer goods available seemed to be to lift price controls. "It became clear that the situation was mercilessly dictating only one option: the most conflict-ridden and riskiest scenario of starting reform," wrote Gaidar.¹⁹

In November 1991, Yeltsin appointed Gaidar his minister of the economy and finance with the rank of vice-premier. Yeltsin decided to run the cabinet himself, without appointing a prime minister—in no small part because no one wanted to accept a suicide mission—and this meant that Gaidar would in effect run the government. To ensure that reform could go forward, Yeltsin secured the right to issue decrees that contradicted existing law, provided the Congress signed off on them.

on January 2, 1992, the government lifted price controls on consumer goods, with the exception of bread, milk, and alcohol. In a couple of weeks, goods began showing up on store shelves. Within a month, prices had gone up 352 percent and the money that Russians had thought of as savings and Gaidar had thought of as a dangerous cash surplus had been spent.²⁰

In an effort to avoid continued hyperinflation, the government pursued a stringent monetary policy. For most Russian citizens, this meant that on the one hand they were paid in large wads or small bags of cash, and on the other hand they could not afford most of the goods that were now accosting them everywhere. In January 1992, Yeltsin signed a decree legalizing private commerce, and private citizens began trading. They stood on the sidewalks holding their wares—sometimes a single raw steak or a fried chicken, exposed, because wrapping supplies were a deficit and a luxury. Many of them had clipped Yeltsin's decree out of the newspaper and pinned it to their jackets to protect them from the police. The orderly gray streets of Soviet cities came alive, vibrating with the sight of varied goods, the voices of people hawking them, and the overwhelming sense of uncertainty. Gaidar's reforms may have averted famine and total infrastructural collapse, but the anxiety they produced far exceeded anything that had come before. By the end of the winter, Yeltsin's honeymoon with the Congress was over.

A majority of the people's deputies adopted a stance familiar from the perestroika era, when the parliament's main task was to challenge central authority. The Congress wanted reforms stopped or even reversed, and it wanted Gaidar out. Yeltsin would not budge, and his

cabinet continued along its path. Where local authorities cooperated, stores and services were privatized. By the summer, the government discontinued all subsidies of consumer goods, including bread, milk, and alcohol. Inflation stabilized at levels well below hyperinflation. From the point of view of Gaidar and his team, this was success. From the point of view of many Russians, this was unemployment, no longer hidden, as it had been under the old regime, with its pretend work for pretend pay. Not only had it been exposed, it was growing, thanks to falling production, and wages that had become laughable. The Congress began blocking presidential decrees—for example, one that would have introduced bankruptcy as an option and a procedure. Wrote Gaidar: