Glacier Melts Beneath Bear
In 1991, the Soviet Union finally collapsed under its own weight, bringing years of confused turmoil for its people. The dismantling of a vast structure like the Soviet Union was never going to be straightforward. Mikhail Gorbachev, the last undisputed leader of the old Soviet Union, who had surprised the world with policies which had opened up new freedoms to the peoples raised under its huge iron cloak, thawed the Cold War and set in chain the events that were to bring an end to this era of history.
These were heady days, Gorbachev’s reforms brought optimism to what seemed intractable world situations. The madness of the arms race looked curable, and in 1986, Gorbachev and Ronald Reagan had even made agreement to eliminate all nuclear weapons by 1996! In 1989, the Berlin Wall was smashed down and the world stepped into a barely imagined world. The glacier of 70 years was melting.
At this time, taking up Tolstoy’s efforts earlier in the century, Nicolaus Tideman initiated a letter to Mikhail Gorbachev, signed by 30 economists, including three Economics Nobel Prize winners. The text of the letter is at the end of this page.
When the end of the USSR finally came, Fred Harrison, leading light of economic justice, gave ten years to the new Russia, working with the new government, trying to guide this great country to wisdom. Alas, Russia would be swallowed by oligarchs. Harrison wrote The Silver Bullet about these years and the choices made.
To cut a long story short, Gorbachev, beset with myriad intractable issues, with crippling economic problems to the fore, would lose grip on power and never see his plans for the gradual, piece-by-piece transformation of the Soviet Union come to pass.
But his successor, Boris Yeltsin, President of what was now the Russian Federation, was seemingly in a vodka-fuelled frenzy to transform the new Russia into a Capitalist economy, he wanted the Great Russian Dream and wanted to privatise everything at once. And in a crazed and corrupt free-for-all, those in positions to grabbed everything they could. Yeltsin’s own Vice-President called the economic reforms economic genocide.
But this dismantling of the Soviet state had begun with a noble idea, which it was hoped would be the foundation of a democratic Russia. There was a very well-founded fear that openly selling the state-owned assets could result in a concentrated ownership of former state assets among a few owners. So, Yeltsin’s reforming government divided the whole wealth of the Soviet Union amongst the whole population, including the children, in the form of vouchers. 98% of the population collected their vouchers. These vouchers could be exchanged for shares in the enterprises which were being privatised.
This was quite a remarkable historic moment: in the death throes of the Soviet Union, there came a moment when the people all held a tangible equal share in what was the USSR. All the horses owned the farm. Just for a moment there, the people truly were equal partners in the wealth of the land, for just the briefest moment of trembling potential. And that would have been a moment to embrace Henry George, a moment to hear the pleadings of Tolstoy’s spirit hovering over the country.
But the precious moment couldn’t be held for long; in the end, it looks like the cruellest of jokes. At this time when most people were still employed by the state, the state had no cash, people weren’t getting paid for months on end. And shops started appearing on street corners giving cash for these vouchers. In many places, various corrupt means had been used to ensure that, in the first place, insiders and financial operators got hold of huge numbers of these vouchers, and of all the mighty industrial capital of the Soviet Union.
The attempt to ensure that all the state property didn’t end up in the hands of a small elite facilitated exactly that happening, and began the era of the business oligarchs in Russia. The Russian people were given their birthright to hold for a moment, then, denied a living, forced to sell their birthright to survive.
The next act was of a financially beleaguered state allowing business oligarchs to buy up control of vast industrial companies, utilities and assets at a fraction of their market value, sometimes for as little as 1% of their real value, in a robbery of staggering scale. The Russian state was bankrupted and the huge majority of the Russian population were cheated out of everything, waking up to find that what had been somehow theirs for 70 years, under the strict governance of severe politicians, now belonged a bunch of vastly wealthy men.
Things got worse, the oligarchs into whose hands these great industries had passed were rightfully fearful that a future government would see something fraudulent in the manner by which they had acquired them. So, rather than continuing the operation and development of sound industries, they asset-stripped them.
A terrible mess, bewildering flows of money; billions of dollars were flowing into Russia from the USA, IMF, etc., but so much more was being haemorrhaged from the country by fast operators in a lawless economy. Nothing could protect the Russian people here. The nation where the people had owned everything in common now vies with Mexico as having the greatest gulf between a rich elite and a majority with very little.
With Tolstoy still echoing on the wind, there were the stirrings of a popular movement to recognise land as common property along with the private ownership of capital. And, actually, at this time, ex-Soviet Republic Estonia started implementing their land value tax, which has had very beneficial effects, of course. And land assessors from America helped them set it up, a country with some experience in this matter.