Report by Margarita Vodyanova, Konstantin Danov:
"We Are In The Market. Rich Poor Russians"
We Have Already Forgotten How We Lived on 72 Cents a Month
A large number of our fellow citizens still nostalgically reminisce
about the era of developed socialism. Let us risk assuming that the majority
of them are not prompted towards this by political but by economic considerations.
They yearn for a bygone era, the symbols of which were vodka for 3.62 rubles,
sausage for 2.20 rubles and bread for 13 kopecks. You could even buy a
box of matches or get a glass of fizzy water for a kopeck then. Today you
cannot even get anything for a ruble. But has our existence worsened because
of this? Have we really got poorer? In the search for an answer, Obshchaya
Gazeta observers turned to experts, statistical data and personal reminiscences.
Eight Circles of Shortage
In the spring of 1991, everyone living in our 14-floor tower on Chertanovskaya
Ulitsa in Moscow drew lots. Each of the two winning tickets gave the fortunate
person the right to visit the central Detskiy Mir [department store] and
redeem a special coupon worth 200 Rubles. After the draw, many neighbours
stopped talking to us: we drew one of the lucky tickets. And were as happy
as children about it. It was the era of total shortages. Literally everything
had to be obtained - not bought: from baby food to spools of thread.
Early in the morning on the appointed day, we emerged onto Ploshchad
Dzerzhinskogo. Eight rings of queues encircled the shop, queues made up
of favorites of fortune like us. It took us nine-and-a-half hours to pass
through these eight circles and we then finally got inside. Alas, there
were virtually no goods left in the shop. We barely managed to spend 100
rubles and that was thanks to the purchase of a three-channel radio. The
only thing that this misfortune facilitated was the restoration of good
relations with our neighbours.
In spring-summer 1991, the development of the socialist planned economy
came to its logical conclusion. And that is - collapse. The attempts of
the government of the time to drastically increase the production of consumer
goods ran up against resistance from exhausted labor collectives and ended
in strikes. That year 1,755 enterprises, which employed 238,000 people,
were affected by strikes. Thus, planned production was more or less abandoned.
Only prices and salaries remained in line with the (above) plan. Under
these conditions, the authorities tried to implement (?Kim Il Sun's) bright
idea - "Socialism means Redistribution". But the venture did not succeed:
the extent of the population's monetary reserves exceeded many times the
volume of goods stocked by the shops.
If we move away from the total deficit, we could today evaluate the
purchasing power of this same ruble using official statistical data. In
1991, you could buy 74 loaves of bread on the subsistence minimum, set
at 71 rubles 83 kopecks. Or your choice of: 6.2 kg of meat; 6.5 kg of sausage;
13.5 litres of vegetable oil; 163 litres of milk; 6kg of cheese; 160 eggs;
28.7 kg of sugar; 33 kg of whole grains; 34.5 kg of pasta; 3.5 litres of
vodka. And if you did not eat or drink for a month you could save 0.09
of a coat; 0.26 pairs of shoes; 0.12 of a suit; 0.11 of a pair of boots
or 0.25 of a pair of women's slippers. Even theoretically, life for the
average Russian during the last year of socialism did not look very good.
The tragedy of the situation was aggravated by the complete lack of the
above goods (except bread) available for sale at state prices.
At the same time, commercial trade emerged as an alternative to the
state. This nonsensical combination of words performed the function of
a euphemism: the authorities were not yet ready to call a spade a spade,
that is to call non-state trade, private trade. Commercial - ha ha! - shops
gladdened the eye with a previously unprecedented abundance and caught
the imagination with just as unprecedented prices. The average salary of
548 rubles would have been sufficient for just three bottles of whisky
there or 20 packs of Marlborough cigarettes or for one automatic umbrella.
The owners of commercial magazines did not stock salt, matches or other
essential goods. It was impossible to understand what lay at the basis
of the process of price formation at the new trading posts!
So to compare living standards in 1991 and 2001 the dollar equivalent
remains for us to use. Although in the opinion of the head of the bureau
for economic analysis, Yevgeniy Gavrilenkov, this method is only correct
to a certain extent: the picture is distorted by the absence of a market
mechanism for setting prices and the substantial increase in demand over
supply of the dollar. But this does not fundamentally change the picture.
Thus, in 1991 currency trading began at the exchange. The average arithmetical
result was 100 rubles to the dollar. Proceeding from this figure, gross
domestic product per head of population was equivalent to 94 dollars. The
average wage was 5 dollars 48 cents, the average pension was 4 dollars
and the subsistence minimum was 72 cents.
The State Statistics Committee does not have data about how many Russians'
incomes failed to reach the subsistence minimum in 1991. But the following
year, the army of the indigent comprised 49.7 million - more than one-third
of the population. And the poorest earned 11.9 percent of total income,
the richest 30.7 percent.
Fallen, But Alive
The past 10 years have flown by as if in a dream, for some a happy one
for others a nightmare. During these years the people have experienced
several shocks (liberalization, privatization, devaluation, default). What
was the result?
Even those Russians living on the subsistence minimum (1,285 rubles
at the beginning of 2001) can afford to eat twice as much meat or fish
or pasta as in 1991; use 4.5 times as many eggs; cook three times more
porridge; drink three times of much sugar in their tea; pour four times
more vegetable oil in their frying pans and "swig" 3.5 times more vodka.
Or buy 0.97 of an overcoat; 0.7 of a suit; 1.4 pairs of shoes; 1.22 pairs
of slippers; 0.66 pairs of boots. The number living below the poverty line
has gone down to almost 6 million.
Our spending has been restructured. We have started spending less on
food and more on non-foodstuffs and services and on savings. And this is
a true sign that we are approaching something like prosperity. Average
GDP per head of population in 2001 is (again expressed at the current exchange
rate) around 1,670 dollars. The average (official!) wage from January to
June 2001 was equivalent to 173 dollars. Pension - 31 dollars. Compare
this to data to that of 10 years' ago. Life does not seem quite so unpleasant.
The year 1991 was the next to last year of protracted economic recession.
Steady economic growth is continuing in 2001. The pace may be slower than
last year, but it is growth nevertheless, not recession!
However, it is impossible to appraise the development of the domestic
economy over the past 10 years unambiguously (see table). Figures illustrating
the growth in our prosperity sit happily alongside data indicating losses.
The latter include the increase in unemployment and mortality, the reduction
in the birth rate and population numbers and the reduction in life expectancy.
Losses in some branches of industry also seem to be barely compatible with
their existence. In the first instance, this applies to agriculture. Over
the past 10 years, farmers have lost 12 million hectares of land under
cultivation and 7 million hectares of meadowland. The number of head of
cattle halved. There are, for instance, just 18 million pigs remaining
in Russia - this is 20 million fewer than 10 years ago.
The gap between the incomes of the poorest (6.2 percent of total income)
and the richest (47.3 percent) has increased drastically. In Yevgeniy Gavrilenkov's
opinion, this has occurred because of the extremely rapid development of
the banking sector, accompanied by galloping inflation, as well as because
of the way in which privatization was conducted. Under these conditions,
bankers, who had access to almost free loans from the Central Bank and
made several hundred percent profit on them, grew perceptibly richer. A
little later, people who had grown rich from financial speculation were
able to profit from voucher privatization. The majority of citizens did
not get a slice of these cakes. But this was not their fault. It is just
that our state has never tried to create a
society with equal opportunities. Just as it has never attempted to
set rules of the game, which are identical for everyone. But, on the contrary,
has done the utmost to retrospectively legalize the actions of the few.
To put it more simply, the authorities' intervention in the life of the
country, if it had any effect at all, was only negative. It would seem
that our current achievements were made not thanks to but despite the actions
of the power structures. And we, Russians, can only pride ourselves on
this!
1991-2001: ECONOMICS OF SLUMP
Percentage in 2001 by comparison to 1991
-
Gross Domestic Product 72.5
-
Industrial Production 65.0
-
Investment in Fixed Capital 32.0
-
Cargo Turnover at Transport Enterprises 65.0
-
Volume of Paid Services to the Population 34.0
-
Population Size 97.0
-
Numbers Economically Active 88.0
-
Real Monetary Incomes of the Population 51.0
-
Average Real Monthly Wage Paid 49.0
1991-2001: ECONOMICS OF GROWTH
Growth in 2001 by Comparison With 1991
-
Housing Fund, Millions of Square Meters from 2,449 to 2,761
-
Average Provision of Housing per
-
Resident in Square Meters from 16.5 to 19.1
-
Retail Trade Turnover, Percent 150
-
Private Car Ownership, Per 1,000 Residents from 63.5 to 128.1
-
Domestic Telephones, Per 100 Families from 31.7 to 46.8
-
Televisions, Per 100 Families from 113 to 124
-
Washing Machines, Per 100 Families from 91 to 97
-
Sugar Production 1.8-fold
-
Preparations to Treat Cardio-Vascular Diseases 3.6-fold
-
Disposable Syringes 3.0-fold
-
Length of International Telephone Channels 3.3-fold
According to data from the Russian Federation State Statistics Committee
and the Working Center for Economic Reforms attached to the Russian Federation
government.
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