When we talk about the last years of the "stagnation" period and about perestroika, we always remember the problem of defitsit (shortages). The economy of our enormous country was totally planned by the central administration and it was impossible to calculate and provide all the simple every day needs of common people. Priority was given to the development of prestigious and important spheres, like heavy industry, for example.
On the one hand, the USSR was a great power with raw materials, relatively highly developed industry, education, and science (including space research). On the other hand, its people were often badly dressed and shod and tired of queuing up. The situation of defitsit was favourable for black market trade and selling under the table. We often used the verb to get or dostat (достать)instead of to buy when the process of buying required effort, stamina and the help of useful acquaintances (blat).
Even buying everyday food was a rather long process. There were not big supermarkets in our district and it was necessary to buy food in different little shops, queuing up both at the and cashier and shop assistant. Sometimes it was impossible to get simple and necessary things like matches, washing powder etc. My granny always cared about a reserve of these "strategic" goods.
During perestroika the problem of shortages grew and a new aspect of it appeared: a shortage of spirits. Our family didn't consume them much--only during holiday parties--but we sometimes needed them to use as an exchanging currency (to barter) and to get something else very useful (some construction materials for our dacha for example).
Generally, I didn't complain. Fortunately, I had fewer problems to buy shoes and clothes them some of my acquaintances because my parents could buy things abroad. I didn't need to queue for three or four hours to get boots, for example. As a student and then as a teacher, I had the possibility to go shopping in the afternoon or early evening when there were not so many people in the shops. I didn't have a family, and I didn't need to care about my husband's dinners and children's clothes. Finally, I am a Muscovite and Moscow was always better provided then the provinces.
So, being from the last Soviet generation, I didn't feel the whole complex of problems. Really, we quickly forget physically uncomfortable thing like badly organized shops. But I think the problem which troubled me most--some features of the people's psychology--hasn't been annihilated yet: rudeness in everyday life, for example. Average Soviet people, tired of daily queuing marathons, were often rude, trying to pay back each other for the problem for which maybe the whole system was guilty, but not their neighbours in a queue or on a bus.
The shop assistants, who considered themselves very important persons, were rude with the customers and could even offend and humiliate them, like dependent people. I think nowadays in capitalist times the situation should be the opposite. However, surprisingly, many sellers in the markets (especially Ukrainian women) are very hostile to the customers. Maybe the stereotype of the powerful and cruel shop assistant, which they say in their childhood, is very difficult to forget. Maybe they hate Muscovites and are envious of them.
Besides the rudeness, the other problem was envy of the people who stood out of the "grey" background by their abilities, talents, professional skills and clothes. If somebody had several advantages, he or she could be the object of very strong envy. "She wears jeans--she isn't dignified enough to be a member of the Communist Party!" This seems ridiculous, but it was a really fact. Sometimes I ask myself "Maybe I distinguish myself too much from the others? Is it good or not? This is an experience received in our society of equal possibilities.
As many people have now explained to me, the Soviet authorities were not interested in censoring classics. According to the Marxist idea of the progress of history, the importance of which David Remnick highlights very well in his book Lenin’s Tomb, classics can be enjoyed as classics without the risk of purging because the stage of history with which the classic deals has been overcome. This is an interesting difference between the totalitarianism as it played out in the Soviet Union and in Germany where many classical works were also subject to censors for their un-Aryan perspectives.
The continued existence of this structure, therefore, grossly underestimates how well Muscovites live. The average salary for all of Russia according to official statistics is 200 dollars. Remembering that official salaries grossly underestimate true earnings, we can safely, I think, at least double that. In Moscow, salaries are at least twice if not three times as high as the rest of Russia. According to the economic statistics (I am not sure what basket of goods this entitles you to), middle class in Russia is defined as earning more than 700 dollars. However, the disposable part of that 700 dollars is much higher than for an American.
Property is for most people, their biggest expense. Most Muscovites, however, pay very little to live in their apartments. Older people gained possession of their flats from the government after the fall of communism, and as a result never really paid anything for the place they live. Many of these old people have now died and the flats are occupied by the younger generation. Although many grown children still live with their parents and might complain about it, the fact remains they don’t pay rent. Basically, then, only non-Muscovites or upwardly mobile people pay rent. Of course, the really rich have bought big villas outside the ring (as the freeway around Moscow is called) or exchanged their cramped apartment for a bigger one, but it is not the plight of the 150,000 plus millionaires in this city as well as the growing upper-middle class that we are talking about.
In addition to not paying rent, utilities are still not deregulated so that water, for example, is not paid for by quantity consumed, but by how many people live in the flat. The rate per person is ridiculously low. Building fees do exist and are rising but at the moment remain minimal—between 500 and 1,200 rubles per month (about 17-40 dollars). Since healthcare is kind of paid for by the state, the next biggest expense is transportation. A brand-spanking new Lada will set you back 6,000 dollars, but the public transport is great here and the traffic terrible, so many people remain carless (though a car is a huge status symbol in a country obsessed with status). Ride all you want on the metro for 10 dollars a month. Food is relatively cheap in the less expensive super markets and markets, so basic expenses for someone like me add up to about 200 dollars a month. This means that most non-pensioner Muscovites have quite a bit of cash to throw around, since as discussed in my piece on banks and taxes, to most Russians, there is no point in saving anything.
Many Muscovites love to spend their money on status symbols. The phone is perhaps the average Muscovite’s favorite symbol. The accountant at my school seems to have a new several-hundred dollar phone every couple of months, and I am considered terribly outdated. I don’t even have a color LCD screen for heaven’s sake. Another symbol is the tan. Where you go and how many stars you stay in is of the utmost importance. A lady I teach in a business, who works in customer service told me about her all-inclusive vacation to Egypt at a 5-star which cost 2,400 dollars for the week. These people are not New Russians; they are merely making use of their disposable income, which is a very large percentage of their salary.
These words, are no less true than when Gogol wrote them in 1842, even if it was in the fanaticlaly motivated second volume of Dead Souls. I was reminded of these words when I had a conversation with a very wise friend of mine back in the U.S., and I realized how little is generally know about Russia’s transition to a capitalist economy back in the United States. Most educated people have this hazy idea that some problems exist, but I think very few are aware of how seriously these problems effect the growth of the Russian economy and what makes it such a difficult market in which to operate.
We read in the paper every day here in Moscow, and most days in the U.S. as well, about the trial of Mikhail Khodorkovsky and his partners. The charges, most people hear, are for tax evasion. Yet, one only realizes how ludicrous these charges are when one realizes that, for the most part, in the realm of business, law is a mere triviality where it does exist and the tax police are a highly questionable political tool at best and mere extortionists at worst.
Stephen Kotkin, in his book Armageddon Averted, which provides a good introduction into the genesis of Russia’s problems today, labels Russia not as corrupt but as pre-corrupt because in order to have corruption, one must have laws.
In the 90s when Khodorkovsky made his billions this was especially true. Yeltsin and his entourage permitted the wholesale looting of the state, which was given into the hands of the communist powerful and some other ruthless businessmen such as Khodorkovsky. In fact, since communism fell apart in chunks and pieces, one had to operate illegally in order to make a profit. Yet, these people foresaw that the system was going to change and that many of their actions would allow them to get to the top of the heap after a capitalist system had been implemented.
Russia, the saying goes, must be so rich to have been looted so many times and still have something left. Many are enjoying the fruits they have reaped. I recently went to a friend’s dacha next to the second dacha of the regional Moscow prosecutor. The prosecutor’s dacha was several thousand square feet in the classic French style, and this was is third home in Russia! Khodorkovsky, like the prosecutor, was simply playing by the rules of the game as they were defined at that time. Russia, in effect, is just beginning to have some kind of law—but just barely—and it is only being enforced widely against people who cross the president in the political arena.
This is certainly true in the realm of taxes. Most Russian companies only play very minimal taxes, whereas international companies are left to bear their heavy tax burden. * The tax codes here are impossible and are still paid wholly by the business, not by every individual (though this is changing), and taxes are prohibitively high. Therefore, most companies simply declare a very small percentage of their income, pay their workers minimum wage legally and slip them the rest in cash under the table.
A friend, of mine, for example, works for company that imports Latvian china and silverware. The company, like most, is run by a former member of the KGB, who cashed in on their connections in the government to start businesses when capitalism bame around. My friend’s declared salary is 1,700 rubles, or about 60 dollars a month. The other part—more than a thousand dollars—is given to him in cash under the table. "It’s not bad," my friend says with a shrug. “I’ll have a very small pension when I get older.” Most people in Russia, as a result of both the cradle to grave support of the Communist regime and the political instability, do not live for the future. Why not wear one and a half inch heels and smoke cigarettes? It looks good, right? “Live fast, die young,” my students say.
I wondered when I first got here why there were so many exchange bureaux all over the city, and why everybody knew the prices of everything in dollars. The answer is simple: Russia is a cash economy that operates in dollars. It is estimated that Russians have over 40 billion dollars squirreled away under their pillows. I personally would believe it was at least three times that.
After the bank default in ’98, the few Russians that had put their faith in the banks, lost it. There is no FDIC here, and people merely lost thousands of dollars as banks went under. In addition, foreign banks are not allowed to operate branches in Russia, so foreign banks accounts are out of reach for almost everyonne. Meanwhile, even today nobody knows who owns most Russian banks, and while the government is trying to crack down on them, it’s hard to tell what’s for real and what’s political motivation as in the most recent case of Sodbiznesbank.
I was in the travel agent's the other day, where of course you can’t buy your ticket from the travel agent, but you have to go up to the ubiquitous касса (Kassa) and pay. There was a long line, and I watched everybody fork over money for their plane tickets only in cash. Everybody in the line was buying 800-dollar plane tickets in cash. Not a single person used a credit card. A student of mine, whose favorite hobby is to window shop for cars she can’t afford told me that she goes by a BMW dealership here and sees people buying seven series in cash. No 0% APR, no factory rebate, just cold hard (and probably cocaine dusted) cash.
This is also true for Moscow outrageously priced real estate. The concept of a mortgage as only widely become known in the last couple of years, and since even those people who make enough to qualify for a mortgage, cannot because there salary is paid under the table. Hey, why not buy a 100,000-dollar flat an old Stalinist communal building in cash? It’s better than under your mattress, and with the average cost of real estate in Moscow (let’s not even talk about the center) well over 1,000 dollars a square meter, it’s a great investment, right? That, is unless the city government, which retains the rights to the land on which your property lies, decides to bulldoze your building. Either way, At least you don’t have to pay interest on your mortgage.
For anybody who has taken macroeconomics one realizes that the lack of trust I the banking systems makes the size of the monetary base very similar to the size of the money supply. In effect, currency is not circulating properly throughout the economy, and the only way to circulate more currency is to print more, which often as many deleterious side effects.
This, interestingly, has led to partnerships with Russian and international companies whereby Russian companies, who know how to do Biznes in Russia simply run a franchise in Russia. This, in my opinion is bad news, because it lends and air of law-flouting the reputation of the company. This happened in the case of Reebok, as reported by the Moscow Times.
Novedevichy or New Maiden Cemetery is adjacent to the magnificent convent of the same name. During Soviet times, of course, religion was highly frowned upon and church lands were closed and confiscated. The cemetery became the resting grounds of Moscow’s most eminent and famous communists.
It has always been a macabre passion of mine to wander through the cemeteries (if they have them) of the countries I visit, and Novedevichy proved to be a real treat as well as another demonstration of the stark contrasts that exist in Russia and in Moscow especially.
The difference between the pre and post-revolutionary tombstones is galling. Even famous people before the revolution had modest tombstones bearing the orthodox cross. The likes of Shostakovich and Gorky are buried in simple tombs, reminding us of the Christian belief in dust to dust. Simple and moving in the tree-lined aisles of Novedevichy, they seem to befit the atmosphere. The communist ones, however, demonstrate the power of, what during communism, was the new state religion and the immortality of the human world. The deification of military might was especially shocking.
Interesting, though, are the other smaller tombs to lesser heroes of the revolution and the Soviet realist art style that accompanies these them. The ballerina gets a full-sized statue of herself on her tomb, while the chess master receives a knight on his.
The fall of communism has not dampened wealthy Muscovites love of ostentatious tombstones and is a reminder of many Soviet traditions embedded in society.