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However, it was only in April 1991 that theCouncil of Ministers of the USSR presented a Draft Programme of Action designedto get the economy out of the crisis. This document, which detailed theOctober `Main trends' of the President and which, therefore, was not anindependent draft, could well be treated as a positive contribution at thelevel of declarations but it was eclectic from the point of view of taking somespecific steps. This is quite evident as far as the privatisation sphereis concerned, for the programme (a) lacked distinct treatment of the conceptsof `privatisation' and `restoration of property to private ownership', (b) wasnot clear where the line of demarcation indicating the sphere of power of theCentre and the republics would be, (c) was not clear what the rate ofprivatisation would be or how realistic the whole thing was, (d) did notindicate the scale of the privatisation effort with reference to medium-sizeand large enterprises (which is not surprising if one takes into account thescale of operations of the then Military Industrial Complex (MIC)). Whatthe architects of the Programme insisted on was the basically `for payment'nature of privatisation, rejecting the ideas of a free `hand-out' of stateproperty among work collectives or the entire population of the nation.At the same time, and specifically ignoring the experience of Yugoslavia, theyacted as consistent adherents of the so-called `collective (people's)enterprises', priority for which was set out in the programme.

It is approximately at that time that wecould see an intensive effort in developing anti-crisis programmes. forinstance, on 17 April 1991 the Presidium of the Council of Ministers of theRSFSR approved a USSR Government Programme on stabilising the economy andtransition to market relations which also affected the issue ofprivatisation. In particular, the plans of the government of Russia in1991 included ensuring incorporation of some 100 large enterprises, keeping inmind their forthcoming privatisation (this limitation on the number ofenterprises could be explained by the large share of the Union MIC in Russia'sindustry - up to 60%), the privatisation of up to 46,000 small businessenterprises in commerce, the services sphere and housing and utilities.Yet it should be emphasized that the `Silaev's programme', as well as that ofthe Union, was basically eclectic regarding the forms of privatisation (`goingfrom various versions of free distribution of state property... up to itsforceful sell-out') and it was somewhat declaratory in nature.

An outcome of the vigorous work of the Unionand republican governments in working out anti-crisis measures was the signing(in July 1991) of a Programme of joint action by the Cabinet of Ministers ofthe USSR and the governments of the sovereign republics designed to extract theeconomy of the country from crisis in conditions of transition to themarket. As far as privatisation was concerned, the programme provided forthe following:

- from the third quarter of 1991 -implementation of special Union and republican programmes,

- priority privatisation of enterpriseswhich service the population and which turn out goods of mass consumption orproduce foodstuffs, then small industrial businesses, and construction andtransport businesses,

- a consistent reduction of the sharesate,

- priority to the establishment of jointstock companies, partnerships, collective (people's) and lease enterprises witha but-out right,

- preferential terms for members of workcollectives.

The Programme laid strong emphasis onpriority for the development of collective property but the accent changedcompared with April: now the talk was not so much about an abstract`people's enterprise' but deposits, shares and interests of citizens, whichrepresented a step forward within this concept. To speed upprivatisation, the programme also provided for the sale of property by aninstalment system, some tax privileges and credit assistance.

In summer 1991, as in September 199, thegovernmental programme faced an alternative: this was a project with thetitle `Accord for a Chance', worked out by Yavlinsky and his group andAllison. In the field of privatisation this programme envisaged twostages (1991-1993, 1994-1997), provided for an immediate speed-up of the rateof small privatisation with a gradual addition (as incorporation proceeded) oflarge enterprises the first stage was followed by the second. In essence,at least as far as privatisation is concerned, this meant a speed-up in theimplementation of the `500 days' programme, geared to co-operation with theWest.

Actually, none of the programmes weretranslated into reality - be it full or partial. The problem was not onlythe popularity orientation of most of these programmes but the objectiveconditions of a growing crisis, a crisis that was running ahead of anyrecommendations or stages of development, and the fact of collapse of theUSSR. As it turned out it was more realistic to implement someanti-crisis and privatisation measures within the framework of Russia on thebasis of the operational adjustment of the economic situation.

What happened in August 1991 onlycontributed to the vigorous strengthening of the process of separation of theimplementation of the economic reforms in individual republics. theexperience gained in the course of implementation of the 1989-1991 programmeswas not in vain; however, what really happened was a switch-over to therepublican level as far as the process of reform was concerned. Inconditions of a real shift of all conditions of the announced policy of radicaleconomic reforms (remember the agreement between Gorbachev and Eltsin) and thedeclaration of the `full recognition of the right of private property' (asstated at the extraordinary session of the Supreme Soviet of the USSR on 26August 1991) it became quite possible to go ahead with a full-scale programmeof privatisation. By that time Russia already had some fundamentallegislation on privatisation but the problem was of a different kind, namely,how to operate the necessary mechanisms in practice in a situation where theprocess of spontaneous privatisation was so intensive.

Chapter3. The 1990-1991 Debate on Privatisation

Since the middle of 1990, simultaneouslywith the development of the governmental programme and alternative programmesof the transition to a market economy, the privatisation debate became morepractical: the object of debate was not the legality of this processitself but the more effective and socially acceptable methods ofprivatisation. In practice from the middle of 1990 the pivotal issue ofprivatisation was whose interests would the privatisation serve.

What the debate of 1990 showed was theexistence of a range of approaches: the politicians and economists of theSoviet school were in favour of giving away the state property, thinking thatthat was the way to solve the issues of privatisation democratically, whilethose who looked to Western practice stood firmly for a rapid corporatisationapproach (see Grigoriev & Yasin, 1991) /9/. Rather influential,though keeping somewhere in the background, was the most conservative wing ofthe Soviet school, advancing the ideals of the `socialist choice'.

The elaboration of the legislation onprivatisation at the all-Union and republican levels which had been going onsince the beginning of 1991 now received a new impetus to boost the theoreticaldebates. The peak of these debates was the spring and early summer of1991 - i.e. the period that directly preceded the adoption of privatisationlaws by the Union and Russian parliaments. It is at that period, if weleave aside the views of those who categorically denied any necessity for thetransformation of state property, that one can clearly distinguish three basicapproaches toward privatisation /10/:

- the creation of collective (people'senterprises both with non-divisible and collective-divisible (individualised)property;

- the incorporation of enterprises andopen sale of the shares of state enterprises on the securitiesmarket;

- distribution of state property amongthe entire population through the implementation of various versions of thevoucher system in line with the East European concepts.

I intend to deal with the issues in greaterdetail since at the time of writing (autumn 1994) such divisions remain, thoughto a great extent this is at the level of irrational political pronouncementsby one party of politicians or another.

3.1. Creation of Collective People'sEnterprises

Adherents of this approach (and we canmention here V. Cherkovets, A. Boiko, V. Tarasov, E. Yasin, T. Popova and manyothers) suggested that state enterprises should be turned over to the ownership(or at least control) of work collectives free of charge or on the basis of aprivileged buy-out. In their opinion, that was the simplest and mostpainless way of transition toward market relations, when work collectives ofself-run enterprises will be acting as economic subjects. Among theadvantages of such an approach, the things that were named first were theideological acceptability and attractiveness for broad strata of thepopulation, as well as a possibility to enhance the efficiency of production,since workers who are at the same time owners of property have an interest inimprovement of the results of their activities at their own enterprise/11/.

These, however, were the very features thatwere so violently attacked by the opponents of collective ownership (P. Bunich,S. Glaziev, A. Zaichenko and others). Transfer of the means of productioninto the ownership of work collectives when these enterprises are profitable,well-equipped businesses would indeed be attractive for their workforce.But for the workers of unprofitable enterprises or enterprises where the fixedassets are already heavily depreciated, not speaking about doctors, teachers,pensioners and some unemployed young people, this kind of approach is certainlydiscriminatory /12/.

Quite as doubtful is the thesis on itseconomic effectiveness, resting on the assumption that a worker who is at thesame time an owner is interested in the results of his enterprise.Actually what such a worker-owner is most interested in is how to maximize hiscurrent earnings. Therefore, there is a real danger that collectivelyowned enterprises will try to direct the lion's share of their earnings towages and salaries, thus undercutting the interests of long-termprogress. In other words, they can hardly take effective decisions in thearea of investment policy or take the necessary risks in business, or makeintensive use of labour resources or eliminate the existing redundancy.Moreover, the process of decision making in large collectives in principleinvolves enormous difficulties. Very often, in spite of the formalequality, the decisions are made by a handful of people, or the work collectivemay easily fall under pressure from outside.

These dangers are no only fully exemplifiedby the experience of Yugoslav `people's enterprises' but also supported by dataon the comparative effectiveness of private and collective autonomous(self-managing) firms in developed market economies. On average,collective firms in these economies register poor performance indicators andplay an insignificant role in the development of the economy and should betreated rather as a means to fight unemployment, as a social stabilising factorrather than a means of enhancement of production efficiency (for details alsosee Sirc, 1994).

It should be noted that the adherents ofthis approach were quite heterogeneous. It is enough to say that thegroup included deputies of `Communists of Russia' and one of the authors of the`500 days' programme, E. Yasin. In other words, the concept was shared by`fundamentalists' adhering to their communist values or the society of`people's rule' who tried to prevent any cardinal transformation in propertyrelations, and modest reformers who advocated their painless and sociallyacceptable transition to the market.

A watershed between these two groups lies inthe question of the nature of collective property. In principle, one candistinguish two versions of giving enterprises to work collectives: innon-divisible and collective-share types of property. The first version,backed by the `fundamentalists' in both party and business structures, actuallyimplies the institution of kolkhozy in industry, which would give bureaucrats quite real powers toretain their privileged status. Modest reformers suggested thatcollective enterprises should be set up with share-type personalised propertyas an inescapable and legal process, since it rests upon the initiative of workcollectives and makes it possible to get enterprises out of the control of thestate rapidly.

3.2. Incorporation and Sale of State-OwnedEnterprises

Some economists who did not agree with thearguments of the adherents of collective forms of ownership for enterprisessuggested that a generally accepted world path be taken and the state propertyright sold off into private hands. Small enterprises would be sold on thebasis of tenders and auctions and the large and medium-size enterprises wouldbe incorporated as joint stock companies and then, as the secondary market insecurities shares became more mature, offered for sale to institutional andprivate investors.

One of the major advantages of the sale ofstate property was, its adherents believed, the possibility of tying up `hotmoney', stabilising the financial position of the nation, as well aschannelling the financial resources obtained to set up a system of socialprotection for needy people. The necessity of sale was also supported bythe claim that only property that was bought and not given free would be put toeffective use.

The idea of selling the state property wasshared by both the radical market-oriented elements (for example, this methodwas supported by the Democratic Party of Russia) and the pragmatic elements andsometimes even by rather conservative elements close to governmentalcircles. While the former stressed the fact that the sale of stateproperty into private hands was the most direct way to get to a full-fledgedmarket, the latter elements put more emphasis upon getting some additionalmoney for the budget that later on could be utilized not so much for socialprogrammes and maintaining healthier finances as for propping up unprofitableenterprises and the military industrial complex.

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