Privatizing Russia

by Maxim Boycko, Andrei Shleifer

Privatizing Russia offers an inside look at one of the most remarkable reforms in recent history. Having started on the back burner of Russian politics in the fall of 1991, mass privatization was completed on July 1, 1994, with two thirds of the Russian industry privately owned, a rapidly rising stock market, and 40 million Russians owning company shares. The authors, all key participants in the reform effort, describe the events and the ideas driving privatization. They argue that successful reformers must recognize privatization as a process of depoliticizing firms in the face of massive opposition: making the firm responsive to market rather than political influences. The authors first review the economic theory of property rights, identifying the political influence on firms as the fundamental failure of property rights under socialism. They detail the process of coalition building and compromise that ultmately shaped privatization. The main elements of the Russian program -- corporatization, voucher use, and voucher auctions -- are described, as is the responsiveness of privatized firms to outside investors. Finally, the market values of privatized assets are assessed for indications of how much progress the country has made toward reforming its economy. In many respects, privatization has been a great success. Market concepts of property ownership and corporate management are shaking up Russian firms at a breathtaking pace, creating powerful economic and political stimuli for continuation of market reforms. At the same time, the authors caution, the political landscape remains treacherous as old-line politicians reluctantly cede their property rights and authority over firms.

Genres: Economics

176 pages, Paperback

First published April 19, 1995

Reviews

[Eddie · Rating 4 out of 5]

Read this as research for my EPQ very difficult book to come about but extremely useful in understanding the chaotic privatisation process by some of the architects of the whole ordeal. Of course there is hefty bias from these men and their motivation aren't always so pure, in fact Shleifer and his univerisity were fined $26.5mn due to his dodgey dealings in Russia - gaming the system he helped to create. Yet the insight gained into the supposed rational however exagerated the outcomes are is invaluable. It's like watching the moment before a car crash, the groundwork has been layed for the creation of the oligarchs and by proxy Putin and Russia today (the corruption, the control, the wars) and it can largely be attributed to the brief moment of rapid change described in this book.