Atmosphere in the First Years of Transition
How did people in Moscow experience their situation in the first years of transition? The subject is difficult. The main problem is that the author is infected by his Western upbringing. Would he have been a native Russian however, there would have been equally severe problems in properly understanding the changes in consciousness.
What are the hopes and fears of the people in Moscow, what are their ideals, what do they see as evil? What do they do to survive? How do they judge morally their own and other people's behaviour? This is going to be an attempt to paint a picture of the moral atmosphere in Moscow. I shall give my personal thoughts about the historic roots and the dynamics of this atmosphere, primarily relying on my own experience with Russians and on what I have learned by talking with other people from the West who tried, with or without success, to do something in Moscow.
Contents: Sheremetjevo Airport; | Street Trade; | Investment; | Loud New Rich and Morals; | Projection of Western values
The year 1989. For the first time I go alone for business to Moscow. Sheremetjevo seems desolate. In the airport buildings one finds three and a halve tax free shops, and an astonishing amount of announcements saying that it is absolutely forbidden to give presents to the officials of this airport. I fill out my customs form. My ballpoint pen is empty. The international standard filling is not for sale at the airport, I am given the address of a hotel in the centre where I might try.
At Sheremetjevo airport, I learned later, there are a lot of Russian comrades ready to take on their own initiative the presents they are not allowed to accept if offered. Among these one probably finds also those who ordered the curious announcements to be hung all over the airport. Members of gangs (groups with a highly organised core and an informal set of adjacent figures who help occasionally if they can profit) check the airport luggage. They also determine the taxi prices. A crowd of taxi drivers waits sadly, some faces show outright despair. A normal taxi driver pays the gang a considerable tax for the right, given according to what in the West would be called mafia procedures, to drive travellers to the city. The fees of the final taxi product are astronomical, certainly to Moscow standards. You pay at least $45, one week's salary of a Russian professor. If you look rich you run the risk of being robbed by the extremely poor taxi driver (what is left to him of the fee could be anything down to $3). He had better not find a real lot of money (like $500 or so) on you, because that will make him afraid for persecution by police, for the crime, and by the gang, for the money. In that case your chance of being killed is considerable.
Despite my moderate and safeguarded travelling money, I will be picked up, like many of my fellow travellers. The taxi market has become thin. One taxi driver keeps approaching me insistently with an official letter with government stamp, apparently supplied to him by the gang.
As an economist, my first thoughts on Russia are on the optimal strategy for mafia groups around airports. What this mafia does not to do, is maximisation of profit: by reducing the price, and increasing safety (a mafia field of expertise!) they could simply earn a lot more money in this business. The mafia is strong, but does not yet understand the economic laws of its own business in the new environment.
Later I hear that Norsk Hydro transports its fertiliser, sold to Siberia, over the Mediterranean sea to the harbour of Odessa, because the Odessa mafia is so much cheaper than the one of St.Petersburg as to offset larger transport cost. The market starts functioning, but it seems the mafia is still on its way to understand it properly.
This all sounds rather frightening, but once I left the airport, I did not notice much of it, in the private Lada with a student in front, and at my side in the back W., the scientific assistant of my host, in his forties. I know him. Before I knew Russian I could already discuss with him properly: he speaks German very well. Together we look through the broken front window of the car, while we drive through horrifying holes in the road. How is life, I ask. His face assumes no expression at all and he says "Sosolala". It changed a lot here since I was here five years earlier, before glasnost. Out of W. slips a deep sigh. The young student in the front seat however looks one second over his shoulder, his eyes twinkling.
In the communist times, the streets used to be clean. Nobody talked loudly. I remember I was asked to whisper while talking with a Russian colleague on the street on what seemed to me completely harmless subjects. Now everywhere paper and plastic is blowing in the wind, improvised foldable tables near metro stations display cigarettes, journals, banana's, electric wire, cans with Coca Cola, stinking dead chickens and lots of books promising to teach you quickly how to speak "Amerikanski jeziek", that is how you should call English if you want to sell English language books in Moscow. And, I would almost forget, lots of long legs under short skirts on spike heels. The background of this tableau vivant often is a very large state shop with lots of empty shelves. As soon as a truck appears near the shop, everybody quickly enters, but often this is no use. The street traders have good connections in the shop. Often, nothing appears on the shelves, but a little later all products brought by the truck are for sale on the street for something like two or three times the officially determined state shop price.
This, my host will later say ironically, is what Jeltsin calls the free market economy. But according to him the truth is that Jeltsin gives income and quasi self-respect to these small traders by granting them their fake trade and portraying them as the enlightened avant garde in the process of transition. Many people in Moscow would like to forbid street trade, in order to enjoy again the low state controlled prices. They have absolutely no idea what damage the resulting misallocation does to the economy and hence to their own welfare. My host's suggestion is different and reveals much more insight: prices in state shops should be raised to the street (that is: free market) level. The margins of the street traders would then be taken by the state shops themselves. The money of street profits would be kept in the decent circles of the official state owned suppliers. My host is an economist at the end of his successful carrier, that entirely took place in the communist era. I have a question, but I hesitate to ask, because I fear to cast doubt too openly upon his honestly meant norms of decency. The question is: for what would this additional state shop revenue be used? But he has an answer: in the scientific world, a lot of people earn much too little. He himself is a good example. The government should do something about this.
My host is not stupid, but he did loose contact with reality. Jeltsin's street traders are too small in numbers to win elections with. He is right to say that the street trade margins are artificial due to the state controlled wholesale prices for which street traders buy. But by state control we must understand a complicated negotiation procedure between superiors and inferiors all the way down the production process, where everybody has its own power, officially meant to be used in the collective interest of the country, in practise used to maximise personal advantage in the difficult life of Moscow. The following of my host's suggestion of raising state shop prices would cause all money of consumers to flow back into this highly questionable circuit of civil servants promoting their own interests. Now this money remains in the hands of private traders. It is clear that hope is attached to growing purchasing power of this private sector. What are Russia's new capitalists going to do with the money thus kept outside the governmental circuit?
Behind decisions how to apply private capital in Moscow is a Russian mental world that for us is difficult to grasp. The first thing you do after a day they earned money is to change it immediately for hard currency, such as dollars. If you are a normal trader you hide the dollars, and complain loudly about bad trade and heavy losses, thus hoping to keep mafia at a distance. Small traders usually do not go to the bank. Big traders often have their own bank. Banks can not be trusted, and can offer any interest rate, from unbelievably high to negative real interest rates. An alternative to hard currency is a speculative stock of durable consumer goods, if you have a safe place to hide them.
In the Western world, money and stocks are seen as "expensive". They are costs. A trader in durable consumer goods needs money and stocks of goods in his shop to run his business. But this costs money, because their value could be brought to his saving account, where it would yield interest. Hence he wants to hold money and stocks of goods as little as possible. Russian people on the contrary have always been taught to be happy with money and stocks. The more the better! The idea to do something with the stocks, to transform them into saleable goods en sell them still feels like a sorry thought to many Russians, even many who became shrewd entrepreneurs in other respects.
Loud New Rich and Morals
Apart from these silent new rich, there are also the loud new rich. They do nothing to avoid being noticed. In fact they want everybody to see them all the time. They love it. The tires of their sport cars scream at every street corner. In a casual manner they park, and enter the casino, with a Havana cigar in the left hand and in the right arm a blond woman, heavily hung with jewels. Though we know this type in Western Europe (in England, they are called "show-offs", in Dutch "patsers") there is something to Western eyes extremely strange and interesting in the Moscow variant, once we realise that this was how the Western capitalist was depicted in former Soviet propaganda, in Soviet cartoons and the like. In this propaganda, all Western capitalists were depicted as such kinds of show-offs. And in the Soviet Union there weren't any at the time! So, one way in which this segment of Soviet society can have learnt how to behave as capitalists and as show-offs is by an image carefully designed by the officials of communist propaganda, the kind of person decent Soviet citizens were taught not to imitate. Later, after Western films were more freely allowed into Russia, the rich criminals that feature in Western top selling movies may have added to the picture the loud new rich needed to create their own image. The loud new rich ostentatiously plays the role of show-off-capitalist, to tease the old elite, and in general, to tease all people that stick to old communist values. A Russian emotional game of Russians among Russian, quite difficult for us to feel. The communist show-off symbolic is used by a new generation, not for any intrinsic value, but purely to react against an old generation. It can be compared to what we experience here when young children paint swastica signs on stones in graveyards, simply to have fun by scaring old people. The "old people" in Russia must hear the tires scream, the jewels glitter, and be made very sure their game is over. None of both parties in this game, neither the "young" nor the "old", has had much opportunity to meet a real Western enterpreneur, none has any idea of how such a person thinks about consuming, saving, investment, and other basic attitudes in life. The communist image of the capitalist is here the object of an intergeneration game.
What the loud new rich shouts out is: look how bad I am! And I am not ashamed: those morals are yours, not mine!
And here it is that the turn of morality in Moscow is most clearly visible. Until five years ago trade was on equal footing with theft. It was an ordinary crime. If caught, you would be imprisoned, next to the thief. This was not a view exclusively held by government officials. It was the general moral disposition of society: trade is crime. Almost everybody thought something like that. The view was that in a good society, everybody tries in his own job to execute the public goal, by working hard and having modest demands. Thought the destructive role of self interest in society was clearly seen by many, it was generally considered to be something to fight against, not something to allow for by conceding a free market system. In the eyes of many, the problem of the socialist Soviet republics was that, due to the presence of too many ill bred, egoist people, the republics were not socialist enough.
Legalising trade is a direction opposite to the right one according to many honest people in Russia and raises equal, or rather much more controversy than for instance legalising euthanasia in the Netherlands. In the Russian, like in the Dutch example, the general public is continuously misinformed by demagogues defending different views, appealing to primitive emotions of those who are at first unable to overview the problem as a whole, and have been taught from their youth to think in terms of the rigid distinctions between good and evil that time made unworkable.
So in Moscow, the one calls free trade a shame, the other opts for interpreting it as a sorry necessity of realistic politics, the next one gathers some courage to be a little positive about free trade, knowing he takes a big risk of ruining his image into one that some in the Western world have of a sex club owner, or, may be an even better example forty years ago in our country: a producer of preservatives. And beware, this is about trade as such, in commodities nobody is afraid to confess to buy. W. The excellently German speaking economic research worker for instance, undoubtedly has the word "Haendler" in his vocabulary. But he does not use it and speaks consistently about "Spekulanten". The openly visible traders and the defenders of free trade clearly feel, in their own society, a disgust concerning their way of living, and this has an important implication: only those start to engage in visible free trade who are not afraid to be in a paria, an outcast position. The loud new rich are not afraid.
The new rich, loud and silent, are "bad" according to many. They feel the stigma, the visible mark put on them. For them it is an unattainable ideal to be considered as honourable widely in their environment. In the West, there are distinctions between more, less and dishonourable trades. These distinctions have not yet got the chance to cristallise in Moscow. Trade and private investment is in a moral vacuum. Traders and private investors live in a moral vacuum. Practising virtue cannot give them some social recognition. If an enterpreneur wants to practise virtue, he will have to decide for himself of what consists this virtue. The communist culture in which he is born can yield no criteria to help him. And even if he succeeds in deciding what is virtue, practising it remains a private hobby, only to justify as a personal need. If you take into consideration that, as an enterpreneur, you compete in a rough environment where survival is a constant worry then it will be clear that our distinctions of good and evil do not exist in Moscow, and put more strongly, that our views on good and evil have no value in Moscow, they are of help to nobody and if expressed, at most create irritation, concealed for business reasons. This is the background of what a Russian bank director said, some weeks ago on the Dutch news: "there is no mafia in Russia, it is too cold for Italians". The changing Russian economic world must develop it own norms, no Western country has ever been in a situation like Russia today, and no Western cliches are applicable. These Western cliches are, however, highly interesting to study, we shall come back to it.
However everybody may think about it morally, the fact is this: if you have the courage to run a business in Russia, you run it in deep silence, or you have a number fighting-school kids at your service, and reach some agreement with the unscrupulous forces that control Moscow. These forces are quite diverse, private, public, and sometimes surprising joint ventures of both. If you don't do this, you have no business in Moscow. It is as simple as that.
And what is mafia? By now, I hope is clear that from the old Soviet view, all trade was crime. Such a definition strikes us, from the West, as too wide. But also we are in danger too easily to call some Russian business practice as criminal, because we insufficiently understand that without some practice that strikes us as immoral, no business in Russia can survive. The unhappy coalition of Russians still caught in Soviet perspective on trade, and unskilled Western observers created the idea that Russia is under control of "mafia". This statement is neither false nor true. It is dangerously unclear, and merely conveys feelings of fear that can be used by anyone in any direction. It does not help us to understand the process of transition, it is if I may say, new opium to the people of both East and West.
Projection of Western Values
Western newspapers about Russia, write about treason, crime, corruption, deceit, fraud, swindle, lies, mafia. The fact that of all these words translations can be found in dictionaries of Russian language, might make us think that we really know what we read about. But we don't. We know crime, corruption, deceit, fraud, swindle, lies and mafia in our own Western culture, and we are simply projecting these phenomena in Russian society. This leads us to think that Russia is like the West, only even much more criminal. It would be nice if there was another way to start interpreting another culture. Projection leads to enormous misunderstandings, but there is no other way. The only way to set aside false projections is to replace them by better ones.
To illustrate projection problems: in Dutch culture, some level of loudness in speech and amplitude of gestures indicates people are quarreling. If a Dutch person sees Italians acting like that, he projects his established pattern, and concludes that the Italians have a quarrel. But they do not, which can only be discovered by the Dutch if he is ready to doubt a conclusions he drew almost automatically, and starts to find out what is said between them. He improved his projection now. The Italians turn out to be very kind to each other. Further research might reveal this kindness masks a deep conflict between them, and in fact they could drink each other's blood. That would not mean the Dutch person's first conclusion was right after all!
Let me do so by going back into our own history to period before the birth of capitalism in the late middle ages. The basic process that had to be taken place for capitalist development to start was the appropriation of land and other means of production. Marx, my favourite transition economist, wrote about these episodes in detail (Capital I, Chapter 24, "Die sogenannte ursprungliche Akkumulation"). When we read in our Western history books about the main initiators of this brutal process, they are called nobility. They still feature dominantly in the minds of our children and we buy plastic swords for them to play the game of the knights. The so called noble character, and the deeds of those who were going to be the leading elite of Western European development have a striking resemblance to the ones of those whom we now call mafia in Russia. This is inconsistent. This is Western double morals. This explains the Russian banker's irritation on Dutch TV, who said: "There is no mafia in Russia. It is too cold for mafia."
The main method for improving our projections is to realise that treason, crime, corruption, deceit, fraud, swindle, lies, mafia are terms, each of them collecting a specific set of types of actions that we disapprove. To understand Russia, the degree of aggregation of these terms is simply too high. We should analyse every single type of action separately, and ask ourselves again precisely why we do disapprove it, and whether or not these reasons also hold for Russia today. And very often, you will find to your surprise, that once you properly understand the position of some person in Russia, your moral judgement will change.
On November 9, 1994 the front page of the weekly Argumenti I Fakti shows the following letter: "my father is takes money by means of corruption. He is a thief, who is the leader of a whole region. Nobody in our large family ever buys something. Everything is brought to us: meat, fish, honey, building materials...I myself am a student but my girlfriend lives in a village. I see how difficult life is to her and how poor her family is on the collective farm. At the same time the head of this farm brings us trucks filled with goods. Sometimes we have to throw away meat, because it exceeds the capacity of our three refrigerators. I have talked a lot about this with my father, but he says that all his friends do the same, and one just should use one's power. He finds me ungrateful. I am running out of patience. It is impossible to discredit my father. But let him see this letter. If he does not stop with it I will write again, and I will publish his name. Let him know that I am ashamed. He is always complaining about young people who do trade. But I would rather do that than live without conscience as my father. Let our parents know we are better then them."
Our first projection might be led heavily by pity with the boy and the poor in the farm he writes about. Yes, it is a shame! But consider a second projection starting from the story of a renowned Soviet hero, 13 year old pioneer Pavel Morosov, who betrayed his father who was hiding stock, to the communist party. What does the young author in Argumenti i Fakti want? He is raised in a communist nomenklatura (elite) family, and he does something belonging to the tradition of such families: he is betraying his father. The boy simply thinks in terms of a Soviet dictatorial power structure: his father behaves "badly", now someone higher in the power structure should come to do something.
The boy fails to see (and how could he see with his education..) that this power structure to which he wants to appeal is on its way to go, and that this will sooner or later affect his father's attitude. If his father keeps unflexibly complaining about Trade and other Evils he will loose his power. If not, he might keep it by shrewdly changing his policies. It is a pity that the boy's patience is over, because that is the only thing he needs, apart from a completely new perspective for his own life. In this projection, the advice to the boy is: do not talk so much with your father, talk more with other people. Do not communicate to change others, which is a very traditional Russian and communist attitude, of which his newspaper letter is an example, communicate to change yourself.
There are more projections possible for this case, most notably the one that involves the decision making in the journal's offices: may be the boy does not exist. He could product of the creativity of someone with some interest, to gain power of some process, or even simply to sell todays newspaper.
Of course, no words can replace the experience of going to Russia, watch the people and talk to them. I could have no wider ambitions than hope to convey some feeling of what Western people might learn from contact with Russian culture.
First, most of the problems in Russia, once seen in their proper perspective, can also be found to exist in Western culture. This is the very reason why it is possible for us to understand them, that is, to project approximately correctly. If we succeed, that is succeed in drawing a correct analogy, we can learn from Russian problems to understand our own. Personally, I feel that my contact with Russian culture considerably improved my understanding of Western society in many respects.
Secondly, by making successively better projections, one learns that the problems of Russia are not to be dealt with in terms of distinctions like Good and Evil, Criminal and non Criminal, mafia and non mafia, but in terms of the question: do or do not the people in power over a certain process understand properly what is in their own interest to be done? Russia brought forth writers, musicians, and scientists who belong to the greatest in history. It will finally succeed in the difficult task to run a performing free market economy and adopt Russian morals and a Russian way of life that promotes this interest.