RUSSIA TODAY IV
Russia is acquiring a middle class. It is still small, but it is there. No modern state can remain stable or progress without a middle class; and an unstable Russia could be very dangerous indeed. Hence, we greet joyfully every sign that the Russian middle class is growing, even when we have to read the signs in the Cyrillic alphabet.
A Russian supermarket falls a long way short of the average American store, but it is clean, attractive and well-stocked. There is a tendency among Russians to romanticize the better characteristics of communism, but almost nobody suggests that the variety and quality of goods has not vastly improved. Moreover, for every one who says that the poor really can=t afford to buy the imported food and clothing, there are others who will concede that the empty shelves of the price-control past did not provide much for the poor either. There are active roadside markets where the prices are much cheaper.
What the supermarkets, stores and billboards demonstrate is the existence of a middle class that wants good products at reasonable prices. This middle class can now afford to eat well at home (restaurant eating is still uncommon), have a television and DVD player, and own a car. Increased power demand and traffic jams are common. Seeing kids charge up to tourists to sell postcards may not be an accurate means of assessing the entrepreneurial spirit, but to watch them haggling makes one wonder if this is a return to the old marketplace of fruit and rugs or practice for the coming global marketplace. The kids not only make a persuasive sales pitch, but they seem to be having fun.
Commerce has traditionally been a niche for minorities—Jews, Germans, Moslems—and since individual initiative was essentially illegal under the Soviets, it became associated with crime. In a police state criminals have to be better—more inventive, more ruthless—and better organized. Since the Soviet Union was often virtually indistinguishable from a criminal enterprise, the mafias found it relatively easy to work with corrupt administrators to provide essential services and products. (You need parts for your car, we can get them—at a price. You need a car? We can deliver one from Germany in a week. With documents almost as good as new. In fact, they are new.) When state communism fell apart, the mafias just came out in the open and fought for domination. The turf wars are now over and the police have able to reimpose some type of order on the survivors. But also the mafias have recognized what American criminal syndicates learned long ago—there is money to be made in legitimate enterprises, money without the risk of jail time or murder; moreover, there is a limit to public toleration of violence and disorder that it would be unwise to cross over. As a result, foreign businessmen now report that Russia is much better suited for investment than it has ever been. Just don=t just send your money and hope for the best—you can invest foolishly in the USA easier.
Russians learned the hard way not to trust markets. When large enterprises were privatized a decade ago, employees and citizens received vouchers; many, seeing that runaway inflation was eating up their savings, invested in stock funds. Then administrators essentially stole everything of value while the Yeltsin government looked the other way—out of incompetence or corruption or misunderstanding how capitalism works. When the currency finally stabilized, few had money to invest, and almost nobody had confidence in the system. Building investor trust will be a hard task, but the most essential steps have been taken—the enactment of commercial codes, establishment of banks, education of government officers, and paying the police and other authorities so that they do not have to rely on bribes to live. Now they have to walk the walk.