By Boris Kagarlitsky
MOSCOW — At the end of 1990, when it was announced that trade in Moscow would be privatised, the city authorities promised that within a few months store shelves would be laden with goods. Queues would disappear, and thanks to free competition, prices would fall. Sales assistants would stop cheating customers, and would become polite and sweet-tempered.
Since then, two and a half years have gone by. There are, indeed, many foreign goods in the shops. But this has not been due to privatisation; all that has happened is that exporters from Western Europe, the US and South-East Asia have taken over the Russian market, squeezing out local producers.
The shops, like society as a whole, have become subject to social stratification. The old "closed" stores for the bureaucratic elite no longer exist (at least, so the authorities tell us). But in the shops for the rich the prices are so high that the average citizen doesn't contemplate even going in.
Worse than before
What about all the other privatised trade, which is supposed to provide for ordinary residents of the city? Sociological surveys this year show that just as before, people complain about queues; shortchanging and short-weighting; shortages of goods; and the rudeness of salespeople. There have also been numerous complaints about dirt, breaches of sanitary regulations, and general inefficiency and disorder.
Every Muscovite knows from personal experience that in many shops the situation is worse than it was before. Years ago you could at least complain to some higher organisation. Now there's nowhere to lodge a complaint; you're dealing with the private sector.
Meanwhile, commercial enterprises that used to have monopolies still enjoy them. There are simply too few shops for real competition to arise.
So much for our traditional "Soviet commerce". But what about the Western retail firms that have set up operations in our market?
The situation here is much the same, especially in the case of the shops which are not ultra-high-priced, but which aim to sell to the so-called middle class. The Spanish firm Galerias Preciados has set up a supermarket in Moscow. It sells, very cheaply, everything the firm has long been unable to clear from its shelves in Madrid and Barcelona.
Drop into Galeries Lafayette, handily situated in the GUM retail complex alongside Red Square, and you'll be struck by how very Soviet everything seems. There are endless queues, rude salespeople ou, only one of me!" "Can't you see I'm busy!" — or just a haughty silence). At the cashier's booth hardly anything stirs. There's no question of their providing change on hard currency transactions. Ten or 20y cents on each purchase — work it out, how much does that come to over a whole day?
The customers here aren't especially wealthy, but they're not poor either — workers in joint ventures, small and middle business people, bureaucrats, bosses' sons and daughters. All of them stand meekly in line and put up with boorish treatment. They've earned the right to suffer from Russian rudeness in a French store instead of a Russian one.
Of course, it's not always that bad. There are examples of successful privatisation. On Leningradsky Prospekt, in place of a cafeteria that never did a serious day's work, there is now a shop with the curious name Food-2. Here the products are of good quality, the staff are polite to customers, and the prices, though high, are not exorbitant. There are people who prefer to shop here simply because they get treated like human beings. But note: this isn't a privatised Soviet organisation, but a completely new firm that has leased the premises. It's far from typical of Moscow retail trade.
Every Muscovite has personal impressions of this kind to relate. But here are the results of checks carried out by the Moscow City office of the State Commercial Inspectorate. During the first half of 1993 this office carried out 3416 inspections, finding breaches of the regulations in every second enterprise.
The inspectors' conclusions were gloomy: "Privatisation of retail trade in the city has not ensured good-quality service to the population. Negative phenomena have not become less frequent. The main problems are cheating, rudeness, unsanitary practices, unjustified price rises, and the unsatisfactory organisation of trade."
The inspectors reported that the number of complaints concerning lowquality merchandise had tripled. In most of the shops, the employees responsible for checking the quality of goods had simply been sacked; in the privatised sector, it appears, the problem of quality has at last been solved.
Deception and fraud
In Moscow during the first half of 1993 a total of 822 criminal prosecutions were brought against workers in trade as a result of deception and fraud, and the city received 17 million roubles in fines for breaches of trade regulations. But everyone knows this is a mere drop in the ocean.
The plans to balance the city budget through the sell-off of property have been a complete failure. By the middle of 1993 a total of 9486 trade outlets had been privatised, and as a result the Russian capital had received 5.5 billion roubles in revenues. Compared with the volume of property sold off, this sum — currently about US$5.5 million — is negligible. Of the privatised enterprises, only 2221 had received documents officially recognising the transfer of property. or the paperwork to go through, and in the offices of the city government, people were still awaiting the customary "gifts".
Even the chairperson of the Moscow Property Committee, Alexander Nikitin, reportedly assessed the results of privatisation as "very mediocre". He hoped, however, that everything could be put right if the same failed policy were to be implemented on a still more massive scale. It is hard to see what might yet be privatised, since all the "juicy titbits" in Moscow have already been grabbed.
The semi-official newspaper Economy and Life, in a special Moscow issue, stated recently that "hopes in the omnipotence of private property and pure market mechanisms" had proven "illusory", and had "not been borne out". The pity is that the authorities came to this conclusion only after they had destroyed the whole municipal trading system, ignoring the warnings of the trade unions and of the Labour fraction in the Moscow City Soviet.
Moscow Mayor Yuri Luzhkov states proudly that he has not allowed "crash privatisation", which would lead to "chaos in the area of trade and services". He also threatens to expropriate enterprises which systematically breach trade regulations.
In general, Luzhkov has a reputation as a tough and determined character. But in this case, for some reason, his threats remain on the verbal level.