Who Will Own “Nobody’s Property”? The Perils of Russian Privatization

At the beginning of Gorbachev’s perestroika, a number of economists expressed the idea that so-called “socialist property” essentially belonged to no one—it lacked a subject. But the well-being of those who managed this property in the name of the state directly depended neither on the size of the property under their authority nor on its effective use. Complete or partial property losses due to bad management did not lead to those severe consequences that an entrepreneur experiences in the West. The state simply registered the losses. In a word, the changing of property rights was put forward even at that time as the principal item of an economic reform designed to make interest in profit the moving force of development.

Today it seems that society and its ruling powers firmly associate transition to the market with privatization of state property. For the most part, one cannot prove that market mechanisms are beginning to function and guarantee the progress of the economy simply by virtue of the fact that producers and consumers of goods and services are now free to behave as they please. In other words, market mechanisms will only really function when the state ceases to be a monopoly property owner of land, minerals, forests, enterprises, residential housing, roads, and so on, and when a majority of independent property owners, acting at their own risk and competing among themselves, comes into being.

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