In Russia, Money Starts to Talk
NOW that membership in the International Monetary Fund (IMF) and the World Bank has been offered, Russia and the other former Soviet republics have dramatically taken their place in the world economy. Emerging from seven decades of communism, and climbing the rugged path to market economies, they soon will begin negotiation to release the $24 billion aid package unveiled April 1 by the Group of Seven major industrial democracies.Skip to next paragraph
Subscribe Today to the Monitor
While such aid encourages optimism, the republics' ability to absorb it effectively is questionable. Infrastructure bottlenecks, shortage of skilled professionals, debt-ridden state enterprises, and an ineffective banking system will plague reforms.
Less discussed is another problem: the low value Russia's people attach to money, because the Soviet economic system made money relatively worthless.
The West takes for granted key operating assumptions in capitalism - the value of money and its role in setting prices in a competitive market system. Such perceptions long have been absent in Russia. The ruble in the USSR played a peripheral role in the economy, society, and polity.
A lagging Russian acceptance of money must be overcome before reforms can kick in at the grass-roots level. The Russian people have been conditioned to think of themselves as a small part of a centrally controlled distribution system working toward giant collective goals - frequently brutally, certainly not in ways to foster entrepreneurial skills applied to earning money. Everyone worked for the state, which placed its people in specific positions within a production and service-oriented hierarchy.
Nor did money provide social status or prestige. More important assets for "success" in the former Soviet Union's centralized barter system were valued resources that came with the position one occupied within the hierarchy. Such assets included possession of special goods from refrigerators to ball bearings, information access, decisionmaking power in the distribution of resources, and personal contacts. Hard-driving individuals tried to work their way to the top of a system in which economic relationsh ips became barter-oriented.
To survive under such conditions, one turned to resources other than money. You made deals - a good for a good or favor for a favor. A physician might barter his medical talent with a diplomat in exchange for expensive French cosmetics acquired abroad.
Under Marxist-Leninist economics, you couldn't pay extra money for a service even if you wished; indeed, it would be perceived as criminal. The rules prohibited money as a universal instrument for payment, for "liberated" money might destroy the state's policies by promoting people through independent business activities. The man on the street came to live by the old Russian proverb, "Don't have 100 rubles, but have 100 friends."
Barter behavior has conditioned ordinary people from the former Soviet republics to feel suspicious about people who acquire large sums of money. Rich people have been perceived as violating the rules by bringing money into the arena of barter relations - as taking bribes and upsetting norms of equality.
Today we see the first glimmer of change in Russian attitudes toward money, because the economic system is moving in ways to give more value to it. This year, Boris Yeltsin and Yegor Gaidar, first deputy prime minister of Russia and architect of its radical economic reform program, began taking steps toward liberating money. They introduced free trade and commercialized people's relations at all levels of management and private life.
These moves appear to have shifted attitudes toward a preference for monetary values, for the first time in decades. A public opinion poll held in Moscow in February 1991 - after the price liberation - showed that 72.3 percent of all respondents cited high salary as a No. 1 priority in their job preferences. Roughly the same percent favored the Yeltsin-Gaidar reforms, with 11.7 percent against and 16.3 abstaining.
In the emerging business-oriented system, new monetary incentives are attracting people out of state sectors by offering salaries based on money that, as time goes on, will purchase desired goods. The shift away from old state enterprises to new business activities is reflected in a 9.5 percent decrease in state-sector employment since last year.
Still, if money is to be liberated in Russia - making it the means of access to Western goods for ordinary Russians - the country must have a convertible ruble. That now seems a distinct possibility.
When it occurs, it will strengthen monetary relations in Russia and other republics, stimulate long-term investments, help forge a market economy, and pave the way for IMF and World Bank aid to take hold. It should encourage a shift in attitudes toward earning money - reducing suspicions of those who accumulate wealth. And if it promotes an entrepreneurial spirit and breaks the view that people are hired employees of the state, Russia could be well on the road to recovery.