By Renfrey Clarke
MOSCOW — "I'll buy your voucher for 1000 roubles! Phone now — the price will go down!" Some weeks ago that hand-written notice was pasted up outside the bread shop where my neighbours and I queue in the autumn frosts.
The offer was not a generous one. The nominal value of the Russian government's "privatisation cheques" or vouchers is 10,000 roubles. In the securities exchanges where vouchers are now almost the only items that attract much interest, the price early in November was a little over 4000 roubles.
All the same, my neighbourhood speculator is clearly doing business. The tags that hung from the notice, carrying a phone number, have long since vanished. Out of panic or ignorance, a few more Russians will have surrendered for a pittance — in this case, the equivalent of about US$3 — their share of what used to be called the "property of all the people".
Like the Thatcher government in Britain, the Yeltsin regime in Russia was flush with rhetoric about using the assets of state-owned enterprises to create a "people's capitalism" in which scores of millions of citizens would have a direct stake. But as in Britain, the rhetoric and the reality are turning out to be very different.
Vouchers have been printed for every one of Russia's 150 million citizens, and since October 1 have been available for collection from savings bank branches. In effect they are state-backed securities, which the holders from December 1 will be able to exchange for shares
in joint-stock companies to be set up on the basis of the enterprises which are to be privatised.
But will the mass of Russians take up the offer to become shareholders in industry? This theory involves some improbable assumptions, to say the least.
First, it assumes that the majority of the population will be able to choose not to sell their vouchers. The asking price for vouchers on the securities exchanges, though corresponding only to about US$12, is more than the monthly wage of large numbers of Russians. Only if they sell their share of national industry will many people be able to eat properly throughout the winter.
Second, the notion that "voucherisation" will create masses of small shareholders assumes that exchanging one's voucher for shares is a rational act. The truth is that most Russians who do this will be taking a very long shot indeed. Reliable information on the economic state of specific enterprises is often impossible to get for anyone without inside contacts. Workers usually have some general idea of the state of their own firm, but in most cases these impressions are not encouraging. Russian industry is in catastrophic condition, and at least 50% of Russian workers are reckoned to work for loss-making enterprises.
The odds confronting would-be investors would have been less daunting had the government made sure that investment funds were set up before the vouchers began to be issued. Such funds exist in many countries,
and allow people with no special knowledge of the stock market to have their capital managed for them. However, the Russian government is only now preparing legislation for the setting up of funds to which people will be able to subscribe their vouchers.
Finally, large numbers of Russians will sell their vouchers because they find the concept of taking out shares in a joint stock firm incomprehensible, and are convinced that anything urged on them by the government must be a swindle. It is people like this who are most at risk from a new breed of tricksters. In remote villages, fast-talking con-artists are reportedly buying vouchers for the price of a bottle of vodka — currently 220 roubles.
According to surveys, as many as 80% of Russians will opt to sell their vouchers. Most of the shares assigned for voucher privatisation will not finish up owned by thrifty workers but by professional speculators.
Voucherisation will not "give property to the people" as promised. Instead, it will concentrate property in the hands of a small number of sharp operators. The result will not be "people's capitalism" but "mafia capitalism".
Advertisements explaining the voucher program insist that "your cheque is not money!" But if vouchers are not money, it is strange how often they are used to buy things. At an auction of state-owned trucks in the city of Nizhny Novgorod recently, purchasers were allowed to pay up to 50% of the price in vouchers.
In a society with an exasperating shortage of banknotes, the vouchers have already begun circulating as cash. With the returns from exchanging them for shares so unpromising, large numbers of vouchers will remain in circulation, playing the role of money, for many months.
Economists also warn that large quantities of money from the cash hoards of the "shadow economy" will be used to purchase vouchers. Instead of lying in safes, these banknotes will come into the hands of people who will spend them almost immediately.
Together, these phenomena will have an effect on the Russian money supply which will not be much different from giving the entire working population an extra month's wages. The implications of this are ominous; inflation was 25% in October alone, and financial writers have been making anguished warnings about the quantities of "hot money" already in people's pockets.
Surprising as it might seem, the government does not appear to have anticipated how voucherisation would go wrong. Ill-educated and impressionable, Yeltsin's ministers latched onto an idea fashionable in liberal circles, and legislated it into existence without ever thinking through its likely consequences.
Still, there is no reason to think the scheme will be abandoned. More and more regarded as paralysed and barren of ideas, the Yeltsin administration needs to be able to point to voucherisation as evidence that it is doing something, and has programs in train which will eventually spur an economic revival. Whether a faith in vouchers will contain people's anger through the winter remains to be seen.