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Scarcity Trauma
RATIONING CARD FOR TOILET SOAP. LENINGRAD, MARCH - APRIL 1990 / © PUBLIC DOMAIN
In 2001, ten years after the launch of reforms in Russia, 54% of Russians believed the main achievement of the reforms was the availability of consumer goods, rather than freedom of speech or the possibility of travelling abroad. A decade later, public attitudes had not changed, and the availability of goods on store shelves was still perceived as the number one priority. The massive trauma caused by scarcity was particularly strong. How it was addressed and in what way it influenced public attitudes after the USSR collapse is examined in a study by HSE professor Oleg Khlevnyuk.
Chronicles of Chronic Scarcity
'An Eros store opened in Moscow, displaying naked shelves'. This joke referring to shortages of goods in the USSR is an accurate reflection of the early 1990s' reality. There was no Soviet Union any more, but store shelves remained 'erotically' bare. A monitoring survey conducted on January 8th-14th, 1992, revealed the following situation in retail stores of major cities (regional centres) across Russia:
72% did not have vegetable oil available; 67% did not have meat available; 54% did not have sugar available; 47% experienced interruptions in bread supply; 62% had people queuing up for dairy products; just 65% of the cities had potatoes and vegetables (foods considered to be in stable supply) consistently available in stores.Grocery stores in Moscow were traditionally better supplied and had enormous queues.
From a 1992 report of the State Statistics Committee: 'A bakery in Pervomaisky District [of Moscow] had a queue of some 300 people waiting to buy bread in the morning; the Novogireevsky supermarket had 400 people queuing up for sugar and another 150 waiting to buy milk, but the store had already run out of milk 20 minutes after it opened'.
Also revealing are documents from the Russian State Archives which the author reviewed for his study. The shortages of basic goods were, indeed, total and chronic, not limited to food but also affecting other necessities such as detergent, soap, toothpaste, linen, footwear and others. As an emergency measure, some regions limited the amount of goods which could be sold to one customer at a time (the ‘one-pair-of-hands’ rule).
Wasted Effort
The government attempted to turn the tide by liberalising prices. On January 2, 1992, price control was lifted, with an expectation that a free market would self-regulate. The prices of just a few items, including certain types of bread, milk, vegetable oil, matches, and vodka, were still subject to government regulation.
As a result, consumer prices soared forcing people to buy less, but store shelves remained empty. 'We are facing a paradoxical situation, where even the liberalisation of prices has failed to fill the shelves of state-run stores', reported Minister of Economy Andrei Nechaev in his memo for the government.
Surveys conducted on June 10th and 17th, 1992, found that 'of the 36 cities covered, meat and bread were readily available in stores in 17 cities, sugar in 7 cities, and milk in 15 cities'.
A monitoring survey of industry and commerce in August 1992 revealed an absence of consumer items such as 'irons, washing machines, electric kettles, vacuum cleaners, refrigerators and televisions, school notebooks, affordable furniture, shaving blades and tea utensils' in retail stores.
By the end of 1992, the majority of Russians had failed to develop a more positive outlook, with 46% of survey respondents denying any reduction in shortages of consumer goods since the transition to free market prices.
But Why?
According to Khlevnyuk, one of the reasons for the post-reform shortages was 'a continued regulation of prices on certain items which thus remained relatively cheap and were often purchased in bulk for future use or resale'.
Even more important, according to the author, were other factors, such as a persistent decline in industrial production and the government's attempt to deal with the crisis by printing more money: 'household incomes, especially those of poorer people, increased much more slowly than consumer prices, but amidst a general lack of basic goods, government handouts pushed prices up and perpetuated the shortages. While the need for helping people who were falling into poverty due to decline in production was obvious, these measures hindered the stabilisation of the market'.
'In August 1992 alone, the amount of cash held by the population increased by 24.1%; including public deposits with Sberbank, this was equal to the entire retail trade turnover in January – August 1992'.
The clumsy, monopolised retail system was a major liability, as was the rupture of economic ties with the former USSR republics, bringing the share of imports from these countries in Russia's retail turnover from 15% in 1991 down to just 2.5% in 1994.
Substandard Imports
The government decided to use imports to combat shortages. The share of foreign imports in the overall volume of consumer goods sold domestically increased from 14% in 1991 to 54% in 1995. This official figure is an underestimate, because it does not account for informal shuttle traders who imported a substantial proportion of the consumer goods sold via street trade permitted by the January 1992 decree.
While mass imports helped saturate consumer demand, they also caused a major decline in the quality of goods, including issues such as expired shelf life, margarine sold as butter, and alcoholic beverages having an 'unusual taste and smell'.
In 1994, the State Trade Inspectorate withdrew more than 40,000 tons of food products, mainly imported ones, from store shelves. In 1995, the share of 'substandard' imports increased by 1.5–2 times: 'Some 41% of imported sausages and smoked meats, 51% of dairy products, 56% of vodkas, 63% of cognacs, 47% of garments, etc. were either rejected or had their quality grade lowered following inspections, as opposed to 15%, 11%, 22%, 31%, and 62% of corresponding domestic goods'.
Slowly and Surely
In July 1996, the Resolution 'On measures to protect the Russian consumer market from low-quality imported goods' was adopted, followed by the establishment of an interagency commission to coordinate its implementation.
The efforts brought results, and the quality of goods slowly improved while the shortages were gradually filled. In October 1996, most Russians polled by the VTsIOM confirmed the availability of food products (84%) and manufactured goods (76%) in their communities.
The official statistics looked even better: in late 1994, the government reported consumer market saturation with food products by 88% (vs. 59% in 1992) and with manufactured goods by 92% (vs. 70% in 1992).
Free Market vs. Socialism
As the market filled with goods, public attitudes were changing. Concerns about shortages were replaced by dissatisfaction with rising prices and falling living standards, and the ongoing public debate about the appropriate socioeconomic model for Russia was intense. According to Khlevnyuk, this debate boiled down to a choice between a free market with high prices but no shortages and socialism with strict price control but a return of shortages.
Polls showed a slight prevalence of free-market supporters.
In March 1994, almost 62% of Russians agreed with the statement 'It is okay that prices are high, as long as plenty of goods are available', as opposed to some 50% in July 1990. Between 1993 and 1995, the proportion of those who supported a card rationing system dropped from 37% to 12%, and the share of its opponents increased from 51% to 72%.
Despite the high social costs, most Russians appreciated the benefits of a market economy, the study author concludes. The memory of chronic shortages of basic goods in the USSR was still fresh; people associated state regulation with empty store shelves and did not want to go back.
IQ