The Moral Economy Reconsidered: Russia's Search for Agrarian Capitalism

The Moral Economy Reconsidered

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The Moral Economy Reconsidered Russia’s Search For Agrarian Capitalism

Stephen K. Wegren

THE MORAL ECONOMY RECONSIDERED

© Stephen K. Wegren, 2005. All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles or reviews. First published in 2005 by PALGRAVE MACMILLAN™ 175 Fifth Avenue, New York, N.Y. 10010 and Houndmills, Basingstoke, Hampshire, England RG21 6XS Companies and representatives throughout the world. PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 1–4039–6950–7 Library of Congress Cataloging-in-Publication Data Wegren, Stephen K., 1956– The moral economy reconsidered : Russia’s search for agrarian capitalism / by Stephen K. Wegren. p. cm. Includes bibliographical references and index. ISBN 1–4039–6950–7 1. Peasantry—Russia (Federation) 2. Land reform—Russia (Federation) 3. Rural renewal—Russia (Federation) 4. Agriculture— Economic aspects—Russia (Federation) 5. Russia (Federation)— Rural conditions. I. Title. HD1536.R9W44 2005 338.10947—dc22

2004064917

A catalogue record for this book is available from the British Library. Design by Newgen Imaging Systems (P) Ltd., Chennai, India. First edition: August 2005 10 9 8 7 6 5 4 3 2 1 Printed in the United States of America.

For Oksana and Alina

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C on t e n t s

List of Tables

ix

Preface

xi

Chapter 1 Russia’s Agrarian Question in Historical and Contemporary Context

1

Chapter 2 Why Peasants Adapt: Origins of Behavioral Change Under Yeltsin

35

Chapter 3 How Peasants Adapt: Large Farms and Farm Managers

61

Chapter 4 How Peasants Adapt: Rural Households

105

Chapter 5 Effects of Adaptation and Sources of Rural Revival

153

Chapter 6 Peasants’ Moral Economy and Implications for Russia’s Agrarian Capitalism

197

Notes

215

Index

264

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List of Tables

2.1 Basic indicators of Russian agricultural inputs, 1990–2000 2.2 Trends in production capacity by region, European Russia, 1991–1999 2.3 Changes in food output by region, European Russia, 1991–1999 2.4 Terms of trade for agricultural products, 1992–2000 2.5 Policy positions of rural conservatives and liberals during Yeltsin period 2.6 Agricultural interests and state policy: USSR and Russia 3.1 Distribution of agricultural enterprises by form of organization in January 2000 3.2 Internal and external operational changes in large agricultural enterprises 3.3 Evaluations of labor discipline following farm reorganization 3.4 Adaptive measures by privatized and non-privatized farms in Nizhnii Novgorod and Orel’ Oblasts 3.5 Size of livestock herds, 1992–2002 3.6 Evaluation of changes in material conditions of farm employees 3.7 Attitudes of land buyers, land sellers, and experts toward private ownership of land in Russia 3.8 Support for agricultural policy measures 3.9 Implementation of state policy measures 4.1 Percent of income received as monetary income, urban and rural households, 1997–2002 4.2 Construction of rural infrastructure, 1990–2000 4.3 Farm workers’ perceptions about their family’s material condition 4.4 Rural orientations to market reforms, 1998–2002 4.5 Food output from households, 1991–2002 4.6 Food sales from households, 1991–2002

44 45 46 48 56 58 68 80 81 83 85 93 97 101 102 111 114 116 116 120 126

x / list of tables

4.7 4.8 4.9 4.10 4.11 5.1 5.2 5.3 5.4 5.5 5.6 5.7

Attitudes by land share owners toward land privatization in 1998 Attitudes toward private ownership of land in Russia by place of employment Rural land transactions on the private land market (between individuals), 1996–2002 Income effects on increases in household land plot Mean monthly income by source Mean number of animals by income category, 1995–2003 Mean levels of land by income category, 1995–2003 Perceptions of winning and losing during reform by income category, 1991–2003 Party support by income category Potential for rural protest and collective action, 1995–2002 Number of animals owned by households, 1991–2002 Food output by private farms as percentage of total national output, 1992–2002

133 134 137 143 145 158 158 161 164 167 182 186

Preface

This book represents something old and something new. On the one hand, this book is the culmination of more than 15 years of work on various agrarian issues in Russia. This book is an expression of ideas and views that have been percolating and evolving for a long time. I have been traveling to and working in Russia since the latter Gorbachev period, averaging more than two trips a year since 1989. Those readers familiar with my work will recognize themes and questions that have run through my previous publications, questions that I have been pondering for several years. So, in several respects this book represents a statement about my evolution. On the other hand, the approach used in this book is unique and marks a significant departure from the way Russian agrarian reforms have been analyzed to date. I have tried to address central theoretical questions that appear in comparative peasant studies. My modest hope is to make a contribution to Russian studies, the broader field of comparative politics, and peasant studies. As is true for virtually any book, a great number of individuals and institutions contributed, either directly or indirectly, to the completion of this project. It would be impossible to thank each individually, but a few warrant special mention. In alphabetical order, I have benefited greatly from the assistance and collegiality of several Russians: Vladimir Belen’kiy, David Epstein, Andrei Morozov, Vasilii Olonichev, Valeri Patsiorkovski, Natalia Shagaida, and Vasilii Uzun. To all of them I express my heartfelt appreciation and thanks for their selfless willingness to help me with my own research agenda. I would also like to thank my colleague and friend David O’Brien, with whom I have had the privilege to work closely for the past few years as we coauthored grant proposals, articles, and book chapters. I have learned a lot from David regarding research design, survey methods, and data analysis. It is an understatement to say that this book would be fundamentally different had I not the good fortune to work with David. He also kindly made available to me some of his data that greatly improved the analytical quality of several chapters. To him, I express my deep gratitude and thanks.

xii / preface

In addition, I would like to acknowledge and thank the following institutions for the financial support that facilitated my research. These organizations include IREX, from which I received two short-term grants, and the John G. Tower Center for Political Studies at Southern Methodist University, which provided a short-term grant to conduct summer research. Special thanks is extended to the National Council for Eurasian and East European Research (NCEEER) that provided a grant to conduct an 800 household, five-region survey in 2001. The survey results have proven crucial to the analysis of rural behavior. The survey is cited in several chapters, and I refer to it as “NCEEER data.” This is merely a shorthand way to identify the data set and is not meant to imply that the data or the results are the property of NCEEER or that NCEEER conducted the survey. Needless to say, the views herein are mine alone and are not to be attributed to the institutions that provided support. The usual caveats about author’s responsibility for the factual content apply. Finally, but not the least important, I would like to thank my family for their endurance as I completed my writing and rewriting. They allowed me the time to think and to write, even at the expense of our family life. For their patience and understanding, I am very grateful. For the past 35 years, a dominant view of peasant reactions and responses to reform stimuli has been framed by the moral economy model that argues peasants are resistant to change. The moral economy approach sees values and behaviors as “embedded” in peasant societies, and these values are therefore reflected in the nature of village institutions. Within that context, the goals of this book are twofold. While the Russian countryside displays elements of both continuity and change, the first goal is to illuminate the degree and nature of change that occurred during the 1990s, thereby challenging the argument that few, if any, changes have occurred in the Russian countryside. At the macro level, it is particularly important to note the change in land relations. During the Soviet period, all farmland and property belonged to the state. During the late Gorbachev period, land leasing was permitted, but not land ownership. In the post-Soviet period, farmland and property have been destatized and farms are now legally owned “privately” by farm members. While there are restrictions on rural land turnover (as in some other postcommunist European states), the fact is that the rural land is now destatized, which has enormous implications for economic relations and rural transformation. The second goal is to analyze adaptive behaviors during market reform, showing not only that rural actors have embraced opportunities presented by reform, but also who responded and how they benefited.

preface / xiii

Adaptive behaviors are especially important given the policies of state urban bias and the lack of a market infrastructure during the 1990s. If the analysis presented herein is accurate, and rural actors are not fundamentally antimarket or antiprivatization, it suggests real opportunities for building rural support for reform and reform-minded political candidates, provided a “correct” agrarian policy can be formulated and implemented. The book is structured as follows. Chapter 1 defines the nature of Russia’s agrarian question by examining some historical examples and exploring several theoretical questions surrounding reform. The chapter concludes with surveys of reform experiences in selected European nations undergoing the transition from communism to market economies. Chapter 2 analyzes the economic and political origins of rural adaptation during the Yeltsin years. The state pursued two strategies: state urban bias and state withdrawal. I argue that state urban bias is a double-edged sword: acting as a stimulus to reform, while creating necessity for change and opportunity due to the political weakness and ineffectiveness of conservatives to use political means to block reform. Chapter 3 examines adaptation and change among farm managers and on large farms. I argue that demonstrable change occurred. Changes in farm operations and in workers’ behaviors are surveyed. Considerable attention is devoted to the attitudes of farm managers toward reform, and to the ways in which reform opportunities allowed them to benefit. Chapter 4 examines adaptation among the rural population, showing how the rural population has embraced reform opportunities with special attention to food production, food sales, land relations, and sources of household income. These aspects, it is argued show a pro-market orientation. Chapter 5 examines the effects of adaptation, with specific focus on economic effects and political effects. The chapter also examines prospects for rural revival by considering policy changes under Putin. There is also an extended discussion of the rural producer most likely to lead the revival and the reasons for the same. Chapter 6 summarizes the themes of the preceding chapters and then examines the policy implications for Russia’s search for agrarian capitalism.

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C h ap t e r 1 Russia’s Agrarian Question in Historical and Contemporary Con t e x t

This book focuses on rural responses to agrarian reform from above, using Russia as a case study. Although the factual material and analysis apply to present-day Russia, the questions this book addresses have a long history in the literature on peasant studies. The “agrarian question” is one of the most enduring issues in peasant studies, although the definition of the agrarian question has been approached differently by various authors, with both the questions and approaches evolving over time.1 Russia’s contemporary “agrarian question” is straightforward: how to achieve agrarian capitalism, which in turn implies that issues such as peasant adaptation, peasant resistance, embedded values, the nature of reform from above, state strength, and rural orientations are of crucial importance. The hope here is that this book contributes to a general understanding of rural actors and their rural economy by shedding new light on rural orientations to marketization and privatization in postcommunist societies. In doing so, the larger question of how and why peasant behaviors adapt to their economic environment is addressed. By presenting an original analysis of how peasants adapt to their changing environment, the book sheds new light on three vitally important questions about peasant societies: (1) Why peasants adapt to their environment (2) How peasants respond to their changing environment, which addresses the question of the strength of embedded peasant values and institutions. (3) Who in peasant society is adapting, that is, which substrata of the peasant population are changing their behavior. In short, this book seeks to shed light on the relationship between peasant behavior and the processes of marketization. In doing so, it directly challenges the moral economy argument and forces us to reconsider its application to post-Soviet states, and perhaps to peasant societies worldwide.

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At the beginning of the twentieth century, Russian intellectuals and policy-makers were concerned with the strength of peasant village institutions, whether peasants and peasant society were rigid and unchangeable, and whether peasant behavior was malleable. One hundred years later, following Stolypin’s and Stalin’s attempts at agrarian reform, scholars and policy-makers face many of the same questions. In the early 1990s, Russia undertook a set of radical agrarian reforms that attempted to undo the economic, social, and political basis of agricultural policy and the rural economy that was built during the period of communist rule in the twentieth century. Russian agrarian reform had its antecedents in the Mikhail Gorbachev period, although real progress in rural privatization and marketization began only after the demise of the Soviet Union.2 Unlike the efforts of former president Gorbachev, agrarian policies under Russian President Boris Yeltsin’s era were not intended simply to reform the basis of Soviet agriculture, but to break sharply with the Soviet past. The intent was to construct an agrarian policy that allowed different forms of land tenure and labor organization, although the stated policy preference was to establish a private sector and see it flourish. The hope was that the transfer of farmland and property away from state ownership into individuals’ hands would create the foundation for a rural class of independent and prosperous private farmers who would compete with large farms and eventually account for up to 40 percent of food output.3 During the course of reform, rural dwellers were asked to change their relationships with fellow villagers, to change how they calculate economic advantage, how they grow and market food, how they relate to forces outside their production sphere, and most fundamentally, how they view the use and ownership of land. Large farms were asked to change how they produce and market their output, how they operate internally, how they calculate what is profitable to produce, and how they obtain production inputs. In sum, nothing short of an attitudinal, behavioral, and cultural revolution was attempted in the Russian countryside. Russia’s agrarian reforms were intended to transform its agricultural economy along market lines, to introduce a transition that ultimately would lead to agrarian capitalism. More than a decade after Russia’s rural transition was begun, there is little consensus about its results. The arguments put forth in this book may be controversial, but they go to the heart of how and why peasants respond. The book was motivated by the need to respond to the argument that maintains that the rural population and, particularly, farm managers are only capable of opposing contemporary market reforms entailing

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privatization and marketization in rural Russia. This line of argumentation had become the conventional wisdom by the late 1990s, emphasizing the continuity of embedded cultural values that are egalitarian, collectivist, and antimarket. If the conventional wisdom is correct and the rural dwellers are antimarket and have resisted reforms, then why has the countryside been so quiescent when the comparative theoretical literature would have predicted a range of collective actions in response to incursions on their embedded values? In short, if rural values have been threatened by reform policies, why has the countryside been so quiet? Furthermore, the conventional wisdom argues that little change occurred in the Russian countryside during the 1990s. Therefore, a second primary problem under investigation in this study is how much change actually occurred, and what has been the nature of that change. Russia’s contemporary agrarian question, therefore, concerns the nature and degree of change in rural orientations and behavior. The Moral Economy and Russia’s Agrarian Transition For the past 35 years, a dominant view of peasants’ responses to exogenous economic stimuli has been framed by the moral economy model that argues that peasants are resistant to change. The moral economy argues that peasants are antimarket and are antiprivatization. The moral economy approach views peasants as pursuing a safety-first strategy in their economic relations. In this scheme, peasants prefer collective to private property and see a closed village as more secure than an open village with extended economic relations.4 The moral economy approach sees values and behavior as “embedded” in peasant societies, and these values are therefore reflected in the nature of village institutions.5 According to the model, commercialization of agriculture attempts to disembed peasant values and behaviors, and to displace existing village institutions with market-based institutions, thereby facilitating peasant discontent and rebellious action.6 During commercialization, personal networks are replaced with impersonal networks, thereby depriving peasants of the “flexibility” in their economic relations that is inherent to traditional societies. The key point is that a predominant strain of literature viewed peasants as fundamentally opposed to commodity agriculture and rural market structures; as a result, resistance was either overt and violent or covert and passive. There are several problems with the moral economy approach as it applies to postcommunist Russia. The first problem with the moral economy approach is that it places undue emphasis on peasant resistance. James Scott admits as much when

4 / the moral economy reconsidered

he subsequently wrote, “it occurred to me that the emphasis on peasant rebellion was misplaced. Instead, it seemed far more important to understand what we might call everyday forms of peasant resistance.”7 In later works, Scott and others examined how peasants resist marketization and escape the effects of commodity agriculture, terming these passive resistance strategies “weapons of the weak.”8 Although Scott argued that “it would be a grave mistake, as it is with peasant rebellions, to overly romanticize the ‘weapons of the weak,’ ” the essence of the argument remained fixated on peasant resistance. In a later work, Scott examined the “arts of resistance,” forms of resistance that are disguised for safety and effectiveness, but here too the emphasis is on resistance and not adaptation.9 The second problem with the moral economy approach, which applies as well to weapons of the weak, is that an understanding of “resistance” is diluted because those concepts can be used to describe virtually every kind of peasant action. For example, resistance flowing from the moral economy fails to distinguish between simple laborers without land, who survive at the subsistence level and who are exploited, and landed commercial farmers, who lobby for lower input prices and higher purchase prices. Resistance, seen in this light, fails to distinguish socioeconomic identity or motivations for behavior. In short, the moral economy approach lumps all rural actors together as “resisters,” without taking into account abilities or motivations not to resist.10 The fact that different strata within the peasant society are glossed over is a serious analytical mistake, for two reasons: (1) it belies reality, as peasants are economically stratified (although stratification obviously varies). Even in Tsarist Russia, with its egalitarian communal structures, economic differentiation inside and outside the commune was evident.11 In Soviet Russia, as is well known, Lenin, and later Stalin, mobilized committees of poor peasants against well-off kulaks. (2) It ignores state policies toward different economic strata and rural actors. Robert Bates reminds us that in any agricultural system, some will benefit more, some slightly, and some will bear the brunt of state discrimination.12 Moreover, the “arts of resistance” argument sees an autonomous or semiautonomous culture coexisting and interacting with the dominant culture. The problem here is that, first, similar to the moral economy, resistant cultures become indistinguishable from conformist cultures; and second, an autonomous or semiautonomous culture does not in and of itself represent resistance. Taken together, the moral economy and arts of resistance combine to suggest that nearly all peasant actions and all of peasant culture are oriented toward resistance.

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The third problem with the moral economy approach is that it distracts our attention from the ability of peasants to adapt, motivations and stimuli to adapt, as well as to their actual adaptive behaviors. Some authors argue that the embedded nature of pre-communist values are a fundamental cause for the failure of Russia’s agrarian transition to achieve agrarian capitalism.13 More than seven decades of Soviet rule is suggested to have robbed the peasantry of ambition and ability. In contrast, this book casts doubt on the idea that rural values in Russia are inherently antimarket and antiprivatization. Instead, it sees contemporary reform as tapping into and unleashing a range of behaviors that facilitate economic stratification and differentiation, behaviors that were suppressed but not extinguished under Soviet rule. The book also rejects the idea that all peasants can be lumped together for whom blanket generalizations can be applied, either in terms of behavior or embedded values. Moreover, this book argues that significant rural change has occurred, and subsequent chapters demonstrate that at least some rural actors in Russia have taken advantage of opportunities presented by reform policies. Clearly, the propensity to adapt is conditioned by a number of factors— legal structures, economic opportunity, social and human capital of the household, village institutions, and the constraints imposed by nature. But where conditions are conducive, evidence of the ability and willingness to adapt is widespread and has been extensively discussed in the literature of peasant studies—one could peruse The Journal of Peasant Studies for any given year (since 1973) and locate numerous examples of peasant adaptation. In 2001, a new journal called The Journal of Agrarian Change began publication, and one could find examples of peasant adaptation there also. It is, therefore, impossible to cite every instance throughout the world of peasant adaptation. The point is that it is misleading to assume, a priori, that peasants can and will only resist. From a pragmatic standpoint, it is important to note that traditional peasants have to be adaptive and responsive to their environment because they live so close to the subsistence threshold. They cannot afford to ignore the signals sent by the larger environment, and if the environment becomes too inhospitable, they migrate, which shows an acute sensitivity to the environment.14 In a classic book written several years ago, Nobel Prize winner (in Economics) Theodore Schultz argued that peasants are very sensitive to their economic environment and respond to market forces. Where work habits seem to be lacking, it is due to inadequate incentives. He argued: Incentives to work more than these people do are weak because the marginal productivity of labor is very low; and incentives to save more than

6 / the moral economy reconsidered they do are weak because the marginal productivity of capital is also very low.15

Thus, whereas the moral economy approach might see a weak work ethic and a low savings rate as resistance, Schultz sees them as a consequence of a larger economic environment. Even when structural conditions are unfavorable, there can be adaptation, as this book demonstrates. A remarkable contemporary example of peasant adaptation to commercial structures draws from the experience of the Grameen Bank, an experiment in micro-loans to rural women in Bangladesh and other developing nations. Not only have the loans been very popular, but the results also have been highly successful on a number of dimensions: economic empowerment of a cohort whose rights are often suppressed, an admirable track record of responsibility shown through repayment rates, improved health of children in the family, and significant movement out of poverty. Thus, this experiment represents the commercialization of economic relations at the family level, the most basic of levels in developing societies, indicating that peasants, even the most downtrodden, are not resistant to impersonal relations represented by bank loans. The response to the bank has been so overwhelming that the Grameen model has been replicated in 40 countries.16 The relevance of the moral economy for Russia’s agrarian transition, therefore, is direct and significant. If the moral economy argument is correct, then the agrarian transition is doomed to fail in Russia, and with that failure, neither agrarian capitalism nor capitalism in general is likely to be consolidated. If the moral economy argument is incorrect, we may expect to see evidence of rural adaptation without recourse to violence or the occurrence of peasant disturbances. Whichever alternative interpretation is correct, it has direct relevance for broader analyses of peasant responses and behavior. If it turns out that the moral economy is not correct, or at least does not apply to Russia, we must search for reasons why and ask if the model only holds for certain nations, certain regions, at specific points of time, as opposed to a more universal application. We would then need to specify the conditions under which the moral economy facilitates our understanding of peasant behavior and when it obfuscates reality. The outcome also has ramifications for our understanding of peasant–state relations. If the rural population resisted land privatization owing to their embedded antimarket and antiprivate orientations, and then if behavioral change is demonstrated, it follows that village institutions and peasant values are weak vis-à-vis state pressure from above. If the peasants did not resist

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reform, then it suggests that at least some peasant values are concordant with reform goals (peasants are not antimarket or antiprivate), and that rural actors are opportunistic and adaptive. In either of these cases, our understanding of peasant behavior must be modified. Analytical Issues and Independent Variables To posit that Russia’s agrarian question concerns the degree of adaptation brought on by contemporary agrarian reform—that is, how much progress has been made toward agrarian capitalism—immediately raises several analytical issues that warrant further discussion. To begin, it should be noted that most of the analytical focus in this book is on the Yeltsin period, although chapter 5 devotes attention to policy changes under Putin in the discussion of rural revival. The reason for this focus is that, first, land privatization and significant agrarian reform began under Yeltsin and therefore that is the logical and obvious starting place. By “significant” I mean an attempt to move away from Soviet era policies, whereas Gorbachev merely attempted to reform Soviet agricultural institutions. But beyond chronological reasons, most analysts agree that reform under Yeltsin had a distinctly destructive character, as he tried to deconstruct and destroy the vestiges of rural communism built under Stalin. But what is less understood and acknowledged is that a reconstructive process begun as well. This reconstructive process carried with it the origins of adaptation by rural dwellers as they attempted to deal with state urban bias, state withdrawal, and the consequences of deconstruction that characterized Yeltsin’s agrarian reform. A second reason for the focus on the Yeltsin period is that it would be incorrect to date the origins of adaptation to the Putin period. Clearly, the Putin period represents a new phase in the agrarian transition, about which there can be little doubt.17 The new approach toward the agrarian sector and attempts to rebuild Russian agriculture have been termed Putin’s “quiet revolution” elsewhere.18 What is important to note about the change from Yeltsin to Putin is that the Putin period represents, in my opinion, a consolidation and expansion of rural adaptive trends. But the origins of adaptation are to be found in the Yeltsin period, and thus a large part of this book intends to demonstrate these trends. For the purpose of defining a context for the analyses in subsequent chapters, this chapter discusses several analytical issues that are central to the issue of peasant resistance and adaptation. In particular, it is argued that there are three main factors that act as independent variables and these variables directly impinge upon the question of peasant resistance or

8 / the moral economy reconsidered

adaptation, the nature of rural orientations to reform, and the responses displayed during contemporary Russian reform. Each of these factors is discussed in turn. Cultural Values and the Question of Embeddedness The first factor that is central to the issue of peasant resistance or adaptation is the question of embeddedness, that is, whether peasant values are “embedded” in peasant societies. The answer would appear to be positive but it begs the next question: Where do peasant values and institutions originate? The question is large, but traditionally peasant institutions evolve from local reactions to structural factors (land, climate, demography), to their economic environment, and to opportunity.19 Later, peasant institutions evolved from limited land and property rights imposed by landlords. Peasant values and institutions also develop out of local reactions to politically driven policies representing either those in power (landlords) or the priorities of decision-makers in more contemporary times. As the object of economic and political conditions that lie outside their control, peasant societies are often viewed as traditional and conservative. Surely, some peasant values are embedded, and some of those values, norms, and mores passed from generation to generation.20 The more interesting analytical issue is not whether peasant values are embedded, but rather, what is the content of these embedded cultural values? Obviously, a detailed historical investigation of peasant cultural values is beyond the scope of this introductory chapter. Furthermore, the issue itself has been the subject of debate among historians. However, a few comments drawn from Russia’s historical experiences are warranted. Much of the emphasis on Russian peasant culture is placed on communal and egalitarian aspects, flowing from the social structure and form of governance of the communal mir.21 The idea that Russian peasants were inherently collectivist originated and was perpetuated by slavophiles, socialists, and Marxists. The slavophiles saw the mir as the embodiment of true peasant values, while socialists and Marxists saw the peasant commune as the basis for peasant Socialism. But these arguments were selective in the peasant characteristics that were attributed to peasant society. Despite sweeping generalizations that sometimes suggest that all Russian peasants were collectivist and egalitarian, there are interesting historical examples that suggest inherent, if sometimes concealed, proclivities for individualism, upward mobility, and economic gain. In other words, it is more accurate to see Russian peasant culture as containing a mixture of different values—some concordant with capitalism,

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some collectivist—instead of a one-dimensional set of values that is uniformly adhered to by all. For example, in Tsarist Russia, there is evidence of peasant adaptation toward land use and land improvement within the communal system by both communes and households, despite the fact that “innovations” could be “lost” during the next land repartition.22 In short, peasants within a collective setting pursued “private goods” and attempted to differentiate themselves from other households. Moreover, private ownership of land has been dated to the tenth century— by princes and nobility, by the church, and by independent peasant communes—so there is a long historical tradition on which contemporary reform may build.23 In contrast to a peasantry that is inert, immobile, and passive, there is significant historical evidence of peasant values that if not exactly “capitalist,” then certainly compatible with capitalism. The discussion below focuses attention on three such values, citing historical evidence to illustrate the point. The first of these historical experiences surrounds the Emancipation of peasants in 1861 and concerns their quest for freedom. One historian characterized the situation thusly: Alexander II and the planners of the reform [Emancipation] had good reason to be apprehensive about the way in which peasants would greet the reform, for they knew well that the emancipation they were planning bore little resemblance to the aspirations of the peasants. . . . Peasant speculation about emancipation inclined toward a belief that all the land would be theirs, free of charge or obligations, and that all responsibility toward the pomeshchiki, and even toward the state, would come to an end.24

Even before Emancipation, Russian peasants displayed an innate desire for freedom. Franco Venturi, who wrote perhaps the classic book on revolutionary movements in nineteenth-century Russia, discovered that: Entire villages disappeared in search of other lands and freedom, often making to the Caucasus. In the forties this phenomenon became even more serious. In the department of Kursk twenty thousand peasants made preparations for flight, and were persuaded to remain by the arrest of the first to leave (and even they tried for a time to resist the troops).25

When Emancipation came and the peasants found that their idea of “natural right to land” would be frustrated, numerous and widespread peasant “disturbances” occurred.26 Peasant disturbances actually began in the latter 1850s, as rumors abounded as to what reforms would

10 / the moral economy reconsidered

entail.27 After the proclamation, historian Emmons notes that: Immediately following the proclamation of emancipation, peasant disorders on an unprecedented scale began to be reported from practically all the provinces. . . . They were provoked by general confusion and disappointment with the terms of emancipation. In no case, however, were they organized movements, nor did any of them involve the expression of revolutionary demands. Violence was rare, even when troops were called out.28

In other words, the peasants were frustrated by the lack of freedom and access to land they thought was theirs. The disturbances were individual in nature and not as part of an organized effort by a revolutionary group with broad societal goals. Instead, the disturbances resulted from a denial of personal (or familial) freedom and a desire for land. In 1861, the first year of Emancipation, 1,859 peasant disturbances were recorded, and disturbances continued for the duration of the 1860s, though the number declined as the decade progressed.29 If the Emancipation illustrates the peasants’ quest for freedom, the Stolypin reforms reflect the peasants’ desire for land, which is the second cultural variable under discussion. Resistance to an Emancipation that neither freed peasants nor endowed them with land stands in contrast to the Stolypin reforms and the months leading up to the 1917 Bolshevik revolution. Historical interpretations of the Stolypin reforms are far from unanimous in their view of the outcomes and peasant responses. Traditional explanations claim that, far from having had the positive impact on rural life the government had hoped for, the Stolypin reforms, in fact, helped prepare the social basis for revolution by seeking to break down traditional forms of life, particularly the peasant commune, thereby turning peasants against the government.30 Introduced in 1906, the Stolypin reforms attempted to create a stratum of privately based family farms, independent of the communal mir in the countryside that had regulated village land use for centuries.31 To be sure, there were concrete aspects of the reforms that significantly increased household insecurity. For example, if a peasant could obtain a bank loan (from peasant banks, such loans were not hard to obtain),32 in the words of George Yaney, “he could take a piece of land from every household in the village, and his neighbors would have no legal measures to stop him.” In short, “every villager had now to live with the possibility that one of his neighbors would betray him and seize part of ‘his’ land.”33 Thus, the reform had the potential to poison social relations within villages and to sow distrust among households.

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The second example of potential deleterious effects was the fact that personal consolidators of land necessitated a general reapportionment of land among nonconsolidating households in the commune. Personal consolidations could come often. If only one villager petitioned for personal consolidation each year, communal villages were faced with general redistribution every year (assuming local officials honored each petition). As Yaney concludes, “obviously, such a turn of events would render farming much more difficult and unrewarding than it already was.”34 Despite direct threats to social relations in the village and to the viability of farming, in 1910, the year the Peasant Land Bank sold more land than any other, 93 percent of sales went to individuals and only 2 percent to communal villages. During 1907–1914, 94 percent of land sold to individuals went to consolidated farms.35 By the end of 1915, some 6 million Russian peasant families (one-half of all rural families) had petitioned the government for some form of assistance in changing their land-holding status. Furthermore, an estimated 25 percent of all peasant households actually left their communal mir and adopted family farming based upon ownership of land. A second historical experience illustrating peasants’ desire for land occurred in the months immediately prior to the Bolshevik revolution in 1917, when spontaneous peasant uprisings occurred to confiscate landlords’ land.36 These uprisings flowed from the “natural right to land” held by the peasantry and their frustration with previous land reform efforts. Statistical reports on the number of incidents are neither comprehensive nor reliable for a variety of reasons.37 Moreover, historians who have analyzed the March–September 1917 period disagree about the actual number of uprisings, ranging from 4,285 to 6,103—a variance of about 50 percent.38 However, what is clear is that “the leading role in the peasant movement was played by the [peasant] soldier, who brought home from the front and from the city barracks a spirit of initiative.”39 Furthermore, land was most often seized in areas of land shortages, that is, where peasant land shortages existed alongside large private holdings.40 In particular, central Russia and the middle Volga regions were most affected by peasant uprisings, while the northern nonblack earth region were more quiescent;41 where peasant uprisings did occur, some estates escaped but most were touched by this spontaneous “land reform” (although the wholesale destruction of estates was fairly rare).42 Trotsky also notes that there was at the same time “a movement of the communal peasants against the individual landowners,” that is, those who took advantage of the Stolypin reforms.43 Atkinson refers to a “second social

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war” in which poor peasants attacked wealthier peasants, those who had separated and consolidated their land holdings.44 The final historical experience illustrates peasant reactions to economic opportunity, drawing from the New Economic Policy (NEP) that was in place during 1921–1928. NEP followed the period of War Communism (1918–1921), which was a destructive phase that essentially undermined whatever progress had been achieved during the Stolypin reforms. The NEP period is well known to historians and specialists on Russia, so only a few highlights are presented here that may be of interest to nonspecialists. The early NEP period (1921–1925) is notable for its relaxation of state regulation over peasant households and reductions in state requisitions that characterized the period of War Communism and Civil War. State controls were relaxed: the food tax was replaced with a monetary tax and reduced in size, and forcible confiscatory policies of food were abandoned. As a result, the Russian peasantry responded by quickly increasing the production of grain and other food products, bringing the amount of land and grain production almost up to the levels of 1913 by 1925.45 The increase in food production was significant because during 1920–1921 there was famine in Russia and the harvests in those two years were only 54 and 43 percent of the prewar average.46 Not only was Russian hungry, but the larger cities were becoming depopulated as people searched for sources of food.47 Such was the immediate context for NEP.48 The production increases therefore provided the regime with a much needed respite and also improved socioeconomic conditions throughout the country. The improvement in food production during NEP was remarkable, not only because peasant households quickly seized upon new opportunities, but also because production increases occurred despite the so-called price scissors crisis of 1924–1925 (referring to the growing disparity between wholesale agricultural prices and industrial prices), and “goods famine” (which refers to the physical shortage of manufactured goods so that peasants either were unable to buy such goods or had to pay exorbitant prices in the private market).49 Despite these obstacles, peasant responses during NEP displayed a willingness to seize upon new opportunities. Not only did the amount of land under cultivation increase, resulting in higher grain production, but there was also a significant increase in private trade, giving rise to a new class of “wealthy” peasants, the so-called kulaks.50 Particularly interesting were land-usage patterns that reflected opportunism. In May 1922, a Basic Law on Land Use was adopted, followed by the Land Code adopted in the RSFSR in December 1922.51 According to the

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Land Code, households wishing to separate from communes could do so at any time with the consent of the commune, or without the consent of the commune during a general redistribution of land within the commune.52 In addition, Article 9 of the Land Code guaranteed the right of any individual to use land for agriculture based upon personal labor. As a result of these legal rights, peasant households and individuals enlarged the amount of agricultural land they used during NEP. It is estimated that during 1922–1928, peasants were given the right to use 12.4 million hectares of state land, and even so peasant demand for land was not satisfied.53 Land plots received from the government were quite small, which means that millions of peasants petitioned to obtain land. By 1927, peasant households and individuals were using no less than 93 percent of all agricultural land,54 and by some estimates as much as 98 percent.55 Thus, NEP shows that there is little doubt about peasant willingness to take risk. After all, land plots were obtained or expanded despite the fact that the Bolshevik regime had made clear its antipathy toward private land ownership and individualism, and had expressed its preference for collectivism based upon large-scale mechanization. Despite the recent experience with War Communism and the stated political goals of the regime, Russian peasants during NEP took advantage of liberalized economic conditions and adapted their behaviors in significant ways. These brief summaries of significant historical experiences demonstrate broad patterns of adaptation, illuminating peasant desires, and presumably values, for freedom, for land, and for economic opportunity. Today, a mixture of peasant values continues to be evident, displaying some of the opportunistic behavior indicated above, while also showing some continuity with values that are premodern and may not facilitate capitalism or capitalist economic interactions. As this book demonstrates, new patterns of social and economic interaction are developing. Those forms of interaction are not entirely “socialist,” but neither are they fully modern and have not fully escaped the characteristics of traditional society. But it is clear that a process has begun in terms of changing patterns of interaction between peasant households and their social environment. The Nature of Agrarian Reform The second variable that affects rural responses to reform is the nature of agrarian reform. This is an important consideration because it indicates what type of reform is being attempted and what are its goals. Understanding the nature of reform provides a context for understanding rural responses and orientations to reform initiatives. Similar to other

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agrarian reforms in Russia during the twentieth century, contemporary agrarian reform is a top-down, state-sponsored reform that did not grow out of rural pressures from below. The goal of rural reform was to bring agrarian capitalism to Russia by distributing land into private hands and destatizing the rural economy as a whole. Having postulated that contemporary reform intended to supplant communist values with capitalist values and nonmarket institutions with market forces, it is important to recognize that the nature of contemporary Russian agrarian reform is a “giving” reform, similar to the reforms discussed in the section above. That is to say, there are two primary models for getting peasants to respond. One model entails force, violence, and coercion; the second motivates desired responses through incentives and opportunity. These two models may be termed “push” and “pull” strategies, respectively. “Giving” reforms create incentives and create opportunities to benefit and “pull” peasants to respond. Contemporary reform provides opportunity through the destatization of rural land and property and the transfer of property rights and physical property to individuals. Other incentives were created as well to pull rural actors in the desired direction: the privatization of processing and agricultural enterprises, the distribution of land shares to farm members and land deeds to persons who left a large farm, the legalization of land privatization and the adoption of supportive legal institutions, the creation of an individual private farming stratum, and the development of a land market. Thus, it would appear to be irrational for rural dwellers to resist Russia’s giving reform since it entails the expansion of economic rights and the opening of new opportunities.56 In contrast, “taking” reforms are those that “push” peasants to respond using coercion, violence, and even terror. A main characteristic is that taking reforms withdraw land and other economic resources from peasants, either through the nationalization or expropriation of land, and are usually accompanied by significant violence and coercion. In Russian history, War Communism was a taking reform. The greatest taking reform was, of course, Stalin’s collectivization during the late 1920s to the early 1930s when he moved against family farming and individually leased land.57 Even prior to collectivization, in the late 1920s, as the state began to restrict economic opportunity, raise procurement levels, and increase taxes, Lynne Viola notes that “everyday forms of resistance” became evident.58 During the different waves of collectivization, as is well known, collectivization met with considerable resistance, violence, and death.59 Resistance was both overt and passive, ranging from the bribery of officials, grain hording, attacks on kulaks, killing of

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livestock, and attacks on sel’sovet officials and party officials in charge of collectivization.60 Tracy McDonald, in describing in detail a peasant rebellion in Riazan oblast, argues that the orientation of the sel’sovet was a key factor in whether a village rebelled or not. She notes that “Sel’sovet chairmen were in the most difficult situation imaginable, caught in a vice between the mass of the peasantry on one side and the regime on the other. . . . What angered peasants most was their knowledge their own local government had betrayed them, when it should have protected them.”61 But while identification of resistance during “taking” reforms would appear to be straightforward, Lynne Viola reminds us that the very concept of resistance is slippery.62 Overt, active resistance is the most clear cut. Passive resistance during collectivization has been demonstrated. But what about actions that are simply deviant, disobedient, or antisocial? Is that resistance? For example, Elena Osokina documents actions that she terms “economic disobedience,” for instance “illegal” private production, illegal use of land, illegal private sales, illegal reselling of goods, and illegal barter.63 She argues that these types of actions are not resistance but rather reactions to economic need and the economic environment. In that respect, she argues that before labeling behavior as resistant, it is necessary to take into account the nature of legal institutions defined by the state and the degree to which they are ideologically constructed. In other words, just because Soviet ideology and Stalinist policies defined certain behaviors as illegal, and just because enforcement personnel characterized certain behaviors as illegal, does not mean that those behaviors were resistance. Thus, our understanding of resistance should be conditioned by the legal and political environment in which resistant behavior takes place. It should also be noted, at least in passing, that a multiplicity of peasant responses occurred during collectivization, not just resistance. Mark Tauger, for example, argues that peasant responses cannot be reduced solely to resistance, that often they adapted to the new system, and that they worked hard within the system to overcome famines.64 Assuming that some reasonable definition of resistance can be agreed upon, then logically “giving” reforms should experience much less overt resistance than “taking” reforms, for obvious reasons. In the contemporary period, land privatization did not entail anyone actually “losing” much land. Managers of large farms, during the farm reorganization process, decided which land to allot to families that were leaving, which land to be used for household production, and which land to contribute to raion land funds. In this way, farm managers were able to retain the

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most productive land for the larger farm, and anecdotal evidence suggests they did so. In addition, few families actually exited large farms, and when they did so the land allotments were quite small. In good agricultural areas, average land allotments were often 3–5 hectares per family member, which meant that the typical family received 9–15 hectares (although the actual size varied by raion). According to World Bank survey data, in 1994, 65 percent of large farms had 0–9 departures by farm members, which equates to 3–4 families.65 Thus, in total, an average farm would lose somewhere between 27 and 60 hectares, whereas the average amount of agricultural land held by a collective farm in 1991 was over 6,000 hectares.66 Moreover, in the post-reorganization period, most farm members leased their land shares back to the larger farm, although there was some differentiation according to economic strata.67 Thus, in reality, large farms and farm managers “lost” relatively little land. Finally, a correct understanding of Russia’s “giving” reform requires sensitivity to the temporal dimension. The temporal dimension alerts us to what kinds of behavior and responses should logically be expected at what point in time. Early on during contemporary reform, policies and procedures were not clear and were still evolving. For this reason, the agrarian transition may have seemed very much like a “taking” reform to farm managers, who had not yet figured out how to respond, adapt, or benefit from reform opportunities. Likewise, early reform may have seemed to be taking away the economic security that farm members had enjoyed since the mid-1960s. Thus, some resistance and opposition might be considered a “natural” response, especially considering the fact that reform was introduced from above.68 Agrarian change is often a slow process, one that may take decades to unfold and show its real significance. But Russia’s reform did not take decades to unfold; there was considerable evidence of adaptation underway by mid-decade, and this evidence will be presented in subsequent chapters. For now, it can be asserted that the fact that so much adaptation occurred within a single decade in Russia is remarkable. Role of the State and State Strength The third and final factor affecting peasant adaptation is the role of the state and state strength. Historically, the role of the state has differed during Russia’s agrarian reforms. During the Stolypin reforms, the role of the state was to create legal institutions and incentives to leave the communal mir and to develop individual farms. The role of the state was to, first, facilitate the rise of a rural bourgeoisie who would improve agricultural production in order to feed the cities during ongoing urbanization

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and industrialization, and second to generate foreign export earnings.69 During the Stalin period, the role of the state was to suppress the kulak class, who were perceived as class enemies, to create conditions for largescale, mechanized farms organized on a collective labor system to operate, and to establish party dominance in the countryside so as to suppress peasant resistance to communist rule. Today, the role of the postcommunist state is to create conditions for the achievement of agrarian capitalism, that is, an agricultural economy that operates according to market principles. Agrarian capitalism is a broad term, but at its core it concerns the withdrawal of state control and ownership over the means of production, replaced by private owners who operate according to the principles of supply and demand. Agrarian capitalism, therefore, implicitly assumes economic freedom.70 There is already significant evidence of emerging agrarian capitalism, both behaviorally and attitudinally, although surely problems and obstacles remain. Evidence of agrarian capitalism is presented in subsequent chapters, although for now it may be noted that a number of indicators support this proposition. First, food production and production decisions respond to supply and demand factors. Second, food prices also reflect supply and demand. Third, there has been an observable trend for some rural households to engage in private business and to depend less upon a large farm for employment and income.71 As the 1990s progressed, a smaller percentage of household income was derived from farm wages and more from food sales and/or a household business (which could be agricultural or nonagricultural). One might argue that this was mainly a survival strategy, given the fact that farm wages often were not paid, and further, that rural real wages lagged inflation more than in any other sector of the economy. There is in fact validity to these arguments, but at the same time, it is important to note that these trends not only continued but also accelerated even after the first signs of rural revival were evident in 1998. Thus, one might interpret these trends as “jumping from a burning ship” or as evidence of rural entrepreneurship. Do all of the new aspects of the agricultural system operate perfectly according to market principles and conform to the original plans and desires of international advisors? Of course not. But the amount of structural and operational change ushered in during Russia’s agrarian transition has been significant. While there should not be much disagreement over the general direction of the state’s role in the development of agrarian capitalism, the same cannot be said of state strength. It is often argued that the state was weak during the 1990s and as a result of this weakness the agricultural lobby, or at least parts of it, was able to block progress in reform.

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Following the ideas of Douglass North who defines institutions as rules of the game, laws, and incentives, if states create reform institutions that have meaning for actors, that is, are not just empty proclamations, then the state is not weak. I have argued elsewhere that in fact the state was not too weak in agriculture but rather too strong during the 1990s.72 The “lack of progress” argument—which really means the frustration by reformers that policy goals were realized—was due less to successful blocking by the agricultural lobby than it was to incentive structures that sent the wrong signals and that failed to reward the “right” behaviors. This argument is supported by Jerry Hough as well, who argues the point dramatically for the economy as a whole: It can be confidently asserted that the Russian economy was centrally regulated and directed from January 1992 through the end of 2000. The central government had overwhelming power vis-a-vis the enterprises, the oligarchs, the banks, and the regions. . . . No one should continue to assert that the Russian government was not strong or that institutions did not exist. . . . In fact, the state has been quite “strong” in the sense of being deeply involved in the economy and forcing through the “king’s” preferences and maintaining tight control over major economic actors who would want more freedom and security.73

With specific reference to agriculture, it is clear that in many respects the state was successful in redefining the nature of agricultural policy and the structure of the agricultural system. At the macro level, state policies toward Russian agriculture have changed so much so that the operation of Russian agriculture in the early twenty-first century has little resemblance to the operation of Soviet agriculture a mere 10 years earlier. The extent and degree of these changes have been well documented by liberals in Moscow.74 Perhaps the most dramatic and demonstrable change has been the withdrawal of the post-Soviet state from regulation over production, delivery, and processing of food. A short list of policy and structural change would include: 1. ending of planned production; 2. ending of obligatory procurements and delivery to procurement points; 3. removal of federal regulation over wholesale food trade; 4. relaxation of federal regulation over purchase prices; 5. removal of federal regulation over input prices; 6. decline of federal production subsidies to farms; 7. removal of federal consumer subsidies at the retail level;

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8. reduction in federal control over rural investment; 9. change in predominant channels of food trade, with most of the food trade now channeled through private markets; 10. privatization of land, with limited rights of disposal; 11. liberalized import and export rights to large farms and private farmers; and 12. removal of job security from farm employees, who now may be fired for incompetent work or for other economic reasons. In short, the argument is that state strength not only facilitated, but also required, rural adaptation. As noted above, some state policies created dysfunctional incentives and reform went awry, or at least did not meet original expectations. What is less understood is that state strength created both positive and negative pressures to adapt by sending signals that the status quo was untenable. This argument is explored in greater detail in chapter 2. The Dependent Variables: Rural Orientations and Behavior During Reform It was argued above that three independent variables—the nature of embedded values, the nature of reform, and state strength—worked in tandem to exert a significant influence on rural orientations toward reform and to shape the nature of rural responses to reform. Rural orientations are important because they concern how rural actors will be disposed toward agrarian reform and the transition to agrarian capitalism. Two groups of orientations are discussed. Orientations of Farm Managers Most of the literature on Russian agrarian reform—indeed, on agrarian reform in postcommunist nations—begins with the premise of farm manager resistance. Evidence documenting obstructionist behaviors are typically drawn from the 1992–1994 period, during which time farm reorganization was occurring, when reform policies were unclear, and when state bias against large farms was highest. An explicit example of this line of argumentation was offered by Andrew Barnes who wrote “directors of state and collective farms saw in land reform only threats and responded with direct rejection and obstruction of land reform policies.”75 This line of argumentation has been repeated many times by various authors, to the extent that it became the conventional wisdom for agrarian reform in the 1990s.76 This conventional wisdom sees farm

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managers as the big losers during agrarian reform, and therefore asserts a continuous resistance and refusal to adapt during the 1990s on the part of farm managers and large farms. Statistical data are presented in chapter 3 to show the ways in which farm managers benefited and adapted, and discusses stratification of income and stratification of opportunity as specific benefits derived from reform. As the decade progressed and reform institutions created a more predictable environment, farm managers began to understand the ways in which they could benefit from reform opportunities. Thus, contrary to the conventional wisdom about managerial resistance, chapter 3 demonstrates that as the 1990s progressed, farm managers discovered that contemporary reform policies presented many opportunities to benefit. In particular, they seized upon more farm autonomy, more opportunity for personal benefit, and greater economic stratification. Thus, by about mid-decade there was clear evidence of farm-level adaptation among large enterprises. For now, it is well to remember that prior to reform, farm managers lacked any real autonomy in managing their farms, had limited freedom in deciding operational issues on their farms, and, due to wage scales that were centrally determined, were underpaid relative to the rest of the farm workforce. In short, farm managers controlled very little and lacked basic economic freedoms during the Soviet period. Beyond the evidence that is presented in chapter 3, the conventional wisdom about farm managers is problematic. Before discussing the deficiencies in the conventional wisdom about farm managers, it should be noted that the view presented here is controversial. For various reasons, there appears to be an interest in not understanding or recognizing that farm managers did not solely resist. The conclusion that farm managers mostly benefited and adapted instead of resisted is sometimes thought to be based on support for the old system. Not only is that view far from the truth, but it has also nothing to do with a serious investigation of rural responses to reform stimuli. Clearly, some farm managers, in some regions, on some farms, with varying economic conditions, did resist. Thus, it is necessary to understand the characteristics of the farm managers, farms, and regions that may have resisted the most and that adapted the most. It is not argued here that all farm managers adapted, for surely that would be as incorrect as those who argue that all farm managers resisted. Instead, we are interested in patterns that are theoretically interesting and sound. Further, the evidence that is presented demonstrates that the broad outlines of reform were toward adaptation instead of resistance, and responses by different economic strata are analyzed.

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Having laid out a preliminary “defense” of the position argued in this book, it is important to take note of some of the problems with the conventional wisdom about farm managers. First, the farm-manager-as-obstructionist view is analytically inconsistent. Those who see farm managers as obstructionists also argue that the state is weak and conservatives penetrated governing institutions to the extent that they greatly influenced the agrarian reform process. It is never explained why “obstructionists” would want to block a reform process that they putatively controlled. Second, the farm-manager-as-obstructionist view is theoretically misconceived. Interest group behavior is firmly rooted in democratic theory. There is hardly a textbook on the American political system that does not have a chapter on interest groups and their behavior. One of the most influential writers on democratic theory is Robert Dahl, who wrote that one of the key elements of democracy is that citizens (1) have the right to formulate their preferences; (2) are able to signify their preferences to fellow citizens and the government through individual and collective action; and (3) have their preferences weighed equally, that is, not to be discriminated against because of the content or source of the preference.77 Another prominent political scientist has argued that the core of politics is the struggle over “who gets what.”78 One wonders why, during the Soviet period, the development of rudimentary interest groups was considered a significant movement on the evolution away from totalitarianism.79 Yet, during the post-Soviet period, interest group behavior by groups is “anti-democratic” if they espouse policy goals that are politically incorrect. The real question is how are rural interests in Russia supposed to act? Is it reasonable to expect agricultural interests, or any interest group, not to lobby for higher resource flows? Why do interest groups exist if not to defend the interests of their constituency? Third, the conventional wisdom about farm managers ignores the lessons of history. The history of capitalist development shows that the economic elites lead the way and the masses follow. Economic elites are those with above-average education, skill, and access to capital. Farm managers fit these criteria. Furthermore, abundant anecdotal evidence has argued that farm managers (and the managerial stratum in general), who controlled the land and property distribution process, obtained the best land and were the core of the cohort to start private farms. The available evidence suggests, therefore, that the economic elite led the way during Russia’s agrarian transition, and farm managers were this economic elite.

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Orientations of the Rural Population A second conventional wisdom that arose during the 1990s argued that a common peasant response to reform was to resist. A main proponent of this argument is Carol Leonard, who implied that peasant resistance was closer to Scott’s weapons of the weak than to outright rebellion.80 It is argued in chapter 4 that some segments of the rural population, far from resisting reform, took advantage of reform opportunities. There is evidence of significant adaptation to reform opportunities by the rural population as early as 1992–1995. Survey data are presented to show patterns of adaptation by economic strata. Similar to the view that farm managers oppose marketization, the conventional argument about resistance by the rural population suffers from several problems. The first problem is that this conventional wisdom is oddly ahistorical. The view that Russian peasants resisted land distribution ignores the fact that peasant rebellions have often occurred because of the lack of land distribution. Some of the “great” peasant revolutions in the twentieth century were, fundamentally, expressions of rural frustration over the absence of meaningful land reform, for instance in Mexico, Russia, and China. In the words of Samuel Huntington: “No social group is more conservative than a landowning peasantry, and none is more revolutionary than a peasantry which owns too little land or pays too high a rental.”81 The history of the twentieth century demonstrated that peasants were willing to resort to collective action, violence, and even revolution, in order to obtain land. True, different strata of peasants had different interests and some might resist. For instance, Eric Wolf reminds us that middle peasants had reasons to resist incursions on their land holdings. But the broad trends in peasant movements were to obtain land. For instance, in Mexico in 1910, peasants revolted against the Diaz regime and land concentration in haciendas.82 In China, the Chinese Communists based their party strength and future on the peasantry and their desire for land.83 In Latin America, peasants revolted over “land hunger” during the 1960s and the 1970s.84 More recently, “land invasions” are becoming ever more frequent in present-day Venezuela, where peasants are seizing land from rich landowners.85 With regard to Russia, one wonders why contemporary Russian rural dwellers would be opposed to land privatization, when the historical summaries presented above—of the Emancipation, Stolypin reforms, and NEP—suggest otherwise. Why would Russian peasants today not want land, when so clearly there was a long historical desire to obtain land? The answer is not clear. The argument that rural households are opposed to land privatization is not only ahistorical but also acomparative. Analysts who believe that

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rural actors are opposed to land privatization in Russia are unable to explain why the contemporary Russian rural population is so much different from the rural population in eastern European countries, where land reform has progressed rapidly in several nations, including several that previously were extremely “Stalinist.”86 Of course, there are historical, cultural, and leadership differences, but in 1990–1991, the USSR and eastern Europe had more in common than not, and most started land reform from a common base and common historical experience.87 Trends in agrarian reform for several eastern and central European nations are summarized in the following section below. Thus, in a comparative sense, there are strong reasons to doubt that peasants are viscerally opposed to land privatization. Those doubts extend to Russia’s transition to agrarian capitalism. A review of some evidence suggests that Russian land reform has been quite impressive. At the beginning of 2001, more than 130 million hectares had been privatized, and about 43 million Russian families—accounting for about 80 percent of the Russian population—were land owners in one form or another.88 Comparatively speaking, among Latin American nations that undertook land reform, Mexico, Venezuela, and Bolivia are considered to have been the most successful in distributing land.89 While a full review of those land reforms is outside the scope of this chapter, the following data are instructive. In Venezuela, from 1960 to the mid-1970s, about 35 percent of land that had been censused was distributed to rural families, of whom about 35 percent received land. In Bolivia, which started land reforms in 1953, about 90 percent of croplands was distributed to peasant families by the mid-1970s, although livestock ranches in the mountainous regions of Bolivia remained relatively untouched. About one-half of rural families in Bolivia became farm owner-operators during land distribution. Land reform in Mexico is a class unto itself, distributing about 60 million hectares by the early 1970s, in comparison to 8 million hectares in Venezuela and about 10 million hectares in Bolivia.90 Land distribution in Mexico encompassed about 35 percent of land that had been censused and benefited almost one-half of males employed in agriculture.91 Thus, based on these comparable data from “successful” land reforms, Russian land reform has actually accomplished more. Finally, the argument that rural households are opposed to land privatization is not only ahistorical and acomparative, but it is also internally inconsistent. First, one wonders why farm managers would need to block land distribution if the rural population did not desire to obtain it. Why prevent the transfer of a commodity not desired? Second, the contemporary cultural continuity thesis holds that peasant households

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are opposed to contemporary marketization because they have retained their egalitarian and collectivist values from Tsarist and Soviet times.92 This argument implies that collectivist and egalitarian embedded peasant values survived the twentieth century and are still salient. However, that same cultural continuity thesis then argues that these same peasant households oppose contemporary land privatization. The implication is that peasant households retained their egalitarian and collectivist values at the same time they were losing their desire for land ownership. It is never explained how or why some values remain important while other recede. In sum, subsequent chapters argue that rural orientations and behavior changed because three conditions were met: (1) there was a stimulus, seen by the need to respond and adapt to a hostile economic environment and the inability to use political means to defend rural interests and the status quo; (2) there was opportunity, indicated by adoption of reform policies combined with relaxation of state regulation; and (3) there were increasingly concordant interests that emerged over time between reform opportunities and peasant motivations to adapt. These three conditions acted together to facilitate change in rural behavior. Flowing from this broad line of argumentation, the following specific arguments will be presented and substantiated in subsequent chapters: 1. The agrarian transition occurred in an environment of intensified state urban bias. 2. State withdrawal created opportunities to benefit economically. 3. Rural conservatives were unable to use political means to block reform. 4. Large farms changed their operations and farm managers benefited from reform opportunities. 5. A substrata of rural households took advantage of opportunities presented by marketization and privatization. 6. Flowing from points 4 and 5, resistance was not the defining characteristic of contemporary reform. 7. Political resistance and opposition to reform policies that did occur was ineffective. 8. Although private farms have increased their production, average size of land holdings, and their contribution to the nation’s food supply, large farms will lead the rural revival. 9. Based upon essentially pro-reform rural orientations, the Putin government has an opportunity to build rural support with the effect of diminishing conservative political opposition and strength.

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These lines of argumentation have important implications for Russia and for peasant studies as a whole. If the arguments herein are accurate, it means that interpretations of enduring resistance have pointed analysts in the wrong direction. Moreover, if these arguments are correct, and if reform policies and institutions influenced incentives, it means that the state Putin inherited is much stronger than assumed, and therefore strengthens his hand as he attempts to guide Russia further in the direction of agrarian capitalism. For peasant studies as a whole, if the lines of argumentation herein are correct, it forces us to rethink the nature of peasant values, orientations, and behavior. If a country such as Russia, with a history of rural collectivism, can be shown to have adapted to market incentives, then why not rural populations without a strong collectivist past? Since peasants are sensitive to their environment, if we are to understand more fully peasant responses to market-based agriculture, perhaps more attention needs to be devoted to such questions as who controls wholesale prices, wholesale markets, and commodity exchanges. What incentive structures are being created for peasant households to “join” marketization? What are the disincentives? What are the alternative opportunities? In short, the analysis herein raises the question whether scholars (and policy-makers) should be redirecting attention away from issues of moral economy and more toward factors of political economy in order to understand peasant behavior. The Pursuit of Agrarian Capitalism in Comparative Perspective This book argues that rural behaviors in Russia moved in a pro-market and pro-privatization direction much more than is generally acknowledged, that rural actors have seized upon reform opportunities (some more than others), and that the degree and nature of rural change has been significant, especially considering the obstacles and nature of the economic environment. In order to show that rural orientations in Russia are not unique, it is important to broaden our scope and to show that experiences in other postcommunist European nations support the arguments being presented herein. Similar to Russia, the agrarian transitions in postcommunist nations have been state sponsored, entailing “giving” reforms that attempted to transfer land and property from state ownership to individual ownership (although there has not been one model of land distribution and different nations have chosen different methods). In general, considerable progress

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has been made throughout eastern and central Europe, with the extent of progress in each former communist nation depending upon political factors. Land reforms proceeded less rapidly in nations where political control remained centralized and strict, as in Belarus and the central Asian states of the former Soviet Union.93 Some would include Ukraine as well, but that situation appears to be changing, at least formally, after presidential decree 1529 that was issued in December 1999.94 Conversely, progress in land reform has been most rapid in Hungary, the Czech Republic, the Baltic states, Romania, Moldova, and Albania.95 Poland and Slovenia are excluded from this list because in those two nations collectivization failed, which meant that even during the communist era, private land ownership and small family farms were significant components of the agricultural system. Bulgaria is also excluded, but not because reform failed to privatize and distribute land. Instead, first, the reasons lie in the fact that state and collective farms had been abolished already in the 1970s and replaced with horizontally integrated agro-industrial complexes, which in turn were abolished in the latter 1980s. Second, political volatility and change of regimes in the early 1990s slowed reform progress in comparison with other central European states. Third, complexities and difficulties occurred during the land restitution process.96 A detailed review of land and agrarian reforms in each of the nations in the postcommunist bloc is beyond the scope of this chapter and, indeed, this book. What is important, however, is to survey several analytical issues that point to the fact that where political and economic conditions were liberalized (where more “giving” occurred), rural actors seized upon the opportunities afforded by reform. As top-down reforms, the course of reform depended upon the signals from above. Importantly, rural actors did not resist market-based land reform. The larger point is that Russian rural actors were not alone in adapting and changing in response to reform institutions, and were not unique in taking advantage of reform opportunities. To support the argument that rural responses to reform in Russia were not dissimilar from those in other postcommunist states, land reform results for each of the aforementioned states are briefly surveyed below (with the exception of the Czech Republic that primarily has an urban population). The discussion focuses on three important issues in each nation: (1) what happened to state and collective farms; (2) the privatization of rural land; and (3) the rise of private farms (individual or family). Hungary Hungary is considered one of the main success stories in postcommunist central Europe, having converted quickly to a market economy and a

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democratic political system. Hungary’s progress was codified by its entrance into NATO in 1999 (along with Poland and the Czech Republic). Hungary has long been considered one of the most Western-oriented of postcommunist states, and so rapid de-communization of society was perhaps not unexpected, although not entirely smooth, as the Hungarian Socialist Party won the election in 1994 in the National Assembly and thus reassumed legislative power in a coalition with radical liberals.97 It follows then, that agrarian reforms were, likewise, among the most successful in postcommunist states. Csaba Csaki and Zvi Lerman summarized the situation thusly in 1997: [T]he first six years of transformation in Hungarian agriculture can be considered as one of the most successful examples in regional comparison. The major achievements of the first phase of the agricultural reform in Hungary include almost complete privatization of farm land, creation of a market-conforming incentive framework for agriculture, full privatization and ongoing modernization of agro-processing, and deep reforms of government institutions in agriculture.98

The legal foundation for Hungarian agrarian reform was laid by the adoption of four laws during 1991–1994.99 This legislative basis restructured Hungarian agriculture by permitting collective farm members to withdraw their land from the collective; by compensating former land owners who had lost their land during communist nationalization; by transforming collective farms into Western-style cooperatives and privatizing their land as well as property; by privatizing state farms; and by establishing property rights and a functioning land market.100 The results were impressive. In 1996, members of cooperatives and private farms owned about 81 percent of arable agricultural land.101 By the mid1990s, there were more than 1.2 million individual or family farms, whose numbers were decreasing as consolidation occurred.102 Baltic States Land and agrarian reforms in the Baltic states are not new. Following the collapse of the Russian empire after World War I, Estonia, Latvia, and Lithuania undertook state-directed reforms. These reforms entailed the expropriation of land from large estates, compensation, and the redistribution of land in the early 1920s. Recipients included those who had served in the army, landless persons, and existing landholders who could demonstrate a need for more land. By the early 1930s, each of the Baltic states had several hundred thousand family farms.103 Although the Baltic

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states were forcibly incorporated into the USSR in 1940, agriculture was only collectivized in the late 1940s following the war. During collectivization, many thousands of the most successful private farmers were deported to Siberia. By the end of the 1950s, private farms (except for private plots) basically had been eliminated. The legislative foundation for contemporary agrarian reform was laid in 1989, when each of the Baltic states adopted a law on peasant farms. Other important legal acts followed during the early 1990s. The goal of contemporary reform was to return to the pre–World War II farming structure based upon individual and family ownership of land. In fact, one outcome of reform legislation was that only individuals or the state could own land—organizations and farming enterprises were prohibited from owning land. Therefore, one of the main aspects of reform in the Baltics was the restitution of land. Restitution could take one of three forms: by assigning the same land plot that was owned prior to nationalization; by assigning a similar plot in the same area as previously, or in the current place of residence; or by providing compensation. Most large state and collective farms were divided and distributed to former owners. Those state and collective farms that continued to exist were transformed into privatized companies. As a consequence of reform legislation, several processes were set in motion: (1) the number of state and collective farms decreased dramatically, from several hundred to just a few dozen, and their average size decreased as well; (2) the number of private family farms increased very rapidly, although their size was small; and (3) state-owned land as a percentage of all agricultural land declined.104 Romania Romania experienced very rapid land reform, beginning almost immediately after the Ceausescu regime was toppled in December 1989. The first land decree came into effect at the end of January 1990 that allowed any family in agricultural areas (including town residents) to claim up to 0.25 hectares of land, provided that the land would be cultivated and a land-use fee was paid. The rapidity with which this decree was issued reflected the perceived need to legalize the process of seizing land that had been occurring spontaneously during and after the tumult surrounding the fall of Ceausescu.105 The next legislation was a land law published in February 1991, which served as the basis for Romanian land reform. This law introduced land restitution to former owners, ranging from 0.5 to 10 hectares, depending on the amount of land previously owned. With this legislation in place, land restitution in Romania proceeded more quickly than in

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any other former communist nation. By the beginning of 1991, more than 10.3 million hectares had been restituted, and private ownership of land accounted for 70 percent of all agricultural land.106 This percentage rose to 80 percent by the end of 1991. The rapidity of reform and the search for justice led to land being distributed in an inefficient manner. According to one survey, 57 percent of new owners were over 65 years of age, 43 percent lived in towns, and only 18 percent were using land actively for agricultural purposes.107 The break up of collective farms (called agricultural cooperatives, or CAPs) began in February 1990 and land was distributed to farm members (0.5 hectares) and villagers not working on the farm (0.25 hectares). By the end of 1991, some 5.3 million families benefited from this land distribution, including 3.5 million that were actively engaged in agriculture.108 By the end of 1994, 99 percent of CAPs’ farmland had been distributed. Possession certificates were issued for 50 percent of distributed land, and ownership titles issued for 20 percent of that land. Thus, by mid-decade, agricultural land in Romania had successfully been destatized and distributed to private owners. The only category of land use that had significant state ownership were pastures and hayfields, of which public ownership accounted for about 45 percent of these lands. New farming organizations replaced communist era CAPs: (1) agricultural societies, which averaged 195 members and 470 hectares each and made independent production decisions, and (2) farmers’ associations, which were informal associations. Most new landowners, however, did not join any type of association. Of the 5 million persons who became new landowners from CAPs’ land distribution, only 1.5 million became members of an agricultural society or farmer’s association. The last category of producers are (3) independent farmers, whether they be individual private farmers or family farms. This last form of production organization accounts for the bulk of agricultural land ownership and numbered more than 3.5 million at the end of 1995.109 Moldova Similar to other countries being surveyed here, the origins of Moldova’s land reform legislation dates to the Soviet era. Between November 1989 and March 1990, a series of laws were introduced that allowed individuals and families to hold long-term leases outside and within collective and state farms. These laws also permitted lifetime inheritable use rights, but did not permit the buying and selling of land. In January 1991, the Law on Property established non-state forms of ownership. Other laws adopted during 1991 established the framework for the transfer of state

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property to individuals and the transformation of state and collective farms. In December 1991, a new Land Code recognized the right to private ownership of land and legalized land sales, although with a 10-year moratorium on privately owned land to January 2001. The Law on Peasant Farms in January 1992 codified the right of individual and family farms to exist, and provided a mechanism for exit from state and collective farms with land and property.110 Once legislation was in place, large state and collective farms were reorganized. During 1992–1997, about 95 percent of large farms reorganized into a new organization form. During reorganization, two trends emerged: (1) the number of state and collective farms declined, from 387 state farms and 535 collective farms in 1990 to 107 state farms and 120 collective farms in 1998, respectively;111 and (2) large state and collective farms declined in size, including the amount of land they farmed and the number of employees. The reduction in farm sizes was accomplished by the break up of large farms into smaller units, by the separation of private farms from the larger enterprise, and by the departure of member families from the collective. According to a World Bank survey in 1997, about two-thirds of larger enterprises reorganized into a cooperative, or a joint stock farm in which members are essentially shareholders in the farm. A very small percentage of farms—only 6 percent in the World Bank survey—decided not to reorganize.112 What is particularly interesting is the fact that the rate of reorganization accelerated as the decade progressed, exactly the opposite trend was hypothesized by some Western economists.113 Private individual or family farms also became more numerous as the 1990s progressed, with a large number of private farms being established in 1994 and during the reorganization push of 1996–1997. Similar to private farms throughout the postcommunist bloc, private farms in Moldova are small, averaging under 4 hectares per farm in the World Bank survey and about 1.5 hectares nationwide. They also have few workers, with 90 percent of the farms employing 1–4 workers.114 Despite difficulties in affording various inputs, the number of private farms increased rapidly during the decade: from zero private farms in 1990, to 3,058 in 1994, the number of private farms exceeded 214,000 in 1998.115 The number of private farms in Moldova increased rapidly after the National Land Program was launched in 1998.116 In 1999, private farms accounted for 22 percent of agricultural land being used, as compared to 1 percent for state farms and 14 percent for individual use.117 Albania Albanian land reform and rural responses to it are interesting because Albania stands in stark contrast to Hungary. First, Albania was one of the

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most Stalinist of all former communist nations. Second, it is much more rural and agrarian. Third, it had (and has) one of the lowest standards of living in Europe. Thus, Albania suggests that structural factors such as political culture and level of economic development are not determinant in deciding reform outcomes. Albania moved very rapidly from a state-controlled economy to a market economy. The legislative basis for reform was created by a series of laws adopted during 1990 and 1991. The most important law for land reform was law 7501 of July 19, 1991 that governed land distribution. The law required the distribution of all land held by state and collective farms to farm members for free on a per capita basis.118 Within 18 months of the passage of law 7501, state and collective farms ceased to exist.119 The one restriction on land distributed under law 7501 was the prohibition to buy and sell agricultural land, but this restriction was considered temporary. In July 1995, the restriction on the buying and selling of agricultural land was removed by the passage of law 7983. By the time law 7983 was passed, almost all land available for distribution already had been distributed, more than 96 percent of land. Land that had not been distributed was marginal land of poor quality or unarable that was not considered worth the trouble to distribute or had been refused by villagers. By mid-decade, more than 500,000 private farms had been established. Although their size was quite small, consolidation would occur to make them more economically viable. Summary The short surveys demonstrate that significant rural change has occurred. In a relatively short period of time, these nations have moved from a common heritage imposed by Soviet rule to considerable diversity. The summaries also suggest that collectivist and egalitarian values contained within communism were quick to erode (although in some cases such as Poland and Yugoslavia, communist rule did not stamp out private property). The reformist orientations have been pro-market and proprivatization throughout the postcommunist region in eastern and central Europe. Similar to Russia, rural dwellers responded to the “giving” conditions of reform, and while some obstruction may have occurred early on, resistance was not the primary response to reform opportunities. Conclusion Russia’s contemporary agrarian question concerns the introduction of agrarian capitalism and how peasants react to reform stimuli. This chapter placed Russia’s contemporary agrarian question in a theoretical and

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historical context. The chapter began with a critique of the moral economy approach, arguing that numerous problems exist and suggesting the utility of a political economy approach instead. The chapter then argued that contemporary rural orientations are shaped by three factors: the content of cultural values, the nature of reform, and state strength. With regard to embedded cultural values, historical examples from Russia’s past were surveyed to illustrate a multiplicity of behavior. It was shown that Russian peasants not only acted communally within their mir, but also displayed a quest for freedom, a desire for land, and an ability to seize upon economic opportunity. With regard to the nature of reform, a contrast was drawn between giving and taking reforms, showing that not only do the two produce different types of behavior, but that the nature of state institutions goes far to define our understanding of what resistance is and is not. The strength of the contemporary Russian state was examined and was shown to be strong, contrary to popular belief, indicated by several indicators of change that occurred, despite the fact that rural conservative elites opposed those policies. Those three variables influenced the dependent variables: rural orientations and behavior. It was argued that the broad pattern of rural responses has not been to resist, but to adapt. In this respect, it is asserted that rural behavior is more pro-market and more pro-reform than previously understood. The chapter concluded by placing Russia’s agrarian question in a comparative context. It was shown that there has been significant change in the structure and operation of rural economies in postcommunist states. This is not to say all transitions have been entirely smooth or that problems did not arise. Of course they did. But rural responses to reform institutions in postcommunist Europe and elsewhere are significant because these pro-reform orientations occurred despite different social and political cultures, differing historical experiences, and different paths to reform. Moreover, rural orientations throughout the postcommunist region in Europe are significant because they show that pro-reform rural orientations in Russia are not unique. Rural actors throughout the post-communist world want land and the opportunities brought about by privatization. Although it may be argued that the Russian agrarian transition was, in some respects, more conservative than in other states during the 1990s (lack of land restitution, not abolishing collective farms), the regime of President Yeltsin pursued market-oriented reforms at least as vigorously as other postcommunist states. Similar to eastern and central European states, Russia pursued market reforms based upon private ownership, destatization of land and property, price reform, and an open trade policy. Russia’s agrarian transition was marked by free

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land distribution—similar to the “giving” reforms found in Europe. Thus, no one should be surprised that rural orientations would support the essence of reform. The surprise would be if they did not. “Resistance” to reform occurred in response to the consequences of reform, not reform itself. Had the macroeconomic environment and state policy been more accommodating, the pace of change might have been greater and the pro-reform nature of rural orientations would be more apparent. Finally, it should be noted that the argument presented herein about rural adaptation differs from other scholarly attention that emphasizes peasant recourse to rebellion or resistance.120 Much of the existing literature often focuses on violent or revolutionary responses when the following conditions exist: threatened embedded rural values, threatened rural economic livelihood, and a weak state.121 Many analysts would concur that those conditions existed in post–Soviet Russia. Moreover, in Russia, the transition from communism encompassed social, political, and economic change, certainly falling into the category of Skocpol’s “social revolution” but without the violence.122 Russia would, therefore, appear to present a perfect case for rural rebellion: social and cultural upheaval, threatened embedded values and psychological shock brought on by market reforms, deteriorating socioeconomic conditions, a weak state (or at least a weakening state), and, importantly, rural actors’ inability to obtain policy preferences through legitimate (legal/political) channels. Indeed, for much of the 1990s, experts inside Russia and abroad predicted an imminent “social explosion.” Nonetheless, the Russian countryside has remained mostly quiescent. Why? One reason is that revolutionary activity by peasants is rare, although it receives a large part of scholarly attention. Only a few agrarian transitions have resulted in full-blown revolutions or wars, while there are hundreds of historical examples where agrarian transitions were nonviolent and marked by peaceful rural adaptation. Eric Wolf, for example, wrote that “Romantics to the contrary, it is not easy for a peasantry to engage in sustained rebellion. Peasants are especially handicapped in passing from passive recognition of wrongs to political participation as a means for setting them right.”123 The rarity of peasant revolution is precisely the reason why scholarly attention in the 1980s turned to the use of passive strategies to resist change.124 Another important reason is that revolution or rebellion is costly. Violent responses would be costly economically (deprivation of way of life), and psychologically (severing of urban links and social networks), and logistically difficult (the Russian countryside is demographically

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old, villages may be separated by large distances, and rural infrastructure is poor). Wolf saw only two strata of peasantry that would be able to sustain revolutionary action: a landowning middle peasantry, or a peasantry outside the domain of landlord control. In Russia, private farmers would constitute a “landowning middle peasantry,” and they were explicitly pro-government. One should also note that the nature of Russian land reform—which distributed free land to anyone wanting to start a private farm and to all employees on large farms—gave rural dwellers a stake in the system and may have undercut any revolutionary impulses.125 Rather than resort to collective violence, rural Russia adapted. Some of the changes were quite significant, others more incremental, but to deny that change has occurred is simply afactual and a serious misreading of reality. Adaptive responses that occurred in the Russian countryside during the 1990s have not received the attention that they are due, and this book is intended to fill that gap. Naturally, to say there was rural change in Russia is different from defining what kind of change occurred. Much of the adaptation and change that has occurred has not conformed to the expectations and goals of liberal reformers in Moscow or their Western advisors. Hence, because change did not conform to expectations, a conventional wisdom arose that espoused “there has been no change in rural Russia.” Subsequent chapters show this position to be factually incorrect by documenting the nature of rural responses and changes to reform stimuli. This conventional wisdom is not only factually wrong, but also distorts our research agenda. Western analysts should be devoting time and resources to understanding why the nature of change has unfolded as it did, not debating whether change occurred or not. Subsequent chapters argue that there has been demonstrable and significant adaptation and change across a range of rural behaviors by different rural actors. The following chapter begins with an examination of the stimulus for rural adaptation in Russia.

C h ap t e r 2 Why Peasants Adapt: Origins of Behavioral Change Under Yeltsin

Why do peasants adapt and change their behavior? How do they react to external stimuli? An understanding of adaptation in rural orientations and behavior requires an examination of the factors that affect reform in general and the rural sector in particular. The analysis in this chapter sets the stage for understanding adaptive behavior by rural actors, a topic that is examined in subsequent chapters. The purpose of this chapter is to explain the effects of the economic and political environment in which rural actors operated during the 1990s in Russia. Toward that end, the chapter focuses on two central questions: (1) what were the economic reasons for rural adaptation? and (2) what were the political reasons for rural adaptation? The chapter argues that Russia’s agrarian reform combined opportunity and motivation for change, that is, both positive and negative stimuli, the latter arising from a hostile economic environment that made continuation of old behavior untenable. In short, this chapter argues that Russian agrarian policy during the 1990s was characterized by a combination of state urban bias and state withdrawal, and it is these two factors that necessitated rural change. The chapter further argues that motivations for adaptation were facilitated by the fact that rural interests were unable to block the course of reform through political means or political influence. This inability was due to the division of rural interests and political weakness. As a result, the rural sector bore the brunt of shock therapy to a larger degree than other segments of the economy. The chapter is divided into three main sections. The first section presents some basic analytical considerations that influenced the course and nature of Russia’s agrarian transition. The second section examines shock therapy and state urban bias as sources of rural change, arguing that necessity and opportunity were embodied in state strategies of urban bias and state withdrawal. The third section examines the political

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sources of change, showing that adaptation was necessary owing to the political weaknesses of rural interests. Rural interests were weak due to ideological differences and a lack of political cohesion. An Overview of Russian Agrarian Reform Agrarian reform in Russia was state-sponsored, that is, it was introduced from above, and was not the result of peasant pressures from below. In short, rural dwellers in Russia were acted upon by the state. The ways in which rural dwellers were acted upon has been analyzed previously, and thus the focus here is on the origins of rural adaptation.1 One approach to the question why peasants adapt their behavior has been to focus on legislation. For purposes here, it should be noted that the passage of legislation in and of itself is not a cause for action, let alone causing changes in orientations and behavior among Russian peasants. Why? There are several reasons. First, during the beginning of reform, legislation and the legal environment were often confused, with mixed signals emanating from the legislative and executive branches as to what was permissible and legal. Personal interviews showed that this situation was confusing to policy-makers and scholars in Moscow. It follows that it must have been perplexing to regional officials as well, who were in charge of reform implementation. Further, one can only imagine the types of responses a confused legal atmosphere engendered among ordinary rural dwellers who operated on the basis of incomplete information, rumors, and speculation. Second, the level of political trust by the rural population toward national political actors was quite low during the 1990s. For example, in October 1993, only 22 percent of respondents in a national survey “fully” trusted the president, a level that fell to 19 percent in February 1994, 11 percent in September 1997, and 2.5 percent in September 1998 and 1999. Likewise, trust in the national government was also low: only 17 percent fully trusted the government in October 1993, falling to 11 percent in February 1994 and September 1997, 3.8 percent in September 1998, and 8 percent in September 1999.2 Thus, even if the legislative signals emanating from Moscow had been clear, their efficacy would have been low due to a lack of political trust by the vast majority of the rural population. Third, it is commonly accepted that Russia did not have during the 1990s, and most likely still does not have, a society based upon the rule of law.3 Instead there seems to be a culture of law-avoidance, or at least law-bending, in several layers of society. There is a conventional wisdom

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about Russia that dates to the Tsarist period, that compliance with laws and policies decreases as the distance from Moscow increases. While legislation is necessary to secure property rights and lend predictability to markets, it would be naïve to argue that the mere passage of laws and legislation is an adequate stimulus for behavioral change. There needs to be something more. The origins of adaptation emerge from situations in which old attitudes and behavior are no longer effective or beneficial. That is to say, adaptation occurs when the larger environment sends signals that change is necessary. The necessity to adapt can come from negative stimuli, in which maintaining old behavior threatens survival; or from positive stimuli, in which new opportunities arise which benefit the risk averse. Russia’s agrarian transition ushered in both necessity and opportunity. These two components of change were inherent in the state’s policies and strategies toward the rural sector. In this respect, Russia’s agrarian reform combined characteristics of “giving” reforms with elements of “taking” reforms that were discussed in chapter 1. This chapter focuses on the necessity of adaptation stemming from a hostile economic and political climate, while subsequent chapters examine more closely the opportunities that arose and the responses to them. At first glance, it might appear that a hostile economic environment would preclude rural change, creating rural conditions so bad that survival, not adaptation, would be the predominant objective.4 This argument would have us believe that rural actors do not react to negative stimuli. Indeed, one well-known Russian scholar has argued that “Recessionary times do not create economic incentives for production units and therefore do not induce real transformation.”5 This position may be countered with several points: (1) it ignores the political and economic policy environment in which behavior occurs; (2) individuals respond as much as to negative stimuli as to positive stimuli, if not more; and (3) adaptation was a completely rational response, especially given the campaign-like manner in which reform was conducted, imbued with ideological motivations. Russian agrarian reform was conducted in an ideological manner, and state levers were applied against those who resisted reform policies.6 Given the necessity of change arising from a new economic environment, an adaptive course of action was the least “costly” and most beneficial to rural actors. Subsequent chapters present evidence that there has been demonstrable adaptation across a range of rural behavior by different rural actors. Finally, a word or two about implicit assumptions. The views about necessity and opportunity implicitly assume peasant rationality.

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A common assumption in the literature on peasants, peasant social organization, and rural development is that peasants are rational. That is, peasants are fully capable of deciding what makes economic sense and what does not, and they are able to orient their behavior accordingly.7 This position is perfectly reasonable and is subscribed to herein. At the same time, the nature of peasant decisions is a more contentious issue, and there is disagreement over whether peasants are risk-takers or are security-driven.8 But the basic idea that peasants are able to make calculations and decisions regarding their welfare has been stipulated by both sides participating in the debate.9 Indeed, it would be very odd if peasants—whose livelihood and survival depend on accurate assessments and reactions to their environment—were not rational. My position on the risk versus security question will become clear as the book unfolds. What is sometimes overlooked is that calculations of rational behavior are often influenced by politics and political considerations. What constitutes “rational action” must consider two core variables: what is desirable and what is possible.10 Often these variables are conditioned and defined by what is politically permissible. Thus, “rationality” is a flexible term. It greatly depends not only on existing economic incentives (or disincentives), but also on the set of legal and political institutions that confront the individual actor. In short, rational action is conditioned by existing institutions, and any judgment as to rational action must take into consideration what these institutions are and what they allow. Economic Reasons for Adaptation As noted above, in order to understand the origins of adaptation and change, one needs to focus on the state, its policies, and its strategies. This approach implicitly coincides with peasants’ moral economy in the sense that states facilitate or hinder commercialization, whether the origins are domestic or foreign. Thus, the source of rural adaptation begins with the state. For Russia, it was asserted that a combination of state urban bias and state withdrawal occurred, a combination that is highly unusual. Nonetheless, these conditions created conditions of necessity and opportunity in the Russian countryside. State urban bias has been one of the most prevalent theoretical frameworks for analyzing urban–rural relations in developing nations since the mid-1970s. Flowing from the work of Michael Lipton in the mid-1970s, urban bias became widely accepted as a political economy approach to why rural interests were often discriminated against in

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developing nations.11 The urban bias model became a powerful explanation for urban–rural relations in the third world and one-party states.12 Urban bias defines urban–rural relationships and the ways in which regimes extract resources from the agricultural sector to the benefit of the non-rural sector. The urban bias argument maintains that states act to protect urban interests and discriminate against rural interests. The urban bias theory argues that financial, productive, and human resources are deliberately “pumped” out of the countryside in order to benefit urban dwellers. Food producers are discriminated against on price and resource flows (although there may be variation according to type of production). Urban bias, therefore, leads to extractive and discriminatory policies against the rural sector.13 To say that state urban bias intensified toward the rural sector in the 1990s is not to deny that the urban population also suffered. Urban dwellers also experienced the effects of high inflation, erosion of standards of living, and declining real incomes. These outcomes have been widely documented.14 The point here is that the rural economy faced discriminatory pricing, trade policies designed to benefit urban consumers, and financial policies designed to deprive the rural sector of adequate investment and capital. Rural dwellers had fewer escape points from urban bias, and did not benefit from certain state policies, for example, the importation of cheaper food to feed urban consumers. This chapter also sees a Russian state that withdrew—as a policy choice—from many of its interventions in the rural economy during the Soviet period.15 While state urban bias is a deliberate policy to extract resources and to discriminate against the rural sector, state withdrawal entails the reduction of state interventions that characterized the Soviet period, particularly during and after the Brezhnev years in agriculture. State withdrawal implies a state that is unwilling to extend the benefits and protections that existed as part of the welfare state and command economy. In postcommunist Russia, the withdrawal of communist-era protections in essence translated to inaction and thereby exacerbated policies of state urban bias. However, state withdrawal does not automatically lead to the desired reform goals being achieved (a market economy). The mistaken notion that equated state withdrawal with market reforms was noted by Alan Greenspan, who argued that “The dismantling of the central planning function in an economy does not, as some had supposed, automatically establish a free-market entrepreneurial system.”16 State withdrawal ended most Soviet era protections for rural actors, thereby exposing them to the harshest consequences of market reforms. For example, as early as 1992, policy decisions were made to drastically

40 / the moral economy reconsidered

curtail the level of capital investment into the rural sector. Concurrent with price liberalization in 1992, the state permitted terms of trade to turn against rural food producers, without increasing subsidies to offset growing industrial–agricultural disparities. As early as 1993, the Russian government moved to reduce its influence in the food trade system, not because it was unable to continue to procure large percentages of output, but as a result of a policy choice. The key point is that policy choices flowed from ideological principles that emerged from neoliberal philosophical conceptions of the role of the state in the economy. Analytically, it is important to keep state withdrawal as a policy distinct from state weakness, the former reflecting policy choices and the latter concerning state capacities. Therefore, it is necessary to keep distinct the consequences of policy choices that became evident later in the 1990s with policy choices that were made early in the economic transition process. Thus, even with “shock therapy,” the Russian state in 1992–1993 was in a position to either continue Soviet era interventions or to move away from them gradually. The fact that reformers did not was a policy choice. Shock Therapy and State Urban Bias State urban bias (expressed through shock therapy) and state withdrawal went hand in hand. State withdrawal drew from the philosophical basis of the so-called Washington Consensus that preached minimal state intervention in and regulation over the economy; and political elements of state urban bias fit nicely with notions of the countryside being one of the bastions of Communist support. Urban bias could be used as a strategy to destroy Communist-era institutions, behavior, and attitudes. Together, these two factors were an important catalyst for rural change, motivating rural actors to adapt and adjust their behavior. Urban bias was a policy of longstanding in the Soviet Union. The philosophical basis for communist peasant–state relations can be dated to Marx and Lenin’s War Communism, although the real progenitor of urban bias was Stalin and his policy of collectivization. Even though the Brezhnev leadership moderated the excessively anti-rural orientation that existed during the Stalin regime, rural life remained primitive and harsh.17 The disposition toward agriculture was aptly described by former general secretary Mikhail Gorbachev, who also served as party secretary for agriculture during 1978–1985: The traditional concept of the peasant as a second class citizen had a further negative effect. . . . The countryside, with 100 million people, received

why peasants adapt / 41 only 10 percent of electric power. . . . A gas network was introduced in urban areas but farmers were deprived of it, and there were no plans to make gas available to them. . . . Rural areas were badly off for roads, schools, medical services, public services, newspaper and magazine supplies, cinemas and cultural entertainment. . . . Statements claiming that agriculture was “unprofitable” were found to be wrong. All data pointed to the fact that much more was siphoned off from agriculture than invested in it. And, of course, the nation’s economic development had been achieved at the expense of the countryside.18

Gorbachev further notes that 60 percent of expenditures on agriculture was used to pay for industrial supplies to rural areas, thus casting a different perspective on the monies invested in agriculture and our understanding of who really benefited from those policies.19 Moreover, retail food prices were held artificially low for political reasons. In particular, the political leadership held retail food prices artificially low to benefit urban consumers.20 When the Gorbachev government unsuccessfully tried to raise food prices in 1990, for the first time since the early 1960s, concerns over political instability were evident and the government retreated. Gorbachev explains the situation: “At the time, any noticeable increase in retail food prices was resolutely rejected. The problem was totally divorced from economic considerations, and regarded as purely a political issue.”21 When retail food price increases were introduced in April 1991, the government was careful to protect urban consumers by compensating as much as 85 percent of the increase in the form of higher wages, despite warnings by economists that compensation undermined the logic of the price increase. In late October 1991, President Boris Yeltsin announced a comprehensive reform program, effective January 2, 1992. This program included price liberalization and privatization, known as “shock therapy,” under the stewardship of Egor Gaidar.22 Yeltsin explains his course of action: [F]or me it was paramount that we reject the path of the Communist economy in one swoop. Gaidar achieved the most important thing: He taught everybody, from the minister on down to the truck loader, how to think in market terms and how to count money.23

From the beginning, shock therapy had a dual mission. On the one hand, the intent was to bring rapid economic reform, and with it, success in building markets and a capitalist system. On the other hand, shock therapy had a political dimension and was intended to ensure that a rapid transition from communism occurred and that Communists

42 / the moral economy reconsidered

would not or could not return to power. The alternative, gradualism, was seen as a “prescription for chaos” by Russian reformers and Western advisors.24 Shock therapy and its consequences have been severely criticized by several Western authors.25 Critics of shock therapy concentrate on the negative consequences, of which there were many, but ignore that the “shock” motivated people to respond—perhaps not in ways that were intended or expected—and perhaps out of survival rather than adaptation at the beginning, but nonetheless, shock therapy stimulated responses. One criticism of shock therapy is that “little contemporary thought had been given to the institutional infrastructure required of markets.”26 Marshall Goldman, for example, argues that “after seventy years of Communist rule, anything resembling market institutions in Russia had almost certainly been destroyed. . . . What the reformers failed to understand is that when market institutions are not already in place, it may take not months but years or decades to create them.”27 Further, he continues that “Chubais inadvertently created structural deformities in the economy that will not be easy to remedy. He chose to overlook the fact that there was no market or competitive infrastructure in place to absorb and temper these newly privatized monopolies.”28 While this is not the place to pass judgment on either the advice or the persons giving it, several Western advisors have maintained that their advice was sound, even in the face of severe criticism. They somewhat curiously defend themselves by arguing that their prescriptions were not fully implemented while simultaneously arguing that the reforms their advice engendered were largely successful.29 Russian reformers have been a bit more reflective. They did not expect the extent of the economic downturn that was to come when they introduced shock therapy. Gaidar himself acknowledges several mistakes, and admits that he expected an inflation rate of 200–300 percent for the whole of 1992.30 Instead, inflation was 350 percent in January 1992 alone and 2,600 percent during 1992. Indeed, many of the effects of market reforms during the 1990s were deleterious, including significant production declines, a falling standard of living, erosion of health care, education, and the pension system, rapidly spreading disease and drug problems, and a demographic crisis that coincided with the introduction of reforms in 1992.31 Stabilization and growth were to occur after Yeltsin left office and Putin became president. But during most of the 1990s, Russia’s economy was in shambles. In urban Russia, the inflation that followed price liberalization wiped out lifelong savings. By 1993, for example, the purchase of one daily newspaper such as Izvestiia and

why peasants adapt / 43

one ride on the Moscow metro would equal the amount the average Russian had in his/her savings account when the Soviet Union collapsed in late 1991. In rural Russia, the effect was even more dramatic, and threatened the existence of farming communities. The policy of state urban bias toward the rural sector was born out of a conscious policy choice, disdain for the rural sector, and advice by Western lending institutions and advisors. Jerry Hough summarizes Yeltsin’s strategy toward agriculture: The Yeltsin government had an unannounced but explicit policy of trying to maintain living standards in the largest cities at the expense of the countryside. . . . Wholesale agricultural trade was kept under full state control. Much of the trade was conducted by nonmonetary means, heavily discriminating against the agricultural sector. . . . Urban food prices were officially subsidized in the early years of reform, but controls were quietly kept in place afterwards as well. . . . The Russian reformers shamelessly claimed to be subsidizing agriculture, and many of their western allies were seriously misled. On closer examination, however, the “agricultural subsidies” proved to include subsidies to the food processing industries, such as urban bakeries. The reformers blamed the steady decline in agricultural production on the effects and corruption of the collective farm nomenklatura rather than on the decline in inputs and investments. They pushed the free sale of land as a panacea, but, in fact, the private farm sector failed as badly as the collective farm sector. Prices were just too low for private farmers to survive economically.32

It is of no surprise, therefore, that public opinion polls and sociological surveys have consistently found that urban residents in large cities supported market reforms more than residents in small towns and rural areas.33 One could argue that residents in large cities were protected from the full effect of market reforms, whether it be from state regulation of retail bread prices (in effect until autumn 1993), state control of wholesale trade, or food policies that supplied the largest cities with cheaper foreign imports, particularly of meat. Intensified state urban bias in the 1990s, as part and parcel of shock therapy, was a double-edged sword. Urban bias was to have an impact on the nature and degree of adaptation in rural Russia, but not in the way most analysts would expect. On the one hand, state urban bias is largely responsible for the terrible economic performance of Russian agriculture during the 1990s. During 1992–1998, agricultural production declined an estimated 45 percent in comparison to 1990, and large agricultural enterprises’ output in 1999 was 36 percent that of 1990.34 Investments into agriculture, and productive capacity, deteriorated

44 / the moral economy reconsidered

significantly. Table 2.1 illustrates inputs at the macro level into agriculture and reflects the decline in its production potential. Table 2.1 shows that with the exception of the number of agricultural enterprises, all types of basic inputs—land, workers, animals, machinery, fertilizers, and electricity—declined significantly. By the time Yeltsin left office at the end of 1999, the level of productive capital was a fraction of the levels in 1990. Contractions in production capacity may also be viewed regionally. Table 2.2 presents data on changes in land under cultivation, the size of animal herds, and size of the workforce by economic region during the 1990s. According to table 2.2, production capacity declined in all regions, but more so in the northern, northwest, and central economic regions. Table 2.1 Input

Basic indicators of Russian agricultural inputs, 1990–2000 1990

1995

1997

1999

2000

Number of large 25.8 26.9 27.0 27.3 27.6 agricultural enterprises (thous.) Agricultural land of 202.4 154.1 149.2 152.7 149.7 large enterprises (mil. ha) Number of persons 8.3 5.8 5.7 5.1 4.7 employed in agriculture production on large farms (mil.) Number of pigs and 98.8 68.2 54.2 45.7 46.3 cows—all categories of farms (mil. head) Number of tractors per 10.6 9.3 8.1 7.7 7.4 1000 ha of agricultural land Application of mineral 9.9 1.5 1.5 1.1 1.4 fertilizers (mil. tons) Application of organic 389.5 127.4 86.1 69.1 66.0 fertilizers (mil. tons) Electric consumption 67.3 53.0 42.1 34.3 30.2 (billion kilowatt hours)

2000 as % of 1990 107 74 57

47 70 14 17 45

Sources: Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), pp. 43, 67; Rossiiskoi statisticheskii ezhegodnik (Moscow: Goskomstat, 2001), pp. 402, 405, 406; Agropromyshlennyi kompleks Rossii (Moscow: Goskomstat, 2001), pp. 18–22; and author’s calculations.

why peasants adapt / 45 Table 2.2 Trends in production capacity by region, European Russia, 1991–1999 (all categories of farms)

Region Russian Federation Northern Northwest Central Volga-Vyatka Central Black Earth Volga North Caucasus Urals

1991–1999: Percentage 1990–1998: change in 1991–1999: 1991–1999: Percentage number of Percentage Percentage change in hectares used change in change in size for grain number of beef number of pigs of rural work cultivation cattle and hogs force 25 46 49 35 25 22 26 19 25

51 53 62 56 43 55 52 53 43

52 66 77 60 45 59 54 53 42

27 39 34 37 27 25 23 22 24

Sources: Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 1998), pp. 201–02, Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), pp. 324–25, 330–31; and Trud i zaniatost’ v Rossii (Moscow: Goskomstat, 1999), pp. 348, 355, 360, 374, 380, 386, 395, 405.

As would be expected, contraction on production capacity affected food production. Regional food production (from all producers) during the 1990s is indicated in table 2.3. Because most food is produced in European Russia, and this is where two-thirds of Russia’s population resides, the data are confined to European Russia. Food production declined in all regions, although production declined somewhat less in southern, agricultural regions. The implication is that, comparing the agricultural sector to the industrial sector, that is, adopting an essentially urban–rural perspective, would lead one to conclude that the rural sector “lost.” In essence, shock therapy in Russia ushered in deindustrialization, and with it, demodernization. As the capital stock of Russian agriculture aged and was neither replaced nor repaired, the use of manual labor actually became more prevalent. Thus, the declines in agriculture illustrated in tables 2.2 and 2.3 were neither expected nor desired, and these trends had both economic and political consequences for the Russian economy and society. At the same time, there was also a positive side to state urban bias that has not received the attention it deserves. It is often overlooked that

46 / the moral economy reconsidered Table 2.3 Changes in food output by region, European Russia, 1991–1999 (all categories of farms)

Region

Average Average grain output, grain output, 1991–1995, 1996–1999, million tons, mt, after after cleaning cleaning

Northern Northwest Central Volga-Vyatka Central Black Earth Volga Northern Caucasus Urals

1996–1999 grain Average Average average as meat output, meat output, percentage of 1991–1995, 1996–1999, 1991–1995 mt mt average dead weight dead weight

1996–1999 meat average as percentage of 1991–1995 average

.39 .33 8.67 4.96 9.91

.24 .20 5.28 3.72 6.98

62 61 61 75 70

.20 .23 1.03 .51 .66

.11 .11 .62 .35 .42

55 48 60 69 64

15.5 19.2

12.6 12.7

81 66

1.07 1.07

.69 .63

64 59

12.3

10.9

89

1.11

.81

73

Sources: Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 1998), pp. 242–43, 356–57; Agropromyshlennyi kompleks Rossii, pp. 74–75, 123–24; and author’s calculations.

shock therapy, and with it, state urban bias, made rural change necessary. Creation arises out of destruction. State urban bias, along with other policy levers, made the status quo behavior of the Soviet period untenable. The introduction of a hostile economic policy toward rural actors necessitated a strategy of adaptation. The irony is that urban bias created the need for behavioral adaptation, but the actual policies contained within urban bias led to production declines and undermined the economic goals of reform—to make agriculture more productive and efficient. Urban bias, therefore, carried within it forces that compelled adaptation, but created conditions and incentives that undermined broader reform goals. Elements of Urban Bias and State Withdrawal The transition in postcommunist Russia during the Yeltsin period witnessed significant declines in financial resource flows to agriculture. In addition, rural living standards and farms’ productive capacity declined since agrarian reform was begun in 1990–1991. By the end of the 1990s, a series of trends contributed to significant declines in food output, by an estimated 40–45 percent in comparison with 1990, according to some Russian analysts.

why peasants adapt / 47

For the purposes of this chapter, elements of urban bias and state withdrawal have four main characteristics, although this list is not exhaustive: (1) price scissors between industrial input prices and agricultural prices for produce; (2) lack of protection for domestic producers from foreign food imports; (3) domestic purchase prices that are below world market prices; and (4) low levels of investment and financial resource flows to the countryside. Each of these factors is explored below.35 Price scissors During the Soviet period, state and collective farms benefited from state regulation of the wholesale market. The price of farm inputs was controlled by the state, as farm inputs were subsidized and sold to farms at advantageous prices. Farms were largely shielded from price increases in basic inputs, for example, fuels, fertilizers, and energy. These were political decisions, not really based on economic rationale, and the consequences included steadily rising subsidies to producers and an ineffective use of inputs, leading to waste and lower productivity than found in Western nations.36 In the post-Soviet period, most wholesale and retail prices were freed from state control, and input producers and suppliers were privatized (although not always de-monopolized). However, agricultural prices remained more controlled than industrial and consumer goods during the early years of reform. This was part of a conscious policy to protect consumers from high food prices. During 1992 and 1993, agricultural wholesale prices remained under state control and food procurement differed little from the Soviet period. During this time, the state continued to procure food through federal and regional food funds and promised “market prices” for food purchases, but the reality was quite different.37 As a result, the terms of trade faced by large agricultural enterprises (and private farmers) created a “scissors” crisis between agricultural prices and the cost of farm inputs, particularly in the first half of the 1990. The relationship between agricultural farmgate prices and industrial prices is shown in table 2.4.38 The data show that prices for industrial inputs increased more than agricultural prices dramatically in the first half of the 1990s.39 Using a general price index, Goskomstat, as well as Russian scholars, calculated that prices for industrial goods used by agricultural producers increased 4–5 times faster in comparison with agricultural products during 1992–1998.40 Particularly affected were regions of high agricultural output, such as Krasnodar krai in the south of Russia, where prices for

48 / the moral economy reconsidered Table 2.4

Terms of trade for agricultural products, 1992–2000 (in percent)

Industrial goods price index Agricultural goods price index

1992

1993

1994

1995

1996

1997

1998

1999 2000

3,380

1,000

330

270

26

7.5

23

67

32

940

810

300

330

43.5

9

42

91

22

Note: Industrial price index uses wholesale prices; and agricultural price index uses farmgate prices. Source: Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2001), 583.

gas, oil, diesel fuel, and electricity increased between 5 and 20 times faster than wholesale food prices received by farms.41 Thus, if in 1990 a “Niva” tractor cost the equivalent of 33 tons of grain, in 1999 it cost the equivalent of 268 tons.42 After the collapse of the ruble in August 1998, domestic wholesale and retail food prices increased in real terms relative to prices in other branches of the economy. Domestic agricultural prices were helped by the fact that with a sharp devaluation of the ruble, imported food became prohibitively expensive and less competitive on price with Russian domestic products. The results were beneficial to domestic producers through the first half of 1999. However, after the first half of 1999, agricultural prices again began to lag behind price increases in the industrial sector.43 On the whole, however, agricultural wholesale prices increased faster than consumer and industrial prices by a wide margin in 1998. And in 1999, agricultural prices increased faster than the consumer price index but not as fast as industrial prices. Better agricultural prices contributed to a decline in the percentage of unprofitable large farms: 89 percent of large farming enterprises were unprofitable in 1998, 54 percent in 1999, and 52 percent in 2000.44 On the basis of price policy, there is widespread consensus that, during the 1990s, financial resources were “pumped out” of the agricultural sector. Thereafter in the Putin period, even as the percentage of large farms considered to be unprofitable declined, overall farm indebtedness continued to increase, and virtually every large farm had long-term debt.45 Low protection from foreign imports During the Soviet period, foreign trade was controlled by the state, and this was true for agricultural and nonagricultural trade. Foreign trade was regulated and controlled through foreign trade organizations and

why peasants adapt / 49

the Ministry of Foreign Trade. As a result, farms were protected from foreign competition and food processors enjoyed a domestic monopoly. Gorbachev began a process of limited reforms that opened foreign trade and in the 1990s, foreign trade was liberalized further.46 In the post-Soviet period, Russian domestic producers lost not only their previous protection from foreign foodstuffs, but the Russian government pursued a liberal trade policy in which import tariffs were set significantly lower than world levels.47 For example, in the European Union, some tariffs on specific food imports may reach 200 percent. More generally, agricultural tariffs averaged about 40 percent worldwide in the 1990s.48 However, aggregate Russian import tariffs were only about one-half of world levels, and many food tariffs did not exceed 10 percent,49 and on average agricultural tariffs were about 14 percent in Russia during the mid-1990s.50 To offset decreased domestic production, and as a benefit to urban consumers, an open trade policy was pursued, which witnessed a significant increase in imported food. Prior to the collapse of the ruble in August 1998, imported food was cheaper, of better quality, better packaged, and preferred by Russian consumers. From 1992 through 1997, total meat imports increased 440 percent, including chicken meat that increased over 2,500 percent, pork imports increased by nearly 500 percent, and beef imports increased by almost 245 percent.51 By the beginning of 1997, Russia was the world’s largest importer of poultry meat, and imported more than 50 percent of its total supply of poultry meat. During the 1990s, Russia imported a significant percentage of its total meat supply, reaching a high of 22 percent in 1999.52 Most of the imports came from the European Union, the United States, and China. Of particular note is that Russia’s largest cities, Moscow and St. Petersburg, imported an estimated 70–90 percent of their meat and meat products.53 Low domestic purchase prices The difference between domestic purchase prices and export prices is a common strategy of states to raise revenue for investment, modernization, or other purposes.54 States benefit either through the direct control of food trade, or by taxing the profits that private traders reap by buying low and selling high. This strategy is not unique to post-Soviet Russia and was used in the past, most notably to fund Tsarist industrialization in the early 1900s, and to fund Stalin’s industrialization during the 1930s. Following Stalin’s death, the state paid lower domestic prices and sold at higher world market prices. However, the net effect was marginal for the state because Russia was not a significant food exporter and the

50 / the moral economy reconsidered

net effect was marginal on farms because they benefited from a range of subsidies, soft credits, low interest loans, and price supplements that offset discriminatory pricing policies. In the post-Soviet period, Russia remains a food importer and less so a food exporter (although Russia did export significant quantities of grain following the 2001 and 2002 harvests).55 Today, Russia’s large farms derive a much greater percentage of their income from purchase prices, and much lower percentage of income from credits, subsidies, and loans. In other words, many of the benefits that Soviet era farms received to compensate them for low purchase prices have evaporated during the post-Soviet period. Thus, both large farms and private farmers are more dependent on “fair” domestic purchase prices. Three significant aspects stand out in the relationship between purchase prices and export prices. First, during the 1990s, Russian farms were not being paid world market prices; second, there was often a significant gap between domestic purchase prices and export prices; third, Russian food exports were sold at somewhat lower than world market prices. The reasons for this disparity are partly higher levels of subsidization by other governments for food exports, a policy the Russian government has eschewed. Another reason is the deliberate state policy to underpay domestic producers, reminiscent of Preobrazhensky’s “primitive socialist accumulation” during the 1920s. The following examples illustrate the relationship between purchase prices and export prices in Russia. Despite increased farm dependence on “market” prices for food production, domestic purchase prices in Russia were often significantly below export prices. Export prices are usually a close approximation of world market prices, but Russian farms were being underpaid for their production, and the state is at least indirectly benefited from the gap between domestic purchase prices and export prices. Export prices for grain in the United States and Western Europe ranged between $100 and $110 a ton during 1999 into early 2000, but farms in Russia were being paid the equivalent of $50 a ton.56 For wheat, Russian farmers were being paid about 50 percent of the world market price, while the export price was 67 percent of the world market level. More generally, this pattern existed for several other important food products as well: the domestic purchase price for corn was 34 percent of the world market price while the export price was 75 percent of the world level; for sunflower seeds, 13 and 64 percent; for potatoes, 66 and 91 percent; and for tomatoes, 90 and 120 percent, respectively.57 The relationship between domestic purchase prices and export prices was somewhat better for animal husbandry than for plant products.

why peasants adapt / 51

The spread showed that animal husbandry producers were being paid closer to market prices. State subsides for both animal husbandry and plant products decreased significantly during the 1990s. For plant products, for example, subsidies comprised nearly 18 percent of the wholesale price of grains in 1993, but only 2.5 percent in 1997.58 Similar declines occurred in animal husbandry; however, animal husbandry products were paid closer to world market prices and could take advantage of exports. In 1998, the beef-producing sector received 55 percent of the world market price, while the export price was 58 percent of the world market level. Pork producers fared even better: in 1998, the sector received 96 percent of world market price, while the export price was 99 percent of the world market level. By early 1999, the poultry industry was being subsidized: poultry producers received 227 percent of the world market price, while the export price was 123 percent of the world market level.59 Investment and financial resource flows In the Soviet period, the state was the basic source of capital investments for agricultural enterprises and rural development. As late as 1985 the state was providing 68 percent of all rural capital investments to agriculture.60 In the post-Soviet period, the role of the state has changed significantly. Since agrarian reform was begun in 1990–1991, two financial trends characterize state investment policy. The first change is in state investment policy and was characterized by a decrease in federal investments to agriculture. In nominal terms, it appeared that budgetary outlays for rural capital investments were increasing. In real terms, however, the sum of capital investments declined by a factor of 10 from 1991 through 1995.61 When calculated as a percentage of all federal capital investments, agriculture received nearly 18 percent in 1991, but this percentage declined constantly thereafter to 2.5 percent in 1997, before rebounding slightly to 3 percent in 1998. Thereafter it declined to 2.9 percent in 1999 and 2.7 percent in 2000.62 The second change in state investment policy witnessed a change in budgetary sources of investment monies. As resource flows from federal government to rural areas declined, more responsibility for capital investments was shifted to local budgets and to agricultural enterprises themselves. By 1994, farms were the basic source of financing for construction projects. In 1996, it was reported that farms had financed 65 percent of all rural capital investments. By 1998, farms were providing almost 72 percent of investment capital, a trend that continued to the end of the Yeltsin period.63 Burdened with debt and their own financial difficulties, farms were unable to fill the void, and as a result, the

52 / the moral economy reconsidered

construction of rural infrastructure was drastically curtailed (this topic is discussed in more detail in chapter 4). Finally, some analysts have argued that “soft credits” given to large agricultural enterprises are a principal reason why large farms did not reform.64 However, this position reflects a basic misunderstanding of the political strategy behind the soft credit policy. The policy of soft credit was not a pro-rural strategy, designed to help farms. It was, in fact, an implicit urban subsidy designed to keep large farms operating and supplying cheap food to cities (food that was either not paid for at all or purchased at below market levels, as explained earlier). Likewise, rural debt write-off is a game used by Russian politicians that Western analysts have bought into. As an urban subsidy, there never was any intention to try to collect this “debt.” Reformers can claim that they are subsidizing agriculture, but in reality the subsidies keep the retail price of food down for urban consumers. In reality, “rural subsidies” are strategies to transfer financial resources out of agriculture and to deprive it of needed capital for investment. In conclusion, these four elements of urban bias characterized state policy toward the agricultural sector and provided a stimulus to adapt. Large farms bore the brunt of much of the urban bias (and experienced the greatest decline in output). Since the collapse of the Soviet Union, market reforms have witnessed a significant deterioration in policy outcomes favorable to rural interests during economic and political reform— exactly the opposite what urban bias theory would predict. Urban bias occurred in post-Soviet Russia despite consistent and vehement opposition from rural interests, who protested against the effects of market reforms and asked for state protection. The crucial question is why rural interests were unable to defend their interests better? An answer to this question is provided below. Political Reasons for Adaptation In the early 1990s, in order to address the agricultural problems inherited from its Soviet past, agrarian reform under Russian President Yeltsin introduced a course of institutional and policy change that broke sharply with the Soviet past: reorganization and privatization of state and collective farms, the privatization of processing and agricultural enterprises, land privatization and the adoption of supportive legal institutions, the creation of an individual private farming stratum, and the development of a land market. Yeltsin’s agrarian reforms were intended to transform Russia’s agricultural economy along market lines. As discussed above, if

why peasants adapt / 53

a market-based rural economy was the end goal, shock therapy and state withdrawal of Soviet era protections were the means. As a result of Yeltsin’s reforms, Russia’s rural interests witnessed a deterioration in their social, economic, and political standing. The important point to note from the following discussion is that rural interests lacked the political strength to block reform initiatives. In short, not only was the state strong as argued in chapter 1, but the rural opposition was also weak. This is an important, albeit controversial, argument. A common view among Western analysts is to see the “agrarian lobby” as strong and effective. For example, Anders Aslund wrote that “the agrarian lobby . . . [is] the most potent lobby in Russia.”65 Some analysts argue that the “agrarian lobby” took advantage of state weakness and blocked agrarian reform, with the implication that adaptive responses were likewise stunted.66 This line of argumentation is problematic for several reasons, not the least of which is that it is difficult to reconcile the changes that occurred in the agricultural economy and the view that reform initiatives were blocked (see chapter 1). In fact, it may be argued that during the Yeltsin period, the “agricultural lobby” had extraordinary difficulty resisting the momentum of change and turning policy preferences into actual state policy, and this line of analysis is pursued below. A final point concerns the argument that the “agrarian lobby” resisted reform by arguing for agricultural subsidies, credits, or trade protection. To this argument it is necessary to note that attempts to use the system—to work through the political system via legislation or lobbying in order to obtain resources for the rural sector or defense of its interests—is not the same as opposition to reform. The implied logic of those who see agricultural lobbying efforts as inherently harmful to reform is that any group attempting to defend the economic interests of its constituency is considered to be anti-system, or in this case, antireform. Extending such logic, does that mean when farmers’ associations in the United States attempt to receive price supports or export subsidies they are anticapitalist? Does it mean that when Polish farmers want higher livestock purchase products they are antireform? And what conclusion would such analysts draw about French farmers who want both subsidies and import protection? Are they anti-system? If so, then why does the French government provide financial assistance to agricultural interest groups that allows them to lobby more effectively? The answers to these questions are, of course, no—each group is simply defending their interests, as any normal bureaucratic or any interest group would. The argument herein is that the “agrarian lobby” is characterized by weaknesses in rural political representation, a lack of unity among rural

54 / the moral economy reconsidered

political and social groups, and an inability to turn policy preferences into policy. For example, Russia has a number of broad-based rural interest groups and more than 30 commodity-specific food unions.67 Although it is virtually ignored among analysts, these interest groups have different goals, different constituents, and different levels of resources and influence. The fact that there are so many different groups, whose various goals are to protect food producers, food processors, domestic food traders, and food exporters, means that the “agrarian lobby” is in fact fractured along many lines. This fact belies the impression of a monolithic agricultural lobby that resists reform and frustrates policy implementation. Producers have different interests and goals than processors do. Exporters and importers have different interests. Different commodities compete for market share, consumer preferences, and of course state support. Moreover, the fact that so many different agricultural interests exist and compete provides an important impetus to adapt and adjust to market relations in an effort to keep up with competitors. Political and ideological divisions and weaknesses among agricultural interests have prevented the development of a cohesive policy agenda or the representation of rural interests as a unified front. A more detailed examination of divisions and weaknesses follows. The Division of Rural Interests The importance of political and ideological differences among rural interests can hardly be overstated. To protect the interests of rural producers, a coherent and unified political organization is necessary. During 1989–1990, Russian agrarian leaders were explicit that a unified political organization was needed to protect and promote rural interests because this was not being done adequately by the existing political organizations. On the eve of agrarian reforms in 1990, for example, one agricultural leader noted that “unless we have political power we will be unable to really struggle for the peasantry’s interests.”68 During the early 1990s, rural conservative and liberal interests united on some issues, as did workers within the agro-industrial complex, thus presenting a united front in the form of the Russian Agrarian Union. The importance of unified rural interests was shown when rural conservatives and rural liberals worked together in the summer of 1993. Under joint pressure from rural liberals and conservatives, the Russian government raised the purchase price of grain dramatically and agreed to index grain prices to inflation.69 Ultimately, price indexation was dropped in October 1993 because the government could not afford to maintain those expenditures,

why peasants adapt / 55

but the point was made that rural interests, when joining forces, could influence agricultural price policy. In time, however, the Russian Agrarian Union fractured as liberals resigned from the coalition because of disagreements over delegate selection and policy positions regarding the interests of private farmers. Henceforth, rural interests in Russia were divided. Thus, for much of the 1990s, the Russian countryside was dichotomized along a liberal/conservative axis, thereby preventing a rural united front in an attempt to influence policy and negotiate resource flows to the rural sector. The dichotomy had distinctly ideological overtones, affecting voting patterns in the State Duma. At the core of the splintering of rural interests, liberals and conservatives had fundamental differences over the preferred course of agrarian reform and agricultural policy. Differences spanned a range of policy issues, including farm privatization, whether or not retail food prices should be regulated by the state, how much state intervention there should be in the wholesale food market, and the degree of freedom in domestic and international food trade. The party program of the leading rural conservative political party, the Agrarian Party of Russia (APR), stated an explicit preference for not a laissez-fare economy, but a regulated market economy, and advocated a mix of “market self-regulation combined with state planning and regulation.” The party also favored “strong state control over prices” in order to forbid high monopolistic prices. There were also differences over which sector of the rural economy should be prioritized for investment, credits, and loans. Rural liberals advocated a private farming sector based upon private property, backed by state protection of the legal rights of property owners. Rural liberals favored substantial state resource flows and other economic advantages to private farmers and rural small businesses. Rural conservatives argued that the most resources should flow to the largest producers—collective farms and their legal successors—and private farms, which produced a small percentage of the nation’s food, were seen as secondary importance. The most notable, and bitter, difference was over the nature of the land market. The liberal Association of Peasant Farmers and Agricultural Cooperatives of Russia (AKKOR) differed with rural conservatives over the right to convert rural land to urban land use, and the unregulated sale of land and land shares.70 AKKOR favored an unrestricted land market with the freedom to change land use, that is, the freedom to buy and sell land and to convert rural land use to urban land use.71 The APR opposed the “uncontrolled” sale and purchase of agricultural land, “which may lead to landlessness and the further destruction of the majority of peasants.” Its party platform advocated the “strict state

56 / the moral economy reconsidered Table 2.5 Policy positions of rural conservatives and liberals during Yeltsin period Issue Prioritize rural private sector Increase subsidies to large farming enterprises Expand farm privatization (Nizhnii model) Permit agricultural land sales Regulate wholesale market for inputs Food import protection Increase federal funding of rural infrastructure

Position of rural conservatives

Position of rural liberals

Oppose

Favor

Favor

Oppose

Oppose

Favor

Oppose

Favor

Favor

Oppose

Favor Favor

Favor Favor

regulation of land use” and proceeded from the principle “that land first and foremost is for those who work it.” Further, “the party is . . . against a new rich [class], created from land latifundia for personal enrichment.”72 These fundamental differences between liberals and conservatives were reflected in the stalemate in passing a federal Land Code, a bitter debate that endured for more than 7 years.73 A summary of policy differences between rural liberals and conservatives is indicated in table 2.5. Political Weaknesses of Rural Interests Both rural conservatives and rural liberals suffered from political weaknesses.74 The focus is on rural conservatives because they are alleged to have resisted reform the most. For rural liberals, the issue of resistance and reluctance to adapt was less important because liberals supported reform and were enthusiastic about new opportunities. To began with, it is important to remember that the 1993 Constitution created a political system that gave far greater powers to the executive branch while circumscribing the powers of the legislative branch, a fact that has been well documented and described by a number of authors.75 As a result, mere representation in national-level political institutions did not necessarily

why peasants adapt / 57

translate into political influence. For example, during the mid-1990s, the representatives of the APR, Alexander Nazarchuk and Alexander Zaveriukha were minister of agriculture and deputy prime minister, respectively, who were in charge of agriculture during 1994–1996. The APR also had a fairly significant representation in the State Duma, and the chairman of the Duma Committee on Agrarian Problems was an APR member.76 Despite this level of representation at the federal level, the APR was unable to stop the progress of rural reform and was not very successful in turning its preferences into policy. For example, during this time period, former state and collective farms completed reorganization, and a national program for farm privatization was introduced that divided large farms into several smaller, privately operated farms (based on the Nizhnii Novgorod model of farm privatization).77 Farm land was privatized, and land certificates were distributed. By late 1999, experts in Russia estimated that more than 80 percent of all farmland had been destatized. A land market emerged, though rudimentary. Starting in 1994, several hundred thousand rural land transactions occurred annually, and each year witnessed more and more transactions among private individuals. Furthermore, international food trade policy was liberalized, leading to increases in food imports. Finally, subsidies and monetary resource flows to agriculture declined precipitously. Moreover, even though APR representatives chaired the Duma Committee on Agrarian Problems during different sessions in the 1990s, the president retained the right of veto and was able to block the most important agrarian legislation. For example, several versions of the new Land Code that were passed in the Duma were vetoed by President Yeltsin, and starting in 1998 agrarian representatives in the State Duma attempted to assist food producers by legislating “price parity” between agricultural and industrial products, but were unsuccessful.78 A second factor was that the APR had inherent electoral weaknesses, namely the fact that they received minimal support among urban voters, particularly in the largest cities. For example, in the 1995 Duma elections, the APR received 0.3 percent of the vote in Moscow and 0.4 in St. Petersburg.79 Support for more liberal-minded candidates predominated in large cities and in industrial, urban areas. Moreover, the popularity of the APR, and thus its political support, declined over time. Nationwide, after the APR received 8 percent of the vote in the 1993 Duma election, it failed to cross the 5 percent threshold in the December 1995 election.80 In the 1999 Duma election, it joined an electoral alliance with FatherlandAll Russia, and in the December 2003 election, it ran as an independent

58 / the moral economy reconsidered

party but did not meet the threshold and therefore was not assigned any seats from its party list.81 These examples of political weaknesses meant that rural conservatives were ineffective in defending their interests. As a result, rural actors had to adapt their behavior because of the inability to block reform through political influence. The inability of rural interests, particularly rural conservatives, to turn policy preferences into state policy, or to stop the course of reform, is illustrated in table 2.6. Table 2.6 shows that rural conservatives were not able to win on the most important policy issues facing agrarian reform during the 1990s. Allegations of a “weak state” aside, the record shows that reform progressed despite elite opposition by the APR. Thus, ideological differences, a lack of political cohesion, and differences over policy preferences have been key factors in the political weakness of rural interests. Rural political weaknesses are important to the question of adaptation and change. Rural actors could not depend upon political strength to protect themselves from urban bias. Nor could rural actors expect that political strength would be able to achieve a continuation of Soviet era protections. Table 2.6

Agricultural interests and state policy: USSR and Russia Position of Agrarian Party of Russia

Position of Russian government Policy outcome up to 2000 up to 2000

Increase Increase production subsidies Farm Oppose privatization (Nizhnii model) Permit Oppose agricultural land sales Establish price Favor equivalence

Increase

Decrease

Decrease

Oppose

Favor

Occurred in selected regions

Oppose

Favor

Favor

Oppose

Regulate input Favor prices for farms Regulate food Favor retail prices Food import Favor protection

Favor

Oppose

Permitted according to regional law None—Draft law passed but not signed No regulation

Favor

Oppose

Favor

Oppose

Increase

Decrease

Issue

Soviet-era policy, pre-1990

Federal funding Increase of rural infrastructure

No regulation at federal level No quotas, but tariff system existed Federal funding declined

why peasants adapt / 59

In short, political strength could not be a shelter against the economic consequences of market reform. Stated another way, rural political weaknesses necessitated alternative response strategies to market reform since old behavior was no longer effective or beneficial. Conclusion What motivates peasant responses? In the moral economy model, the violation of peasant norms, values, and institutions that accompany the commercialization of agriculture may act as a stimulus, and often in the direction of resistance and even rebellion. In contemporary Russia, the commercialization of agriculture was much less an issue, given the fact that peasant households had been growing food for consumption and sale even during the decades of Soviet rule. Instead, urban bias and state withdrawal had an impact on the nature and degree of adaptation in rural Russia, but not in the way most analysts would expect. This chapter argued that Russia’s experience during agrarian reform suggests a different model, one that combines “giving” and “taking.” In this respect, reform policies gave new economic opportunity while urban bias/state withdrawal took away economic security and Soviet era protections. Thus, urban bias was an important catalyst for rural change, forcing rural actors to adapt and adjust their behavior, at the same time that reform offered alternatives in terms of behavioral choices. As reform marched forward, rural elites were unable to block the adoption of reform policies that changed the structure and function of the agricultural sector in significant ways. An analogy would be when a large Western company encounters economic difficulties and its financial status deteriorates. Companies change their corporate behavior by shaking up management, revamping sales and investment strategies, and reorganizing their operations. In the real world, failure to adapt to new economic conditions leads to insolvency.82 Therefore, a central argument that flows from this chapter is that while peasant–state relations worsened along a number of dimensions during the 1990s, this deterioration stimulated adaptation rather than stifled it. In short, urban bias and the inability to block its effects necessitated change. This interpretation is entirely consistent with farm reorganization patterns, in which the strongest farms (those with the least need) often reorganized formally, or not at all, while weak farms underwent the greatest changes.83 Patterns of adaptation among large agricultural enterprises are examined, in greater detail, in the next chapter.

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C h ap t e r 3 How Peasants Adapt: Large Farms and Farm Managers

Of the three main food producers in Russia—large farms, private farms, and households—it is clear that large farms were most affected by state urban bias and the elements thereof. During the 1990s, large farms experienced significant and prolonged reductions in gross output, their contribution to the gross domestic product declined, farm debt increased, and the number of unprofitable farms skyrocketed.1 Given the unfavorable macroeconomic and political environment in which large farms operated during much of the 1990s, it would be very easy to conclude that there was little adaptation in the Russian countryside. Indeed, some Western analysts have concluded that this is exactly the case, arguing that Russia has experienced “false transformations” or pro forma institutional change.2 Unfortunately, with few exceptions, the issue of rural change has not been explored systematically. One reason for this oversight is the relative difficulty of conducting research in rural areas. Unlike urban areas, rural areas are quite primitive, they are difficult to get to, logistics are complicated, and permission from sel’sovets (rural administrations) to work in villages can be problematic. Thus, at best, we are often left without a comprehensive, coherent picture of rural reality. Urban orientations to reform and adaptive responses have been investigated to a much greater degree. Even so, there is little academic consensus. Some studies by Western analysts have concluded that privatization is supported, while others find little support.3 If our knowledge about orientations to market reforms and privatization is cloudy for Russia’s urban sector, it is even more so for the rural sector. As a result, a conventional wisdom has emerged out of that vacuum of knowledge, a conventional wisdom that draws implicitly from the moral economy approach. The conventional wisdom maintains that the rural population, and particularly farm managers, have been largely opposed to agrarian reforms entailing privatization and marketization. From this basis, the conventional wisdom argues that little change has occurred in the Russian countryside.

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The purpose of this chapter is to present evidence about adaptation among large agricultural enterprises and farm managers, arguing that conventional wisdom has led to an incorrect understanding of the ongoing transformative processes during Russian agrarian reform. In doing so, the unit of analysis changes from the state to farms and farm managers. This chapter addresses three main questions: (1) to what extent have market reforms been embraced, at least by some large farms and farm managers? (2) to what extent have managerial orientations been opportunistic? and (3) what is the evidence of adaptation and change on large farms and among farm managers? The chapter argues that significant adaptation—both attitudinal and behavioral—has occurred, and uses considerable survey and other data to substantiate the argument. What makes rural adaptive behaviors and risk taking all the more impressive and significant is the fact that they occurred in a social, economic, and political environment that was hostile, as discussed in the previous chapter. If this chapter is successful, it will force a rethinking of the view that sees the rural elite as resistant to change and unwilling to adapt. The remainder of the chapter is organized as follows. The section below summarizes reform initiatives and policies. This review is important to create a standard by which managerial “resistance” can be judged, and to create a foundation from which managers’ responses to reform may be discussed.4 The following section then examines the orientations and behavior by farm managers toward privatization and marketization. In particular, four specific arguments that compose the core of conventional wisdom about farm managers are examined, with accompanying counterevidence for each argument, drawing heavily on survey data from the Russian countryside. The overall thrust of the argument is that more adaptation took place on large farms and among farm managers than has been appreciated. In this respect, this chapter argues that a more accurate view of managerial behavior to reform is that responses were opportunistic and not merely resistant. A Review of Reform Initiatives and Policies Russia, similar to other former communist nations, faced a dilemma when approaching privatization. Namely, there were political and economic necessities to privatize, but the problem was how to put productive assets into individual hands when the individuals’ savings accounts were insufficient to permit the selling off of land and farm assets. Throughout the former communist world, different paths to privatization were chosen, some choosing to sell property shares, while others distributed

large farms and farm managers / 63

shares free of charge.5 Russian reformers chose free distribution, and vouchers were distributed to the population at large, while industrial enterprises were divided according to a share system.6 Jerry Hough summarizes the politics and the problems of industrial privatization: There were two major arguments for distributing property to the population for free or basically free through a voucher system, but, unfortunately, the arguments were inconsistent with each other. The first—and naturally the most frequently used in public—emphasized equity and political factors. All would be treated equally regardless of where they worked; everyone would become a share-owning capitalist. . . . The second argument for voucher privatization was proclaimed less loudly because it was politically less appealing. The reformers expected the vouchers to flow into the hands of those with financial skills and resources either through their own purchase of vouchers or through the creation of mutual funds. . . . The ugly truth about the Russian privatization program . . . is that the neoliberal Russian economic reformers knew that they did not have the managerial skills to be the most efficient owners. . . . Hence it was even more necessary for them to engage in grabification than the insiders of the Gorbachev era.7

In the agricultural sector, the same type of “grabification” witnessed in the industrial sphere was precluded by the fact that collective farm statutes prohibited any one person from owning more than three hectares of farmland. Some authors write of the absence of “secure property rights” for rural dwellers and their putative effects on hindering reform progress.8 In reality, farm members had much more secure rights than industrial workers. In industry, after privatization, the new “collective ownership” usually did not issue share certificates, and enterprise employees had no legal proof of their “ownership.”9 In contrast, in agriculture, land users of all types—farm members, private farmers, operators of private plots, collective fruit or vegetable gardens, dacha plot owners, and the like—were issued certificates of ownership for their land. Subsequently, land deeds were distributed that acted as the legal basis for land transactions. In effect, rural dwellers were more protected in their property rights than were urban employees. The review of reform initiatives consists of three subsections, beginning with state urban bias, which created not only the need for adaptation but also influenced specific adaptive outcomes. The discussion begins by considering how each of the elements of state urban bias influenced behavior, and with it, reform outcomes. The second subsection examines some of the foundations of reform legislation. Through a series of presidential decrees and governmental resolutions (that are not subject to

64 / the moral economy reconsidered

legislative oversight or veto), the legal parameters of reform were defined to which rural actors were forced to comply. Changes in formal legal institutions compelled state and collective farms to reorganize and unprofitable farms to disband or consolidate with a stronger farm. As explained below, farms could chose from a variety of different organizational and legal forms. The third subsection considers changes in formal administrative relations at the farm and village level. Responses to Urban Bias The primary goal of agrarian reform was to make the rural economy, and in particular, large farms, responsive to economic signals. To a large extent, this economic goal was accomplished. In an ideal world, farm reorganization would have stimulated an increase in farm production, increased the attractiveness of farms for investment capital, and improved the financial-economic status of large farms during the 1990s. The ideal-world scenario was not achieved because the macroeconomic environment was hostile. As was argued in chapter 2, shock therapy created economic and psychological necessities to change behaviors, but carried within it policies of intensified urban bias that undermined production capacity. In particular, the elements of state urban bias led to specific behavioral responses, some of which supported the direction of reform, others undermined the goals of reform. A short review appears below: 1. Price scissors led to changes in production mix and gave producers an incentive to (a) reduce production of food groups where costs were high and purchase prices low; (b) curtail purchases of agricultural equipment and machinery; (c) reduce purchases and application of mineral fertilizers; and (d) reduce amount of land under cultivation. 2. Low protection from food imports motivated shifts in production to products that were price competitive or without competition. 3. Low domestic purchase prices supported shifts in production to products whose prices were higher. (a) Livestock herds were reduced. (b) During the 1990s, the amount of land used for grain products for consumption declined significantly, by 25 percent. However, the amount of land used for the growing of “technical

large farms and farm managers / 65

crops,” or, to put it differently, those with an industrial use, increased more than 27 percent.10 4. Reductions in capital investments led to (a) a reduction in improvements of land; (b) a curtailment in capital investments in rural infrastructure; and (c) a reduction of resources to rural social services. Thus, urban bias had a definite and measurable impact on domestic production, particularly from large agricultural enterprises. Changes in production mix and production levels in turn affected dietary structure and per capita consumption.11

Foundations of Reform Legislation Legislation also influenced the course and nature of reform. Although it is common to read about “the weak state” in Western analyses, the reality is that, at least in agriculture, Yeltsin had his way and the agrarian system was restructured along the lines preferred by liberal reformers (which is not to say that the agricultural system operated according to reformers’ desires or entirely on market principles). The agricultural system that existed when Putin assumed the presidency in 2000 was the result of the legal foundation laid by Yeltsin’s decrees during the first half of the 1990s. The fact is that the Russian agricultural system was significantly different in 2000 than in 1991, as was shown previously. While some analysts measure reform “success” by the degree of decollectivization, total decollectivization was never a realistic goal, given the fact that the country had to eat. Nor was total decollectivization a policy goal of the Yeltsin team of reformers, as reform policies were never defined in such a way that decollectivization was required. In 1994, when advisors around Yeltsin tried to push him toward forceful decollectivization, this attempt was widely condemned in academic and political circles in Russia.12 Analysts who argue that the lack of decollectivization is a reflection of “failed” reforms or rural “resistance” are simply wrong because they fail to consider the legal, social, economic, and political environments. Although a series of reform laws was adopted in late 1990, the most dramatic legislation was in December 1991, with several other important pieces of legislation throughout 1992–1993.13 Beginning in December 1991, a series of presidential decrees and government

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resolutions fundamentally reshaped the nature of the rural economy. By the beginning of 1994, the post-Soviet rural economic system was redefined, and carried with it rewards for acceptable behavior and sanctions for unacceptable behavior. The following review centers on several important legal acts. (1) December 1991: Russian President Boris Yeltsin signed a decree at the end of December 1991 that allowed collective and state farm members to withdraw from their parent farm with land shares and property shares.14 Land and property shares were distributed to farm workers and pensioners. At first, shares were not equal in size for every person, but were calculated according to the type of work that had been performed and the salary level.15 Subsequently, a government resolution in September 1992 equalized land and property shares for all farm members and farm pensioners, as well as extended share rights to service personnel of the farm. Yeltsin’s decree not only divided land and property but also allowed owners to exchange their shares, or to lease the rights to their shares. The decree also allowed farm members to sell their land plots “to other citizens” if they retired from farming, inherited the plot, wanted to organize a private farm elsewhere, or intended to invest the proceeds in rural processing, retail, construction, or business. However, at this time the right to buy and sell land was still restricted. (2) December 1991: Farm restructuring of large agricultural enterprises in Russia was defined by a government resolution entitled “On the Procedure for the Reorganization of Collective and State Farms.”16 The resolution was intended to privatize collective enterprises and their farm land.17 The resolution instructed all state and collective farms to re-register themselves by the end of March 1992, and if the farm was unprofitable, to reorganize (the time frame was eventually extended to January 1, 1994). The timing of the reorganization was difficult because while farms were proceeding with the legalities of re-registering and distributing land and property shares, they also had responsibility for preparing the spring sowing at a time when agriculture remained under state control and fulfillment of state orders (production quotas) was still mandatory.18 To oversee farm reorganization, privatization committees were created at the oblast and raion level, as well as within every state farm and collective farm. Managers of collective farms and directors of state farms had “personal responsibility” for the fulfillment of this resolution.19 Farm managers were given seats on local “malyy soviets” that were local bodies that

large farms and farm managers / 67

decided land distribution issues. State and collective farms had a number of different options to choose from when undergoing the reorganization process, and these choices have been described in detail elsewhere.20 With farm reorganization, farm members were offered the opportunity to depart from a state or collective farm with both land and property shares. However, even with the freedom of choice, farm members did not decollectivize. Thus, at the end of farm reorganization in 1994, an overwhelming percentage of farms lost only one to three families.21 Most large farms, about 84 percent, either retained their collective farm status or became closed joint stock farms that allowed the exchange of shares only among farm members.22 (3) March 1992: Point 14 of the December 1991 government resolution could have meant the closure of large numbers of state and collective farms because it required farms that were unable to pay off their debts and meet their payrolls to be declared bankrupt by February 1, 1992.23 Chronically unprofitable farms were to be liquidated during the first quarter of 1992—equal to approximately 2,500–3,000 farms out of more than 25,500 large farms in existence at the end of 1991. Because the closure of a large number of large farms was neither politically nor economically feasible, in March 1992, the Russian government adopted another resolution that allowed state and collective farms to retain their previous status, that is, to remain state and collective farms, if a meeting of farm members so voted.24 Thus, following the March 1992 resolution, farms were given an “out” that allowed them to avoid having to disband. (4) October 1993: On October 27, 1993, President Yeltsin issued a decree that served as the cornerstone of land reform in Russia.25 The October 1993 decree instructed that members of state and collective farms were to receive a certificate (svidetel’stvo) of land ownership entitling them to a share of the farm’s land.26 Previously, a farm member “owned” a land share in principle, but did not receive the land (and in fact did not know its location) unless he departed from the parent farm. This certificate was a legal document for purchasing, selling, leasing, exchanging, or mortgaging land.27 In addition, the October 1993 decree annulled previous restrictions on land sales and allowed the owner of land shares to sell his land allotment. Some restrictions did apply on Yeltsin’s land market, for instance, that land shares were to be offered to other members of the farm first, before “outsiders” were eligible to purchase the shares. In addition, agricultural land had to remain in agricultural use. These aspects of Yeltsin’s decree remained key points of contention in the debates over the new Land Code for the rest of the decade.

68 / the moral economy reconsidered Table 3.1 Distribution of agricultural enterprises by form of organization in January 2000 (in percent)

Type of enterprise Open joint stock farm Closed joint stock farm Partnership with limited responsibility Association of private farms Agricultural cooperatives Collective farms Collective enterprises State farms State enterprises Other

Percentage of agricultural enterprises with that form of organization 3.8 14.3 13.7 2.6 33.0 13.0 5.5 3.7 5.3 5.1

Source: Agropromyshlennyi kompleks Rossii (Moscow: Ministry of Agriculture and Food, 2000), p. 3. The data are drawn from 74 of Russia’s 89 regions.

(5) In late 1993, a farm privatization program was introduced in Nizhnii Novgorod oblast that was funded and supported by the International Finance Corporation and the British Know-How Fund.28 Based upon this project, the Nizhnii Novgorod model of farm privatization was adopted as a federal program in mid-1994, called the “Program of Land Privatization and Reorganization of Agricultural Enterprises.”29 By early 2000, the Nizhnii model had been introduced into 11 oblasts, encompassing the privatization of several hundred collective farms. Moreover, large agricultural enterprises themselves continued to refine their form of ownership and operation. Thus, by the time Vladimir Putin became the acting president in January 2000, the structure of large agricultural enterprises was characterized by variety. Table 3.1 illustrates the distribution of large agricultural enterprises by their legal form of organization. In summary, reform legislation during the Yeltsin period produced a rural sector in which large farms reorganized themselves but were not required to disband unless they were chronically unprofitable. Large farms, by retaining their previous status or similar internal organization, were permitted to continue to dominate the countryside, at least physically.

large farms and farm managers / 69

Land share distribution was egalitarian. Relatively few farm members took advantage of the right to leave the farm due to the high risks involved in private farming and the hostile macroeconomic environment. A land market existed but was both rudimentary and regulated. A voluntary farm privatization program was introduced, but by the end of the Yeltsin period it had affected only a few hundred of Russia’s 27,000 large farms, in large part because the special conditions that were applied to the pilot farms were too expensive and could not be duplicated elsewhere for political and economic reasons. These aspects of rural reform may be traced directly to the nature of reform legislation as defined by the executive branch under Yeltsin, and are not reflections of farm manager resistance to reform. Farm and Village Level Administrative Change Reform brought significant change in the relationship between large farms and the local administration (either village or raion). Previously, local governments essentially controlled state and collective farms and performed clerical and administrative duties for them. Farms were tightly controlled by a bureaucratic vertical organizational structure composed of party and local government personnel. In turn, the raion bureaucratic structure in charge of agriculture was controlled by the oblast upravlenie or otdel. In the post-Soviet period, this vertical organization structure has changed: raion and village administrations are much less controlled from above and are able to forge horizontal ties with administrations in other areas. Farms in turn are much more independent from raion and village control and are free to establish either horizontal or vertical links in the production or marketing spheres. Finally, village residents have been empowered with resources (the ability to acquire land and conduct land transactions) that in turn increase their freedom from both large farms and raion administrations. Rural residents, like farms, are able to create horizontal or vertical links outside their village.30 Adaptation on Large Farms and Among Farm Managers The analysis now turns to adaptation on large farms. In the following sections several elements of the conventional wisdom are examined. Each argument is briefly reviewed, followed by a section of counterevidence. Taken together, the sections portray a different picture of rural change than that depicted by the conventional wisdom. The argument is controversial and likely to displease many people, but I am firmly

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convinced that the “lack of restructuring” position is often the result of Western misunderstanding, unrealistic expectations, and a lack of appreciation for the larger political and economic environment in Russia. Large agricultural enterprises remain the dominant economic actor in the Russian countryside, employing more than 8.3 million workers in 2000 (about 13 percent of the national labor force).31 Although the large farms’ contribution to the nation’s food supply decreased during the 1990s, they still accounted for about 43 percent of the ruble value of food output in Russia at the turn of the century.32 Following the financial crisis of 1998, production on large farms began to increase, thus validating President Putin’s stated intent to revive food output first and foremost on large farms. Furthermore, large farms are important because they tend to sell both higher volumes and higher percentages of production and therefore have primary responsibility for feeding the nation. As is argued in a subsequent chapter, a consideration of large farms is necessary because they are likely to lead the rural revival in Russia and will remain the backbone of Russian agriculture. Argument 1: Farm Managers Opposed Agrarian Reform in General Research in the industrial sphere concluded that industrial managers emerged as “winners” during the course of reform.33 Industrial privatization progressed because managers supported it, and they were able to create favorable conditions for “exit” from the state system.34 In contrast, the question of the role and orientation of farm managers has been one of the most controversial subjects surrounding Russian agrarian reform. There is, of course, a great deal of variance in the attitudes of farm managers. Some managers have “progressive” attitudes and others are rooted in the past. Variance is influenced by education level, age, condition of the farm, location of the farm, or other socioeconomic variables.35 Farm managerial attitudes and their adaptive strategies during reform remain important subjects for future research. The moral economy approach emphasizes opposition to agrarian and land reforms, and included in that undifferentiated view are the rural elite. Farm managers are said to represent the “nomenklatura” from the Soviet period who want to hold onto their power. Perhaps the most explicit of the early analyses of agrarian reform was written by Don Van Atta, who argued: Privatization of agricultural land, equipment and structures has been undertaken to break the apparatus’ power base. Since many members of the former privileged classes are strenuously resisting attacks on their

large farms and farm managers / 71 power and position, the agrarian reform has become a major, immediate political issue, in which the stakes are far higher than just the future organizational structure of agricultural production. . . . Because they understood that even a few independent peasant farms or voluntary rural cooperatives threatened their power, the most outspoken defenders of the old order opposed any changes in the kolkhoz–sovkhoz monopoly over agriculture.36

These ideas found resonance in later works as well. According to this line of analysis, rural conservatism runs the gamut from legal opposition to reform, to blocking behavior, to embedded cultural values, all of which hinder rural adaptation. In the legal realm, a common line of argumentation is that farms have utilized loopholes in reform legislation and have escaped real reform. Due to the lack of sufficient legislation, in the words of one commentator, reform has been “cosmetic.”37 Andrew Barnes contrasted farm managers’ orientations with those of urban factory managers, arguing that “managers in the agricultural sector did not want to lose control of the resources under their influence. . . . Because of what they stood to lose, the agrarian managers used their considerable resources to block property rights reform outright.”38 Finally, advocates of these views use several pieces of evidence to support their view. For example, they point to farm manager resistance to land distribution during 1992–1993, and to the fact that large farms continue to use labor brigades as their primary form of labor organization.39 Others have argued that the attempts of the “agricultural lobby,” to maintain subsidies, credits, and investments represent antireform behavior.40 The World Bank has contributed to the conventional wisdom. Its 1994 survey of five regions, subsequently published in 1996, cited low acceptance rates for land ownership and a land market among farm managers.41 Counterevidence Commonly held views about farm managers are misleading because such analyses commit several analytical mistakes: they ignore change over time, they fail to account for declining strength of opposition, and they ignore how farm managers have adapted to and even benefited from reform. In general, there is a great deal of misunderstanding about what constitutes managerial “resistance.” The first counterpoint concerns the relative power of farm managers in the Soviet and post-Soviet periods. The comment by Barnes about what farm managers stood to lose is not quite correct. In comparison to the Soviet period, farm managers in the post-Soviet period have much more to gain by embracing

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reform, a fact they eventually discovered. What exactly were the “powers” of the Soviet farm manager? The farm manager was strictly controlled by raion and oblast party officials.42 Moreover, the typical farm manager was poorly paid relative to his education and expertise; he had little input into production decisions on his farm; he was instructed where and to whom to sell, and at what price; he had very circumscribed leverage inside his farm as the farm wage structure was centrally defined; and he had limited means to enforce farm discipline. Stories are legendary about heavy drinking, stealing, and a general lack of discipline on Soviet farms. Either the farm manager condoned such activity— highly unlikely since bonuses and job security were tied to meeting production and delivery quotas—or he was relatively powerless to stop it. It is precisely this reason why privatization was hailed as a means to increase worker responsibility while reducing theft and drinking.43 Moreover, given the official Soviet policy of “full employment,” it was difficult to fire a laggard worker. Soviet farm managers mostly had power over who would get which farm jobs, decisions over the assignment of housing, the power to oversee the calculation of “work days,” the granting of permission for vacation or temporary leave of absences from the farm, allowing job transfers, and other mundane aspects of farm operations.44 It is for these reasons that Peter Rutland paints a picture of farm managers being acted upon, rather than being power brokers in themselves in the 1970s: The key figure was the raikom first secretary, who wielded almost mythical power over his territory. Typically, the relationship between raikom officials and farm directors was antagonistic. . . . Farm directors tended to enjoy lower prestige and status than their counterparts in industry. This was particularly true of kolkhoz chairmen. . . . Rates of turnover of farm directors were often unacceptably high.45

All of these conditions began to change as agrarian reform unfolded. Under Gorbachev, farms gained limited autonomy, although it was clear that they remained responsible to officials from above.46 In the postSoviet period, farm managers have gained true autonomy, independence, and responsibility. As a result, farm managers in the post-Soviet period have much more freedom than during the Soviet period. In the post-Soviet period, farm managers are able to decide production mix, they can travel abroad to learn new techniques and technologies, they can establish direct links with processors, either foreign or domestic, and they are freer to search out the best wholesale prices for their production. Especially interesting is the research by Max Spoor and

large farms and farm managers / 73

Oane Visser who looked specifically at the patterns of adaptation on large farms. These two researchers surveyed large farms in Rostov and Pskov oblasts. They found that although structural transformation sometimes lagged, large farms showed adaptations to the environment that the authors termed “coping” mechanisms, for instance, by searching out new trading partners either within the oblast or in other oblasts. Overall, the lack of a market infrastructure and market environment influenced, to a large degree, the operation and nature of choices that farm managers had, but these were factors that were and are beyond the control of farm managers.47 The second point is that it is necessary to consider the temporal dimension, remembering that reform policies were still being defined during the course of 1992. This often forgotten fact affected the pace of reform and rates of compliance with reform directives. Even then, it is well known that decrees and policies emanating from Moscow were sometimes vague, or were contradictory to either legislation considered by the Duma or to regional legislation. It is unclear whether it is reasonable to argue about “resistance” when reform policies were still unknown or unclear. Thus, it is normal that rates of compliance would be lower at the beginning of the reform period, but as reform policies became clearer, compliance increased. Take, for example, farm reorganization at the national level that began in January 1992 and according to original plans was to be completed by March 1992 (it subsequently extended to 1994). By July 1, 1992, only one-third of all state and collective farms had reorganized.48 Once the rules of reorganization were fully defined, however, rates of compliance accelerated. By October 1, 1993, 77 percent of all state and collective farms had reorganized, a percentage that reached 87 percent on March 1, 1993, and 91 percent on July 1, 1993.49 Belgorod oblast may be used as a further example to show how reform played out in the regions. Government resolutions and the presidential decree to privatize land and reorganize large farms were issued at the end of December 1991, as noted previously. On January 21, 1992, in Belgorod oblast, the head of the oblast administration issued resolution number 75 which established an oblast commission on land privatization, with parallel raion commissions.50 In early March 1992, the terms of farm reorganization were changed and refined. In addition, presidential decree number 213 in March 1992 instructed rural administrations to distribute land free of charge, using differentiated land share sizes by raion according to the size of the population. In mid-March 1992, the administration in Belgorod oblast issued instructions to raion officials to comply with these instructions.51 In May 1992, a special land

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fund was created in Belgorod oblast for those wishing to undertake private farming.52 In September 1992, the rules governing farm reorganization were changed again, as a federal government resolution instructed that during farm reorganization all farm members (including pensioners) were to be given equal land shares. Those farms that distributed land prior to September 1992 had to subsequently redistribute following the issuance of the September resolution. Thus, during 1992, farm leaders were instructed to distribute land and property, but guidance came late, and the rules were often changing. Furthermore, there are descriptions in raion newspapers of rural administrators’ “resistance” over the distribution of land. For example, in Krasnogvardeiskii raion (Belgorod oblast), in October 1992, it was noted that sel’sovet administrations in the raion were working “very poorly” and had only distributed land certificates to 6 percent of eligible recipients.53 Western analysts often seize upon such evidence, as resistance, forgetting that in 1992, the reform situation was quite confused. For instance, interviews at oblast and city land committees in Kostroma oblast showed that agricultural land had yet to be cadastred, the requisite legal forms had yet to be distributed (and Kostroma was not alone), and land reform officials lacked computer programs (and even computers) to keep track of who had been assigned which land. The third point is that some resistance was normal and to be expected. The question is whether resistance became the defining characteristic of reform, and to this question, the answer is clearly no. Therefore, it is reasonable to stipulate that some farm manager resistance was present early in the reform period. Farm managers responded “rationally” (from their perspective), given the environment, incentives, and the nature of early reform policies. In this regard, however, it is important to note that Russian farm managers’ early responses were not unique. Comparatively, there are other examples of rural elite resistance in nations undergoing a transition from autocracy to democracy and significant changes in social policies. For instance, agrarian reform in Japan following World War II has relevance for Russia as both nations attempted significant social, economic and political change following defeat—Japan lost a military war, Russia lost the struggle of political and economic systems during the Cold War. Japanese agrarian reform originally arose in response to chronic food shortages following the war, and the first indication that the Japanese government was interested in reform came within two weeks after its surrender to Allied forces. The main thrust of Japanese agrarian reforms began in 1946 and continued to 1950, changing the property rights of some 6 million families. Japanese agrarian reforms

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culminated in 1952 with the adoption of the Agricultural Land Law that strengthened the rights of tenants, controlled land rents, controlled the land market, and restricted the rights of landlords.54 The most notable inroads into the power of Japanese landlords occurred during the early period of postwar reform, when absentee landlordism was virtually wiped out through compulsory sales of land to tenants (there was a clause that allowed absentee ownership of 2.45 hectares of land), and through quantitative limits on the size of land holdings. During 1946–1950, landlords tried to resist reform and then to manipulate the process. One reason for landlord resistance rests with the fact that state-regulated prices that landlords were paid for their land were very low, and that landlords were not even paid in cash but rather bonds that yielded less than 4 percent annually, at a time when the yen was depreciating at a more rapid rate.55 Landlords in Japan used two strategies to resist reform. One was explicit resistance, that is, failure to give up land. The second strategy employed by landlords was by retaining influence at the village level. Reform legislation permitted landlords to comprise up to 30 percent of local land reform commissions—the bodies that decided who would get which land. Thus, landlords tried to exert influence from within the commissions by finding loyal tenants who could speak for landlords and represent their interests.56 Landlords also attempted to exert influence through dual membership: one seat in a land reform commission and another in local government, a private firm, or the next highest level land reform commission. In order to prohibit overlapping membership by landlords, legislation was adopted in January and July 1947.57 These two pieces of legislation significantly reduced, but did not eliminate, the power of landlords within the land commission system. Even after this legislation, landlords exerted significant influence by gaining the chairmanship of land commissions. When landlords began to lose these chairs, they then resorted to intimidation of peasants, filing suits against tenants to return rights of cultivation, and even filing suits against the government challenging the constitutionality of reform. In 1952, the Agricultural Land Law was adopted to further reduce the power of landlords and to prevent their resurrection. This law strictly controlled the farmland market. Size limits were placed on the amount of land that could be owned and sold. A person could own no more than 3 hectares of land. Land could be sold at market prices as long as the land holdings did not exceed this limit. If an owner wanted to sell his land, only the tenant-cultivator was allowed to purchase it.58 Land transactions were subject to the approval of local authorities.

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Tenancy rights were heavily protected, making it virtually impossible to evict land tenants. Land rents were set quite low and were strictly controlled. Absentee landlordism was forbidden. This law defined the basic structure of Japanese agriculture. In 1962, Agricultural Land Law was amended that relaxed the upper limits on farmland holdings. However, other aspects of the 1952 law, such as the prohibition on absentee landlords and strong tenancy rights, remained intact. Thus, during Japanese agrarian reform, reform legislation and political levers were used to withdraw land from the control of landlords for the purpose of redistribution. As a result of state actions, the influence of landlords was reduced over time, their capacity to resist reforms diminished, and the distribution of rural political power was restructured. Similarly, in Russia, it is reasonable to argue that farm manager orientations might have been resistant at the beginning of reform because it was not entirely clear what “farm reorganization” meant or how far it would go. Early reform rhetoric commonly spoke of the end of collective farms, and former president Yeltsin himself had to deny that this was his intent.59 Further, some manager resistance arose because of the way reform was being conducted. For example, Vice President Alexander Rutskoi was interviewed in March 1992, at which time he denounced the fact that: in a number of regions reorganization of farms is proceeding as a “campaign.” . . . Under the slogan of privatization, joint stock farms and peasant farms are encouraged to plunder profitable farms and to distribute them into the hands of people who seldom have a direct relation to the land. Such a practice brings losses not only to agroindustrial enterprises but to the entire economy of Russia.60

Comparable to Japan, managerial resistance in Russia was most evident early in the reform process but dissipated over time. Like Japan, the Russian state was strong in agriculture, and used various levers to enforce compliance with reform policies. For example, in May 1992, the head of Belgorod oblast, V. Berestovoi, received a personal warning from President Yeltsin about “serious shortcomings” in land distribution and privatization in the oblast. Berestovoi was reminded that he had “personal responsibility” for fulfillment of reform decrees, and he was given 2 months to correct the situation.61 The effects of the warning are evident. In January 1992, Belgorod oblast, which is one of the most productive agricultural regions in Russia, had the fewest number of private farms in the Central Black Earth economic region (CBE), accounting for less than 12 percent of all private farms in the CBE. By January 1993,

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Belgorod had the third highest number of private farms and accounted for more than 16 percent of private farms in the CBE.62 This growth was real, not just relative, as the number of private farms in the CBE increased from 2,368 on January 1, 1992 to 10,688 on January 1, 1993. But the comparison with Japan has limitations because it is important to note that Russian reform policies created incentives that allowed farm managers to benefit. That is to say, both “carrots and sticks” were used toward farm managers. These themes will be developed further in a subsequent section. Argument 2: Nothing Changed on Large Farms Following Reorganization Following farm reorganization that occurred during 1992–1994, it was sometimes argued by Western analysts that large agricultural enterprises (successors to state and collective farms) did not adapt to new legal, financial, or marketing conditions. Maria Amelina complained that because large agricultural enterprises “refuse either to restructure or disappear,” there has been no reform.63 According to this view, large agricultural enterprises are production relics, dinosaurs, left over from the Soviet period, which have not reformed their operations, and yet they refuse to disappear.64 This same analyst attempts to explain the view that perceives no change: “[farm managers’] participation in the traditional exchange chain [with local administrators] allows managers to continue with production and managerial practices without changing the skills mix, keeping accumulated skills and associations current and preserving them from being devalued by the new market paradigm.”65 Moreover, the conventional wisdom considers “cosmetic” farm reorganization as resistance, that is, large farms tried to remain intact and often merely changed their legal status but not operations. However, this argument ignores the fact that reform policies allowed farms that were operating profitably to remain intact, and when reform began, only about 5 percent of farms were unprofitable. The number of unprofitable farms only skyrocketed as the effects of shock therapy deepened. In addition, this view neglects to take into account the fact that during 1991–1993 large farms were still required to fulfill state orders by delivering a certain quantity of their output to processing points.66 In the Soviet period, farm managers’ bonuses, not to mention job security, depended upon plan fulfillment. During the early period of reform in post-Soviet Russia, it was not clear to managers if nonfulfillment of planned sale quotas would result in job termination or what the consequence would be. In any event, nondelivery was politically risky and

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undermined personal interest. Jerry Hough aptly summarizes the situation: Yeltsin created a classic politicized economy. An orderly bureaucratized economy was replaced by one ruled through personalistic, patrimonial bureaucracies by top officials without job security who were preoccupied with palace politics and the acquisition of property. Those with successful economic enterprises had no property right in their output, but were forced to give subsidies to others. Those in economic difficulties had to receive subsidies awarded not by some impersonal formula, but through personal favor. The subsidies were made in forms that made them bankrupt. Hence they had no secure property rights of any kind. The line between personal and official was obliterated, and everyone was motivated to concentrate on promoting short-term personal interests and seeking political favor.67

Not only did farm managers have a vested interest in keeping their farms intact in order to meet state-defined delivery quotas, but they also had a vested interest to ensure their own future. In this respect, farm managers acted very similar to industrial managers and other economic actors during reform, who tried to obtain ownership of the best productive assets.68 In one example, the leadership of the collective farm “Kirova” in Krasnogvardeiskii raion (Belgorod oblast), privatized for themselves 16 out of 27 transport vehicles possessed by the farm.69 There is some duplicity on the part of Western analysts who see such actions as “resistance” or “exploitation” of reform. Reform was intended to create a new class of rural entrepreneurs, and in fact many farm managers and specialists, who established private farms during 1991–1992, became among the strongest and most productive private farmers. Statistical evidence is clear that private farms that started earlier in the 1990s were significantly better equipped than farms that were created later in the decade.70 But the means to productivity—obtaining the best through privatization—was often condemned by Western analysts. Critics who assert large farms have not changed their operations significantly base their arguments on several observations: (1) the number of large agricultural enterprises in 2000 had actually increased in comparison to 1992;71 (2) the decrease in the number of farm workers was less than the decrease in food output from large farms; (3) that labor brigades remain a primary form of labor organization on many large farms; and (4) that farm managers attempt to “protect” farm members from the worst consequences of marketization.72 Despite the suggestive nature of these points, when one considers the fact that foreign investment in Russian agriculture has not been

large farms and farm managers / 79

significant,73 that domestic investment in the agro-industrial complex has declined precipitously since 1992, that commercial banks have been extremely reluctant to invest in the rural sector, that during the 1990s Russia lacked an adequate credit system, and that farm debt increased dramatically, it is clear that adaptive opportunities and financial resources were constrained, making any farm adaptation all the more impressive.74 Had those key-supporting elements of reform been in place, farm restructuring would have been much more obvious and significant. Even so, critics who assert that no change has occurred may be answered through several points of counterevidence. Counterevidence: An Overview One continuity has been the retention of work brigades as the basis for labor organization on large farms. However, besides that continuity, there are several significant changes to note at the macro level. For example, the wage system has been revised to reflect skill differences, and wage levels are more tied to output. Dividends are paid to farm employees and linked to the farm’s finances. Moreover, large farms exhibit more sensitivity to the price of basic inputs, and during the 1990s, reduced their consumption of inputs significantly. It is hard to understand how large farms could cultivate less land, use less fertilizer, have less farm machinery, consume less electricity, receive lower levels of subsidies, have greater financial responsibility for capital investment and rural infrastructure, market their food output through different channels, have fewer workers, and not change their internal operations, as some have suggested.75 It is furthermore difficult to imagine how negative signals could not have an effect on operations and behavior on large farms. To illustrate change on large farms for Russia as a whole, a scheme of how large farms have changed their internal and external operations is illustrated in table 3.2. Generally speaking, a farm’s potential for adaptation is influenced by its financial and economic strength. A survey of reorganized farms in several oblasts found that almost one-third reported a decrease in drinking, 33 percent reported a reduction in theft, 46 percent reported improved use of resources, and more than 25 percent reported improved worker responsibility.76 A Russian scholar at the Northwest Institute for Agricultural Economics in St. Petersburg analyzed agricultural enterprises in Leningrad oblast and divided them into four categories based upon their financial strength. The first category includes those enterprises that are profitable and solvent. The second category includes those enterprises that are currently not profitable but which have a reasonable chance to become

80 / the moral economy reconsidered Table 3.2 Internal and external operational changes in large agricultural enterprises Internal changes in farm operations

External changes in farm operations

Wage rates determined by farm council Increased wage stratification

Change in marketing strategies Ending of farm-level sales quotas, plans Farm finds own domestic buyers

Distribution of land shares to farm personnel Distribution of property shares to farm personnel Limited rights of property disposal Land leasing among land share holders Farm management is profit-oriented Loss of job security Farm manager elected by farm members

Farms make direct contact with foreign buyers Purchase prices are negotiated and market influenced Change in trade channels and trade partners Regional movement toward vertical integration Reduction/ending of federal production subsidies New relations between farms and private farmers

Emergence of limited land market Curtailment of social services provided by farm Change in cropping patterns Production autonomy Payment of dividends to farm personnel Sources: Constructed from various surveys, personal interviews, and articles.

profitable in the future if they receive support. The third group includes enterprises that are unprofitable and have relatively little chance of becoming profitable or solvent. Finally, the last group consists of those enterprises that are unprofitable and have no chance for profitability.77 A different Russian scholar used a similar scheme to divide large enterprises into three categories: (1) 22 percent of large farms are financially sound; (2) 17 percent have temporary balance of payments problems; and (3) 61 percent of large farms have chronic financial problems and are unable to pay their bills. In this latter category, 18 percent have debts that exceed earnings by two times, and 27 percent are de facto bankrupt, with debt four times earnings.78 Significant differences have appeared between stronger and weaker farms. Stronger farms produce disproportionately more food, have better financial conditions, and presumably, have undertaken more change.79

large farms and farm managers / 81

A main variable for change, therefore, is the financial status of the farm. It is for this reason that the Minister of Agriculture, Aleksei Gordeev, called for channeling financial support to strong farms. In late 2000, he argued that “state support should be directed only to effectively working farms. The resolution [of the problem] of chronically unprofitable enterprises requires a different approach. [For those farms] the state should create conditions for establishing new organizational–legal and economic relations.”80 This policy prescription—to channel resources to the strongest farms—was repeated often by Gordeev in subsequent years. A program for the financial rejuvenation of large farms was implemented in 2002 (see chapter 5). As part of this program, strong farms were encouraged to acquire weaker farms. Furthermore, in March 2001, Gordeev stated that strong vertical and horizontal integration of large farms was one of the priorities of the Putin government.81 What is interesting to note about this policy strategy is that: (1) the “integration” (take over) of weak farms by stronger farms was sometimes pursued at the behest of the regional governor, who, it is alleged, instructed this process to ensure compliance. Thus, the process was much less voluntary than it might appear; and (2) the channeling of resources to the “most effective” farms was not quite as straightforward as it sounds. Anecdotal evidence suggests that contacts, networks, and relationships matter, perhaps more than economic results. In one region, all government support went to one farm.82 The importance of the financial strength of the farm being a key factor is illustrated by the following two tables, drawn from surveys in different oblasts where the Nizhnii model of privatization was adopted. The table 3.3 shows improvements in labor discipline and other behaviors. Table 3.3 Evaluations of labor discipline following farm reorganization (in percent)

Strong Farm Reorganized Non-reorganized Average Farms Reorganized Non-reorganized Weak Farms Reorganized Non-reorganized

Improved

Stayed the same

Declined

26 30

56 46

18 24

23 13

44 34

32 52

18 2

41 37

40 61

Source: V. Ia. Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’no-ekonomicheskii analiz (1994–1997 gg.) (Moscow: Znak, 1998), p. 111.

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Table 3.3 shows that the largest differences occurred between strong and weak farms in terms of improvements in labor discipline. This outcome is natural and probably due to the fact that workers on strong farms can see tangible results of their efforts and, therefore, have greater motivation to be disciplined. Interestingly, there are fewer differences between reorganized and non-reorganized farms that are strong, which suggests that reorganization did not have a significant effect. Strong farms that were working well prior to reorganization continued to do so. The policy prescription that flows from table 3.3, therefore, is that “normal economic conditions” should be created in which farms operate, which would lead to fewer farms in the weak and average category and more in the strong category. Normal economic conditions in turn suggest a greater proclivity to improve farm workers’ behaviors and farm efficiency. While the financial condition of large farms is an important variable, and strong farms have more resources to adapt, it would be wrong to conclude that adaptive behavior is occurring only on the strongest farms. A survey of 1,417 farm members in Nizhnii Novgorod and Orel’ oblasts further illustrates adaptation and change among strong and weak farms. The data are based upon a stratified sample of strong, average, and weak farms, including farms that adopted the Nizhnii model of farm privatization and those that did not.83 The results from the survey are shown in table 3.4. One would expect privatized farms to display adaptive behavior because they are, for the most part, new enterprises created out of the division of former collective farms and joint stock enterprises. The fact that privatized farms sell to new buyers or use new suppliers is not surprising. What is notable about these survey data is that they reflect adaptive behavior by non-privatized farms also. Non-privatized farms are also searching for new buyers, new suppliers, and using new methods of management. The largest difference between the two categories of farms is in the introduction of new technologies, with 35 percent of privatized farms responding they were able to introduce new technology, as opposed to only 15 percent of non-privatized farms, which may reflect existing stocks of equipment rather than differences in predisposition to acquiring new equipment. There was also a large difference in reducing the size of the farm workforce, but in the case of privatized farms that came from new startup businesses spinning off from the parent farm. In general, an unfavorable macroeconomic environment leads both privatized and non-privatized farms to be “all the more reoriented to the task of survival.”84 Let us now turn to other examples of farm adaptation.

large farms and farm managers / 83 Table 3.4 Adaptive measures by privatized and non-privatized farms in Nizhnii Novgorod and Orel’ Oblasts (1998 survey data, in percent) Adaptive measure Increase food production Planned Realized Sell to new buyers Planned Realized Use new suppliers Planned Realized New methods of farm administration Planned Realized Introduce new technologies Planned Realized Introduce processing facilities Planned Realized Reduce number of workers Planned Realized

P

NP

73.9 43.5

84.6 61.5

65.2 65.2

61.5 46.2

56.5 56.5

38.5 30.8

52.2 47.8

46.2 39.5

43.5 34.8

23.1 15.4

39.1 17.4

30.8 15.4

30.4 26.1

23.1 15.4

Notes: P  farms which adopted farm privatization model. NP  farms which did not adopt farm privatization model. Source: Uzun, ed., Sotsial’no-ekonomicheskiy analiz rezul’tatov reorganizatsii sel’skokhoziaistvennykh predpriiatii, p. 65.

Entrepreneurism A key goal of agrarian reform was to breed a spirit of entrepreneurship, of independence from dictates from above, and to make large farms more productive and efficient. In a key insight, Jerry Hough argued that farming regions in the south of Russia had the most to gain from reform if market prices were used and agriculture released from state control. Instead, “southern farmers, who had a strong interest in real market reform, voted Communist in reaction to that which was introduced.”85 While the signals sent by shock therapy and urban bias undermined economic production, it did not prevent an entrepreneurial mentality

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from arising. The first piece of counterevidence concerns, therefore, the desire for freedom and independence expressed by farm managers. As early as mid-1993, there was anecdotal evidence from farm managers of prosperous collective farms in Rostov oblast that they embraced and supported the freedom that reform introduced. One farm manager in Sal’sk raion told the author: You ask why I am an optimist. I will tell you why. Because reform has unleashed a spirit, a spirit that cannot be controlled. There is no going back to the past. Everyone knows this is unacceptable. For the first time, workers on our farms have a stake in how they work. They know that if they work well, they will prosper.86

Another farm manager in Rostov raion voiced similar sentiments: I don’t want state subsidies. I want economic freedom. Let our farm produce. Let us be accountable for final results. If we are profitable, we should be paid. The continuation of subsidies implies a continuation of the old system in which the poorest farms receive the most help. This hurts profitable farms and forces them to understate productivity so as to receive more state aid.87

Another example to illustrate entrepreneurism is drawn from regional evidence. On stronger farms, capital and management is being concentrated in the hands of a rather narrow group. In Saratov oblast, for example, five farms that underwent reorganization retained labor brigades, but changed their internal organization and economic functioning. As the farms reorganized into new legal entities, only the best workers of the past 2–3 years were retained, so that about 20 percent of the previous workforce was let go. The administrative staff, and in particular the number of accountants, was reduced by 40–50 percent. Farm specialists became personally responsible for the selection of their labor brigades, and annually stood for reelection from their groups.88 Production Mix There is also evidence of adaptation in basic food production. In this regard, it is important to note that adaptation may be positive or negative. Analysts at the United States Department of Agriculture argue that the large declines in the size of livestock herds is evidence that farms are adapting to new conditions by responding to the signals sent by input costs, production costs, and consumer demand.89 That argument may be extended to show that in response to new economic signals, large

large farms and farm managers / 85

farms adapted to new conditions. Unfortunately for large farms and their managers, the economic environment was not favorable, and therefore adaptation took the form of curtailing production capacity and changing product mix, contributing to a significant decline in food output. During the 1990s, as direct federal production subsidies essentially ended, animal husbandry became extremely unprofitable, while plant crops were profitable.90 In response, the size of animal herds were deliberately reduced on large agricultural enterprises. Table 3.5 shows declines in herd sizes on large farms during 1992–2002. Table 3.5 graphically depicts significant declines in the size of animal holdings on large agricultural enterprises.91 What is seldom mentioned among analysts is that declines in animal stocks during the 1990s exceeded the losses suffered during Stalin’s collectivization (expressed as a percentage of previous stocks). Clearly, production capacity in animal husbandry diminished as large farms attempted to reduce monetary losses from this unprofitable production. Granted, plant crops also experienced declines in both output and the area cultivated. However, on large agricultural enterprises, the number of cattle and the number of pigs in 2002 was less than 50 percent the number in 1992, whereas agricultural land used by large farms declined only 12 percent during that same time period. The amount of land used for fodder, potatoes, and vegetables declined even less. The area used for technical crops actually increased. Therefore, it is clear that large farms reduced economic activity that was unprofitable and put more emphasis on products and activities that were profitable. The point is that large farms did adapt to their economic environment, and thus the production structure of Russian agriculture looks different today than it was at the beginning of the 1990s.

Table 3.5 Size of livestock herds, 1992–2002 (million head, large agricultural enterprises only) Jan. 1992 Jan. 1996 Jan. 1997 Jan. 1998 Jan. 1999 Jan. 2000 Jan. 2002 Beef cattle Milk cows Pigs Sheep/goats

47.1 15.3 31.2 42.1

27.7 10.4 14.7 13.5

23.6 9.1 11.5 9.9

20.5 8.0 10.0 7.2

18.0 7.2 9.4 5.4

17.4 6.9 9.9 4.8

15.8 6.0 8.6 4.4

Sources: Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 1998), p. 68; Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), p. 69; Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2002), p. 69.

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Channels of Food Trade Further counterevidence concerns marketing strategies and channels of food trade that are detailed in a different publication, but worthy of mention in passing herein.92 Suffice it to say here that where farms sell their food changed considerably during the 1990s. Large farms have entered into a new era of food marketing by using different channels of trade when compared to Soviet times.93 During the Soviet period, most food was sold through state channels of food trade. At the end of the 1990s, however, higher percentages of food were being marketed through non-state, private channels of food trade. At the national level, the percentages of food sold to procurement agents for state needs declined continuously during the 1990s and into the new century.94 In 2002, only 8 percent of grain was sold to procurement organizations. The state purchased small percentages of other nonperishable products as well. The percentage of perishable goods purchased by state agents was slightly higher, but still far below levels in the Soviet period. In 2002, for example, procurement agents purchased 34 percent of the live weight of cattle and poultry and 67 percent of the milk produced in the country (this latter percentage is due to the lack of privately owned refrigerators).95 Thus, it is fair to conclude that food trade in Russia has moved from state-dominated to private channels of trade, even if some restrictions on trade are imposed by regional administrations.96 There is other evidence of the ways farm leadership is adapting to new economic conditions by developing direct marketing links. In a survey of 1,223 farms in 31 regions throughout Russia by the Center on the Economic Situation, 45 percent of large farms had their own food stores or food stalls, 28 percent had developed direct ties to retail food stores, and 77 percent had developed direct ties with food processors.97 At a minimum, these numbers reflect an assessment of economic necessities and a willingness to adapt to new conditions. Interviews with farm managers in Kostroma oblast further reinforce this evidence, as several managers indicated the willingness to develop on-site food processing operations that would be more profitable than selling raw agricultural products.98 Other scholars are also finding evidence of vertical integration between farms and food processors, both Russian and foreign.99 Field work in Pskov and Rostov oblasts showed that strong farms were most likely to establish trading links beyond in other oblasts.100 A 2001 survey in five regions of Russia, headed by the author and funded by NCEEER, lend further insight into channels of trade used by large farms and the factors that affect trading patterns.101 These regions include Belgorod oblast, Krasnodar krai, Volgograd oblast,

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Novgorod oblast, and the Chuvash Republic. It was found that the dominant channel of food trade for large farms was “market sales,” confirming national trends indicated above. Specifically, sales to local processors was the most common outlet in all five regions. Sales to the state were not very common. Moreover, there is a positive and statistically significant correlation between farm profitability and market sales (using a two-tailed significance test and reliable above the 99 percent level of confidence). A positive and statistically significant correlation also exists between farm profitability and the enterprise having its own processing facilities (significant at the 95 percent confidence level). Finally, and importantly, a positive and statistically significant correlation exists between market sales and an enterprise having its own processing facilities—the correlation is significant at the 100 percent level of confidence and the correlation coefficient was moderately strong at 0.427. Thus, calculations from these survey data allow us to conclude that (1) stronger farms are more likely to have processing facilities; (2) processing facilities are associated with market sales; and (3) market sales are associated with farm profitability. To summarize the evidence for argument 2, it is fair to conclude that a large percentage of farm managers are generally concerned with production cost, expected demand, expansion of market share, and how to compete with imports from other oblasts (although differences exist by region, by farm, and by farm manager). The result is that larger farms have adapted to new conditions: (1) they respond to their economic environment, to demand, to price relationships, and accordingly have changed the way in which they use land by shifting production mixes; (2) they have curtailed expenses by reducing livestock herds; (3) they have adapted to the changes in the way farms are financed; (4) they have improved worker discipline and other behaviors; and (5) they have changed their mode of operation. Thus, far from resisting change, farm managers have had to be champions of adaptation, using their creativity and managerial skills in meeting three main requirements: (1) keeping farm operations functioning; (2) employing paternalistic policies in an attempt to protect farm employees; and (3) keeping farm members satisfied and being responsive to their needs.102 Argument Three: Farm Managers Obstructed Privatization and Marketization A common argument is that nothing has changed on large farms and that reorganized farms are virtually indistinguishable from their Soviet-era predecessors. The predominant perspective in the West sees farm managers

88 / the moral economy reconsidered

as the primary cause for the alleged lack of rural transformation and the “failure” of agrarian reform. The view of farm managers as a class of obstructionists is a rather odd argument since it contradicts both social science theory and other evidence gathered by Western analysts studying the transition in Russia. Viktor Khlystun, Russia’s minister of agriculture during 1992–1994, identified farm managers as the key to reform when he stated “I am deeply convinced that if we look at the situation realistically, the main champion of reform should be first and foremost managers.”103 Counterevidence Empirically, survey research has shown that farm managers of privatized and non-privatized farms prioritize farm profitability as their most important objective (though managers on privatized farms are somewhat more profit-oriented).104 Given the amount of change in the economic environment, an environment in which farm managers are now responsible for establishing or maintaining contacts with input suppliers, food processors, banks and creditors, as well as raion and oblast officials for financial support—all the while being committed to profitability—casts doubt on the perception of farm managers as unchanging and unable to adapt. Therefore, the view of farm managers as a class of obstructionists is not nuanced and misleading. One needs to differentiate by region, by economic condition of the farm, and between privatized and non-privatized farms. Based upon extensive survey data and field work, what we “know” about managerial orientations appears below. The argument has two main components, starting with farm reorganization/privatization. The first argument is that the farm-manager-as-obstructionist view is theoretically misguided. Sociological characteristics of farm managers suggest a potential for support of reform. A survey by the Russian Center on Public Opinion found that 91 percent of farm managers had either finished or attended an institution of higher education.105 The same survey also found that 49 percent of farm managers were 45 years of age or younger. These two factors—education and age—have been statistically associated with support for market reforms in scholarly surveys and voting behavior.106 (1a) Field work has documented a great deal of variation in farm manager orientations and management style, so much so that to universally classify farm managers as obstructionist obfuscates the entrepreneurial and opportunistic behaviors found by Kitching in Vladimir oblast, Ioffe in Moscow oblast, and Wegren in Kostroma oblast.107

large farms and farm managers / 89

(1b) Surveys have documented variation in farm manager orientations, with significant, though varying, managerial support for farm reorganization and privatization. Even at the beginning of the reform there was farm manager support for farm reorganization and privatization. For instance, a survey of 106 farm managers by the All Russian Center for Public Opinion in February 1994 found that 31 percent felt that “the course of reform being conducted by the president” was “basically correct, although mistakes had been made.” Interestingly, 4 percent of farm managers felt that the course of reform was “completely correct,” while 5 percent of private farmers felt similarly. Only 26 percent of farm managers responded that the course of reform was “completely incorrect.”108 A survey of privatized large farms in Nizhnii Novgorod and Orel’ oblasts during 1997–1998 found that 50 percent of farm management considered privatization as useful.109 A survey by the Agrarian Institute in Moscow, conducted on both privatized and non-privatized farms during 1994–1997, found that 50 percent of farm managers on privatized farms supported farm privatization, as did 39 percent of farm managers on non-privatized farms.110 Finally, a survey commissioned by the World Bank in 1999, conducted by the Center on Agro-food Economy in Moscow, polled 500 experts in 8 regions in Russia and found that 40 percent of farm managers supported farm reorganization.111 Respondents in this latter survey were classified as belonging to “left,” “right,” and “center” political orientations, corresponding to the political spectrum used to categorize parties in Russia. As would be expected, the right was “more supportive” of farm reorganization, but 33 percent of the “left” experts and 55 percent of the “center” experts also supported farm reorganization.112 (1c) Survey data show that farm managers are more receptive to farm privatization than pensioners and farm employees.113 Survey data also show that farm employees’ orientations are greatly influenced by reform results: those whose family condition worsened during farm privatization view farm privatization as less useful than those whose condition improved.114 The point understood from these data is that despite direct and immediate “threats” to managerial power and control that farm privatization presented, survey data have established a significant base of support for farm privatization. (1d) The Nizhnii Novgorod model of farm privatization—which by 2000 had extended to more than 11 oblasts and several hundred large farms (not to mention several million dollars spent by the International Finance Corporation [IFC] in support of this privatization program)—was first and foremost a model of farm reorganization from below, a voluntary

90 / the moral economy reconsidered

program undertaken at the initiative of the farm manager. IFC documents are emphatic on these two points: that the farm privatization program was both voluntary and initiated from below at the request of farm managers.115 (1e) Finally, it is interesting to note the response from the head of the Agrarian Party of Russia, Mikhail Lapshin, when asked whether agricultural privatization should be reviewed with the intent of reversing privatization in cases where conflicts have arisen.116 (The Agrarian Party is the main representative of farm managers and large farms’ interests). In January 2001, Lapshin answered “I am firmly convinced that the privatization that occurred in agriculture should not be subject to a review . . . arguments and conflicts arising in the agroindustrial sector should be decided in court on the basis of that legislation which we now have.”117 The second element of the argument is that the farm-manager-asobstructionist view lacks a temporal dimension and cannot account for several documented trends concerning land reform. Several key pieces of evidence counter the farm-manager-as-opposed to-land-reform view: (2a) During 1992–1994, almost 82,000 private farms were created directly from the reorganization of large collective and state farms, which in 1994 equaled roughly one-third the total number of private farms throughout Russia.118 (2b) Barnes argues that “administrative records of Volgograd oblast are replete with reports of farm directors trying to thwart the transfer of farmland to private farmers.”119 Yet, among oblasts in the Volga economic region, a productive agricultural region, Volgograd oblast had by far the most number of private farms in the Volga economic region during 1992–1993, on the order of one-third the number of all private farm in that economic region. In fact, during the first few years of land reform, Volgograd oblast accounted for about 10 percent of all private farms in Russia.120 (2c) By the end of 1996, every person who remained a member of a large agricultural enterprise had received his/her land share. Land share distribution occurred through the office of the farm manager, and therefore could not have been completed without the cooperation of the farm manager. (2d) By 1999, virtually every land owner or land share owner had received his/her land deed, numbering several tens of millions deeds. The land deed is a document that provided proof of ownership and allowed the individual to engage in land transactions. While the relevant

large farms and farm managers / 91

land committee (city, raion, or oblast) was in charge of actual distribution of land deeds, the cadastring of land and registration of land owners could only take place with the cooperation of the farm management. (2e) Orientations to private land and a land market by rural elite are positive, as shown by the survey data and will be discussed in further detail below. From this evidence, it is clear that either farm managers were not successful in blocking land reform (thus undermining the weak state view); or farm managers decreased their resistance as they learned to adapt to, and even benefit from, reform policies over time (thus undermining the obstructionist view). There might also be some combination of both. In sum, the evidence suggests that if farm managers were so viscerally opposed to farm reorganization and land privatization, then they were very ineffective in actually blocking reform progress, particularly in rich agricultural areas in the south of Russia where the number of private farms increased very rapidly during 1992–1994.121 In contrast to the conventional wisdom, it is worth considering the possibility that farm managers did not oppose reform in principle because it offered possibilities for them to profit and prosper. When considering managerial orientations and behaviors, it is often overlooked how farm managers benefited from the opportunities afforded by reform. The discussion below is a first attempt to add balance to the discussion. In particular, stratification of opportunity and income stratification have occurred between farm managers and the farm population as a whole. These two aspects are examined in more detail. Stratification of Opportunity While farm managers have been beset with a host of problems and responsibilities that they did not face during the Soviet period, there is also a set of opportunities that is new. One set of opportunities has to do with the operation of one’s farm. As a result of reform, farm managers are now able to fire alcoholic or laggard workers. It is noted in passing that farm managers have in general been inclined toward paternalistic protection of farm labor; it is also true that turnover of farm labor is much higher than during the Soviet period. Some of the turnover is voluntary, and some involuntary.122 Farm managers, along with their management councils, are now able make their own production decisions, trade and sales decisions, and to decide financial questions of the farm. Another important opportunity is to adapt to market conditions by changing production mix and the

92 / the moral economy reconsidered

use of inputs. Farm managers have the opportunity to maximize profit, which is to say that strong farms are no longer discriminated against on purchase prices, as was the case during the Brezhnev era when weak and inefficient farms actually received higher purchase prices than strong profitable farms. If one’s farm is successful, farm managers, like other managerial personnel in contemporary Russia, are now permitted conspicuous consumption and no longer have to hide the benefits they enjoy. For example, among farm managers in the early to mid-1990s, I noted the prevalence of Jeep Cherokees, which were not only useful for navigating paths called “roads” in rural Russia but also a status symbol of affluence. Farm managers now have the opportunity to travel abroad for conferences and seminars held in Western nations. For example, for several years during the mid-1990s, Harvard University hosted annual conferences where managers and leaders in agribusiness would convene for several days. Business trips and exchanges to the Midwest to meet U.S. farmers became possible, and several grassroots organizations like the ColoradoRussian Agricultural Group (CRAG) were formed to establish farmerto-farmer contacts. Finally, it became possible to establish direct trading contacts at the commodity exchanges in Chicago and Kansas City.123 Thus, not only did farm managers have incentives to adapt, but they also had opportunities to benefit from reform policies. Farm managers have been in a privileged position because they enjoyed access to resources and had contacts that the average farm member did not. With regard to contacts, some anecdotal evidence suggests that farm managers personally benefited during land distribution by accepting kickbacks for allocating good quality land to would-be private farmers. With regard to resources, farm managers and specialists were among the prime beneficiaries of land reform because it is often argued that they often were the recipients of some of the best agricultural land. Moreover, there is evidence of managers’ opportunism with regard to other possibilities offered by reform. The NCEEER survey in five regions (referred to earlier) showed that farm managers were the cohort that was most likely to have their own agribusiness or other business. About one-half of the managers in the survey were planning to obtain additional land for their household land plot, compared to 29 percent of farm workers.124 As a result of taking advantage of new opportunities, farm managers are relatively more satisfied and optimistic than other categories of labor on large farms (the NCEEER survey divided labor categories into specialists, clerical, and workers). To the question “were you a winner or loser

large farms and farm managers / 93

during reform,” farm managers responded that they were “winners” during reform more so than any other labor category with the exception of private farmers.125 Income Stratification Regarding income stratification between farm managers and farm members, it is necessary to consider the broader quality of life/standard of living question, and a narrower question of monetary income. Concerning the first issue, the quality of life/standard of living, rural standards may not be very high and certainly do not match urban living standards, particularly of those who reside in the largest cities. But there is little reason to think that farm managers have suffered to the same extent as ordinary workers, indicated by the fact that in the 2001 NCEEER survey, farm managers had the highest level of satisfaction with life in general, with 60 percent of manager respondents answering that they were satisfied with life. Other survey data are illustrative of managerial standards of living. The material condition of different strata of farm workers was measured in a survey of 5,000 rural workers in 13 regions of Russia in 1999.126 The results of the survey suggest that farm managers’ standard of living did not decline as much as other farm employees during the 1990s. A clear hierarchy exists in which those at the top are better off and have experienced less deterioration. These trends are illustrated in table 3.6. Table 3.6 Evaluation of changes in material conditions of farm employees (in percent) Managers and specialists of high link Material condition improved during past 5–7 years Material condition worsened during past 5–7 years No change Live tolerably Live in full comfort With difficulty live month to month Live in poverty

16.4

Managers and specialists of Skilled Unskilled All farm average link workers workers employees 9.9

10.3

7.3

10.3

57.0

59

62.4

66.4

61.7

26.6 48.5 5.3 38.8

31.1 37.5 1.5 49.8

27.3 37.7 2.3 50.0

26.3 27.2 2.6 51.3

28 36.8 2.5 49.0

7.4

11.2

10.0

18.9

11.7

Sources: L. V. Bondarenko, “Dokhody i potreblenie v sel’skom khoziaistve,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 12 (December 2000), p. 44.

94 / the moral economy reconsidered

Table 3.6 demonstrates that the percentage of respondents whose material conditions are perceived to have improved the most is highest in the managers and specialists category, and descends as the level of skill declines.127 Likewise, a lower percentage of respondents answered that their material conditions deteriorated in the high link category. Furthermore, the percentage of respondents who considered themselves to be living “tolerably” was highest for those in the high link, while the percentage of respondents who were living “in poverty” increased as the skill level decreased. Data from the NCEEER survey present a more precise view of farm managers’ standards of living compared with farm members. The data from five regions in Russia show that farm managers enjoy more material amenities than regular farm workers do. For example, in 2001, 73 percent of farm managers had an automobile, but only 52 percent of farm workers had one; 87 percent of farm managers had a telephone, but only 41 percent of farm workers had one; 67 percent of farm managers had a VCR, but only 34 percent of farm workers had one; and 20 percent of farm managers had a computer, but 0 percent of farm workers had a computer.128 Turning to the second question, monetary incomes, there are two sets of comments. The first comment concerns the level of income and the second comment concerns sources of income. Regarding the level of income, there are clear signs of differentiation within the rural sector, and farm managers and specialists have benefited the most. Data from the NCEEER survey show that farm managers are the most satisfied with their income—53 percent were either satisfied or absolutely satisfied with their income in 2001, higher than any other labor category except for private farmers.129 This reflects the fact that as the 1990s progressed, upper income individuals accounted for a larger percentage of all rural monetary incomes.130 It is important to note that rural stratification is relatively new in Russia. Under the Soviet system, wage egalitarianism was the norm. Farm managers received only marginally higher wages than farm workers, despite generally higher levels of education, party membership, and increased responsibilities. For instance, wage data from Kostroma oblast in 1990 showed that the mean monthly salary for a collective farm manager was 316 rubles. Farm specialists had a mean salary of 234 rubles a month, and permanent farm workers engaged in agricultural production had a mean wage of 246 rubles a month (including premiums but excluding payments in kind).131 This meant that in 1990, collective farm workers earned about 78 percent the wage of a farm manager and 105 percent of farm specialists. Wage data for state farms show essentially

large farms and farm managers / 95

the same pattern, but farm workers earned an even higher percentage of the manager’s mean wage (85 percent) and of specialists (114 percent).132 Data from Kostroma are consistent with trends found throughout the Russian Republic at the time. After reform was introduced, mean monthly incomes began to diverge. During the rest of the 1990s, farm managers’ wages increased substantially relative to farm employees. As a result, the income gap at the end of the 1990s was larger than it was at the end of the Soviet period when wages were centrally regulated. Although regional variations existed, available data show a growing inequality between farm workers and farm managerial personnel. Already by the end of 1993, farm workers were earning on average only 60 percent of the salary of a farm manager and 84 percent of a farm specialist. In 1997, 70 percent of families of specialists had a per capita income of 1.5–3 times the minimum subsistence level, while only 11 percent of families of workers did.133 In 1999, in Leningrad oblast, farm workers continued to receive on average 60 percent of the monthly salary of a farm manager, and 89 percent of specialists.134 Survey data from Goskomstat further confirm intrafarm differentiation. Data from the 2001 NCEEER survey show that 59 percent of farm managers had a monthly monetary income above the subsistence level, while only 24 percent of farm workers did in the five regions.135 The second issue is the source of income. In the NCEEER survey, it was found that farm specialists and farm workers actually have a higher mean income from farm salaries than farm managers do.136 Overall, farm managers’ mean total incomes are much higher than those of specialists and workers. How is this apparent discrepancy explained? What distinguishes farm managers’ households most are higher levels of income from private business, thus suggesting adaptation to new opportunities. The data show that managers receive a large portion (over 70 percent) of their monetary income from private business activities. Thus, managerial households have moved away from dependence on their salaries, and this movement constitutes a significant change from the Soviet era.137 In short, on large farms, managers “won” because they became entrepreneurial.138 During the 1990s, delays in payments of wages were chronic, not just in agriculture, but throughout the entire economy. In the 1999 Leningrad survey cited above, only 14 percent of the respondents received their wages on time, 28 percent experienced a delay of several months, and 26 percent had experienced a delay of several years!139 As a consequence of lower wages and wage delays, ordinary farm workers drew more income from private plot activities and leasing of land shares than farm managers did. Farm managers’ level of income is higher, which allows them

96 / the moral economy reconsidered

to ride out wage delays. Survey data from Rostov oblast show that farm managers on reorganized farms drew 51 percent of their income from farm wages and 38 percent from private plot operations. On nonreorganized farms, the percentages were similar to those of workers: 27 percent of income came from wages, 45 percent from private plots.140 Argument Four: Farm Managers Opposed Land Privatization The final argument about farm managers concerns private land ownership and a land market. The conventional wisdom emphasizes farm managers’ resistance to land reform and land distribution because they want to hold onto their power. It has been widely reported that farm managers and specialists oppose land privatization because it threatens their interests. Virtually all the literature on Russian agrarian reform, at least in English, has viewed farm leadership as an obstacle to the implementation of land reform policies, pointing to negative elite attitudes about land reform and the land market. A closer examination reveals some surprising results. Counterevidence There are two types of counterevidence, the first showing that elite attitudes were not as antiprivatization as has been believed, and this counterevidence draws from two surveys encompassing rural orientations by “experts.”141 The second type of counterevidence concerns actual behavior of farm managers. Turning to attitudes first, a World Bank–commissioned survey in 1999 found that 77 percent of the sample of experts supported land reform and privatization. According to this survey, 72 percent of farm managers and farm specialists felt that land reform was necessary for further development of the agricultural sector.142 There was a significant difference between “rightists” and “leftists,” as 83 percent of the former group supported land reform. Nonetheless, 60 percent of leftists and 73 percent of left-centrists also supported land reform, which suggests widespread elite support for land transformation.143 Underscoring elite attitudinal support for land privatization, and by extension, a land market, are data from two rounds of surveys conducted by the Institute of Land Relations and Land Tenure in Moscow and the Institute of Sociology in Kaluga oblast.144 These survey data indicate a high degree of support for private land ownership from experts, although the preference is for ownership with some restrictions. The results are shown in table 3.7.

large farms and farm managers / 97 Table 3.7 Attitudes of land buyers, land sellers, and experts toward private ownership of land in Russia (in percent) Attitude toward private ownership For land ownership without any restrictions For land ownership but with restrictions Against private land ownership Too hard to answer

Land buyers

Land sellers

31

28

13

11

55

54

71

78

7

10

14

8

7

8

2

2

Experts-1996 Experts-1998

Note: Percentages have been rounded. Sources: 1995–1996 and 1997–1998 survey data.

One notable aspect from table 3.7 is that expert respondents prefer private land ownership, although with some restrictions.145 Another notable aspect is that the percentage of elite support for land privatization from these surveys is similar to the 1999 survey commissioned by the World Bank. The two surveys worded their questions differently so they are not strictly comparable, but the results are highly suggestive. The World Bank survey found that 77 percent of the sample of experts supported land reform, while the latter survey by the Russian institutes found that 83 percent of experts in 1995–1996 and 89 percent in 1997–1998 supported private ownership with either some or no restrictions. In other words, there were two separate surveys, conducted independently of each other and taken at different times, each demonstrating elite support for land privatization. There is also a temporal factor for experts, showing less support for unrestricted ownership and more support for restricted private ownership between the two surveys. These survey data also allow attitudes toward the land market to be subdivided, depending on whether the land in question is rural or urban. The data are clear that during the 1990s there was elite support for an agricultural land market. According to the survey, 81 percent of experts responded that there should be a land market, either with or without restrictions, although there was very little elite support for an unregulated rural land market.146 The overwhelming elite preference was for a rural land market with restrictions, indicated by 76 percent of respondents. Less than one in five (17.5 percent) answered that a rural land market was not needed at all.147

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The second type of counterevidence concerns actual behavior. It was noted earlier that, according to the NCEEER survey, 50 percent of farm managers were planning to increase the size of their household plot. To explore the questions of who participates in the land market, who expands their land plots, and why, a statistical analysis was performed by the author and published elsewhere.148 The results found in this analysis are directly relevant to the discussion here. The analysis began by first considering the effect of structural factors on participation in the land market (structural factors were defined as size of household, the condition of the husband’s health, the age of respondent, gender, and educational level of the husband). It was found that structural factors had limited explanatory power, and thus other independent variables were examined. In particular, regression analysis was performed to test for the effects of different types of income, the effects of economic assistance networks, and the effects of livestock holdings. Of the three models, the income model was the strongest. First, a Pearson correlation (using a two-tailed significance test) yielded a coefficient of .504 between monthly monetary income per capita and land plot increase, with 100 percent statistical significance. Thus, the first step in the analysis suggested a moderately strong association between income and participation in the land market, but monetary income was used as an aggregate variable, that is, including all sources of income. The second step was to consider different sources of income (salary, pension, income from sale of produce, dividends, income from business, and other sources). An income “model” was created to test the individual effects of each source of income on participation in the land market. The model as a whole yielded an R-squared of .335 (R-squared indicates what percentage of the variance is explained by the model, or, simply put, how much explanatory power the model as a whole has). Among the independent variables in the income model, income from business was the only variable that was statistically significant and had a positive effect on land plot increases, with a beta of .572. (Beta is a statistical measure that indicates the strength of effect a particular variable has on the outcome, or, in effect, it measures the strength of causation.) The finding suggested that individuals who depend upon basic salary, dividends, pensions, and income from sale of produce do not have the monetary resources to expand their land plot. Instead, individuals who are more entrepreneurial and have additional monetary resources are more likely to expand their land plot (and to do so by larger sizes).149 This is an important finding because it was shown above that farm managers have higher income and most of that is income from business activities.

large farms and farm managers / 99

Thus, farm managers fit the statistical profile of those who are likely to expand land plot sizes. Second, this is an important finding because it suggests that stratification will increase in the future. Those who are advantaged will become more so, and therefore not only have farm managers benefited in the short term, but they are also likely to benefit from reform opportunities in the long term as well. What Farm Managers Want From Reform The purpose of the previous discussion about farm managers is not to deny that obstructionist and change-resistant behaviors probably occurred by some managers in some regions, with the actual response by individual managers being highly idiosyncratic. Instead, the purpose was to (1) argue that the view of farm managers as a class of actors who were inherently obstructionist and change-resistant is misleading and cannot account for significant counterevidence; (2) argue that the view of farm managers as a class of actors who were inherently obstructionist and change-resistant blinds us to the real adaptation that has occurred; and (3) show that in several ways farm managers have benefited from reform opportunities, which undermines their incentive to block reform. The examination of farm managers concludes with two questions: (1) if the analysis herein is correct, how then are managerial protests over the course of reform explained? and (2) what do farm managers want from reform? In answering the first question, it is absolutely key to bear in mind the overall economic environment that confronted managers of large farms and the nature of incentive structures that flowed from state policies. As was shown in chapter 2, during the 1990s, a significant price scissors occurred between agricultural and non-agricultural goods, which, when combined with decreased consumer demand for food led to soaring farm unprofitability, farm indebtedness, and wage arrears to farm workers. Farm managers, who are responsible for the operation of the farm and the welfare of its employees, confronted dilemmas in how to retain farm workers and maintain farm operations in the face of disadvantageous macroeconomic conditions. Given those trends, it is reasonable to assert that managerial “resistance” was in reaction to the negative consequences of reform, not to reform itself. We can understand what farm managers want by understanding what they don’t like. The IFC’s survey of privatized and non-privatized large farms in Nizhnii Novgorod and Orel’ oblasts sheds light on farm managers’ perceptions. When asked what the main obstacles hindering farm operations were, more than 82 percent of farm managers on privatized

100 / the moral economy reconsidered

farms responded “price disparity” and “insufficient government support” (respondents could choose more than one answer). The third most important factor was “high taxes.” On non-privatized farms, price disparities (91 percent) and insufficient government support (70 percent) were also ranked first and second, with “old debts,” the third most common answer (56.5 percent).150 In addition to the economic environment, it is also necessary to bear in mind the consequences that resulted from farm reorganization. While the economic condition of the parent farm was found to be the determinant factor affecting how subunits fared following privatization, the IFC survey of farms showed that sales profitability and gross income per worker declined for all three waves of privatized farms (1993–1994, 1994–1995, 1996–1997), as well on non-privatized farms.151 It is hardly any wonder that when asked “do you support reform” or “is farm reorganization useful,” significant percentages of farm managers often responded negatively. A survey by the Center on Agro-food Economy in Moscow supports the view above. It asked experts “what are the basic reasons for the ineffectiveness of state agro-food policy?” The overwhelming response, cited by 65 percent of respondents, was “insufficient budget financing.” In the same survey, 84 percent of farm managers responded that reform had led to a significant deterioration in the rural standard of living.152 A different survey taken by the Russian Center on Public Opinion found that the overwhelming reason farm managers did not like their work was “difficulty in obtaining credits and loans.”153 Farm managers bemoaned the lack of financial support, price disparities, and the high cost of inputs. Based on those findings, it becomes possible to begin to define what farm managers want. First, there is evidence by deduction. What farm managers want are economic policies that allow them to work in a normal (or at least not disadvantageous) economic environment.154 There is little evidence that managers want a return to Soviet era conditions. In important ways, managerial preferences today differ from earlier Soviet policies because farm managers want farm autonomy over production, marketing, financial, personnel, and investment decisions. In the survey by the Center on Agro-food Economy there was little evidence that managers desired more state regulation.155 Importantly, in the survey taken by the Russian Center on Public Opinion, only 8 percent of farm managers complained about “too much responsibility.”156 Considering specific policy measures, a collaborative survey was conducted in 1999 by government and presidential analytical staffs during December 1998–April 1999, encompassing 1,490 farm managers, private farmers, and rural administrators.157 Table 3.8 shows a list of measures and the degree of support that each measure received.

large farms and farm managers / 101 Table 3.8

Support for agricultural policy measures (in percent)

Subsidize social services provided by farm Reduce VAT on food products Adopt special measures for purchase of food products produced by households and private farmers Increase size of special farm equipment leasing fund and advantageous credit fund for sowing Consolidate all farm taxes into a single land tax Restructure farm debt to suppliers Limit trade supplements to enterprises selling agricultural products and food Provide subsidized credits State should reduce taxes on purchasing agents of food and processing plants

Yes

No

95.6

1.9

93.9 89.4

2.4 4.7

88.0

3.5

85.9

3.1

85.3 83.1

2.4 9.8

82.9 79.7

10.1 10.3

Note: A respondent was to answer “yes” or “no” to each of the 15 questions; I have chosen those responses that received about 80 percent “yes” or better. Source: M. P. Kozlov, “O putiakh vykhoda agrarnogo sektora Rossii iz finansovogo krizisa,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 2 (February 2001), p. 18.

Table 3.8 reflects the strong desire for increased state financial support, using trade, financial, and tax policy levers. At the same time, survey respondents indicated that state policies and measures most often were not implemented at all, or only partially. These responses are indicated in table 3.9. Thus, tables 3.8 and 3.9 illuminate farm managers’ orientations toward reform. Farm managers want more financial support, and they oppose laissez-faire economic policies in which the “market” is largely unregulated to the disadvantage of agriculture. These responses suggest that farm managers oppose the way reform has been pursued, not necessarily the idea of reform or the philosophical basis of the reforms. Specifically, rural elites oppose policies that have degraded their economic environment and which prevent the consolidation of their status in new economic conditions.

102 / the moral economy reconsidered Table 3.9

Implementation of state policy measures (in percent) Policy Policy partially Policy not Too hard implemented implemented implemented to answer

Receipt of subsidies for plant growing Receipt of subsidies for animal husbandry Introduction of measures for purchase of food products produced by households and private farmers Limit imports Limit trade supplements to enterprises selling agricultural products and food Limiting energy prices Receipt of state credit using crop as collateral Receipt of credits from subsidized credit fund Receipt of guaranteed minimum purchase prices Lease material–technical goods through leasing fund Restructure farm debt

3.7

60.1

29.7

6.6

6.5

72.4

13.4

7.7

2.1

22.8

64.3

10.8

3.0 6.4

26.9 34.3

37.9 29.3

32.2 30.0

3.7 9.1

45.0 41.7

41.5 38.3

9.7 10.9

1.4

53.7

33.0

11.9

8.8

27.0

49.8

14.3

6.4

65.9

18.9

8.8

4.9

38.5

33.3

23.2

Source: M. P. Kozlov, “O putiakh vykhoda agrarnogo sektora Rossii iz finansovogo krizisa,” (okonchanie) Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 3 (March 2001), p. 14.

Conclusion An important aspect of Russia’s search for agrarian capitalism concerns the behavior of managers on large farms. The moral economy approach emphasizes resistance to reform and would have us believe that farm managers have been viscerally and inherently opposed to privatization and marketization. Similarly, the moral economy approach would blind us to the changes that have occurred in the operation of large farm enterprises. The simplistic view that flows from the moral economy has been shown to be inaccurate. Why? Those who argue that farm managers resisted reform seem to forget what reform policies allowed. Reform legislation allowed individuals to remain on a parent farm and to receive land and property free of charge. Farm members who decided to stay did so for reasons based upon rational economic calculations, and much less so because they were prevented

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from realizing their legal rights. Moreover, reform policies legalized the right for large farms to retain their previous status based upon a collective form of labor organization. In 1991, it is well to remember that only about 5 percent of large farms were unprofitable and were required to disband or consolidate with a stronger farm. During 1992, when reform policies began to be defined in earnest, it was completely legal for a farm to retain its previous status as long as it was not chronically unprofitable. Thus, a farm retaining its previous status was neither violating policy nor reform laws, and therefore cannot be considered resistant behavior. Analysts who expected, or wished for, massive decollectivization were merely engaging in pipe dreams and did not understand the reality of the rural economy.158 Thus, farm manager adaptation to opportunities presented by reform is much more significant than early resistance. The outcomes of reform are directly related to adaptation more so than from farm manager resistance. This chapter has argued that farm managers are not inherently opposed to rural marketization, or, at least, much less so than is depicted in the literature. Any credible fieldwork cannot help but recognize the tremendous adaptation that farm managers have made to market reforms. Whether their adaptation meets the criteria according to an ideological agenda or normative notions of what Russian agriculture “should” look like is another question. This chapter presented evidence about adaptive behaviors by farm managers and about the degree of change in large farm operations over time. Farm managers were shown to be opportunistic and actors who embraced, not eschewed, opportunities afforded by privatization. There is widespread evidence that farm managers and specialists have taken advantage of reform opportunities by obtaining possession of, or control over, privatized land and machinery. It is well to remember that reform policies strove to put productive capital into the hands of the most capable. The ideological hypocrisy of many analysts is seen by their position that the acquisition of land and equipment was a desired goal for anyone except former farm managers and specialists. This chapter argued that managerial resistance is over policies that degrade their economic environment. The problem in the realization of reform goals during the 1990s was that (1) the “market” had elements of deformity; (2) reform policies did not create the correct incentive structures; (3) “correct” behaviors were not rewarded; and (4) a hostile macroeconomic environment hindered further adaptation. Whether the Russian countryside is characterized by an immutable and inherent resistance to market reforms has importance not only for the outcome of the agrarian transition, but also for an understanding of rural orientations in general.

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In sum, attitudes and behavior by the rural elite represent a source of optimism for successful economic reform. If the argument herein is correct, the question then becomes what are the best policies to take advantage of this potential source of rural support? If policies are crafted, and a macroeconomic environment created, that improve the livelihood of rural dwellers and their material condition, much higher rates of support for marketization would be reflected in opinion polls.

C h ap t e r 4 How Peasants Adapt: Rural Households

Chapter 3 examined adaptation on large farms and among farm managers. This was an important starting point for discussing adaptation because large farms feed the country and farm managers have a significant influence on the direction of reform. Further, this focus was important for showing how members of Russia’s rural elite responded to reform policies. This chapter focuses on rural households, using survey and opinion data, national-level statistical data, and regional-level data to explore household orientations and behavior.1 The shift in focus to households is warranted because, whereas there are only about 27,000 large farms (and thus 27,000 farm managers), there are several million rural households, with a rural population that exceeds 39 million. In 2002, for example, if the mean family size of three persons is used, this equates to about 13 million rural households. Thus, the sheer magnitude of the rural population requires attention to how they responded, and needless to say, the patterns of responses by rural households determine the ultimate failure or success of reform policies. The term krest’ianskie khoziaistva in Russian means “peasant households.” Traditionally, the term peasant households applies to persons and families whose existence comes primarily from agricultural production. The traditional use of the term “peasant households” suggests a certain social structure, level of education, standard of living, way of life, and exposure to urban influences. In Russia, these aspects differ considerably from the traditional usage. During the Soviet period, rural Russians were linked to collective and state farms for social, education, health, and welfare services. The level of education for rural Russians is higher than typically found in traditional peasant societies, and the standard of living is somewhat higher, measured through the number of radios, TVs, cars, and other material objects possessed by the household. Moreover, among Russian peasants, not all income is drawn from agricultural production.

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Starting in the mid-1960s, rural Russians were included in state welfare benefits and thereafter received transfer payments. More recently, some household income is derived from leasing of land shares, agribusiness income, and other nonagricultural sources.2 Finally, with regard to exposure to outside influences, rural Russians, instead of being isolated, have access to and are exposed to urban influences, whether it be through mass printed media, radio and TV, or trips to a nearby urban center to visit relatives or friends. Although Russian society remains influenced by distinct peasant cultural traits, urban and rural cultures converged significantly during the early twentieth century by otkhodniki, rural dwellers who split time between town and country by working in factories during the nongrowing season. During the 1960s and 1970s, Brezhnev’s rural social policies explicitly attempted to urbanize rural areas and reduce urban–rural differences even further. By the mid-1990s, in the Russian nonblack earth zone, approximately 72 percent of the rural dwellers lived within two hours from an urban center.3 Similarly, in southern Russia, the majority of villages and farms are within an hour by car from an urban center. Thus, rural Russians are less remote and isolated than typical peasant households. An analysis of adaptation among rural households is important not only because of their numbers but also because one of the most influential theories within the peasant studies literature during the past 35 years—the moral economy approach—sees peasants as essentially antimarket.4 The moral economy, which speaks directly to the issue of rural responses to change, uses rural households and rural individuals as the unit of analysis, an approach that is replicated in this chapter. The moral economy was originally published by Eric Wolf and then expanded upon and made more explicit by James Scott who argued that markets and commercialization of agriculture threaten the “moral economy” of rural villagers.5 Two hypotheses emerge from Wolf ’s and Scott’s analyses: 1. Peasants are safety-prone, risk-averse, and prone to adopt social and technical arrangements that help ensure that all villagers have the ability to attain a minimum subsistence level. The “safety-first” peasant is more oriented toward collective good than individual profit. 2. Peasants are antimarket, and prefer common to private property. The exposure to market forces and the breakdown of rural social and economic relations fuel peasant protest movements. Peasants react to defend their core values that they perceive are threatened by capitalist, commodity agriculture.

rural households / 107

The moral economy approach sees values as “embedded” in peasant societies, and these values are therefore reflected in the nature of village institutions. Commercialization of agriculture disembeds peasant values, and displaces existing village institutions with market-based institutions.6 In later works, Scott and others examined how peasants resist marketization and escape the effects of commodity agriculture, terming these strategies “weapons of the weak.”7 The key point for our purposes is that a predominant strand of literature viewed peasants as fundamentally opposed to commodity agriculture and market structures. To date, the moral economy approach has not been applied systematically to Russian agrarian reform, although its ideas are implicit in several studies.8 To be fair, there are considerable differences between Burma and Vietnam in the 1970s about which Scott wrote, and Russia in the late twentieth to the beginning of the twenty-first century. In particular, both Wolf and Scott were writing about peasants in the classic sense of the term as noted above: rural dwellers who depend almost wholly on agricultural output as their primary source of income, villages that are physically remote from urban centers and influences, villages that are culturally distinct from urban culture, and persons with either low levels of education or who are illiterate. Despite these differences, the moral economy idea is embedded in the analysis of scholars who see rural Russian households as opposed to market reforms. For this reason, this chapter uses the moral economy as a point of departure to examine orientations and behaviors of rural households in Russia because of the direct relevance of peasant reactions to market reforms. For contemporary Russia, the issue is less about commercial agriculture—rural households have long been exposed to commercial agriculture and in fact have engaged in commercial agriculture as a way of life for decades, even under Soviet rule. Instead, the issues concern how households and individuals responded to new opportunities toward agricultural land, food sales, and household income. The chapter argues that far from being antimarket, Russian rural households have embraced opportunities presented by reform. Of course, some households and individuals adapted more than others, so the key questions around which the chapter is organized are how did households and individuals respond to reform stimuli? Who adapted and how? Who benefited? Relevant to the question of household adaptation is the issue of survival strategies versus adaptation. An extended discussion of survival strategies versus adaptation has appeared elsewhere, so here it will suffice to note that those issues are acknowledged and to refer the reader to another source.9

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The chapter focuses on two main questions: (1) how did rural households adapt to new opportunities? and (2) who adapted, that is, what are the characteristics of households and individuals who adapted most to reform? The chapter begins with an overview of the conventional wisdom of rural households and their orientations toward reform. The next section presents arguments supporting the conventional wisdom through evidence that suggests that rural households had good reason to resist reform. Thereafter, successive sections present counterevidence by analyzing actual behavior of rural households in food production and marketing, the acquisition and use of rural land, and changes in household income. Why Rural Households Might Oppose Marketization and Privatization During the 1980s, some Western analysts argued that if market reforms were to come to the former Soviet Union, rural dwellers would be most supportive and urban residents the least. The rationale was that rural areas would benefit most from reform because their standard of living lagged under the Soviet system.10 Other analysts argued that rural actors would be proponents of free trade, which would bring cheaper imported manufactured goods into the country to be used as agricultural inputs.11 When reform actually came in the 1990s, the hypotheses of the 1980s were forgotten, and the rural population has been perceived as the most conservative element of Russian society. Carol Leonard, for example, describes rural responses as favoring “persistent collectivism,” characterized by a “rejection of reform.” According to her, those who remain in collective farms “have opted to resist change.”12 The peasant moral economy argues that rural dwellers in precapitalist agriculture resist marketization because it threatens their security as well as displaces their embedded cultural values. If this argument were valid for Russia, it would provide a reasonable explanation why surveys have shown that the rural population was largely opposed to marketization and privatization reforms during the 1990s. Surveys taken by Westerners and Russians have shown consistently that there is a discernible and significant urban–rural divide in attitudes toward market reforms. In the 1990s, there was some disagreement as to urban orientations toward marketization and privatization. For example, Western survey data have cast doubt on support for privatization throughout Russia. For example, Jerry Hough argued in 1994 that “The basic attitudes of the Russian people about economic reform . . . are

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consistent and unambiguous. . . . the Russian public absolutely does not favor the kind of economic reform advocated by Moscow radicals.”13 Another Western analyst casts similar doubt when she argued in 1999 that “the process of enterprise privatization has . . . neither made people more optimistic about their own material prospects nor made them more supportive of market reforms in general.”14 On the other hand, according to surveys taken by the Russian Center on Public Opinion throughout the decade, urban dwellers in large cities were more supportive of market reforms and perceived themselves to have benefited more.15 In contrast to urban studies, there was near unanimous agreement that rural dwellers were opposed to marketization and privatization, so much so that by the end of the 1990s, a conventional wisdom arose about rural orientations toward reform. A large part of the conventional wisdom regarding rural orientations was based upon public opinion polls. According to opinion polls, rural dwellers responded frequently that their incomes lagged price increases during reform. Rural dwellers reported that material conditions in their region were “bad” more often than urban dwellers. They also tended to be less optimistic about improvements in the economic situation.16 In addition, rural dwellers’ assessments of the material condition of their family and optimism for the future were the lowest compared to other cohorts by place of residence.17 Finally, rural dwellers had much higher negative assessments of the economic policies of Egor Gaidar, the architect of shock therapy and market reforms, than did residents of large cities. The same is true for the economic policies of former prime minister Viktor Chernomyrdin who oversaw privatization.18 For example, survey data show the least support for enterprise privatization in 1993 and 1995 from rural dwellers than from any other profession, by a significant margin.19 Flowing from these and other opinion data, the rural sector has, therefore, been seen as more conservative and less supportive of reforms. In the following section, tangible reasons to why rural public opinion would be negatively oriented toward reform are examined. Supporting Evidence for the Conventional Wisdom Peasant households did not suffer from the effects of urban bias as much as large farms. Peasant households consume most of their household production, and therefore they were less affected by low state purchase prices and lack of protection from food imports. The price scissors would have affected peasant households to the extent that they purchased small machinery or used mineral fertilizers. However, most households used their own manual labor and applied organic fertilizers. The precipitous

110 / the moral economy reconsidered

drop in investment flows to rural areas would have affected households indirectly through the deterioration of infrastructure and limited cultural and recreational opportunities (see below). While households were sheltered from the direct effects of state urban bias and state withdrawal, they did not escape entirely the effects of shock therapy.20 During the market reforms of the 1990s, it was commonly accepted that rural standards of living declined along many dimensions.21 It should be noted, even in passing, that this argument is not universally accepted. Eugeniia Serova has argued that the rural standard of living actually declined less than the urban standard of living.22 It is difficult to know this exactly because it is a complex question and many variables must be taken into account. What is often neglected is the fact that rural incomes—and more generally the rural economy—were demonetized during the 1990s, and only after 1998 did incomes become more monetized. Demonetization means that farm members often receive a significant portion of their income from nonmonetary sources. For instance, it is known that with significant wage arrears during the 1990s, farm managers often resorted to paying salaries with production in-kind. A demonetized income system makes it very difficult to measure standards of living.23 However, for indicators that can be measured quantitatively, it does appear that rural socioeconomic conditions deteriorated during the 1990s, which would provide justification for rural resistance to reform.24 Several of these conditions are surveyed below, all of which would help to explain why rural households might oppose reform policies. Income Differentials In chapter 3, it was shown that income differentials between rural workers and farm managers widened during the 1990s. Similarly, during the Yeltsin years, income differentials between urban and rural workers widened significantly. In 1990, on average, a collective farm worker received 88 percent of the monthly monetary income of an industrial worker, and a state farm worker received 104.5 percent.25 In 1998, a worker on a large agricultural enterprise earned 39 percent, the average monthly income of an industrial worker, in 1999, 34 percent, and in 2000, 36 percent.26 Moreover, rural incomes declined relative to other branches of the economy. In 1990 for example, a farm worker received 95 percent of the national average monthly income (industrial workers received 103 percent of the national average). In 1998, farm workers received 45 percent of the national average monthly income, in 1999, 41 percent, and in 2000, 45 percent.27 In contrast, industrial workers received 126 percent of the

rural households / 111

national average monthly income in 2000.28 Finally, rural wages increased slower than agricultural purchase prices, suggesting that farm management used lagging wages as a survival strategy to decrease fixed costs.29 Not only did urban–rural income differentials widen, but the types and sources of income also diverged. During 1998–2000, industrial workers on an average received about 84–85 percent of their monthly monetary income from salary and wages from their place of employment.30 In contrast, workers on large agricultural enterprises drew only about 33 percent of their monthly income from farm salary and wages.31 As large farms’ debt and balance of payments increased, they were unable to pay salaries, and farm managers had to resort to payments in-kind. As a result, monetary income declined. For many farm workers, the main source of income came from their private plot activities, accounting for 62 percent of income on non-reorganized farms and about 45 percent on reorganized farms, according to 1996 survey data.32 Surveys of more than 49,000 households by Goskomstat (State Committee on Statistics) support the finding that urban households receive a much higher percentage of their monthly income from salary and wages than do rural households. During 1997–2002, urban households averaged more than 93 percent of their gross income in monetary form. Table 4.1 illustrates the percentage of income that was monetized for urban and rural households during 1997–2002. Table 4.1 shows that (1) rural households received much less of their gross income in monetary form than did urban households; and (2) during the latter 1990s, rural household income became more monetized, a trend that accelerated after the financial crisis of August 1998. Table 4.1 Percent of income received as monetary income, urban and rural households, 1997–2002 (in percent)

Urban Rural

2nd Q 1997

2nd Q 1998

3rd Q 1998

3rd Q 1999

4th Q 1999

2000

93 70

93.5 72.5

92.5 69.5

93 75.5

93.5 76

93 76

2001 2002 93 76

94 78

Sources: Author’s calculations based on data from: Statisticheskii biulleten’, no. 1 (March 1999), p. 35; ibid., no. 1 (January 2000), p. 19; Dokhody, raskhody i potreblenie domashnikh khoziaistv v III-IV kvartalakh 2000 goda (Moscow: Goskomstat, 2001), pp. 15, 77; Dokhody, raskhody i potreblenie domashnikh khoziaistv v 2001 godu (Moscow: Goskomstat, 2002), p. 29; Dokhody, raskhody i potreblenie domashnikh khoziaistv v 2002 godu (Moscow: Goskomstat, 2003), p. 29.

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With regard to the latter point, the Goskomstat survey did not differentiate the sources of monetary income, so it is unknown what percentage of rural monetary incomes came from salary and wages and what percentage from other sources. Nonetheless, it is reasonable to interpret the increased monetization of rural household incomes to mean that money took on more significance. A primary method of increasing monetary rural household incomes was through higher volumes of food sales, a strategy that was advantageous because food prices rose quickly after August 1998, so fast that several regions and cities (including Moscow) slapped price limits on retail markups to protect urban consumers. Indeed, a panel survey of rural households in three Russian villages showed that households did increase food sales over time.33 The combination of on-time payments and higher prices served as an incentive to monetize income. Thus, increased monetization reflects rural households’ sensitivity to economic conditions and the ability to adapt to maximize their welfare. Rural Unemployment A second effect of shock therapy that provided rural households with a reason to oppose reform is unemployment.34 Analysts agree that the unemployment problem in Russia is most likely understated because only a small percentage of unemployed persons actually register for state assistance, owing to the fact that assistance is so inadequate. In rural areas, registration for assistance is hindered by the fact that a person may have to travel a considerable distance to a raion or oblast center, and rural transportation can often be unreliable for either leg of the journey. Rural unemployment increased during the 1990s, as it did in the economy as a whole, but it increased disproportionately in the rural economy. Under-reporting, as indicated above, is common, and is especially true in the agricultural sector, for which it is estimated that the actual number of unemployed is 2–2.5 times higher than official statistics show.35 During 1992–1994, rural unemployment grew by more than 370 percent, and in 1994 alone rural unemployment doubled. During this time period, nearly two-thirds of rural unemployment occurred in five economic regions: the Central region,36 the Volga region, the Northern Caucasus region, the Urals region, and the Western Siberian region. Significantly, rural unemployment became a problem even in the most productive agricultural regions. For example, in the Volga economic region, during 1992–1996, rural unemployment increased 2,700 percent. Between 30 and 40 percent of the rural unemployed were persons younger than 30. While about one-half of the rural unemployed left their place of

rural households / 113

employment on their own, more than a quarter were released due to reductions in farm labor as a consequence of decreased production.37 Ironically, rural in-migration to areas in southern Russia where agriculture is productive only aggravated the rural unemployment problem. Although much of rural unemployment has been concealed, estimates ranged between 1.8 and 2 million rural unemployed in 1994, a number equal to about 33–37 percent of total unemployment at the end of 1994.38 Using the upper estimate of two million rural unemployed, the number of rural unemployed equaled 20 percent of the number of persons actually employed in agricultural production in 1994. By 1999, it was estimated that 3.3 million rural dwellers were unemployed, or nine times more than had been officially registered.39 If those calculations were correct, it was equal to 39 percent of the number of persons employed in agricultural production and 38 percent of the total number of registered unemployed persons in Russia.40 Thus, rural unemployment is disproportionately high. Who are the rural unemployed? Among the rural unemployed, two main groups stand out. Surveys found that rural women accounted for 70 percent of the rural unemployed, although women comprised about 37 percent of the agricultural workforce in 2000.41 The rate of growth of unemployment for women increased about 380 percent between 1992 and 1994. Rural women experienced longer periods of unemployment, and a higher percentage of rural women were chronically unemployed.42 A second group that was affected by unemployment was the rural young (those less than 30 years of age). This group accounted for over one-third of rural unemployment in 1994 (young women are included in both categories). Among the rural young, the age group most affected by unemployment was that between 22 and 29 years of age.43 A fiveregion survey in 2001, headed by the author and funded by NCEEER, adds additional detail to the portrait of the rural unemployed. In the survey, the unemployed cohort in the sample is on the whole much younger: the unemployed had a mean age of 37, while the employed had a mean age of 53. Female unemployment dominated, accounting for 62.5 percent of those who were unemployed. The data also add additional detail to the portrait of the rural unemployed: more than 95 percent of the unemployed were married. Social and Material Conditions A third effect of shock therapy that provided rural households a reason to oppose reform is that during the 1990s, rural, social, and family

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material conditions deteriorated. Social services were curtailed, clubs and other service and recreational facilities were closed. For example, the number of cultural and entertainment facilities in rural areas declined from 62,600 in 1990 to 48,000 in 2001; the number of libraries decreased by about 10 percent, while library funding declined by 15 percent.44 Educational facilities were also affected. The number of preschools in rural areas declined from nearly 41,000 in 1990 to 22,000 in 2001, and the number of children attending rural preschools declined by more than 50 percent during the same time period. This fact reflects the aging and demographic problem of rural Russia. Overall, the number of all types of educational institutions in rural areas fell by about 10 percent during 1990–2002, while the total number of students actually increased, leading to more crowded schools.45 The quality of medical services, already low, declined further, and access to medicines became more difficult. From 1993 to 1996, nearly 500 rural hospitals closed. By the end of 1996, the construction rate of rural hospitals was one-sixth its 1990 level, and the number of new hospital beds one-fifth the 1990 level.46 Overall, during 1990–2001, the number of health care institutions in rural areas declined by more than two-thirds, from 5,301 in 1990 to 1,743 in 2001.47 A consequence was Table 4.2 Indicator

Construction of rural infrastructure, 1990–2000 1990

1995

1996

1997

1998

1999

2000

Construction of rural 17.9 housing (mil. sq. meters) Construction of 84 kindergartens (thous. seats) Construction of clubs, 90 places of relaxation (thous.) Laying of hot water lines 753.5 (kilometers) Laying of sewage lines 268 (kilometers) Construction of hard 28.3 surfaced roads (thous. kilometers) Number of new telephone 757.0 lines (new numbers, in thous.)

8.9

8.1

8.1

7.2

7.8

7.1

12.8

6.8

4.2

2.3

2.0

2.4

16.8

11.4

10.5

7.5

9.1

7.1

41.9

NA

NA

NA

NA

82.2

44.3

NA

NA

NA

NA

6.9

5.1

4.4

4.1

4.6

5.6

130.1

139.2

126.0

88.9

129.4

148.4

192

Note: NAData not available. Sources: Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” p. 164; Agropromyshlennyi kompleks Rossii (Moscow: Goskomstat, 2001), p. 18.

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a surge in the rural death rate. In addition, the construction of rural infrastructure became a fraction of previous levels. Trends in rural infrastructure are illustrated in table 4.2. How did this disastrous situation occur? Two primary processes unfolded. First, federal investment monies for rural infrastructure declined, as part of a conscious policy decision. As a result, greater responsibility for capital investments fell on regional budgets, and, in fact, in December 1991, federal government legislation recommended the transfer of social expenditures to regional and municipal governments. However, regional budgets were hardly any more capable than the federal government to fund capital investments in rural infrastructure. The second process flowed from the first. Large farms either failed to transfer responsibility for social expenditures to municipal governments, or the latter refused to assume this budgetary responsibility. Moreover, in the second half of the 1990s, many municipalities expanded their size and incorporated what were previously rural administrative territories. Former rural territories became part of a larger urban municipality, which in turn belonged to the larger raion administration. With these changes, rural administrations lost not only autonomy, but also, more importantly, literally became branches of urban government and thus lost a considerable amount of budgetary resources.48 The consequence was that large farms were forced to assume a greater portion of responsibility for capital investments. In 1994, the Russian government indicated that the “basic source of financing construction projects is the agricultural enterprise itself.”49 By 1996, it was reported that large farms were financing 65 percent of all rural capital investments, increasing to 83 percent in 1999.50 Because large farms were already burdened with high levels of debt, unprofitability due to price disparities, and increased production costs combined with lower levels of direct subsidization, the construction of rural infrastructure was drastically curtailed as table 4.2 indicates. Moreover, the deterioration in rural life was reflected by survey data which showed that a very small percentage of the rural population felt their material condition had improved during the 1990s, as shown in table 4.3. Table 4.3 shows that the main differences in rural material conditions were due to the economic status of the farm, but even on the strongest farms almost one-half of the respondents felt that their material condition had worsened. It also shows that the weaker the farm, the more negative the workers’ perceptions were about their family’s material status.

116 / the moral economy reconsidered Table 4.3 percent)

Farm workers’ perceptions about their family’s material condition (in Strong Strong Average Average Weak Weak farmfarm-not farmfarm-not farmfarm-not reorganized reorganized reorganized reorganized reorganized reorganized

Situation improved No change Situation worsened

11 42 47

9 44 47

8 39 53

5 34 60

6 35 59

6 25 69

Source: Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” p. 164.

Table 4.4 Market reforms should Continue Stop Too hard to answer

Rural orientations to market reforms, 1998–2002 (in percent) Nov. 1998

Sept. 1999

Nov. 1999

Jan. 2000

May 2000

Sept. 2000

Sept. 2002

21.7 31.9 46.4

24.0 36.5 39.5

21.4 35.1 43.6

27.1 29.5 43.4

29.1 26.2 44.7

24.3 27.5 48.2

25.8 21.8 52.5

Note: Month indicated is date when survey was taken. Sources: Ekonomicheskie i sotsial’nye peremeny, no. 1 (January–February 2000), p. 73; ibid., no. 6 (November–December 1999), p. 75; ibid., no. 1 (January–February 2000), p. 77 for responses during the latter Yeltsin period. Compare those responses with ibid., no. 2 (March–April 2000), p. 67; ibid., no. 4 (July–August 2000), p. 59; ibid., no. 6 (November–December 2000), p. 76; and ibid, no. 6 (November–December 2002), p. 75.

Deteriorating infrastructure and material conditions of life for a large percentage of the rural population meant that rural dwellers associated these consequences with reform. As a result, the deterioration in rural life was also reflected in attitudes toward reform. Survey data show that rural dwellers responded most frequently that “market reforms should stop” in comparison to respondents in Moscow, St. Petersburg, and large cities.51 When Boris Yeltsin was in power, the percentage difference between responses “market reforms should stop” and “market reforms should continue” was no less than 10 percent. Once Putin was elected president, there was a brief period of a few months when more rural respondents answered that market reforms should continue. Rural attitudes toward market reforms are indicted in table 4.4. When Vladimir Putin became president in January 2000, however, for reasons that are probably not entirely due to his economic reform

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strategy, public opinion data show a spike upward by the rural opinion in support of the continuation of market reforms and a decrease in responses that they should stop. In mid-2000, a higher percentage of rural respondents actually wanted market reforms to continue than to stop. By early fall 2000, however, rural responses returned to their previous pattern, but the percentage difference between responses “reform should stop” and “reform should continue” declined, ranging only from 2 to 3 percentage points during the rest of 2000. Two years later, after the economy as a whole had improved and economic growth had averaged 5 percent per annum during 1999–2002, rural public opinion again indicated more support for the continuation of reform than its cessation. In conclusion, there is evidence from public opinion polls to support the conventional wisdom that rural households were ambiguous about change, or at least less than enthusiastic about the results. At face value, this evidence appears highly suggestive. However, when actual behavior is examined, a different perspective emerges. The sections below focus on two main questions: patterns and nature of adaptation, and who adapted. The analysis starts with food production, and successive sections examine food marketing, land relations, and the development of household businesses. For each section, patterns of responses are considered first, and then who responded, using household survey data. The effects of adaptation are explored in chapter 5. Counterevidence I: Rural Households’ Behavior During Marketization While public opinion data paint rural households as conservative, and despite several unfavorable trends in rural life, when actual rural behavior is examined, it becomes clear that rural households were much more opportunistic than is usually realized. In short, while income differentials, rural unemployment, and deteriorating social and material conditions gave rural residents a reason to oppose reform, those factors also provided a reason to search for new opportunities and to change behavior. The following sections present counterevidence to suggest that rural households did not merely use reform opportunities to survive and perhaps shelter themselves from the consequences of market reforms, but rather embraced new opportunities to expand family welfare.52 In this sense, rural Russians embraced “market reforms,” although in ways that are most beneficial to them, based on their calculations and in ways that do not always correspond to the direction of reform envisioned by Western advisors and international donor organizations.

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Food Production by Households: Responses It is important to remember that even during the Soviet period, rural dwellers were exposed to the “market” based on capitalist principles. During the Soviet period, rural dwellers were exposed to market forces in the form of their private plots and sales from their plots at sales urban farmers’ markets. In the Soviet period, private plots averaged just over one-quarter hectare in the Russian Republic, although they provided a significant percentage of the nation’s food—an estimated 25 percent in the 1980s—and very high percentages of certain products such as meat, milk, eggs, potatoes, and vegetables.53 Virtually every rural family operated a private plot and on average rural dwellers worked on their plot more than 2.5 hours per day.54 The primary outlet for sales of privately grown food was the urban farmers’ market, where retail prices were based on market demand and were several times higher than retail prices in state-owned food stores. A survey taken in the mid-1980s by the Institute of Social-Economic Problems for the Development of the Agro-Industrial Complex within the USSR Academy of Sciences examined the motivations for operating a private plot. For all ages and income groups, the overwhelming reason for having a private plot was to “provide the family with food products,” cited by almost 90 percent of every group. The second most popular reason was to “increase family income.”55 Thus, the primary purpose for privately grown food was family consumption. Under Gorbachev, the limitations on operating a private plot were greatly reduced, and income from private plots provided an important supplement. According to official Goskomstat data based upon a survey of private plot operators, income from private plots averaged 75 rubles a month in 1988 (81 rubles for families living in their own home), compared to an average monthly salary of 200 rubles for collective farm workers (kolkhozniki). For state farm workers, income from private plots averaged 54 rubles a month (71 rubles for families living in their own home), compared to an average monthly salary of 235 rubles.56 In short, rural workers obtained income supplements from market-based activities. From these data, we may conclude that even under communism, a significant part of the Soviet agricultural system was market-oriented, indicated by the private growing of food and the sale of output through market channels outside state control. In the post-Soviet period, all limitations have been removed on private plots so that a plot now may be any size with as many animals as the owner desires.57 There is suggestive behavioral evidence that rural households took advantage of new opportunities brought on by market reforms.

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After the introduction of reform, rural households used opportunities presented by reform to acquire more land for private cultivation during the 1990s. Nationwide, by the end of the Yeltsin period, the total amount of agricultural land used by rural households almost doubled in comparison with 1990.58 During 1990–2000, the total amount of agricultural land used by households for food production increased from 4.2 million hectares (ha) in 1990 to 7.97 million ha in 2000 (household uses include private plots, collective gardens, and individual gardens).59 The amount of land used for private plots (usually household plots) increased from 3.2 million ha in 1990 to 6.2 million ha in 2000 (and continued to increase thereafter to 6.9 million ha in 2002).60 Included in that statistic is the fact that by 2000, the average size of a private plot almost doubled in comparison with 1990, from 0.20 ha in 1990 to 0.39 ha in 2000 and to 0.43 ha in 2002. These data do not include land used by private farmers, which adds another 14.5 million ha in 2000 and 17 million ha in 2002. Overall, by the end of the Yeltsin period, rural households possessed 6 percent of all agricultural land that was used for food production, or a slightly lower percentage of agricultural land possessed by private farmers who are considered the epitome of rural capitalist entrepreneurs who are dedicated to market reforms.61 It is important to note that the expansion of land under household use for private production signifies a reversal of long-term trends from the Soviet period. This trend shows that rural households were not antiprivatization in their behavior, and in fact were quite active in expanding private land use. Rural households increased their production capacity in other ways as well as obtaining more land. Reversing long-term declines in their animal husbandry stock during the 1990s, households increased rather significantly their number of beef cattle, milk cows, and pigs during 1990–1995.62 After 1995, the numbers declined, but the number of cattle and cows were above the 1990 level in 2000. However, given the drastic declines in animal husbandry stocks on large farms, any increase among households is impressive.63 As a result of the trends indicated above, household food production increased as a percentage of the total value of food output in Russia, reaching a high of 59 percent of the ruble value of food output in Russia in 1998 (whereas in 1990, households produced 26 percent).64 Thereafter, the percentage of food produced by households declined somewhat to 54 percent in 2000, as production on large farms began to rebound. The percentage of food contributed by households also equaled 54 percent in 2002.65

120 / the moral economy reconsidered

Within the overall trend of higher household production, it should be noted in passing that increases in the value of agricultural output from households were primarily due to declines in output among large agricultural enterprises and secondarily to increases in the household sector.66 Nonetheless, increased physical output of certain commodities by households shows substantial increases. For example, in 1991, households produced 30 percent of the nation’s meat, but 59 percent in 1999; households produced 26 percent of the milk in 1991, but 50 percent in 1999; and 22 percent of the eggs in 1991, but 29 percent in 1999.67 The greatest increases in physical volumes of output from households occurred during 1991–1995. Thereafter household output either leveled off or declined slightly.68 In essence, expansion of production capacity was greatest during the period of most acute political risk, when the political environment was most uncertain. Trends in the physical volume of agricultural output from rural households are shown in table 4.5. Table 4.5 shows that household production increased during 1991–2002 for potatoes, vegetables, and milk, while declining for meat and eggs. While household output is not sufficient to feed the nation or provide the full range of variety that consumers want, household production is important in that it provides an important source of food for rural dwellers. For example, in 1998, household food production accounted for 40 percent of the value of food consumed by rural families, but less than 8 percent for urban families.69 Given the fact that in 1999 rural families spent an average of 65 percent of their gross income on food purchases, including 50 percent of their monetary income, production from rural households was extremely important.70

Table 4.5 Food output from households, 1991–2002 (million tons unless otherwise noted) Product

1991

1995

1996

1997

1998

1999

2001

2002

Potatoes 24.8 Vegetables 4.8 Meat (dead 2.9 weight) Milk 13.5 Eggs (billion) 10.4

35.9 8.3 2.8

34.9 8.2 2.8

33.8 8.5 2.7

28.7 8.4 2.7

28.7 9.5 2.6

32.4 10.6 2.5

30.6 10.6 2.6

16.3 10.2

16.3 9.9

16.1 9.8

16.0 9.9

15.6 9.6

16.8 9.9

16.8 9.7

Sources: Agropromyshlennyi kompleks Rossii (Moscow: Ministry of Agriculture and Food, 2000), pp. 263–77; Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2002), p. 87; Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2003), p. 408.

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During the 1990s, other forms of “private” agriculture flourished as well, showing an embrace of reform opportunities. The number of families operating collective and individual fruit gardens increased from 8.5 million in 1990 to 14.9 million in 2000. The amount of land used for individual and collective fruit gardens increased from 576,000 ha in 1999 to 1.2 million ha in 2000.71 While the number of families using a collective or individual vegetable garden decreased during the 1990s, the amount of land used for individual and collective vegetable gardens increased from 379,000 ha in 1990 to 602,500 ha in 1995, before declining to 469,000 ha in 2000. Overall, by the end of the Yeltsin period, more than 36 million families operated some form of household agriculture whether it be private plots, collective and individual fruit gardens, or collective and individual vegetable gardens.72 Those numbers were in addition to the 260,000 private farms in Russia in 2000 (employing 800,000–900,000 people). Thus, across a variety of economic activities based on private ownership and individual labor, the 1990s showed that rural households seized opportunities to expand land holdings and increase food production. It might be argued that increased food production was a survival strategy by households to endure and survive a hostile macroeconomic climate. This argument has validity and in general is not overly controversial. But it should also be added that this line of argumentation does not capture the entire picture. In order to cast further light on this question two issues are relevant. First is the issue whether food production was increased out of need or due to opportunity. The second issue is what was done with the increased food production—was it consumed or was it sold. Increased production may in fact be used as a survival technique by the household, independent of participating in marketization. But there is also evidence of increased marketization, which is direct evidence that market reforms and the opportunities thereof were embraced. The following section first examines who responded by increasing food production and then turns to an examination of food marketing by households. Food Production by Households: Who Responded? The argument that households responded to reform opportunities by increasing productive capacity and food production is incomplete without a consideration of who responded, that is, what are the characteristics of households and/or individuals who increased production the most? To address this issue, we turn to survey data collected from 800 households in 5 regions of Russia, funded by the NCEEER.

122 / the moral economy reconsidered

A traditional approach to household production links the number of adults in a household to its food output. In other words, the level of human capital is a key determinant of rural household production.73 This is the Chaianov model.74 Data from the NCEEER survey confirm that households with higher human capital grow more produce on their household plot, and Pearson correlations (with a two-tailed significance test) show positive associations between family size and output of potatoes, vegetables, meat, and milk, each statistically significant at the 100 percent confidence level.75 Family size affects food sales, leading to more sales, which in turn contribute to higher levels of household income. As a result, the more the working adults in the household, the higher the household income. This linkage between human capital, household output, and household income was also demonstrated by O’Brien, Patsiorkovski, and Dershem, based upon longitudinal panel data in three Russian villages.76 However, NCEEER survey data also suggest nuances to the Chaianov model. In an article published elsewhere, the relationship between “surplus labor” and household food output was examined.77 “Surplus labor” is defined as a household with an unemployed person, in which the unemployed individual is not contributing monetary support to the household, although this person is available to contribute labor. Since “extra” labor is available, it might be expected that households with “surplus labor capacity” (at least one unemployed person) would produce more food than households in which all of the adults are employed and therefore have greater time constraints. Tending the plot, whether it be the household plot or a rental plot, contributes nonmonetary income to the household, and thus would be encouraged, especially if the unemployment has been long term.78 Analysis of NCEEER data showed that households without any unemployed members produced more food, even though the mean size of the household was smaller and greater time constraints existed on household members. Households with an unemployed person actually produced less food, with the exception of potatoes, than households in which all adults were employed. The greatest differences in household production were for fruits and meat. With regard to meat, what is particularly interesting is that lower production levels of animal products in households with an unemployed member were not necessarily the result of fewer heads of livestock. For example, households with an unemployed member had a mean of 1.36 cows and calves, while households with no one unemployed had a mean of 1.37. Households with an unemployed member had a mean of 1.11 pigs, while households with

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no one unemployed had a mean of 1.41.79 There was no evidence that employed households had significantly higher levels of mechanized machinery, used more fertilizer, or had other advantages in production. Moreover, both types of households had essentially the same proclivity to use mineral fertilizer, organic fertilizer, and pesticides. Thus, these data yielded no clear trends to suggest that higher production levels were due to differences in productive capital possessed by the household, and instead differences appear to be linked to behavioral responses. How is the labor factor “negated”? Clearly, it is not merely the number of adults in a household that matter, but also the age structure of the household, a finding that O’Brien has examined.80 If labor is not always determinant in influencing household production, what other factors might be operational? One obvious aspect is differences in land quality, climate, and geographical characteristics. There are other structural factors such as level of education, health of respondent, and size of household land plot (although the discussion below shows that the size of a household plot is a variable, not a constant). Each of these variables is positively correlated to higher household food production. But these factors do not explain fully the production differences among households.81 The analysis above did not count pensioners as “unemployed,” so it appears that there is also an important behavioral aspect that is suggested by the findings above. Even though rural areas do not have the same employment opportunities as cities, it might be hypothesized that the same factors that contribute to long-term unemployment also influence food production levels. In short, hard workers produce more and have higher income, while lax workers produce less and have lower incomes. To test the behavioral hypothesis, a statistical analysis of the NCEEER survey data was performed, one that examined the relationship between household income and household food production.82 A dummy variable was created: (1) households living “in poverty” and (2) those “not in poverty.”83 Monetary incomes were used to differentiate between households in poverty and those that were not in poverty. While using this standard, it is acknowledged that nonmonetary income is an important factor in overall household welfare, and nonmonetary income increased as a share of total household income for rural families during the 1990s.84 Moreover, it was recognized that there are degrees of poverty, that is to say that some households are much poorer than others. The greatest behavioral differences are found at the highest and lowest extremes of the poverty scale, that is to say that there might not be much behavioral difference among households clustered around the middle of the scale.

124 / the moral economy reconsidered

Having said that, it was found that households living at or below the poverty line produced significantly less food from their household plot than did households above the poverty line. Despite differences in human and productive capital, as well as differences in structural factors between poor and nonpoor households, the rural poor lagged behind the nonpoor by a surprising margin when it came to food production. The rural poor produced just over one-half the volume of potatoes and vegetables. Of particular note is the fact that the rural poor produced less than one-third the volume of meat as the nonpoor, and meat is usually a primary product produced by households throughout Russia (accounting for 55 percent of national meat production in 2002). Therefore, while households in general were increasing their output and accounting for a larger percentage of national output during the 1990s, these survey data suggest that the rural poor shared in this economic expansion to a lesser degree than the nonpoor. More generally, the data show that the highest income categories produce significantly more food than the lowest income categories. Furthermore, it is important to note the difference between high preference and expensive food commodities (primarily meat), and lower preference and lower cost foods (such as vegetables and potatoes). Households in lower income categories not only produced less in general— despite more household members—but in particular, produced less of high preference and high cost food commodities. For example, the highest income individuals produced almost 10 times more meat than the lowest income individuals, but only about 2.6 times as many potatoes and 2.4 times as many vegetables.85 Higher food production by high-income individuals was a result not only of working hard, but also a result of accumulating productive capacity. When reform began, it is reasonable to assume that most rural households were roughly similar in the size of their household plot, and in the number of cows, pigs, and there is evidence to this effect.86 In 2001, however, when the survey was conducted, there was evidence of emerging stratification: the highest income individuals had a mean of 5.82 cows and calves and 5.12 pigs, while the lowest income individuals had a mean of 0.99 cows and calves and 1.02 pigs. Further, while household land plots were essentially of equal size, 0.25 ha for the lowest income group and 0.26 for the highest, there were significant differences in the size of rental plots. The lowest income group had a mean rental plot size of 0.10 ha while the highest income group had a mean of 2.1 ha. This is important because the size of household land plots correlate positively with household food production but negatively with food

rural households / 125

sales, while rental plots correlate positively with food sales. Thus, land plots appear to have different functions. Therefore, differences in food production are attributable to behavioral responses both at present (working hard to produce) and in the past (a pattern of accumulating production capacity). Extrapolating from these survey results, it is clear that, among rural household producers, high income households are the most productive and are contributing the most to the national food supply.87 The statistical evidence is highly suggestive that these higher levels of production are due to behavioral differences, and not solely due to differences in human capital and other structural factors. Food Marketing by Households: Responses To say that households increased food production, and that some groups of the rural population did so more than others, begs the question as to what was done with food sales. Thus, an important aspect of adaptive behavior is to understand how households’ food production was used, and this section addresses this question. It is important to remember that rural households have long been exposed to commercialized agriculture and market structures, before and even during the Soviet period. As a result, the sale of household food production was not a new behavior, but rather an enhancement of previous trends. During the Soviet period, household private plots made significant contributions to the nation’s total food supply, although the volume of trade turnover through urban farm markets was small compared to state channels of trade. During the 1960s–1980s, a long-term decline was evident in the volume of produce sold through urban farm markets, a trend that was reflected in the decrease in the number of such markets as well.88 This decline resulted from a combination of different processes, namely, the government’s desire to substitute as much as possible production from large farms for private plot production, increases in wage scales on large farms, the modernization of several branches of production on large farms, and limitations on private plot sizes. By 1988, collective farm market trade accounted for just 2.5 percent of food sales (in 1988 prices). In addition, the percentage of income derived from private plot sales displayed a long-term decrease, from nearly one-half of a collective farmer’s income in 1940 to less than one-quarter by 1986.89 Thus, the long-term trend in the USSR was for privately grown food to comprise a smaller percentage of trade turnover, family income, and contribution to the nation’s food supply. In the contemporary period, it is necessary to state from the beginning that detailed national data for sales of agricultural products from

126 / the moral economy reconsidered

households are difficult to obtain, reflecting the fact that Goskomstat itself has difficulty collecting systematic data. Goskomstat conducts surveys among households and extrapolates from that sample. Although the sample is large, it is likely that respondents conceal certain realities, whether it concerns household production or sales. Thus, there are many details lacking about the marketing of household production. Nonetheless, even with data restrictions, the trends evident in the 1990s paint a clear picture that the long-term trends of the Soviet period were reversed. We saw above that food production from households increased during the 1990s. As indicated in table 4.5, at the national level, household production increased for potatoes, vegetables, and milk production, while declining for meat and eggs during 1991–2002. The question is what happened to food sales during this time? These trends are shown in table 4.6. The trends depicted in table 4.6 raise serious questions about what happened to the food produced by rural households. Table 4.6 at first glance suggests that, at least as far as food marketing goes, households did not take advantage of reform opportunities by selling more food. While per capita food consumption declined for the rural population (as for the urban), there may have been some understating of consumption, but even if this is so, there are physical limits as to how much a household can consume, especially given the decreasing size of rural households due to higher death rates, low birth rates, and continued out-migration. Some of the additional production was used for feed, and in fact the number of centners of feed per head of cattle did increase during

Table 4.6 Food sales from households, 1991–2002 (million tons unless otherwise noted) Product

1991 1995 1996 1997 1998 1999 2000 2001 2002

Potatoes 4.9 Vegetables .71 Meat and .92 poultry Milk 2.3 Eggs (billion) .92

4.1 3.5 .70 .72 1.0 1.0

3.3 .80 .99

2.9 2.3 .79 .66 .95 .97

2.8 .78 .96

3.2 2.9 .81 .81 1.1 1.3

2.9 1.2

2.9 1.2

2.9 1.2

3.2 .74

3.1 3.0 .60 .56

2.9 1.2

2.9 .80

Note: Meat and poultry is dead weight. Sources: Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (1999), p. 38; Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (2003), p. 34.

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the 1990s and continued to increase into the new century.90 Finally, some additional food was used in barter transactions. Thus, on the one hand, the data fit well with a survival model and support well-known trends concerning wage arrears, demonetization of income, and income erosion due to inflation. In fact, Goskomstat data show that the percentage of food production that was sold declined for several different products.91 On the other hand, a closer examination of the data raises interesting questions about the relationship between household food production and food sales, and suggests that more adaptation may have occurred than is realized. Examined closely, official data imply that low preference food products such as potatoes and vegetables were consumed, while high preference items such as meat and milk were sold. For example, calculations show that for potatoes, the 2002 production was 50 percent higher than the 1990 production, but the 2002 sales had declined by 41 percent. For vegetables, using the same time points, production increased by 244 percent but sales increased only by 14 percent. For meat and poultry, production increased only by 3 percent, but sales increased by 41 percent; and for milk, production increased by 27 percent but sales increased 128 percent.92 What happened? One explanation is that households consumed or used as feed the cheaper plant products while increasing the sale of higher priced animal husbandry products. If this interpretation is correct, it means that households were much more sensitive to market conditions and were more opportunistic than is usually acknowledged. In general, not only did households adapt to market conditions, but it is also likely that they sold much more food than has been reported, probably in order to hide taxable income.93 It bears repeating that even if household respondents were completely honest, household data on production, consumption, and sales are very difficult to obtain. There are corollary data that support the hypothesis of higher-than-reported food sales. For example, the results of two large surveys provide insight into households’ motivations to obtain land. The first survey was conducted in seven regions during the fall of 1995 and the winter of 1996 by the Institute of Land Relations and Land Tenure in Moscow and the Institute of Sociology in Kaluga oblast.94 The second survey was conducted in the fall of 1997 and the winter of 1998 by the same institutes. Similar to the first survey, respondents aged 18 and higher were polled in face-to-face interviews.95 These surveys found that the primary reason to obtain a land plot was to grow food for consumption—true in both surveys. But obtaining land for the production of food for sale was also

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significant and increased between the two surveys. According to the 1997–1998 survey, among land lessees, who account for 90 percent of land transactions, more than 25 percent of respondents obtained land in order to grow food for sale.96 More direct confirmation of the hypothesis comes from research by O’Brien, Patsiorkovski, and Dershem. Panel data were collected from three Russian villages in distinct geographical regions for the years 1993–1997 (Latonovo, in Rostov oblast, Vengerovka, in Belgorod oblast, and Bolshoe Sviattsovo, in Tver oblast). Altogether, some 463 rural households were interviewed during each round of the survey.97 This team of researchers interviewed and gathered data from the same households during consecutive years, thus forming a comparable time series database. They found that, even considering regional differences, food production increased significantly in all three villages (particularly meat and potatoes).98 At the same time, nonmonetized consumption declined.99 Where did the food go? The evidence from the panel data are suggestive: all three villages experienced increases in household food sales (measured in kilograms). During 1995–1997, the households that were surveyed in Latonovo experienced a 16 percent increase in food sales, the households in Vengerovka experienced a 61 percent increase, and the households that were surveyed in Sviattsovo had a 94 percent increase in food sales.100 Using the same panel data but a different time period (1995–1999), this author found that the percentage of households selling their produce increased, and the mean number of kilograms that were sold increased.101 For the sample as a whole, the percentage of households who sold potatoes increased from 20 percent in 1995 to 33 percent in 1999; the percentage of households selling vegetables increased from 5 to 11 percent; the percentage of households selling meat rose from 43 to 62 percent; and the percentage of households selling milk grew from 49 to 58 percent. With regard to the mean number of kilograms of production that was sold by households in the three villages, Latonovo and Sviattsovo experienced decreases in the mean volume of potatoes sold. Other than potatoes, greater volumes of food were sold in the three villages. In Latonovo, the mean sale of vegetables increased from 0 kg in 1995 to 132 kg per household in 1999; mean meat sales in 1999 were 383 percent of the 1995 level, and mean milk sales were 152 percent of the 1995 level. In Vengerovka, mean potato sales in 1999 were 322 percent the 1995 level, mean vegetable sales were 331 percent the 1995 level, mean meat sales were 158 percent the 1995 level, and mean milk sales were

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138 percent the 1995 level. In Sviattsovo, the mean volume of potatoes that was sold decreased, but the mean volume of vegetables sold in 1999 was 160 percent the 1995 level; the mean volume of meat that was sold was 211 percent the 1995 level, and the mean volume of milk that was sold was 276 percent the level of 1995. These trends fit with increased monetization of household incomes after 1998 and support the hypothesis that more food was sold by households than is reported in official statistics, a fact that suggests greater household adaptation to market opportunities than is usually acknowledged. Food Marketing by Households: Who Responded? Similar to the examination of food production, the argument that households responded to reform opportunities by increasing food sales is incomplete without a consideration of who responded, that is, what are the characteristics of households and/or individuals who increased food sales the most? To address this question, data from the NCEEER survey are again employed. At a general level, 612 out of 800 respondents answered the question about income from household food sales, and of those 612, 53 percent of households had income from food sales in 2001. The mean income from food sales for the sample as a whole was 580 rubles per month, with a range from a low of 12 rubles to a high of 7,958 rubles. There was also significant regional variation. Chuvashia had the lowest mean income from food sales with 393 rubles a month, while Volgograd had the highest mean with 932 rubles a month.102 (At the time of the survey, the exchange rate was 29R  $1.) A more specific socioeconomic profile of households that responded with higher food sales is less straightforward than might be expected. Excepting private farmers, whose livelihood is based upon the sale of food, previous analysis found that households of farm managers and specialists produced more food and sold more.103 To explore the question in more detail, different variables were selected to form a regression model. The model used the variable “meat sales” (expressed in kilograms per year) as the dependent variable, since it was shown above that adaptive behavior was characterized by increased consumption of starches and carbohydrates, and increasing the sale of high preference, high cost products such as meat.104 Overall, the regression model accounted for only 23 percent of the variance (R-squared was .235), suggesting that the model had some, but not overwhelming, explanatory power. Among the independent variables used in the model, the standardized coefficients (beta) were weak and not statistically significant at a minimum

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95 level of confidence, with one exception. Interestingly, the variable “income from sale of produce” had a beta of only .088 and was not statistically significant (.067), which means that the sale of produce and the sale of meat are separate processes and have a weak causal link.105 The one independent variable that stood out was the variable “income from business activity,” which had a beta of .457 and was statistically significant at the 100 percent level of confidence. This finding supports previous research that concluded that high-income households tend to sell more food.106 The result from the regression suggests that higher income households sell more food because there appears to be an inclination toward entrepreneurship that spills over to food sales as well. In short, this suggests not only behavioral differences but also an “entrepreneurial spirit” among some households that leads them to engage in household business and sell more food. Counterevidence II: Rural Orientations and Behavior Toward Land At the core of our inquiry in this section is the question what are rural orientations to land privatization and a land market? A corollary to the “rural households opposed to marketization” position is the argument that land privatization is also opposed by rural households. An odd amalgamation of arguments shape the conventional wisdom of how rural households are oriented toward land privatization and ownership. A conventional wisdom arose through selective emphasis on rural responses during public polling that fits the ideological needs of policymakers and Western advisors. Survey data were used for ideological reasons and interpreted to mold a conventional wisdom. From the beginning of reform, therefore, “convenient” evidence was emphasized while “inconvenient” evidence was ignored. For example, as early as 1990 survey data on relations toward land were published in the prestigious Russian journal Voprosy ekonomiki. The survey was conducted throughout several republics of the former USSR and encompassed 1,774 urban and 823 rural dwellers. The aspects that received attention and which came to form the base of the conventional wisdom were rural responses that: 1. showed that urban dwellers more than rural dwellers felt that ownership of land plots was “necessary”; 2. showed that rural dwellers more than urban dwellers felt that state and collective farms were the most effective form of farming, best able to provide the nation with food; and

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3. showed that rural dwellers favored long-term land leases and lifetime use of land more than private ownership of land as the most effective form of land transfer to individuals.107 Aspects of the survey that were equally important, but which did not receive emphasis and which were not included in our “knowledge” about the rural sector included: 1. the total percentage of urban and rural respondents who felt that land ownership was either “necessary” or “permissible” was actually fairly close (88–85 percent); 2. the percentage of rural respondents who agreed that the right to buy and sell land was “necessary” was higher than for urban respondents, and the percentage of rural dwellers who disagreed was lower than for urban respondents; 3. the percentage of rural dwellers who favored private ownership of land as the most effective form of land transfer to individuals was higher than for urban respondents.108 Once the idea was introduced that the rural sector was more conservative toward land privatization and different aspects of land reform, a conventional wisdom gathered momentum. Survey data published by the World Bank purported to show resistance to land privatization, and by extension, a land market. In its 1996 publication, the World Bank reported that only “40 percent [of farm employees] supported private ownership of household plots, and fewer than 20 percent supported private ownership of land allocated to private farmers.”109 World Bank data from the same source showed low levels of household departures during farm reorganization, and the lack of decollectivization in general. These data were used to support the supposition that the rural population was less than enthusiastic about land reform. Supporting the views of the World Bank were conservative elements in Russia, who argued that the rural population opposed land privatization, and by extension, a land market, because peasants fear they will be dispossessed of their land by speculators and urban buyers who will not use the land for agricultural purposes.110 Thus, neoliberals and antiliberals, although occupying different ends of the political and policy spectrum, concurred that the Russian rural population has been reluctant to embrace land privatization. In addition, a common line of argumentation was that the lack of a land code hindered the development of a land market.111 The presumption was that rural dwellers were risk-averse and not willing to acquire land as

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long as land rights were not specified. At the same time, frequent stories in the Russian press and scholarly analyses described how private farmers, farm members, and other rural dwellers desiring land had difficulty obtaining it or were allocated remote, poor quality land. The argument was that farm managers were blocking the acquisition of land and attempting to keep their farms intact by blocking land distribution, a subject that was discussed at length in chapter 3, where it was noted that managers would not have to block access to a commodity that was not desired. So the two arguments are inconsistent. The purpose of this section, therefore, is to critique the argument that Russian rural dwellers have been opposed to land privatization, and, by extension, have been averse to participate in the land market. To substantiate the argument, this section presents counterevidence, starting first with public opinion data about land privatization and the land market, then turning to trends at the national and regional level, and then using survey data to examine actual behavior of rural households that adapted to new land relations. Rural Orientations Toward Private Land Ownership As would be expected, attitudes toward land reform vary by age, education level, socioeconomic status, and gender. With regard to gender, previous research showed that women held somewhat less negative views about land reform than men.112 The point is that it is no less accurate to assert that all peasants supported land reform any more than it is accurate to argue that all peasants opposed land reform. As noted above, most opinion polls have depicted a rural population that is, at best, ambivalent about land reform. However, an alternative understanding of rural orientations toward private land ownership begins to emerge from data gathered by the Agrarian Institute in Moscow, which surveyed owners of land shares in Nizhnii Novgorod and Orel’ oblasts in 1998. The survey was concerned with assessing the degree of support for land privatization and presents a more nuanced perspective than was previously reported by the World Bank. The data from the Agrarian Institute suggest that rural dwellers were not inherently opposed to private land ownership, despite the absence of a land code and an uncertain political climate in 1998. The results of the 1998 survey are presented in table 4.7. Table 4.7 depicts rural popular support for private land ownership, support for land rights to dispose of land through sales, and support for peasant ownership of land in Russia. The one element suggesting an “illiberal” orientation was support for limitations on the size of an individual’s private plot by respondents in Nizhnii Novgorod. (It might be

rural households / 133 Table 4.7 Attitudes by land share owners toward land privatization in 1998 (in percentage) Question Russia should have private land ownership Yes No Peasants should be owners of agricultural land Yes No Land owners should have right to sell land for agricultural production Yes No The size of a private land plot for one person should be limited Yes No

Nizhnii Novgorod oblast

Orel’ Oblast

36 28

44 31

56 17

68 13

39 27

40 22

31 36

40 32

Note: Figures have been rounded. The source did not indicate, but it is likely the remaining percentages were either missing answers or responses “too hard to answer.” Source: Uzun, ed., Sotsial’no-ekonomicheskiy analiz rezul’tatov reorganizatsii sel’skokhoziaistvennykh predpriiatii, p. 76.

noted in passing that the 2002 law “On Agricultural Land Transactions” did in fact place an upper and lower size requirement on privately traded land).113 Additional survey data from the Institute of Land Relations and Land Tenure in Moscow and the Institute of Sociology in Kaluga oblast support the evidence from the Agrarian Institute.114 These data show the attitudes of both land buyers and land sellers by place of employment toward private ownership of land, indicated in table 4.8. From table 4.8, five main points emerge: 1. The data clearly indicate that management and employees in both state and non-state enterprises support private land ownership, indicated by the small percentage of respondents who are opposed to private land ownership. For management, 85 percent supported land ownership, for employees in state enterprises, over 92 percent support private land ownership, and employees in non-state enterprises, over 90 percent. Thus, support for private ownership is not the issue.

134 / the moral economy reconsidered Table 4.8 Attitudes toward private ownership of land in Russia by place of employment (in percentage) Attitude toward private ownership

Land buyers For land ownership without any restrictions For land ownership but with restrictions Against private land ownership Too hard to answer No answer Land sellers For land ownership without any restrictions For land ownership but with restrictions Against private land ownership Too hard to answer No answer

Management in Employee state owned in state owned enterprise enterprise

Employee in non-state enterprise

26.3

25.0

33.7

58.7

56.0

55.3

7.7 6.9 0.4

10.7 7.5 0.7

5.5 5.2 0.2

33.1

26.0

32.9

47.3

59.1

50.5

15 4.6 0

7.5 7.2 0.2

9.5 6.9 0.3

Source: 1997–1998 survey data.

2. The real issue is what kind of private ownership. The data show that all groups support private ownership with restrictions.115 3. It is interesting to note that management is somewhat more “liberal” than employees, or at least not significantly more conservative. 4. There is not a significant difference between employees by place of employment, although one might have expected employees in non-state enterprises to be notably more liberal than state employees. 5. Land sellers are somewhat more liberal than land buyers, as would be expected. One would assume that persons who own land would want flexibility in disposing of it in order to maximize benefit and profit. In sum, the main evidence used to argue for rural opposition to land privatization has been opinion data. The survey data presented above cast some doubt on the conventional wisdom and should lead us to

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search for additional confirmation, one way or the other. The next section examines rural behavior in the land market, and logically raises the question of the link between opinion data and actual behavior. Rural Behavior and the Land Market: Responses The Russian land market has been analyzed in previous sources, and the reader is referred to those sources for additional information.116 The intent here is to summarize and expand what we know about the Russian land market, using that new evidence to show how reform opportunities were used by rural dwellers. To start, it should be noted that the rural population has become the backbone of the land-owning class in Russia. Overall, at the beginning of 2002, more than 35 million Russian families possessed land plots—most of whom were rural dwellers.117 Virtually every rural family has a land plot for some form of household production which represents a continuation from the Soviet period. Most of these small-scale plots have been privatized, as some 35 million Russians had received land deeds by 1999 which confirm land ownership.118 Moreover, the total number of land transactions nationwide has increased, from about 145,000 in 1993 to 5.5 million in 2001 and over 5.3 million transactions in 2002.119 Official data show that the Russian land market is dominated by land leasing. The number of land lease transactions numbers in the millions, increasing from 3.6 million in 1997 to 5.0 million in 2001 and 4.74 million in 2002.120 During the 1990s, the number of lease transactions as a percentage of total land transactions decreased from 98 percent in mid-decade to about 89 percent in 2002, declining as a result of increased land purchases.121 While land leasing is not a behavior unique to post-Soviet Russia, it should not be discounted entirely. Given the fact that virtually all rural families already had a household land plot from the Soviet era, land leasing may actually reflect the use of new opportunities. Furthermore, it is useful to note that the majority of family farms in America are based upon leased land, and the same is true throughout western European nations. Thus, land leasing in and of itself does not constitute a reluctance to embrace rural marketization, rather, it may simply reflect economic opportunity and a rational choice assessment of what is advantageous given existing cost and incentive structures. Most lease transactions involve state or municipal land, and in rural localities, the primary lessors are local rural administrations or agricultural enterprises. While the municipal market experienced a decline in the number of transactions during the 1990s, the private market

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exploded in magnitude following Yeltsin’s October 1993 decree that permitted private land sales. Private individuals may also lease land— there is an active leasing market among individuals—and land rental payments may constitute an important source of income in some regions. For example, survey data gathered by the Agrarian Institute drawn from 10 oblasts showed that 87 percent of land shares were leased and lease transactions included land rentals to agricultural enterprises and private farmers.122 In Rostov oblast, workers on pilot reorganized farms received more than one-third of their income from rental payments, and pensioners received about one-quarter of their income from rental payments.123 The stronger the farm, the more likely a farm member is to lease his land share, whereas on weaker farms, land is used for household food production.124 The IFC’s survey of privatized and non-privatized farms in Nizhnii Novgorod and Orel’ oblasts found that 90 percent of land shares had been rented out on privatized farms.125 Russians have also engaged in land purchases, as permitted by law. The buying and selling of land consists of two types of submarkets: the municipal market and the private market. The municipal market involves purchases of land from raion or city land funds; the private market refers to the sale of land between private citizens. The purchase of state or municipal land is less popular than the purchase or sale of land between individuals. The purchase of state or municipal land numbered 45,321 transactions in 2002, far behind the 321,508 land transactions between private individuals. Most of the 45,321 transactions were for the operation of private plots or housing construction, and the average size per transaction was 0.13 ha. It should also be noted that of those 45,321 transactions, only 16,778, or 37 percent, were in rural areas, whereas a very high percentage of private land sales occurred in rural areas.126 The private market among individuals is the second most common type of land transaction after leasing of state and municipal land. It is seldom acknowledged that transactions involving privately owned land numbered several hundred thousand annually since 1994. The number of land transactions among citizens and privatized organizations, that is, involving nonmunicipal land, has increased steadily, from just over 100,000 in 1994 to over 321,000 in 2002.127 (The third most popular form of land transaction is inheritance, accounting for 173,279 transactions in 2002.) The most popular uses for land from either municipal or private purchases are small-scale agricultural operations, in particular, private plots or fruit and vegetable gardens. Among transactions between individuals,

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the most popular uses of purchased land were for small-scale collective gardening (sadovodstvo), the operation of private plots, and individual housing construction. These three uses accounted for an average of 96 percent of all purchase/sale transactions between individuals during 1996–2002.128 In 2002, land purchases for use as a household plot (private plot) accounted for 38 percent of all sales of nonmunicipal land, making it the single most popular category of land use.129 Due to the types of uses purchased land is intended for, the average size of a land plot in a private purchase transaction is quite small, averaging 0.18 ha in 2000, 0.16 ha in 2001, and 0.16 ha in 2002.130 It should be noted, however, that average land plot sizes differ according to use. Official data show that the smallest average sizes per transaction are for sadovodstvo (0.07 ha), while transactions involving land to be used for household plots averaged 0.21 ha in 2002.131 Having summarized some general trends in the national land market, of particular interest is the participation of the rural population in land purchases. Official government data on the number of land transactions show the importance of the rural land market. Data from the State Committee on Land (Roskomzem) illustrate national trends in the rural private land market in table 4.9. Table 4.9 shows that rural land transactions accounted for about 40 percent of all land purchases and sales during 1996–1997, and then increased to over 44 percent in 1999 and reached 45 percent in 2001.

Table 4.9 Rural land transactions on the private land market (between individuals), 1996–2002 (all of Russia) 1996 Total land transactions Rural land transactions Rural land transactions as % of total

1997

1998

1999

2000

2001

2002

218,052 263,470 233,898 290,268 313,367 305,692 321,508 85,382

103,752

96,831

39.1

39.4

41.4

129,177 132,442 137,499 138,840 44.5

42.3

45

43.2

Sources: Author’s calculations based on data from Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 1998 godu (Moscow: Committee on Land, 1999), p. 60; Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 1999 godu (Moscow: Committee on Land, 2000), p. 34; Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 2000 godu (Moscow: Federal Land Cadastre Service, 2001), p. 121; Svedeniia o sdelkakh s zemlei i platezhakh za zemliu (Moscow: Federal Land Cadastre Service, 2003), p. 28.

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In 2002, the number of rural land transactions increased, although the percentage of total transactions fell to 43 percent. It should be noted that the rural population constitutes just 27 percent of the total Russian population, so rural land transactions are somewhat disproportionate. It is also interesting to note that, expressed as a percentage, land purchases have been more popular than land leasing in rural areas. In 2002, for example, of the 4.7 million lease transactions from state and municipal land, only 22 percent occurred in rural areas (1.05 million transactions), with both the number and percentage declining since 2000 as the number of land purchases increased.132 Following the adoption of the law on rural land transactions, which took effect in January 2003, the legal stability provided by the law was expected to increase the number of transactions. Early evidence, after the law came into effect, showed both a significant increase in demand, especially in Moscow and Leningrad oblasts, accompanied by rising prices for rural land.133 In addition, anecdotal evidence suggested a new willingness on the part of banks and other businesses to invest in rural land, particularly in Moscow oblast.134 Even before the 2002 law on rural land transactions, survey data from the Institute of Land Relations and Land Tenure in Moscow and the Institute of Sociology in Kaluga oblast showed acute sensitivity to the quality of land, where it was located, and what amenities were located on or near the land. For well-situated, good quality land with amenities, demand greatly outstripped supply. For poor quality land, located in remote regions, with few or no amenities, demand was minimal and supply exceeded demand.135 These are economic relationships that are perfectly normal and are to be expected. These patterns, therefore, attest to the rational use of reform opportunities for the benefit of the individual or family involved in the transaction. Irrational patterns would depict undifferentiated demand (or lack thereof ) irrespective of the characteristics of the land plot, the quality of land, or its location. These patterns of demand also augur for significant regional differences in Russia’s land market. Having argued that the rural population is not opposed to land privatization, it is necessary to examine, even briefly, the constraints on the Russian land market, that is, factors that may constrain adaptive behavior. Arguments citing the lack of property rights are offset by noting that several legislative landmarks established private land ownership, starting in late 1990, again in late 1993, and then in early 1996. These decrees and laws not only supported private land ownership, but also mandated distribution of land shares and land deeds to land users of

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all types.136 Moreover, the 1994 Civil Code guaranteed the right of land ownership and outlined the procedural parameters for land transactions. By mid-1997, virtually all members of large farms had received land deeds, as had private farmers and private plot holders, empowering them with the right to sell, buy, bequeath, trade, lease, or give away their land. Furthermore, as land reform proceeded and control over land by farm managers eroded, the number of land transactions increased during 1994–2002. The adoption of the Land Code in 2001 and the law on rural land transactions in 2002 further clarified the legal environment.137 All of this, however, is not to deny that certain structural constraints flow from the nature of land legislation. For example, the 2002 law stipulates that only arable agricultural land is permitted to be sold, not all agricultural land that would include roads, rivers, forests, and land that is not suitable for cultivation.138 As the 1990s progressed, constraints on the land market were increasingly limited more by macro-socioeconomic factors than by political factors or farm manager resistance. One restraint is the low purchasing power by the rural population. For example, a survey of 5,841 persons during the winter of 1995–1996 and 5,608 persons during the winter of 1997–1998 by the Institute of Land Relations and Land Tenure in Moscow and the Institute of Sociology in Kaluga asked “what is restraining the development of the land market in Russia?” In both the surveys, the number one answer was low purchasing power by the population, expressed by 48 percent of the respondents in the first survey and 69 percent in the second survey.139 Concretely, the problem is a high expense to income ratio and can be illustrated by an example using the purchase of land for a private plot. This example is used because it was shown above that the purchase of privately owned land for subsidiary agriculture is second only to land leasing in terms of the number of transactions.140 According to data from the Federal Land Cadastre Service, in rural areas during 2002, the average size of a land plot purchased for use as a private plot was 0.21 ha, or 2,100 sq.m. For such land, the average price was 9.21 rubles per meter, for a total of 19,341 rubles for a typical purchase.141 However, the following expenses must be added to this total: notary and registration fees of 3 percent of the value of the transaction; land taxes, which vary by location of the plot; and cadastring fees. For private land, the purchaser must pay to have the land plot cadastred and a map drawn. In Moscow oblast, the cost for cadastring and having a map drawn from a private firm was approximately 300 dollars in 2004. Moreover, once documents are received from the cadastre agency, the

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purchaser is responsible for obtaining and submitting the requisite forms to the local land committee and for the registration of the purchase with the local administration.142 These responsibilities may require several trips and are time consuming. As a consequence, a private land transaction requires not only money but also time. Assuming normal expenses, the total cost of a transaction can easily approach 30,000 rubles, not including land taxes. To put that amount in context, the NCEEER survey found that, using monetary income as the measurement for poverty, 74 percent of rural households were living at or below the official poverty level, as defined by the Russian government in the third quarter of 2001—1,524 rubles per month per capita, or about $53 at 2001 exchange rates. (If nonmonetary consumption is included, 46.5 percent of households in the sample live below the subsistence minimum.) Total mean monetary income per month was 4,080 rubles, and 5,201 if both monetary and nonmonetary income were combined. Thus, the expenditure of 30,000 rubles for a land plot was hardly a trivial matter for the vast majority of rural families. A second constraint is that virtually every rural household already had land dating from the Soviet period. For many families the size of their land plot was sufficient to grow food for consumption, and therefore expansion of the land plot or the acquisition of other land was not necessary. This is especially important when the average family size in the countryside is considered (three persons), one or two of whom may be near or at the pension age. Thus, preexisting household land plots affected motivations to acquire additional land, and the demographic structure of the household affected the ability of the household to operate larger land plots.143 Moreover, households also had the option of receiving a free land allotment from the farm on which they worked. While these allotments were not large, they often sufficed for family needs. Overall, constrained by falling real incomes, limited human capital, and other option to meet land needs, it was often uneconomic for households to purchase additional land. Rural Behavior and the Land Market: Who Responded? Previous research has shown the reasons why land plots are acquired, but much less is known about who has responded to reform opportunities.144 Analysis of the 800 household survey data funded by NCEEER starts to begin to fill the void. One of the survey questions asked whether the household land plot had been expanded since 1991, and if yes, by how much. A similar question asked was whether the household land plot had been decreased since 1991, and if so, by how much.

rural households / 141

Other questions asked about whether the household (or individual respondent) had a rental plot of land and if so, what was its size; whether the household (or individual respondent) used land assigned from a large farm, and if so, what was its size; and whether the household (or individual respondent) had other plots of land, and if so, what was the size. Overall, about 35 percent of the households in the survey had increased their household plot since 1991, and another 33 percent had a rental plot. Very few households, about 4 percent, had decreased their land plot since 1991. The responses allow a statistical analysis of who responded to opportunities afforded during land reform. The analysis below focuses on the household plot. To begin, for households a two-tailed Pearson correlation yielded a moderately strong correlation coefficient of .502 between the variables “total household income” and “increase in a household plot” (at the 100 percent confidence level). A two-tailed Pearson correlation between the same variables shows a negative relationship between the variables “total household income” and a “decrease in land plot size,” which means that the higher a family income, the less likely the household was to decrease its land plot since 1991. An analysis of the cross-tabulation data for households and income levels lead to the following conclusions: (1) the lowest income households are more likely not to have increased the size of their household plot since 1991, while high income households are most likely to have increased their plot; (2) higher income households increased their land plots by larger amounts—almost one-quarter of households with over 6,000 rubles a month increased their household plot by at least one ha; (3) although a decrease in the size of land plots is rare across all income groups, the highest income households are least likely to decrease the size of their household land plot, while the lowest income households are most likely (although 9 out of 10 households in the lowest income group did not decrease their land plot); (4) households with 3,000 rubles or more of monthly income are more likely to have a rental plot (land rented by the household for the growing of food), while the poorest households are less likely; and (5) while low, medium, and high income households indicate they plan to increase household food production in the future, high-income households are somewhat more likely to increase production. What is significant is that high-income households are overwhelmingly more likely to increase their food production by obtaining land compared to lower income households (71 percent to 35 percent). Lower income households plan to increase production by obtaining more animals compared to high-income

142 / the moral economy reconsidered

households (64 percent to 29 percent). The difference is significant: land adds to production capacity at present and in the future; animals tend to be consumed. In sum, the data strongly suggest that the lower the household income, the less likely the household is to enlarge its household plot, and less likely to use other types of land plots. The same general trend is found when using the individual as the unit of analysis, that is, using monthly monetary income per capita instead of aggregate household income. A correlation with a two-tailed significance test yields a correlation coefficient of .504 between monthly monetary income per capita and land plot increase, with 100 percent statistical significance, which suggests a moderately strong association between income and participation in the land market. So far in the analysis, monetary income has been used as an aggregate variable, that is, including all sources of income. However, in order to have a greater understanding of the impact of income on behaviors toward land, it is necessary to disaggregate monetary income by source.145 Framing the issue about plot increase is the question of ability versus need: whether a person increases his land plot because he can, or because he does so out of economic necessity. This question is important because previous survey data indicated that the main motivation to obtain agricultural land is to grow food for family consumption.146 Supporting the “need” argument, it would appear logical that poorer individuals have a greater need to grow food than persons with higher levels of monetary resources, who can afford to buy, not grow, a greater portion of their food. Thus, it might be expected that poorer individuals would want to increase their land plot size in order to grow more food, thereby increasing their nonmonetary income. Turning back to the data, when individual (per capita) monetary income is disaggregated by source, a very interesting picture emerges. Of the sources of income (alimony and child support were not included in the analysis for the husband), all of the correlation coefficients are negative and none are statistically significant below the .05 level of confidence, with one exception. The one exception is income from business, which has a correlation coefficient of .578 and is 100 percent statistically significant.147 Pearson correlations measure associations among variables but not causality. Therefore, to test the causal properties of business income, the variable “increase in land plot” was regressed on all of the different sources of monetary income. The results are shown in table 4.10. What do the data mean, and more generally, what does this finding mean? The income model as a whole is statistically significant and has

rural households / 143 Table 4.10

Income effects on increases in household land plot

Income variable Constant Salary-primary job Salary-second job Pension Income from sale of produce Dividends Income from business Other monetary income

Unstandardized Standard coefficient error

Beta

T

Significance

1.291 3.27 2.21 6.20 2.65

0.985 0.001 0.001 0.001 0.000

— .021 .007 .023 .019

1.311 .592 .197 .616 .576

.190 .554 .844 .538 .565

1.58 1.80

0.004 0.000

.013 .378 .572 16.98

.705 .000

3.95

0.001

.013

.714

.367

an R-squared of .335, which is not particularly strong for a model, but it is moderately strong when we consider that only one macro-variable (income) is being used as the estimate of behavior. The regression confirms that business income is the only variable that is statistically significant and has a positive effect on land plot increases, with a beta of .572. The finding suggests that individuals who depend upon basic salary, dividends, pensions, and income from sale of produce do not have the monetary resources to expand their land plot. Instead, individuals who have additional monetary resources are more likely to expand their land plot (and to do so by larger sizes). In short, the results strongly suggest that persons who are more entrepreneurial appear to reinvest in their productive capacity by expanding their land plots, thus further adding to their productive potential and making it likely that they will have higher incomes in the future. Thus, ability is more important than need when determining whether and by how much a person will expand his land plot. The problem for the Russian land market is that relatively few persons have high levels of income, and a large percentage is at or below the poverty threshold. In summary, who responded to reform opportunities by increasing their land plots? The data strongly suggest the following: (1) lower income households and individuals are less likely to increase their land plots, thereby suggesting that ability is more important than need; (2) individuals who are not able to generate business income, but who depend upon salaries, dividends, income from sale of produce, and pensions, are less likely to increase their land plots; and (3) business

144 / the moral economy reconsidered

income is a fairly strong predictor of the likelihood to increase a land plot. The fact that business income is an indicator of entrepreneurship and entrepreneurs expand land holdings, portends an increase in rural social stratification as the land market evolves and matures in the future. Counterevidence III: Sources of Household Income One of the most important, but often overlooked, changes experienced by rural households concerns sources of their monetary income.148 This is important because sources of income are indicative of changes in the operation of the welfare system inherited from the Soviet period, and also because sources of income are indicators of behavior engaged in by household members. During the Soviet period, rural Russian households relied primarily on three sources of income: salary and other benefits from employment in state and collective farms; transfer payments in the form of pensions, as well as payments to disabled persons and single parents; and monetary and nonmonetary (consumption) income from household plots. Official government data show that the sources of income for collective farm remained fairly similar throughout the 1980s, with most income coming from farm employment. In 1980, for example, collective farm families received about 58 percent of their income from farm wages, about 10 percent from transfer payments, over 27 percent from private plot activities (most of which was nonmonetary income), and about 4 percent from other sources. In 1989, the structure of income for a collective farm family was distributed as follows: 62 percent came from the kolkhoz; 9 percent from transfer payments, 25 percent as nonmonetary income from household private plots, and 4 percent from other sources.149 Evidence in the post-Soviet period suggests substantial behavioral adaptation, as indicated by the fact that sources of income underwent considerable change. Changes in Sources of Household Income: Responses Household income data collected by O’Brien, Patsiorkovski, and Dershem from several waves of a panel survey show that household income from agricultural sales increased as a percentage of total household income. At the same time, the percentage of income from salary and wages declined, as did income from transfer payments.150 With an estimated two-thirds of household income coming from sources other than farm wages and salaries, the authors conclude that a “fundamental structural change has occurred in villages.”151

rural households / 145

In particular, the post-Soviet period shows that important changes occurred in the relative importance of different sources of income. Whereas in 1989 household plots provided slightly less than one-quarter of a household’s income, almost exclusively through nonmonetary consumption, household production contributed almost 60 percent of total household income by 1995, including 35 percent of its monetary income according to the panel data. Already in 1995, the share of income from household business activity was increasing while the share from primary salary and transfer payments was decreasing.152 By this time, several types of economic activity were contributing to household income, including agricultural sales, nonagricultural businesses, and rents received from leasing land to the large enterprises or private farmers. The 2001 NCEEER data demonstrate the continuation of trends indicated above and the emergence of other important changes. Although the precise percentages do not match the data from the O’Brien, Patsiorkovski, and Dershem panel surveys, the trends are confirmed. In particular, it is clear that reliance on income from farm employment has decreased, while income from the sale of food produce and income from business activities has increased. In short, household income has become much more diversified than during the Soviet period. The structure of rural households’ mean monthly income by source is shown in table 4.11. Table 4.11 uses income from the husband and wife, who together account for 66–75 percent of the household’s income, depending on the Table 4.11

Mean monthly income by source (in rubles)

Income source Salary and benefits, primary job Salary and benefits, second job Pension Alimony Child benefits Sale of produce Dividends Business income Other monetary income Total income

Husband

% of income

Wife

% of income

602

23.5

266

17

127

5

21

1

386 00 00 580 52 638 171 2,556

15 00 00 23 2 25 7 —

403 3.5 67 451.5 34 60 242 1,548

Notes: Means have been rounded and therefore may not equal 100 percent. “Other” income includes money from parents, and other sources. Source: NCEEER survey data, 2001.

26 1 4 29 2 4 16 —

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region and the number of working adults in the household. Table 4.11 shows that the structure of income is somewhat different for the husband and wife, with the husband having a higher income from his primary job, more income from the sale of produce, and more income from business activities. The wife receives somewhat more income from a pension, and the wife’s pension is a larger percentage of her overall income. The wife has a significantly lower income from her primary job, from a second job, and from business activities. An analysis of the 2001 NCEEER survey data also illustrate in even more detail how the structure of income changed for different categories of workers. The data allow income sources to be disaggregated according to profession. For households in which the husband was a farm worker, monetary income from salaries (first and second job, if any), accounted for about 60 percent of his total income, the sale of produce accounted for about 30 percent, pensions and other transfer payments only about 1 percent, and other assorted sources (dividends, business income, and other income) accounted for about 9 percent of the husband’s income. The structure of income for farm specialists is roughly similar to that described for farm workers. What was new, however, was the structure of income for farm managers. Farm managers experienced a dramatic decline in the percentage of total income accounted for by salaries (10 percent), and a huge increase in the percentage of income derived from business activities (72 percent). The “business activity” variable captures business income other than from food production sales, and includes such things as services for auto repair, shoe repair, electrical and plumbing, tailoring, and transportation. It could also include the production of a nonfood good. This dimension measures the extent to which households sought out additional sources of income through economic diversification, that is, the extent to which households engaged in nonagricultural goods and services. The sale of production accounted for another 14 percent, with transfer payments and assorted other sources comprising the remaining 6 percent of total income. Thus, survey data depict an ongoing diversification of sources of household income, and in this way reflect adaptive behavior to new economic opportunities. Changes in Sources of Household Income: Who Responded? Aside from the fact that farm managers appear to have been more adaptive, as indicated by the significant changes in the structure of their income, the question remains as to what other characteristics are associated with changes in sources of income. In general, it is postulated that persons with more income from business activities were most

rural households / 147

clearly adaptive to new opportunities. It could be argued that food sales also constitute adaptive behaviors, but this is somewhat more ambiguous since food sales might also be considered a survival strategy. The survey data examined above also strongly suggest that high income households and individuals have an income advantage due to household business activities, and less so as a result of income from farm employment or even food sales. For example, a Pearson correlation with a two-tailed significance test of a husband’s income from business and total income has a coefficient of .955 at 100 percent level of confidence—an extremely strong correlation—while food sales have a coefficient of .175, which is a far weaker correlation (also at the 100 percent level of confidence). Therefore, for purposes of this discussion, the focus will be on business income because it is clearly an example of adaptive behavior. Using data from the NCEEER survey, different statistical models were created by way of postulating hypotheses that would explain the causal relationship leading to business activities and business income. The first model was the “structural model.” This model was intended to test to what extent structural factors “caused” (led to) business income. The following variables were used as independent variables in the structural model: education of husband, size of family, respondent’s gender, respondent’s age, husband’s estimate of health, social type of family, and husband’s position. The independent variables were regressed on the dependent variable, business income. (For all the models, the husband’s business income was used as the dependent variable since it was shown above that he was the primary person engaged in business activity.) The model as a whole had little explanatory power, with an R-squared of only .022, although the model as a whole was statistically significant. Of the independent variables in the model, only the respondent’s gender and education of the husband were statistically significant at or above the 95 percent level of confidence. The variable’s beta value for the respondent’s gender was signed negatively (0.144), which means that males were positively associated with business income. The education of the husband had a positive beta value of .110, which showed a causal relationship between higher levels of education and business income. The second model was the “attitude model.” This model was intended to test to what extent attitudes “caused” a person to engage in business activity and earn business income. The starting assumption was that a positive relationship would exist between attitudes toward reform and adaptive behavior. The following variables were used as independent variables in the attitude model: support for state policies in land reform, support for state policies in reform of large agricultural enterprises,

148 / the moral economy reconsidered

support for state policies in support of agricultural producers, respondent’s estimate of changes in village life, respondent’s job security, and respondent’s mood that he/she enjoyed life. Once again the independent variables were regressed on the dependent variable, business income. This model also had little explanatory power, with an R-squared of only .014, although the model as a whole was statistically significant. Of the variables in the model, only two variables were statistically significant. The estimate of change in village life was positive (beta  .088) and statistically significant, as was the mood for enjoying life (beta  .093). These results meant that a person who estimated changes in village life positively and who enjoyed life was more likely to engage in business activity, although the betas for both variables were low, which means that the causal relationship was weak. The starting assumption was not borne out. While the relationship between attitudes and adaptive behavior does not appear to be strong, it should be noted that the wording of the questions is especially important. The questions asked whether the respondent supported state policies in various areas of reform. It is possible that the respondent supported land reform, farm privatization, and so on, but did not approve of the way the government was conducting reform; or did not approve of the consequences of reform. Unfortunately, this imprecision in the wording of the questions became apparent only after the survey, so no correctives were possible and the relationship between attitudes and behavior remains a subject for further investigation. The third model was the “satisfaction model.” This model was intended to test the relationship between levels of satisfaction and business activity. The starting question was whether dissatisfaction would motivate a person to engage in business activity or whether positive satisfaction led to adaptive behavior. The following variables were used as independent variables in the satisfaction model: respondent able to his control life, respondent satisfied with employment, respondent satisfied with income, respondent satisfied with health, respondent satisfied with family relations, respondent satisfied with village life, respondent satisfied with life in general, and respondent satisfied with situation in the country.153 The independent variables were regressed on the dependent variable, business income. This model had little explanatory power, with an R-squared of only .053, although the model as a whole was statistically significant. Of the independent variables in the model, three were statistically significant. The variable “respondent able to control life” was signed positively and had a beta of .111, which means that a person who felt in charge of his life was more likely to engage in business activity. The variable “respondent satisfied with income” was signed positively and

rural households / 149

had a beta of .162, which suggested a positive relationship between levels of business income and satisfaction with income, as would be expected. The variable “respondent satisfied with employment” was signed negatively and had a beta of .086. This last finding suggested a weak causal link between dissatisfaction with employment and business activity. In other words, the negative sign shows some inclination to engage in household business activity as a result of dissatisfaction with employment outside the home. The structural, attitudinal, and satisfaction models all had weak explanatory power. Therefore, a fourth model was developed, called the “behavioral model.” This model attempted to measure not only entrepreneurial behavior but also an entrepreneurial spirit. The measurement of entrepreneurial behavior and an entrepreneurial spirit can only be indirect because specific variables were not designed to measure these concepts when the survey was designed.154 However, a careful selection of variables acts as a useful proxy measure. The assumption of this model was that behavioral adaptation has more explanatory power for business activity and business income than the previous models. The following variables were used as independent variables in the behavioral model: increase in land plot since 1991, decrease in land plot since 1991, sum of credit obtained, income from the sale of produce, frequency of family support, frequency of support from friend/neighbors, frequency of support from village administration, and how many years the respondent lived in the village. The model as a whole had much stronger explanatory power, with an R-squared of .509, and was statistically significant at or above the 95 percent level of confidence. Of the variables in the model, three were statistically significant, although several other relationships were indicated that are both important and interesting. The first variable that was statistically significant was increase in land plot since 1991, with a beta of .672. This is a strong causal relationship that suggests that households that increased their land plots also engaged in household business. The second statistically significant variable was family support, with a beta of .305, which indicates that frequency of family support was an important component of business activity. This is interesting because it reflects the fact that household business tends to rely on other family members for moral, labor, and economic assistance, and much less on impersonal economic ties such as loans or credits from a bank. The third statistically significant variable was frequency of support from friends and neighbors, which was signed negatively and had a beta of .273. This finding suggests an inverse relationship between business income and support from

150 / the moral economy reconsidered

friends/neighbors: the less the support, the higher the business income, suggesting that assistance networks provide support and might reduce incentives to start a business. Another variable in the model that was not statistically significant but was interesting nonetheless was the variable “how long the respondent lived in the village.” This variable was signed negatively at the 89 percent level of confidence, so it is likely to be a real finding, even if the customary level of confidence was not met. This is interesting because one might presume that persons with long-standing ties to the community would be more likely to engage in business, but apparently this is not the case, which in turn suggests that younger persons are more likely to engage in business activity. (In the structural model, age of respondent was not statistically significant and although signed positively, had a very weak beta of .012.) Combining the results of the statistically significant variables in the four models, an approximate profile emerges of the type of person who is likely to engage in business activity and earn business income: (1) male; (2) better educated; (3) perceives changes in village life positively; (4) has a positive mood and enjoys life; (5) feels in control of life; (6) is somewhat dissatisfied with his employment outside the home; (7) is satisfied with his income (which suggests that business activity is not begun out of need or impoverishment); (8) has expanded his land plot since 1991; (9) has strong family ties and receives support from family members; and (10) receives less support from friends and neighbors. To these findings may be added the fact that adaptive individuals—those with incomes at the top of the income scale in the survey—also believe in hard work as a means to improving conditions in the village and in the household.155 Conclusion The chapter argued that far from being opposed to market reform, Russian rural households took advantage of opportunities presented by reform. Evidence was presented that significant change occurred in the behaviors of rural households during the 1990s when compared to the Soviet era. Because some households and individuals adapted more than others, the chapter focused on how households and individuals responded to reform opportunities, and who adapted. By arguing that the rural population is not inherently opposed to rural marketization or to land privatization, it is implied that agrarian reform did not disembed preexisting peasant institutions. Instead, reform policies allowed behavior to adapt in ways that were perceived to be most advantageous to the household. Sometimes adaptive behavior

rural households / 151

fit expected outcomes by reformers in Moscow and their Western advisors, but often responses did not fit expectations, thereby leading to charges that “nothing has changed.” In fact, household behaviors of rural dwellers contradict the conventional wisdom about stasis. The chapter explored the ways that rural dwellers adapted to reform during the 1990s. The number of families engaging in truly “private” food operations based upon private ownership of land grew significantly. The level of food production increased, reversing a long-term decline so that by the end of the decade, households were producing more food than at the beginning. Food sales from households accounted for more of households’ income. Evidence was presented to show that some households had increased food sales significantly, and although official statistics do not bear out this fact, food sales most likely increased, not decreased during the 1990s. The structure of household income also experienced a significant change in sources of monetary income, a fact that underscores changes not only in the welfare system of the state but also in the adaptive behavior by households. It was shown that among some households, income from business activities increased substantially, and for high income households, it became a significant percentage of their income. In summary, there is highly suggestive evidence that rural households embraced, used, and benefited from marketization and the opportunities presented by reform policies. Regarding land privatization, this chapter presented evidence of how rural dwellers have embraced private land ownership. Evidence was presented of how rural attitudes support the concept of land privatization. Further, evidence showed rural dwellers participating in land market transactions, expanding plot sizes, leasing out land shares, and expanding land possessed for private household agricultural operations. The rural land market has experienced a growth in the number of purchase transactions among individuals, and the number of rural land transactions is disproportionate to the size of the rural population. It was also shown that opportunity is more important than need, and thus entrepreneurial households were most likely to enlarge their land plots. In conclusion, based on the evidence presented, it was shown that the rural population has taken advantage of reform opportunities. It is, therefore, hard to conclude that rural Russia is antimarket, despite opinion poll data to the contrary. Using actual behaviors instead of responses to questions, it appears that peasants’ moral economy has not been violated. Embedded peasant cultural values were not displaced or disembedded by market reforms.

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C h ap t e r 5 Effects of Adaptation and Sources of Rural Revival

The previous chapters investigated the degree of change among farm managers and among the rural population. Some segments of the population adapted more than others, leading to the conclusion that rural behavior was opportunistic toward reform. Rural adaptation occurred in the most unfavorable of political and economic climates, changing the way rural actors live, work, and earn a living. Evidence strongly suggests that rural behavior has not been inherently antimarket, nor that peasants’ moral economy was violated. Instead, evidence from previous chapters suggests that reform opportunities and market opportunities were utilized in order to partially escape state urban bias. In this sense, adaptation was less risky than resistance. This chapter carries the argument and analysis one step further. The questions analyzed in this chapter are threefold: (1) what are the effects of the rural adaptation that was described in previous chapters? (2) how has the policy environment changed since Vladimir Putin became president in 2000 and how do policy changes support rural adaptation? and (3) what are the sources of rural revival going forward, in short, which food producer is best positioned to lead Russia’s rural revival? This chapter begins with the assumption that these three questions are related and linked to peasants’ moral economy. Without adaptation, there would be no effects. Government policy would be sensitive to violations of peasants’ moral economy and would introduce policies to stabilize the countryside, and these might be antimarket. And finally, adaptation is the key to rural revival, which is to say that without adaptation there would be no revival. Temporally, this chapter moves out of the Yeltsin period and frames the discussion in the first term of Putin’s rule. The task for the Putin administration is to cultivate a pro-reform rural voice by moving away from state urban bias. Success in this goal will go far in changing the politics

154 / the moral economy reconsidered

of agrarian reform, and would seize upon the opportunity presented by the isolation of Communist opposition and its antiquated policy goals. This chapter, therefore, begins with the premise that the task for the Russian government is not how to overcome innate resistance to reform, but rather how to build rural support and how to stimulate rural revival. To say that rural Russia has the basic behavioral and attitudinal prerequisites for a successful transition to agrarian capitalism is not to deny that the actual transition has been beset with problems.1 Few would argue that the agrarian transition toward market capitalism was completely successful during the 1990s, but it also is not true to say that it was a complete failure.2 Results of reform often in the 1990s did not meet original expectations of reformers, as farm efficiency declined, food production fell significantly, and the expected rural social transformation did not materialize.3 The reasons for unfulfilled expectations include a hostile macro-environment, ill-conceived reform policies and policy mistakes, as well as a series of other macro- and microeconomic factors.4 Shortcomings in reform outcomes have led analysts of Russian agrarian reform to make three common mistakes in their assessments of reform. (1) Results have been confused with implementation, which means that if expected results from reform were not obtained, it was interpreted to mean reform policies had not been implemented. This view ignored whether expectations were obtainable, reasonable, or realistic. (2) Results in terms of food production have been confused with adaptive behaviors, which means that if food production declined, it was taken to mean that large farms had not adapted their behaviors. This view ignored the likelihood that food production declined because of farm adaptation to their environment. (3) Reform results have been confused with market economics, which means if reform results were disappointing, it was interpreted to mean marketization had failed. This view ignores the fact that notable and significant elements of a market economy arose during the 1990s (although there also continued to be nonmarket elements). Despite the deformities in the Russian market and bumps in the road during the course of reform, the Russian government has opportunities to build upon rural support for agricultural markets and privatization. Adaptive behavior during the 1990s was poised to improve the performance of Russian agriculture; what was lacking was a positive macroeconomic environment and policies that helped, not hurt, the rural sector. One of the key questions going forward is, who will lead the revival of Russian agriculture? This chapter is organized into three main sections. The first section examines the economic and political effects of rural adaptation. The next

effects of adaptation / 155

section describes the ways in which the policy environment has changed for rural producers under Putin. In particular, this section examines federal policies toward large farms and households to influence rural revival. The final section analyzes the question of which producer will lead rural revival by looking at the three rural producers: households, private farms, and large agricultural enterprises. The Effects of Adaptation The argument that peasants’ moral economy was not violated during market reforms in Russia, and that adaptive behavior was more significant than is usually acknowledged, would be incomplete without an examination of the effects of adaptation. In short, the argument postulated herein cannot be substantiated without considering the culmination of adaptive trends. While the 1990s represented the beginnings of adaptive responses to state urban bias and state withdrawal, the new millennium promises to bring the consolidation of those trends and yield specific and important results. To illustrate, the sections below investigate economic effects and political effects. The analysis and results are drawn from two different survey data sets. One data set is comprised of data from the 2001 survey of 800 rural households in 5 regions, funded by NCEEER that has been referred to in previous chapters. A second data set is based upon a four-wave panel survey in three Russian villages during 1995, 1997, 1999, and 2003 in three regions.5 This latter survey sampled the same households in each wave, thus allowing longitudinal trends to be tracked and analyzed. Taken together, these survey data provide an interesting and compelling look at the effects of rural adaptation.

Economic Effects Aside from increased food production and food sales, occurrences that were analyzed in the previous chapter, one of the most notable economic effects of rural adaptation is a reduction in the number and percentage of families living at or below the poverty line. While the exact percentage of Russians living in poverty has been debated and often varies significantly, it is agreed that poverty increased dramatically during Russia’s transition in comparison to the Soviet period.6 Using the official poverty line established by the Russian government in 1995, 1997, 1999, and 2003, dummy variables were created that divided the survey sample into households above the poverty line and below the poverty line. Thus, a dichotomous variable was created for each year of the survey that divided

156 / the moral economy reconsidered

households into two groups: those with monetary incomes at or below this threshold, and those above it. The trends over time are striking: in 1995, 91 percent of the households in the three-village survey were at or below the official poverty line. In 1997, this had dropped to 69 percent, reflecting significant progress. In 1999, the percentage increased again to 82 percent, reflecting the effects of the financial crisis and monetary devaluation in late 1998. In 2003, however, the percentage of rural households at or below the poverty line had declined to 53 percent. To put the situation somewhat differently, in 1995, more than 49 percent of the respondents had a monthly monetary income less than one-half the established subsistence minimum. In 2003, only 5.5 percent of respondents had a monthly monetary income less than one-half the established subsistence minimum. That is not to deny that a high percentage of rural households and individuals continued to live below the poverty line, but the finding does indicate a significant decline in extreme poverty. It should be noted that because the survey was a panel survey, the same households were being sampled in each wave, and therefore the results reflect genuine improvement by the same sample group. The reduction in poverty over time is reflected in national data as well, which adds further credence to the findings herein. Furthermore, the reduction in poverty reflects an improvement in the material well-being of rural households. Most of the literature has emphasized a deterioration in the standard of living and the material wellbeing of rural households.7 Survey data collected by O’Brien, Patsiorkovski, and Dershem during 1995–1997 showed some improvement in the material well-being of rural households in their sample. Although significant differences exist among households, their data showed that a “substantial minority” of households purchased large durable goods such as automobiles and VCRs, despite downward trends in macroeconomic figures for the nation as a whole during this period.8 The O’Brien et al. data are supported by longitudinal data spanning four waves of surveys. For example, for the 1995 sample as a whole, the mean number of telephones per household was 0.16, which rose to 1.68 in 2003, and the mean number of VCRs in 1995 was 0.10, which rose to 1.66 in 2003. Items requiring a large expenditure also improved, although not as dramatically: the mean number of cars per household in 1995 was 0.20, which rose to 0.36 in 2003. Although these are rather narrow measures of household wellbeing, the data do suggest that not all living standard trends were downward and raises the question as to how households improved their material well-being. The evidence is that it was not through wage increases, which in general tended to lag the inflation rate and constituted a declining

effects of adaptation / 157

percentage of income as the 1990s progressed. Instead, income data for the husband are suggestive and show that the percentage of total income from household business rose, as did income from food sales. For example, in the 2003 wave of the survey, the structure of income for the husband was 23 percent from food sales, 22 percent from salary from the primary job, 17 percent from business, and 15 percent from government transfers.9 As noted above, this structure of income was significantly different than it was during the Soviet period and the early post-reform years. Of particular note is the growth in household business, which is usually run by the husband.10 In 1995, 27 percent of husbands in the survey engaged in household business activity, but in 2003, this percentage improved to 40 percent. Perhaps most important of the economic effects of adaptation, the 1990s witnessed an increasing stratification among rural households, creating the opportunity for even greater stratification in the future. During the Soviet period, the countryside was mostly egalitarian, as farm salaries, private plot sizes, and the number of livestock owned by the household were regulated by the state. In the post-Soviet period, there are clear indicators that some households have begun to differentiate themselves in significant ways. Stratification is evident in several ways. Stratification that has economic significance is best measured by productive capital, not necessarily material well-being. Thus, for purposes here, let it be noted that high income households increased their material well-being and were better situated vis-à-vis low income households with regard to the ownership of cars, agricultural machinery, agricultural equipment, telephones, and VCRs. Even more important, there is clear evidence that high-income households increased their productive capital, a fact that not only led to increased production and food sales during the 1990s, but also positions them to increase differentiation in the future. Conversely, lower income households either experienced an erosion in productive capacity or failed to increase production potential by fully utilizing reform opportunities. Trends in the differentiation among households for animals and land are illustrated in tables 5.1 and 5.2, respectively. Tables 5.1 and 5.2 divide respondents into income categories based upon their per capita income as a percentage of the government-established poverty level. This method allows for comparisons over time and is more meaningful than showing nominal income levels, which were not only denominated after 1998 but may have also been eroded by annual inflation and therefore do not reflect real economic status. Table 5.1 illustrates that animal holdings in 1995 reflect some egalitarian

158 Table 5.1

Mean number of animals by income category, 1995–2003

Income as % of subsistence level

Cows 1995

Cows 2003

Pigs 1995

Pigs 2003

Sheep 1995

Sheep 2003

Poultry 1995

Poultry 2003

0–49 50–75 76–90 91–99 100–110 111–125 126–150 151–175 176–190 191–200 201 Total mean

1.20 1.24 1.05 1.28 .88 .86 1.30 .50 NA NA 3.33 1.22

1.00 1.04 1.09 1.30 1.42 1.68 1.48 2.13 2.90 4.40 2.05 1.45

1.56 1.41 1.16 1.22 1.63 .71 .80 .50 NA NA 1.43 1.43

.38 .80 .73 1.05 1.30 1.25 1.81 2.04 1.40 3.00 1.90 1.19

.82 .92 .76 .44 .13 1.71 1.50 2.50 NA NA 2.50 .88

.48 1.34 .27 .37 .94 .66 .31 .26 .60 2.00 1.05 .70

21.88 27.89 27.54 26.67 40.63 17.86 25.80 10.00 NA NA 18.67 24.63

13.05 21.96 24.96 28.33 27.73 34.52 41.56 45.39 20.90 27.80 43.25 29.55

Note: NA  no respondents in that income category. Source: Survey data, 1995–2003 (n  382 for each wave of survey).

Table 5.2

Mean levels of land by income category, 1995–2003 (in ha)

Income as % of subsistence level 0–49 50–75 76–90 91–99 100–110 111–125 126–150 151–175 176–190 191–200 201 Total mean

Household plots 1995

Household plots 2003

Rented land 1995

.29 .32 .29 .34 .32 .46 .43 .47 NA NA .43 .31

.31 .32 .34 .35 .34 .30 .32 .36 .43 .38 .32 .33

.08 .10 .05 .06 .12 .05 .04 .18 NA NA .03 .08

Rented land 2003 .15 .19 .13 .13 1.7 .75 .35 .41 4.2 .30 14.7 1.2

Note: NA  no respondents in that income category. Source: Survey data, 1995–2003 (n  382 for each wave of survey).

Other land 1995

Other land 2003

.30 .24 .94 .23 .09 00 .08 00 NA NA 8.4 .45

.48 .37 .34 .30 1.4 1.3 1.1 2.1 5.3 6.7 7.8 1.3

effects of adaptation / 159

tendencies carried over from the Soviet period. In 1995, the animal holdings of the lowest income category were very close to the mean for the entire sample. The 2003 wave, however, showed a deterioration in animal holdings in the lower two income categories, and their mean holdings were significantly below the mean for the sample as a whole. The lower two income categories had lower means for cows, pigs, and poultry, while the mean for sheep rose for respondents who had 50–75 percent the monthly income level of the poverty threshold. It has been argued elsewhere that an increase in animals may be a short-term survival strategy and may not reflect adaptation for the longer term, owing to the fact that animals may be consumed.11 Therefore, even more important to stratification and effects of adaptation is the expansion of land holdings by individuals and the household. Chapter 4 discussed several factors surrounding the enlargement of household land holdings. Here, it is interesting to note what types of land plots were expanded the most, by whom, and for what purpose. Table 5.2 shows that for both cohorts (the rural poor and nonpoor), the mean size of household plots either did not increase very much or even decreased. This finding is not very surprising, given that opportunities to expand the land plot surrounding the house were limited. Since most rural housing and their plots are adjacent, the most common means of expanding the household plot is to purchase or rent land from a neighbor. According to the 2003 survey data, the size of household land plots among lower income households was close to the mean for the sample as a whole, but this is mostly due to land that had already been distributed during the Soviet period. Land holdings among lower income households for rented land and other land were far below the mean for the sample as a whole. Thus, it appears that lower income individuals and households utilized opportunities presented by reform much less than did upper income individuals and households. The real measure of adaptation is rental land and other land used by the household. Interestingly, in the 2001 survey, household land plots were positively correlated with food production and nonmonetary household income, but negatively with food sales. Rented land, however, is positively correlated with food sales, and thus it appears that land has different uses. This is shown, for example, by the fact that the size of a household land plot is negatively correlated with a rental plot and negatively correlated to other allocated land. Therefore, in table 5.2, it is noteworthy that upper income individuals increased substantially the amount of rented land they used, a fact that suggests a tendency to engage in commercial agriculture, that is, to raise food for sale, not just household consumption.

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Likewise, upper income individuals and households were much more likely to increase substantially their “other land” holdings.12 Another economic effect of adaptation is the fact that household income stratification increased. This situation is not unique to rural Russia or to the households in the survey. Stratification is a reality that is attendant with market reforms. Official Goskomstat data show an increasing Gini coefficient (a statistical measure of inequality) for the nation as a whole, reaching .38 in 1995 and increasing to .39 in 2002.13 By the mid-1990s, the richest 20 percent of the population received about 50 percent of total monetary income in the nation, a trend that continued for the rest of the decade.14 In rural Russia during the 1990s, income differentiation was less significant than in urban Russia.15 What is interesting is that although rural Russia was less stratified than the urban sector, survey data show that this situation may be changing. Increased rural stratification is a result, no doubt, of increased differentiation in animal holdings and land usage. Income stratification is evidenced by the following calculations from survey data: (1) in the 1995 wave of the survey, the income differential between the bottom 10 percent of rural households and the top 10 percent was a factor of four. In other words, the top 10 percent of households had four times the income of the bottom 10 percent. In the 2003 wave of the survey, the income differential between the bottom and top 10 percent households had increased to 6.7 times; and (2) in 1995, the bottom 25 percent of households had 48 percent the income of the top 25 percent, but in the 2003 survey, the bottom 25 percent had only 31 percent the income of the top 25 percent.16 These two trends are clear indications of increasing income stratification among rural households, and it is likely that stratification in production capacity, land ownership and usage, and income will increase in the future. An economic effect that flows directly from increased stratification is evidence that economic status affects relations with other people in the village. In the 1997 and 2003 waves of the survey, a question asked the respondent “how does the village relate to you?” The responses were scaled 1–7, with 1  very bad and 7  very good. In the 1997 survey, the lowest two income categories (0–49 percent of subsistence level, and 50–75 percent of subsistence level), had means of 4.76 and 4.84, respectively. The two highest income levels (191–200 percent of the subsistence level and 201  percent of the subsistence level) had means of 5.0 and 4.82, respectively, which showed that the poor were treated essentially the same as better off individuals by the village.17 In other words, the highest and lowest income groups were treated equally well by the rest of the village and had good relations with them.

effects of adaptation / 161

In the 2003 wave of the survey, however, two interesting changes stood out. First, the means for individuals in the lowest income category declined significantly, to 3.81, which was almost a full point decrease. In fact, all income categories experienced a decline in their means except for the highest (201  percent of subsistence level), but in several categories the decline was not significant. The second change was an increase in the mean of the highest income category to 5.10. In other words, during that six-year period, lower income households had somewhat worse relations with the rest of the village and high-income individuals had somewhat better relations. Therefore, by depicting a growing spread between the poorest and richest individuals, the data suggest that those who were increasing their income were treated with more respect over time by the rest of the village.18 If this interpretation is correct, it has major implications for the cultural continuity thesis that sees peasants as egalitarian and jealous of success. The final economic effect of adaptation concerns perceptions of winners and losers. In the 2003 survey, a question asked the respondent “During the course of rural reforms during 1991–2003, have you been a winner or a loser?” The results are shown in table 5.3. Table 5.3 depicts a trend whereby individuals in the lowest income categories perceived themselves to be absolute losers during reform most frequently, with a secondary propensity for being “losers.” The cluster of individuals in the highest income categories perceived themselves to be Table 5.3 Perceptions of winning and losing during reform by income category, 1991–2003 (in percent) Income as % of subsistence level 0–49 50–75 76–90 91–99 100–110 111–125 126–150 151–175 176–190 191–200 201

Absolute loser

Loser

No change

Winner

Absolute winner

21 33 16 10 5 5 7 2 0 0 2

3 25 18 9 10 12 12 7 2 0 3

3 21 12 14 9 12 15 9 2 1 4

0 6 9 4 9 17 19 2 9 6 19

0 0 0 0 0 0 0 0 33 33 33

Note: Percentages have been rounded and columns may not add to 100%. Source: Survey data, 2003 (n  382).

162 / the moral economy reconsidered

winners or absolute winners. These same trends were evident for the question “During the course of rural reforms during 1991–2003, was your family a winner or a loser?” In the 2001 survey, in which the number of respondents was more than double in each wave of the 1995–2003 panel surveys, the trends are even clearer. The lowest income categories are concentrated in the absolute loser/loser responses, while 56 percent of individuals in the highest income category perceived their families to be either a winner or absolute winner. These findings are important for several reasons: (1) the findings reflect the reality of economic stratification in Russian villages; (2) the findings reflect the fact that villagers are aware of stratification and how they compare to others; and (3) perceptions of being a winner (or loser) correlate positively with the respondents mood and perceptions of control over his/her life. Those two aspects— mood and control over one’s life—in turn correlate positively with adaptive behavior such as increases in household plots of land. Thus, there appears to be a cluster of variables that affect proclivities for adaptation. Political Effects of Adaptation In addition to economic effects of rural adaptation, there were also political consequences. In particular, one effect that became clear from rural survey data was the erosion of rural support for the Communist Party of the Russian Federation (KPRF).19 A full description of the Communist Party, its programs and policy platform, and electoral trends constitute books unto themselves and have been analyzed elsewhere by other analysts.20 Briefly, it should be noted that in a short period of time, the Communist Party went from being a dominant power in society, controlling the state and all resources and organizations thereof, to being banished and stripped of its power and resources. The full story of the decline of the Communist Party of the Soviet Union (CPSU) has been analyzed elsewhere.21 The beginning of the end for the CPSU may be dated to the nineteenth Party Conference in June 1988, at which Gorbachev introduced measures to democratize the CPSU. Later that same year, Gorbachev pushed through a decision for competitive elections in 1989 to elect a new legislative body, the Congress of People’s Deputies (CPD), that would replace the rubber-stamp Supreme Soviet. The initial fruits of democratization were the first contested elections in Soviet history, held in March 1989. The March 1989 election, which required a candidate to receive 50 percent of the vote in his/her district (with 50 percent turnout), led to some notable defeats of important Communist leaders. In the Russian Republic, 21 of 55 Communist Party regional first secretaries were defeated.

effects of adaptation / 163

Many of the worst defeats came when Communist candidates ran unopposed.22 Despite the fact that Communist members comprised 87 percent of the CPD deputies, the elections were seen as a “great defeat” for the Communist Party.23 Gorbachev notes that following the 1989 election, a meeting of the Politburo at the end of March 1989 found that “most of the members were depressed, and failure was in the air.”24 The malaise spread to party members at large. After increasing about 2 percent a year during the 1970s and 1980s, starting in 1989, party membership began to decline for the first time since Stalin’s purges, and the decline accelerated in 1990.25 The exodus from the party was especially significant in Caucasus republics. In March 1990, the Communist monopoly on power ended when Article 6 of the Soviet Constitution was abolished. That same month, republican elections were held in Russia and the other republics to replace the old legislative Soviet system. The 1990 election in Russia confirmed the end of the Communist stronghold on the largest cities and large urban settlements generally.26 The Communist Party had always been a party of industrial workers and based its support on large cities. Party control of social and economic organizations was much stronger in cities, and party penetration, as measured by membership, was considerably less in the countryside.27 Given these political realities, one can appreciate the surprise over the 1990 Russian election, when reformist and liberal candidates did best in large cities, while conservative candidates did best in settlements with less than 50,000 residents. In settlements with a population of less than 50,000, 181 conservative deputies were elected, while only 47 radical (strongly pro-market reform) deputies were elected.28 Thus, an important shift in electoral support became evident during the first competitive election in the Soviet Union, with the Communist Party losing its traditional base of support to radical reformers. In turn, conservative candidates found support among small cities and in rural areas. These trends continued in subsequent elections in post-Soviet Russia. Thereafter, during the rest of the 1990s, the rural vote was instrumental in the revival of the Communist Party and formed the base of its electoral support during the 1990s.29 Therefore, an erosion in rural support for Communist candidates had important implications not only for the future of the party, but also for the vibrancy of the party system, the ability of the legislature to check the executive branch, and political pluralism in general. In the first three Duma elections (1993, 1995, and 1999), only the Communist Party managed to increase the percentage of the vote it received from party lists in each election. As noted above, a key component of the

164 / the moral economy reconsidered

revival of the Communist Party was the rural vote.30 However, erosion in rural support for the Communist Party was evident as detailed survey data became available from rural areas. A portrait of this erosion is illustrated in table 5.4. During the 1990s, the target audience for the Communist Party was the poor, the disadvantaged, the elderly, those who occupied a lower status on the socioeconomic scale, and those who were economic “losers” during market reform.31 However, as table 5.4 shows, in 2001 there were already signs that the KPRF was losing its stronghold on the most disadvantaged in rural areas. The table shows that, among the three lowest income groups, support for the KPRF was either second to the centrist party “Unity” or to “no party.” In short, the income categories that should have shown the strongest support for the KPRF did not. Moreover, another of the axioms of Russian politics is that the older voter provides a primary base of electoral support for Communist candidates. Although not shown in table 5.4, additional analysis showed

Table 5.4

Party support by income category (in percent)

Income as % of subsistence level 0–49 50–75 76–90 91–99 100–110 111–125 126–150 151–175 176–190 191–200 201

KPRF Unity 2001 2001 23 21 20 9 3 7 5 3 2 .5 6

13 30 17 8 5 9 9 5 .5 .5 3

No party 2001 29 35 9 6 5 6 3 2 .4 2 3

United Russia KPRF 2003 2003 3 16 16 5 9 14 16 3 7 3 9

4 19 12 17 11 12 12 8 1 1 2

No party 2003 7 26 17 8 8 10 12 5 2 1 5

Notes: The survey question asked: “which political party best represents your interests?” The table is best read by column. For instance, for 2001, Unity received 23% of its support from respondents with a monthly income of 0–0.49% of the poverty level, 21% of its support from respondents with a monthly income of 50–0.75% of the poverty level, and 20% of its support from respondents with a monthly income of 0.76–0.90% of the poverty level. The columns may not add to 100% due to rounding. Unity renamed itself United Russia in 2002. KPRF is the acronym for Communist Party of the Russian Federation. Sources: Survey data, 2001, and 1995–2003 (n  382 for each wave of survey).

effects of adaptation / 165

that support for the KPRF declined among women aged 60 and above. In fact, despite the fact that the retired give high levels of support to the Communist Party, the evidence suggests that the KPRF did not meet the needs of its core constituency, the rural elderly. Instead, the survey data indicate a significant gender divide. For rural men, electoral patterns are precisely as would be predicted: increasing support for the Communist candidate as age increases (and conversely, declining support for the nonCommunist candidate as age increases). Rural men conform to the expected pattern. However, for rural women, electoral support for the Communist candidate actually declined among rural women after the age of 60.32 This finding is important for two reasons: first, rural women outnumber rural men, significantly at upper age brackets (50 and above);33 and second, it suggests that KPRF policies are not perceived as meeting the social needs of older women, who often head the rural household if the husband has died. In this respect, the response that “no party” represents rural interests is especially damaging to the fortunes of the KPRF. In addition, Putin’s policy of paying pension arrears and increasing pension levels represent further erosion of Communist support among pensionage rural dwellers. Therefore, even among the cohort of voters believed to be the strongest Communist supporters, there was evidence of electoral weakness on the part of the KPRF. If the rural political trends depicted in the 2001 data continued, it would mean electoral disaster for the KPRF in December 2003. The question was whether the 2001 survey data were anomalous or whether it was an early indicator of impending political misfortune for the KPRF. In the 2003 wave of the survey, the data show a greater dispersal of support for the KPRF (and even more so for United Russia).34 Importantly, the 2003 data confirm that among the lowest income categories, support for the KPRF was again second to either “United Russia” or to “no party.” Thus, the 2003 data verify that the KPRF was losing the political battle for the most disadvantaged rural dweller. The data also suggest that the battleground for voters had moved to the “middle class,” in this case, individuals whose monetary income ranged from, roughly speaking, just above the subsistence minimum to 1.5 times the subsistence minimum (this cutoff point is arbitrary and open to debate). Here too, political preferences were for either United Russia or no party. In total, in only three income categories—91–99 percent of subsistence, 100–110 percent of subsistence, and 151–175 percent of subsistence— was there a stated preference for the KPRF. Regarding the last two income categories, the problem for the KPRF was that these individuals showed genuine signs of adaptation by increasing the mean size of their rented

166 / the moral economy reconsidered

land and other land, and the KPRF was opposed to a rural land market (see table 5.2). Thus, not only was the KPRF losing its traditional base of rural electoral support, but it was also in danger of losing a future base of support if the party remained rigid and inflexible to new economic realities. These survey data turned out to be prescient. In December 2003, the KPRF suffered a crushing electoral defeat, gaining only about one-half the popular vote of 1999, in the party list vote for the State Duma.35 As a result, Communist representation in the Duma declined significantly. Even more important, the KPRF lost a lot of its legislative clout, as in the aftermath of the 2003 election no Communist delegate headed a legislative committee in the State Duma. Although electoral support for the KPRF declined across virtually every voting indicator, the primary reason analysts attributed to the defeat was the loss of the rural vote. The last political effect to be discussed relates to violation of peasants’ moral economy, rural adaptation, and political quiescence. As noted in chapter 1, the existing literature often focuses on several conditions that facilitate rural revolt: threatened embedded rural values, threatened rural economic livelihood, and a weak state. Indeed, if one believes the conventional wisdom, Russia would appear to present a perfect case for rural rebellion: threatened embedded values and psychological shock, deteriorating socioeconomic conditions, an allegedly weak state, and, importantly, rural actors’ inability to obtain policy preferences through legitimate (legal/political) channels. Yet, the Russian countryside during the 1990s was remarkably quiescent. “Rural protests” most commonly consisted of a few hundred demonstrators organized once a year by the APR to march in front of the Kremlin with their placards and signs. When rural protests did arise, they were not over marketization of agriculture or market reforms, but in response to nonreceipt of wages or poor working conditions. What is remarkable about Russian rural reform is that, despite worsening socioeconomic conditions, rural dwellers expressed low levels of willingness for collective or individual protest action, as shown in table 5.5. Table 5.5 shows a decline in the likelihood of mass rural demonstrations and respondents’ participation in those demonstrations. By the end of 2000, the probability of mass rural demonstrations was extremely low, and thereafter decreased during the first Putin term.36 The exception to the downward trend was in the immediate aftermath of the devaluation of the ruble and the government’s default on its internal debt obligations after August 1998. Even in that tense period, only one-third of rural respondents indicated that they would participate in a mass demonstration. While a combination of factors accounts for a reluctance

effects of adaptation / 167 Table 5.5 Potential for rural protest and collective action, 1995–2002 (in percent)

How likely is a mass demonstration against the fall in the standard of living in your rural raion? Fully possible Unlikely Too hard to answer If a mass demonstration against the decline in the standard of living occurred, would you participate? Probably yes Probably no Too hard to answer

Nov. 1995

Sept. 1997

Sept. 1998

Sept. 1999

Sept. 2000

Sept. 2002

17.8 68.6 13.6

15.0 68.1 16.9

34.7 41.3 24.0

15.3 66.6 18.1

10.0 73.5 16.5

8.2 77.8 14.0

22.4 61.6 15.8

18.4 63.8 17.8

34.3 42.5 23.2

27.1 54.7 18.2

17.5 64.5 18.0

19.6 65.6 14.8

Note: Number of rural respondents: Nov. 1995, 879; Sept. 1997, 627; Sept. 1998, 628; Sept. 1999, 549; Sept. 2000, 549; Sept. 2002, 544. Sources: Monitoring obshchestvbennogo mneniia: ekonomicheskie i sotsial’nye peremeny, no. 1 (January–February 1996), p. 76; no. 6 (November–December 1997), p. 72; no. 6 (November–December 1998), p. 62; no. 6 (November–December 1999), p. 78; no. 6 (November–December 2000), p. 77; no. 6 (November–December 2002), p. 77.

to use collective action or collective violence against the government, the effects of adaptation cannot be discounted. In this respect, the distribution of land shares, physical plots of land, and the ability to increase the size of land holdings gave rural dwellers a stake in the system and undercut anti-system sentiments. Therefore, the Russian case provides an important exception to the existing literature on peasant values, which emphasizes peasants’ recourse to rebel or resist when faced with rural reform and the marketization of agriculture.37 In fact, revolutionary activity by peasants is rare, and only a few agrarian transitions resulted in full-blown revolutions or wars, while there are hundreds of historical examples where agrarian transitions were nonviolent and marked by peaceful rural adaptation.38 Despite the most hostile of conditions, Russian peasants preferred to adapt their behavior, to pursue survival strategies, or at least not to resort to rebellion or mass protest. The effects of adaptation, therefore, were to blunt any impetus toward mass political or economic instability.

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Changes in the Policy Environment During the 1990s, the policy environment was hostile to food producers as the federal government lessened protection, regulation, and financial support. The importance of a hostile macro-policy environment was seen by the fact that domestic production plummeted, industrial–agricultural price disparities led to soaring farm unprofitability, and meat imports were supplying Russia’s largest cities.39 A hostile macroeconomic environment meant that in some regions, even the strongest farms, the top 10 percent that were expected to lead the way to agrarian capitalism, were just surviving by holding their own.40 During 1999–2000, a “new course” of agrarian policy emerged in policy statements and articles by government leaders and ministers.41 This new policy put increased emphasis on changing the policy environment for Russian agriculture, increasing food production, and ensuring adequate food supplies to the population. Already in early 2000, the revival of food production was considered one of the strategic policy directions under President Vladimir Putin. In February 2000, a national conference on the problems of the agroindustrial complex was held in Krasnodar krai. More than 1,000 specialists, scholars, food producers, heads of ministries and departments, and President Putin himself attended. In his speech to the conference, Putin stated that “Our first-order task is to raise the volumes of food output to the levels they were at the end of the 1980s–beginning of the 1990s and to appreciably reduce the country’s food dependence on imports.”42 In July 2000, a program entitled “Basic Directions of Agrofood Policy to 2010” was presented to the cabinet by Minister of Agriculture Gordeev, the outlines of which were discernible from a speech made by Gordeev toward the end of the month.43 The new approach to agriculture posited three main tasks. The “key task” was financial rejuvenation of large enterprises, and Gordeev noted that 40 percent of commercially sold food in the nation was produced by 20 percent of the farms.44 The second task was reform of customs and tariff policy, and in this regard, he spoke of the need to regulate food imports. The third task was to regulate the domestic food market, indicating increased intervention by the government.45 Thus, as the new century began, the performance of Russian agriculture once again became a priority to policy-makers. The importance for peasants’ moral economy and agrarian capitalism is that nascent adaptive trends were largely superseded by the effects of state urban bias under Yeltsin. Under Putin, agricultural producers were poised to consolidate those adaptive trends and to experience a revival, awaiting only a supportive policy environment. Some of the most important federal policies from the Putin government that are intended

effects of adaptation / 169

to support adaptation and responses to market reforms are considered below. The list of factors that is discussed is not exhaustive, but instead addresses issues that are relevant to the moderation of state urban bias. Policy initiatives are divided into two sections, one pertaining to large farms, the other to rural households. Policy Initiatives for Large Farms One of the main changes from the Yeltsin period has been an emphasis on large farms to revive agricultural production. The post-Yeltsin government has de-emphasized the importance of private family farms and instead prioritized the revival of food production on large farms. From the beginning of the Putin administration, Minister of Agriculture Gordeev has spoken out repeatedly that the future of Russian agriculture, and the main food producer for the nation, will be large farms. For example, at an agricultural conference in Moscow oblast in late February 2001, Gordeev stated that the policy of attempting to destroy large farms in the early 1990s “had a negative influence on the course of reform.” Gordeev continued that “no one should doubt the priority of large producers over small ones.”46 Thus, a crucial element in rural revival is the orientation of rural policy under Putin toward large farms. Some of the policies that reinforce rural pro-market orientations on large farms are considered below. Provision of debt relief One of the priorities of Gordeev and the Putin government was to facilitate the rejuvenation of large farms through debt relief. As a result of low domestic purchase prices, price disparities with industrial inputs, and delays in receiving payment for food sales, debt owed by large farms increased throughout the 1990s. For example, by mid-2000, total farm debt was estimated at more than 229 billion rubles, of which 157 billion was overdue debt.47 Even after food production stabilized and began to increase during 1999–2002, farm debt continued to increase, owing to the fact that a large percentage of debt was in the form of penalties and fines for late or missed payments. In 1999, for instance, farm debt was 184 billion rubles, a sum that grew to 322 billion rubles in 2002, even though during this time agricultural output was growing at an annualized rate of 5 percent a year, the number of unprofitable large farms was decreasing, and the agricultural economy as a whole was profitable in each of those years.48 In order to aid large farms, in July 2002, the government adopted a law “On the Financial Renewal of Agricultural Producers.”49 This law

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established a program of debt restructuring and territorial commissions to oversee the program. Farms were able to enroll in the program in order to have their debt restructured, assuming they followed procedures established by their territorial commission. The law envisioned a combination of debt restructuring and some debt relief, primarily of penalties and fines for overdue loans. Further relief came in July 2003 when President Putin signed a decree that eliminated debt repayment of penalties and fines for debt that were not abolished under the 2002 law, and this debt relief continued to April 1, 2004.50 Creation of an effective credit system To support financial rejuvenation of large food producers, it was also necessary to create a reliable credit system, something that was lacking during much of the 1990s. The change in policy had three elements.51 The first element was the creation of a new agricultural bank, to replace the banking network that had failed previously. Toward that end, in mid-March 2000, President Putin signed instructions for the creation of Rossel’khozbank.52 In April 2000, the bank was registered and in June 2000 received its license to conduct banking activities.53 By early 2001, Rossel’khozbank had 27 branch offices in various regions.54 In the fall of 2002, it was announced that 105 branch offices were in operation, with plans to expand to 150.55 As a result of this rapid expansion, Rossel’khozbank became an important banking channel through which state credits to the agricultural sector were distributed. The second element was to reform the credit system. In mid-2000, a new credit system was announced by Gordeev. The new system provided subsidized interest rates for seasonal loans to producers. The money is transferred to Rossel’khozbank, which then provides loans directly to customers at higher interest rates. Most of the loans have a one-year repayment period and are repaid after the harvest. The goal of the system was to increase the effectiveness of credits while at the same time providing the seasonal support that food producers require to meet production costs. The third element consisted of changes in the way that government support was distributed. Gordeev described the new approach in late 2000 when he stated “it is necessary to reject ineffective subsidies and special programs that are financed from the federal budget. State support should be provided to farms that are working effectively. For chronically unprofitable farms, another solution should be found.”56 It remains an open question whether in fact state support goes to the “most effective” or to those with the best connections and influence.57 Gordeev noted

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that the 300 strongest farms, less than 1 percent of the total number of large farms and having less than 2 percent of agricultural land, produced 18 percent of the food from the large farm sector, 20 percent of its income, and 27 percent of its profits during 1999–2001.58 Moreover, the director of the Agrarian Institute in Moscow, Alexandr Petrikov, noted that in 2001, financially stable large farms produced 59 percent of the commercially sold food in the nation, while large farms with financial weakness produced only 5 percent.59 Thus, there is evidence that a policy of concentrated support would be highly effective. In any event, as the policy evolved, the preference of the government was for stronger farms to absorb weaker farms so as to avoid massive rural unemployment. Horizontal “integration” became one of the catchwords of agrarian policy and was highly touted in specialized journals as a primary factor in rural revival. Some view the incorporation of the weak by the strong as less motivated by economics and more the initiative of the governor who was anxious to curry favor with the Kremlin and receive more federal support for these amalgamated farms.60 Use of import tariffs and import restrictions Russia’s agricultural trade policies have been of mixed character, although the use of trade levers to improve the financial condition and trade competitiveness of domestic producers has been more explicit. On the one hand, Putin himself has repeatedly stated that economic integration and entry into the World Trade Organization is not only desirable but also a necessity for Russia, thereby implying Russia’s willingness to move toward freer trade and lower trade barriers. On the other hand, in agriculture there has been a clear undercurrent of increased protectionism, at least for some food products.61 From the beginning, Putin stated that food imports need to be restricted in order to protect national interests and Gordeev agreed when he argued that “food security of the Russian Federation is a component part of its economic security.”62 Since 2001, the Russian government has utilized a variety of protective measures, including banning food imports of specific products from either entire countries or regions, imposing import quotas, increasing import tariffs, and imposing export duties on certain products. These restrictive policies were applied to poultry and meat products, and despite higher tariffs, the volume of meat imports rose during 2000–2002, although the rate of growth slowed considerably.63 For poultry imports, the volume of imports in 2002 declined slightly in comparison to 2001, and imports in 2003 were 84 percent of 2002 levels, but even with reduced imports, the volume of imported poultry was still more than

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twice that of 2000.64 Despite increased volumes of imports, Gordeev was satisfied with the policy, noting in the fall of 2003 that domestic meat production had increased over levels in 2002.65 More generally, total domestic meat production in 2003 was up 9 percent in comparison to 2000, including that on large farms whose meat production in 2003 was 18 percent higher than in 2000.66 Use of state intervention to support domestic wholesale prices Just as trade levers were used to support and protect animal husbandry producers, state intervention in the domestic food market has been used to support producers of grain. The legal basis for state intervention is found in the July 1997 federal law “On State Regulation of Agroindustrial Production.”67 The law envisioned state intervention in the domestic food market in two instances: if market prices for agricultural products, raw materials, and foodstuffs fell below a “minimum level,” or, if food producers are unable to sell their production because of a lack of demand (Articles 7 and 10). According to the law, under these circumstances, the state would offer “guaranteed prices” or purchase some of the surplus food. A second form of government intervention concerned actual food goods. The government would intervene if there was a “deficit” of agricultural products, raw materials, or foodstuffs; or if their retail price exceeded a “maximum level.” In this instance, the state would tap into its reserves and increase food supply. The intended goals of state intervention were to (1) stabilize purchase prices and increase predictability for producers; (2) ensure the ability to market food produce; and (3) provide a minimum level of income for producers, thereby countering tendencies to reduce output. Poor harvests in the latter 1990s meant that the 1997 law was never implemented, but the government’s stated policy of market intervention was put to the test after the 2001 and 2002 harvests, which were unusually good. Early estimates for the 2001 harvest were about 75 million tons or about 10 million tons more than in 2000. In early September 2001, the government announced the allocation of 2 billion rubles to support domestic grain prices if they fell below 2,085 rubles a ton ($71 a ton).68 However, as the size of the harvest increased, the need for additional state intervention became clear. As the 2001 grain harvest concluded, the actual harvest was about 85 million tons. Domestic grain prices declined due to oversupply, exacerbated by limited capacity to export surplus grain. The original allocation of funds for purchase intervention in the grain market had to be increased, and Putin approved this measure

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at the end of September. The government established wholesale prices that acted as guaranteed purchase prices for grain growers. In fall 2001, purchase price intervention began, and it was conducted through three channels: through commodity exchanges, through the state purchasing agent “Federal Agency for the Regulation of the Food Market,” and through selected 15 grain elevators located in 8 regions of Russia.69 Intervention worked by the government buying “surplus” grain at the prices it established, with the purpose of removing some of the excess product from the market and to establish price floors for different classes of grain. The purchase intervention was intended to continue until either the “market” purchase prices reached the established minimum level or funds allocated to intervention were expended.70 Eventually, the government expended more than 5 billion rubles to purchase grain on the domestic market during the 2001–2002 agricultural year. During the 2002–2003 agricultural year, with a harvest of 86 million tons, government intervention in the grain market occurred again, but this time with even more grain elevators involved.71 Policy Initiatives for Rural Households Policy initiatives toward households are important and warrant attention for several reasons. Rural households are important because they comprised 27 percent of Russia’s population in 2002 (about 39 million people).72 Rural households are important because they account for more than one-half the ruble value of food production in Russia. Although most of the value of household production is nonmonetary and is consumed by the household,73 without this production the pressures on domestic food supplies would be tremendous and it is likely that food imports would soar. Household food sales are also important for supplying urban food markets, and in this sense are an important source of food for urban residents as well. Therefore, it is important to note that in the latter 1990s and into 2000, not only did the policy environment change for large farms, but also for rural households. The Yeltsin administration largely ignored the need for the social development of the countryside, and as a result social and cultural conditions deteriorated. Under Putin, the well-being of rural households can only be ignored by the government at its peril, as implied by Gordeev when he stated that “we clearly understand that the steady development of all rural territories is the foundation of agricultural production today.”74 This renewed sensitivity and concern for rural households is evidenced by the following policy initiatives under Putin.

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Rural social development To be fair, social conditions and rural development were important policy issues during Soviet rule, with a vast literature about these problems. There was a special program adopted in 1975 for the social development of the Black Earth region in Russia. An additional program for the social development of the countryside was adopted in the mid-1980s, and in 1991, a law on the social development of the countryside was passed. The 1991 law envisioned that 15 percent of Russia’s gross domestic product would be allocated to develop the agroindustrial complex. Also in 1991, a program entitled “Revival of the Russian Village” was adopted that set out ambitious construction and infrastructure goals.75 Both the law and the special program were ignored, however, and so after a decade of decline during the 1990s, it was obvious that rural social conditions had regressed.76 Therefore, in 2002, a special program for the social development of the countryside was adopted to improve rural infrastructure, housing, education, communications, and the provision of electricity, gas, and hot water to rural communities.77 The program came into effect in 2003 and is to run 2010, and is divided into two stages. The program envisions expenditures of 167.8 billion rubles during its duration, of which 11 percent will come from the federal budget, 42 percent is intended to come from regional budgets, and 47 percent is to come from off-budget sources.78 Stabilize and regulate land relations As is well known, in 2001, Russia adopted a new Land Code to regulate land relations in the post-Soviet period. Controversy and disagreement over the Land Code had been ongoing since 1994. As part of the compromise to get the Land Code approved, sections concerning the regulation of rural land sales were excluded, to be taken up in a separate law. Once rural land transactions were deleted from the Land Code, it was able to move forward and was adopted in June 2001. A separate law, called “On Agricultural Land Transactions” (Ob oborote zemel’ sel’skokhoziaistvennogo naznacheniia), was adopted in June 2002 and came into effect in January 2003.79 This law was important because rural land purchases comprised more than 37 percent of land purchases from state and municipal sources, and more than 96 percent of land purchases between private individuals in 2002.80 While a full analysis of the law is not relevant to this discussion, suffice it to say that the law created a transaction process that was characterized by bureaucratic regulation and intervention. The law did not introduce a process that was characterized by free market land transactions. Among the

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law’s provisions was the fact that only a certain category of agricultural land could be bought and sold (arable land, not total agricultural land); there were regulations concerning minimum and maximum sizes of land holdings, subject to regional variation; and most importantly, the law created a system that allowed local administrations the right of first refusal for rural land that was offered for sale. To summarize briefly, the sale of agricultural land is governed by Article 8 of the law, and according to this article, organs of local government (raion or village administrations) have preferential rights to buy agricultural land that is sold by a private owner. The seller of a land plot is required to submit a written letter, or notification (izveshchenie) to the regional government, or in certain cases, to the raion administration, of his intent to sell his land. This notification should indicate the price of the land and other elements of the transaction. The regional government has 1 month, from the date of receipt of the notification, to exercise its right to purchase the land. If the regional government does not exercise its right to purchase the land, or fails to inform the seller of its intent to acquire the land plot, then the seller has 1 year to sell the land to a third party at a price not lower than that which was indicated in the letter of intent submitted to the regional government. The 1-year term starts with the submission of the letter of intent to the regional government. The selling process is of an iterative nature. If the seller decides to sell the land plot at a price lower than that which was indicated in the original notification, or if other conditions of the transaction change, the seller is obligated to submit a new izveshchenie, and again the local administration has a month to exercise its right of first refusal. If the administration does not want the land at that price, then the seller has a year to sell it to someone else, but not at a price lower than that which was indicated in the notification.81 What is important is that an administration’s right of first refusal does not apply to agricultural land owned by citizens who use it: (1) for individual housing; (2) for construction of garages; (3) to conduct subsidiary agricultural production; (4) for collective gardens and orchards; and (5) for dachas and other assorted small buildings. The exclusion of these types of land from the law’s regulation is an important benefit and a boost to the land market in general. It is precisely these types of small land plots that comprise the bulk of purchase transactions among individuals. In 2002, for example, of the 321,508 land purchase transactions among private individuals, 96 percent were purchases for one of the purposes enumerated above, including 43 percent that were purchases in rural areas.82 In short, the bulk of the rural population was able to

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engage in land transactions with minimal interference and regulation from local administrations. Development of household food production No special purpose federal programs or special federal funding exists to encourage the development of household food production. Financial support to subsidiary agriculture depends on regional financial assistance.83 According to agricultural specialists, one of the shortcomings of federal policy has been the fact that operators of subsidiary agriculture are often unable to receive credit from Rossel’khozbank.84 However, under Putin, the government has attempted to clarify the legal status of subsidiary agriculture. Given the importance of household food production to the nation, it was important that the legal status of subsidiary agricultural operations be codified by law. The last significant legislation concerning subsidiary agricultural operations dated to the late 1970s and early 1980s. In June 2003, the State Duma and Federation Council approved a bill entitled “On Personal Subsidiary Farming” (lichnoe podsobnoe khoziaistvo, or private plots). This bill was subsequently signed into law by Putin on July 7, 2003 and 10 of its 11 articles became effective immediately.85 The law is important because almost 16 million Russian households operated private plots in 2002.86 In particular, the 2003 law clarifies two legal issues that are inherent to household production. The first issue is the difference between the right to a land plot and agricultural activities on the land plot (such land may be owned or leased). The law differentiates the ownership of land from agricultural activities.87 Article 3, point 2 requires that the land plot must be registered with a local land committee. However, article 3, point 2 does not require that the podsobnoe khoziaistvo—subsidiary agricultural operations and productive capital—be registered with a state organ. In other words, a person must register his land but not his animals or any other component of his podsobnoe khoziaistvo. This was an important change because under Soviet law, animals and other productive capital were regulated by the state. The second issue clarified by the law concerns the tax status of the podsobnoe khoziaistvo. Article 2, point 1 defines private subsidiary farming as a non-entrepreneurial entity, and its activities likewise are not considered to be entrepreneurial (nepredprinimatel’skie deiatel’nosti). This aspect is important because it eases registration and tax reporting burdens for operators of subsidiary agriculture. The sale of agricultural products from private plots is also not considered an entrepreneurial activity

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(point 4), and this is important because it means that earnings from food sales are not subject to income taxation.88 In practice, some households attempt to claim that very large plots of land—even 50 ha or greater—are lichnoe podsobnoe khoziaistvo. Thus, the 2003 law on subsidiary agriculture is less important as a landmark of radical reform; indeed, it is unlikely to substantially effect ongoing economic trends and trajectories. The 2003 law on subsidiary farming may provide a modest impetus to household agricultural activities since that income is tax-free. Instead, the new law is important mainly in that it codifies the very real differences between formal economic activities, represented by large farms and private farms, and the informal economic activity represented by subsidiary farming. Sources of Rural Revival The change in the economic environment brought about by federal policies had a beneficial effect. Dating from its nadir in 1998, the value of agricultural production grew at an annual rate of 6.4 percent during 1999–2001.89 In 2002 and 2003, agricultural production slowed to 1.7 and 1.5 percent, respectively.90 However, after nearly a decade of production declines, even a slower rate of growth was a positive occurrence. This growth showed that although the role of the federal government contracted during the 1990s, it does not mean that the federal government is left without policy levers to influence the environment in which food producers operate. While federal policies are important for influencing the macroeconomic environment, the role played by regional governments is even more central to the question of agricultural revival. This section examines the role that regional governments need to play, and then considers which food producer is likely to lead the long-term rural revival of Russian agriculture. It will be argued that neither households nor private farms are likely to lead the rural revival of Russian agriculture. The weaknesses of each and the reasons for this argument are examined, after which reasons as to why large farms will lead the way to agrarian capitalism are presented. The Role of Regional Governments Whereas the federal government is able to influence the macroeconomic environment in which food producers operate—that is, to exert indirect influence—regional governments possess direct policy and financial levers and understand regional conditions better than the federal government.

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Regional governments are best able to effect changes in economic and policy environments that allow large farms to build upon their social, material, and human capital, as well as to benefit from the adaptive changes that were undertaken during the 1990s. Therefore, regional leaders are the key governmental actor for the revival of food production and Russian agriculture. At a general level, regional leaders implement the policies adopted by the federal government, but then go farther, adjusting policies to their own needs, resources, and opportunities. Thus, regional governments are able to influence the production environment more directly than the federal government. For example, some of the policy levers held by regional governments that directly affect food producers include the following. Investment capital Regional (oblast, krai, and raion) capital investments into agriculture were greater than federal capital investments during 2000–2002, accounting for 55, 53, and 51 percent of domestic investment, respectively.91 Very little investment into agriculture comes from the private sector, an estimated 0.4 percent in 2001. Foreign investment into agriculture has increased, coming from 18 countries in 2002. Overall, however, foreign investment is rather low, accounting for just 0.2 percent of capital investments into agriculture in 2002, and such investments are channeled primarily into tobacco, alcohol, and confectionaries.92 Production subsidies to large farms, households, and private farmers Federal-level subsidies have been either reduced or ended, depending on the food product, so regional production subsidies have taken on new importance. Regional governments direct resources where they will be most effectively used, at least in theory. Special purpose federal programs for the support of household production and private farms do not exist. Therefore, regional support determines the extent to which financial assistance is available. Regional trade policies Regional governments are empowered to define import and export policies for their region. In theory, restraints on free domestic food trade are prohibited by federal law. In practice, regional governments often require deliveries to the regional food fund to be made first or explicitly restrict either the import or export of food from their region.93

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Land laws Regional governments have the authority to define minimum and maximum land plot sizes involved in land transactions, according to the 2002 law on rural land transactions. Social development of the countryside The 2002 program on the social development of the countryside requires the bulk of financing to come from regional budgets. During the revival of agriculture, household stratification that was described earlier is likely to take on regional significance.94 Regional variation is thus to be expected, as some regions are better endowed with high quality soils and natural conditions, some with better rural infrastructure, some with more highly developed farms, some with better demographic conditions, and others with more progressive political leadership. All regional governments, irrespective of the factors just mentioned, have similar needs in employing policy levers that increase incentives to expand output. To sustain the rural revival and facilitate agrarian capitalism, regional governments need to do the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.

eliminate regional policies that undermine production incentives; remove regional trade barriers to food trade; introduce and use of market-based purchase prices; adopt policies to free farm gate prices to market levels; adopt policies to create regional agricultural banking and credit systems; adopt policies to create regional land markets, facilitating the transfer of land to the most productive users; adopt policies to facilitate vertical integration among farms, food processors, and foreign investors; adopt policies to create market information systems for dispersal of market conditions and prices to farms; adopt subsidy, tax, and credit policies to target geographical areas and economic sectors that are most in need of it; adopt policies to facilitate development of private farms, and to support household production; regulate natural monopolies and input prices for products used by food producers; create financial assistance programs to support and encourage household business activity; and adopt policies to encourage the development of off-farm rural services, allowing large agricultural enterprises to concentrate on food production.

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The central variable for regional governments is how to use their policy levers most effectively. Not all regional policy interventions help agriculture develop along market lines, and the adoption of some of regional policies extend the transition time to achieve market-based practices and services. The degree of regional intervention is influenced by geographical variations and the importance of agriculture in the regional economy. At present, there are examples of interventionist regional governments (Republic of Tatarstan, Voronezh, Ulianovsk, and Belgorod oblasts), non-interventionist (Leningrad and Novgorod oblasts), and a mix (Saratov and Nizhnii Novgorod oblasts). Political considerations and the political environment in different regions are also important. At present, Russia’s political configuration is such that regions with progressive political leadership tend to be in locations where agriculture is less important to the regional economy. Regions where agriculture is more important tend to have less progressive political leadership, or even left-leaning tendencies. Generally speaking, leftleaning governments tend to be more interventionist, which helps agricultural production in the short term, but may delay the development of market institutions in the longer term. In sum, while the levers held by the federal government are important for indirectly influencing the macroeconomic environment in which farms operate, regional levers and policies are the decisive factors in reviving domestic food production and creating sustainable rural communities for the future. Rural households Although during the 1990s food production from households took on renewed importance and was a major contributor to the nation’s food supply, this section argues that rural households and their production are unlikely to be the leader of the revival in Russian agriculture or agrarian capitalism. That is not to say that household production is unimportant, but households do have several constraints and they are explored in more detail below. Household food production Analysts commonly point out that household food production increased as a percentage of the total value of food output during the 1990s, rising from 26 percent in 1990 to 59 percent of the ruble value of food output in Russia in 1998 and 54 percent in 2002. Households’ production tends to concentrate on certain commodities. For example, in 1990, households produced 25 percent the nation’s meat, but 55 percent in 2002; households produced 24 percent of the milk in 1990, but 50 percent

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in 2002; and 22 percent of the eggs in 1990, but 27 percent in 2002.95 These trends would seem to suggest that households might lead the revival of Russian agriculture. What is less commonly acknowledged is that the percentage increase in total output by households was due in large part to significant declines in output by large agricultural enterprises. Consider the following example. If the mean output (in volume) from all categories of farms during 1986–1990 is used as a base point—a period of good, but not spectacular agricultural production—and assume that those levels of output held steady during the 1990s instead of declining, the contribution of households’ production is put into its proper perspective. Under that hypothetical scenario, in contrast to the percentages indicated above, households would have contributed 27 percent of the nation’s physical volume of meat in 1999; 23 percent of milk; and 21 percent of eggs.96 Thus, although household production did increase during the 1990s, the crucial factor was the decline in production on large farms. As food production on large farms increases, the percentage of food output from households declines, an ongoing trend since 1998. Related to food production are commercial sales of household food production. Official statistics show a decrease in the percentage of household output over time.97 While evidence from surveys was presented showing an increase in food sales, only a small percentage of households sell significant amounts of food. Thus, only perhaps 10 percent of households (not including private farmers) are commercially oriented. This small percentage constrains households’ ability to feed the nation and limits households’ ability to raise additional capital for expansion of production capacity. Production and human capital Households are unlikely to lead the rural revival because of the constraints on production capital. O’Brien and his colleagues found a slight increase in the ownership of agricultural equipment in their panel study of three villages during 1995–1997.98 Elongating the time period to 1995–2003, survey data confirm O’Brien’s original finding. In 1995, for example, the mean number of agricultural machines per person was 0.04, and the mean number of agricultural tools was 0.11. In 2003, the mean number of agricultural machines rose to 0.10 and the number of agricultural tools to 0.17. Even the highest income households had a mean of about 0.5 machines or tools in 2003. Even with increases in the mean, these are hardly numbers that suggest highly mechanized household labor.

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National trends are not even this sanguine. During the 1990s, the production of all types of agricultural machinery declined, the number of piece of machinery in operation decreased, machine and equipment replacement rates were negative, and the use of all types of inputs declined. In short, as the Russian countryside demodernized, household labor became more, not less, dependent on manual labor. Survey data from Kurgan oblast illustrate this fact, as only 14 percent of the rural respondents in several raions throughout the oblast indicated they had mechanized machinery or tractors for cow-milking, manure removal, water-carrying, or preparation of animal feed.99 Production capital concerns not only machinery, but also animals. The number of animals possessed by households rose during the first half of the 1990s, peaked in about mid-decade for most animal categories, and declined thereafter. These trends are indicated in table 5.6. While the number of beef cattle showed a slight upturn in 2000 and continued through 2002, other categories of animals such as dairy cows, sheep, and goats have declined from their highs in 1994. Therefore, it is problematic whether animal stocks will increase significantly in future years. The survey from Kurgan oblast is again suggestive. In that survey, 48 percent of rural households indicated that the difficulty of daily animal husbandry work was a serious constraint on incentives to expand livestock herds or production. Respondents cited the lack of animal sheds,

Table 5.6 Number of animals owned by households, 1991–2002 (thousand head)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Beef cattle

Dairy cows

Pigs

Sheep and goats

9,866 10,654 11,585 12,027 11,560 11,394 10,901 10,425 9,919 10,065 10,252 10,690

5,235 5,735 6,376 6,772 6,691 6,705 6,483 6,237 5,979 5,964 5,918 5,849

7,076 7,728 7,776 7,929 7,781 7,556 7,246 6,962 7,393 7,834 6,791 6,924

16,094 17,030 17,962 16,888 15,021 13,428 11,940 10,560 9,290 9,113 9,342 9,666

Sources: Sel’skoe khoziaistvo Rossii (Moscow: Goskomkstat, 1995), p. 76; Sel’skoe khoziaistvo Rossii (Moscow: Goskomstat, 2000), p. 69; Sel’skoe khoziaistvo Rossii (Moscow: Goskomstat, 2002), p. 69.

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the absence of mechanized equipment, and the difficulty of manual labor. As a result, nearly one-half of rural households in the survey indicated no intention of increasing their number of animals.100 Household production is labor intensive and output depends to a large degree on human capital. Macro level data reflect the fact that the base of human capital in rural areas is being eroded. In 1992, the population coefficient turned negative for the first time in postwar Russia, with the rural death rate per 1,000 persons surpassing rural birth rates. For the nation as a whole, the rural population coefficient declined from 2.2 in 1990 to 7.0 in 1999, to 7.3 in 2001.101 Of particular note are the Northwest and central federal districts where the rural death rate per 1,000 persons equaled 12 and 15, respectively, in 2001.102 A study by Goskomstat on population to 2010 estimated that under the most optimistic scenario, the rural population would decline by 1.5 percent. The medium variant foresaw a 7 percent decline, and the pessimistic estimate forecast an 11 percent decline in the rural population.103 From the time the study was published in 1997 through the end of 2001, the rural population had already declined 1.5 percent, thus making the optimistic scenario unlikely.104 Survey data reflect ongoing realities at the village level and paint a picture of an aging countryside. Longitudinal panel data from three villages showed that the mean age of husbands increased from 44 in 1995 to 51 in 2003; and the mean age for wives increased from 47 in 1995 to 54 in 2003. During this same period, the mean size of the household decreased from 3.1 members in 1995 to 2.8 members in 2003. Assistance from large farms Assistance from large farms is directly related to household food production and constraints on physical capital. It is well known that rural household production benefited from links to larger agricultural enterprises during the Soviet period, as large farms provided valuable services, inputs, and other assistance. This symbiotic relationship between larger farms and households has changed during the period of reform, and survey data strongly suggest that these links are eroding. The 2001 survey funded by NCEER asked respondents how often their household received assistance from various sources, one of which was a large agricultural enterprise. The responses were scaled 0–5, with 0  “no support,” 1  “very little” support, and 5  “very much” support. The mean for the sample as a whole was 0.79, which means that assistance was virtually nonexistent. The question, therefore, is absent of access to credit, and without assistance from larger farms, how much (if any) household agricultural production can be expanded.

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Land Rural households have taken advantage of reform policies, and as a result, a significant portion of agricultural land has been privatized, followed by the distribution of land deeds enforcing the right of disposal. The buying and selling of small plots of land used by rural households for food production constitute an overwhelming segment of the Russian land market. However, as was shown before, household plots as a whole are very small. Most households have already increased their land plots up to the point that their human capital resources can support. Further, there is evidence to show that households do not wish to continually expand land plots. For example, in the 800 household survey in 2001, one question asked whether the household was planning to increase production in the coming year, and if so, by what means. Of the 215 households that indicated production increases were planned, only 68, or less than one-third, responded that they planned to acquire more land. Furthermore, according to survey data, households obtain land to grow food for consumption.105 To feed a household of 3–4 persons, a great deal of land is not needed. Therefore, household plots are not likely to exceed more than a hectare or two, at most, which thereby limits maximum output. Given the fact that most household labor is manual, low-tech, and often performed by older persons, this represents an additional limit on production potential. Moreover, only a small percentage of households increased the size of their land plot by a significant amount by either leasing or purchasing additional land. In addition, only a small percentage of households added significant parcels (1 ha or more) of rented land that is used for commercial agricultural production. Social networks During the Soviet era, individuals and households formed social networks in order to obtain goods and services that were not available through the formal economy (social networks are sometimes referred to as “helping networks”). Social networks also provided the means for community attachment and psychological well-being. Thus, the existence and use of social networks in present-day Russia is not unique. There is evidence that rural social networks are more extensive and more “dense” than urban-based networks.106 Due to inadequate infrastructure and a paucity of rural goods and services, the economic costs of not belonging to a social network in rural Russia are severe. However, rural social networks more so than urban networks are comprised of elderly persons, who need more assistance and therefore

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have wider networks.107 This is important because elderly persons are less likely to rent land for their own use, for obvious reasons. Second, a large portion of household food production—that which is not consumed— gets exchanged through barter transactions and specifically through existing networks. In sum, rural social networks are most similar to those that have been termed “antimodern” by Richard Rose. The consequences of antimodern networks are that “reliance on antimodern networks to get things done is an obstacle to creating a dynamic, modern society.”108 Social networks, in short, retard development of commercial links to economic actors outside the network, and hinder the development of a modern society based upon transparency, rule of law, and economic efficiency.109 Private Farmers Certain aspects of private farming show that the sector is experiencing growth and is becoming more important. This discussion will focus first on positive developments in the private farming movement, and then examine the reasons why private farmers will not lead the rural revival. On the positive side, although the number of private farms has not changed dramatically and has ranged between 265,000 and 270,000 farms since 1995, the area of land used by private farmers increased significantly. In 1992, private farmers had about 1.3 million ha, which increased to 17.6 million ha in January 2004. The mean size of a private farm also increased during this time, from 42 to 67 ha, reflecting an ongoing consolidation process.110 This consolidation process is reflected by the fact that private farms greater than 200 ha accounted for only 6 percent of all private farms in 2002, but this 6 percent of farms had more than 55 percent of all private farmland.111 Moreover, private farmers are exceptional people. They have shown themselves to be resilient and true rural entrepreneurs. Perhaps more than any other group of the rural population, they have seized the opportunities afforded by reform. Despite a favorable legal environment and support from reformers in Moscow, private farmers have had to endure enormous obstacles in establishing and operating their farms. At the beginning of the movement they faced hostility from collective farm chairmen and rural bureaucrats.112 A survey of private farmers during 1992–1993 showed that more than 20 percent had experienced “conflicts” with managers of state or collective farms.113 This author has interviewed private farmers who survived having their cropland salted, their water and

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electricity turned off, and livestock killed by jealous neighbors and farm chairmen. Also on the positive side, food production is increasing and for certain commodities has become a significant contributor to national output. Private farms’ production averaged about 2.5 percent of the total value of agricultural output during the second half of the 1990s, but increased to 4 percent by 2002. Some argue that the percentage is even higher and that “the majority of farmers prefer to conceal the true size of their production.”114 Table 5.7 illustrates the contribution of private farmers to Russia’s food supply for several food products. Despite a favorable legal environment and the fact that private farmers have overcome significant obstacles to entrench themselves in the rural economy, it is unlikely that private farming will be the leader of the revival in Russian agriculture or food production. Western international organizations and advisors wanted to see an emerging dominant private sector based upon family farms. Whether or not that was a reasonable, or even a realistic policy goal, the reality is that this expectation clearly will not be met as private farmers remain economically insignificant and politically weak. There is little to suggest that private farming will become a dominant farming sector in the near or medium term, that is, for the next 10–15 years, as it remains plagued by shortcomings in rural finances, human and productive capital, and in political representation.115 Several reasons underscore this argument and are explored below. Table 5.7 Food output by private farms as percentage of total national output, 1992–2002 Commodity 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Grain 2.1 Sugar beets 2.0 Sunflower 5.8 seeds Potatoes .8 Vegetables .8 Meat .7 Milk .5 Eggs .1

5.2 5.1 4.7 4.6 6.2 6.8 7.1 8.4 11.0 12.2 3.9 3.5 3.5 3.3 3.5 4.0 5.4 4.9 5.7 7.1 9.9 10.2 12.3 11.4 10.8 10.9 12.6 14.2 16.2 19.9 1.0 1.0 1.1 1.1 .2

.9 1.1 1.5 1.5 .3

.9 1.3 1.5 1.5 .4

.9 1.1 1.7 1.5 .4

1.0 1.5 1.6 1.5 .4

1.0 1.8 1.6 1.6 .4

1.0 2.1 1.9 1.8 .4

1.1 2.2 1.9 1.7 .4

1.2 2.3 2.0 1.8 .4

1.3 2.6 2.0 2.0 .5

Sources: Author’s calculations based on data in Agropromyshlennyi kompleks Rossii (Moscow: Ministry of Agriculture, 2000), pp. 231–63; Rossiiskii statisticheskii ezhegodnik (1999), p. 351; Rossiia v tsifrakh (Moscow: Goskomstat, 2001), p. 203; Rossiia v tsifrakh (Moscow: Goskomstat, 2002), p. 208; Rossiia v tsifrakh (Moscow: Goskomstat, 2003), p. 205.

effects of adaptation / 187

Expansion linked to state financial support During the 1990s, one of the dominant patterns in private farming was that private farm numbers expanded fastest when subsidized credits were provided by the federal government. During 1990–1991, when subsidized credits were not provided, private farm creation averaged only about 2,000 new private farms per month. Once the government began to provide financial support to private farmers over the course of the next 2 years, 1992–1994, the private farming movement witnessed the registration of almost 10,000 new private farms every month.116 As a result, the number of private farms throughout Russia increased from 49,000 in January 1992 to about 279,000 at the end of 1994. The rapid increase in farm numbers during the 1992–1994 period reflected opportunism despite the considerable risks involved in starting a farm. Since late 1994, when subsidized state credits to private farmers were ended, the rate of farm creation fell drastically, and the net number of private farms in Russia contracted. Whether or not a farm was begun in a period of state support has important implications for its financial strength. According to data from Goskomstat, 83 percent of private farms in existence in 2000 were created in 1995 or earlier, and less than 12 percent were begun in 1997 or later.117 Weak lobbying power During the 1990s, private farmers enjoyed high level political support, even though their political representation was low in federal and regional governments. During the 1993, 1995, and 1999 Duma sessions, only one representative from AKKOR (Association of Peasant Farmers and Agricultural Cooperatives of Russia, which represents private farmers’ interests), was a Duma deputy.118 As agrarian policy and priorities have shifted to strengthen large farms, weak political representation translates into weak lobbying power. AKKOR has organizations at the federal, oblast, and raion level. AKKOR operates in 56 regions and in more than 500 raions.119 At the oblast level, an average of 1–10 persons work in the branch office, depending on how strong the farmer’s movement is in that region. In some regions, such as Krasnodar krai, Rostov, Saratov, and Omsk oblasts, the AKKOR office acts as a consultation center.120 At the federal level, the national headquarters are in Moscow, located in a wing of the building that houses the Ministry of Agriculture. A total of eight persons work in the national headquarters of AKKOR, and in fact the office is small, consisting of one desk, one table, and one computer. There is one legal consultant to answer questions and provide legal advice. An interview with the vice president of AKKOR, Andrei Morozov,

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revealed that the organization was consulted on the 2002 law on rural land transactions, as well as other relevant legislation such as the 2003 law on private farming. In general, the fact that AKKOR is consulted does not mean that it has a powerful voice in policy matters. For example, Morozov noted that no federal programs exist that specifically target private farmers, despite requests for financial support; in fact, he claimed that support under Putin is less than it was under Yeltsin. He also noted that at the oblast level, AKKOR’s lobbying is somewhat more successful, mentioning a strong private farming lobby in Smolensk oblast and noting significant financial support in Tatarstan. However, he acknowledged that at the federal level, the lobbying efforts were mostly ineffective.121 Profitability linked to state support During the early years of reform (1992–1994), private farms were dependent upon state subsidies and credits to show “profitability,” and when state subsidized credits ended in late 1994, farm profitability plummeted. During 1992–1993, when subsidized credits were available, a very high percentage of private farms was “profitable.” Even at the end of 1994, an estimated 20 percent of private farms were profitable, in part reflecting the ending of subsidized credits from the government. After 1994, and continuing upto the financial crisis in 1998, farm profitability plummeted and bankruptcies soared. Private farm profitability rose to 41 percent in 1999 as a result of rising domestic wholesale prices for food products, but even with this improvement, it still meant that six in ten private farms were operating at a loss and were subject to closure.122 Declining state support for private farming Federal budget allocations to private farmers declined in real terms every year since 1992. Resolutions and promises from the government to fund infrastructure and direct capital investments to private farms went unfulfilled during the 1990s. By budget year 2000, there was not even a budget line for federal support to private farming. Private farmers are eligible to participate in federal programs that exist for agriculture as a whole. For example, several years ago, the government introduced a leasing program for agricultural machinery, with interest rates subsidized by the government. The purpose was to help food producers gain access to mechanized equipment when they cannot afford to buy. However, since 2000, the government stopped making the first payment for private farmers who sign lease agreements.123 With a few exceptions, the absence of financial support from the federal government has not been compensated adequately by support from regional governments. Commercial banks and lenders are often reluctant to extend loans to private farmers for fear they will not be repaid.

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Financial constraints on private farmers were reflected in a survey by Goskomstat that showed that the number one constraint on farm operations indicated by private farmers was the “lack of sufficient money,” and the number two reason was “ineffective state support.”124 In addition, the lack of financial and operational support for private farmers was reflected by data drawn from a survey of 28,500 private farms in Russia, conducted by Goskomstat in 1999. These data showed that more than 80 percent of private farms: (1) did not receive production subsidies for grain growing; (2) did not receive production subsidies for animal husbandry; (3) did not receive state credit to use production as collateral; (4) did not receive guaranteed minimum purchase prices; (5) did not participate in the government leasing program; (6) did not receive preferential energy prices; and (7) did not have their debts restructured.125 Marketing difficulties Private farmers experience problems with marketing their products. According to the survey conducted by Goskomstat, less than one-half of private farmers have secure purchasers in their local food market— where retail prices would be the most advantageous—and only 7 percent sell their produce to other regions. For these reasons, almost one-third of production is bartered, and another 19 percent is sold to wholesale procurement agents.126 Overall, in 1999, private farms sold about one-half of the grain they produced and just 58 percent of the meat. Industrial crops such as sugar beets and sunflower seeds had higher percentages, 72 and 67, respectively.127 This is surprising given the fact that the sale of food is supposedly the primary source of income for the farm. Large farm enterprises sell much higher percentages of their production, and in this way private farms are not competing effectively. Low levels of productive capital Private farms are not well equipped, due in part to the ending of credits and insufficient funds of their own. In 1993, for example, there was an average of 79 tractors, 20 grain combines, and 42 trucks per 100 private farms.128 In 1999, the private sector averaged 76 tractors, 28 grain combines, and 36 trucks per 100 private farms.129 In other words, the level of large farm machinery possessed by private farmers was not much better, and in some cases worse, at the end of the decade than at the beginning. Low levels of human capital In 2000, the total labor force on private farms equaled 919,000, a number that included registered members of private farms, family members who participated in farm production, and hired laborers.130 The average was

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just over three persons per private farm, which in turn yielded a total that was approximately 10 percent of the rural labor force engaged in agricultural production.131 In 2000, only two economic regions in Russia averaged more than two private farmers per 1,000 persons—the Volga region (2.0) and the Northern Caucasus (4.5). Most economic regions in Russia experienced a decline in the number of private farms per 1,000 persons since the mid-1990s, with the exception of the Northern Caucasus region. In contrast, the number of private plots, vegetable gardens, and fruit gardens per 1,000 persons is many times higher and increased over time.132 The profitability of nonagricultural activity Successful private farmers have often gravitated away from food production in favor of providing services, trade or other non-agricultural activities. According to the Goskomstat survey cited above, over 12 percent of private farmers were in the business of providing agricultural services, another 8.5 percent were middlemen, involved in food trade, 4 percent had established food processing operations, and another 4 percent provided food transportation services.133 For example, a private farmer from Kostroma oblast related how financial pressures have led some private farmers to become “farmers” in name only. This private farmer explained that at first he tried to produce meat, milk, and potatoes. “I worked from morning until night but my labor did not yield any income.” He then started to become a trader, finding that “vodka was especially marketable.” He sold vodka to “a thirsty countryside,” and gradually built up cash reserves that he then used to give as loans to other farmers at high interest rates, as a lender of last resort so to speak since commercial credit was so hard to obtain.134 Although this farmer became well-off, the reason for his wealth was his departure from agricultural production. Another private farmer from Pskov oblast recounted how he became successful: In 1987 I was working as the chief veterinarian in the sovkhoz “Belorussia.”. . . At that time in the raion an experiment in new forms of farming was going on, based on the leasing of land and private ownership of the means of production. After thinking about it for a long time, I decided to build my own animal husbandry farm. . . . In order to start the farm, I took a loan from the bank for 35,000 rubles in order to build a home. . . . In order to start a farm, a person needed 400,000–450,000 rubles, and I had all of 35,000. I decided to risk it. I invested the loan in

effects of adaptation / 191 the purchase of fuel-lubricants, and subsequently I acquired almost all the materials necessary for construction and I began to build. As a farmer, I received commercial credit in the sum of 2.5 million rubles in order to obtain a tractor and a truck. It was 1993. Inflation in the course of one week turned a ruble into a kopek. Commercial banks inflated their interest rates. I was in a difficult financial position. There was not enough money for construction, for agricultural operations, or to make payments to the commercial bank to repay the credit. My production capacity consisted of one cow, two young pigs, and 20 chickens. My position became catastrophic after the tax inspectorate levied a 300,000 ruble bill on me for the purchase of construction materials. I expected total bankruptcy if I did not change fundamentally farm operations. It became clear to me that to facilitate becoming a [productive] farm, I would need to concentrate my strength on entrepreneurial activities, and the fulfillment of agricultural work was entrusted to specialists— hired workers. Thus, I began to form a farm based on the use of hired labor. . . . My main task [now] is commercial activities. I organize the sale of those products from which I am able to receive maximum income. . . . I was able to escape the critical situation in 1993 when I began to use information about the market throughout the northwest region. I began to help agricultural enterprises and farmers of the region deliver their agricultural products to the markets of St. Petersburg, Leningrad, and Archangelsk oblasts. . . . The downside of this type of economic activity is that I daily, hourly, risk everything that I have.135

Existing private farms—those created prior to 1995—are consolidating and expanding, but the low stock of human capital in private farming is particularly important because of the under-capitalization of private farms, as the data presented above indicated. Thus, in terms of human capital, private farming would appear to have inherent limitations in its future development. For the reasons enumerated above, private farming has fundamental limitations that will prevent it from leading the rural revival. Despite the hope and expectation of reformers when the agrarian transition began that private farming would become the leading sector in Russian agriculture, the results during the first decade of reform were disappointing. Large Agricultural Enterprises Large agricultural enterprises, that is, former state and collective farms and their legal successors, are likely to lead the rural revival.136 This seemingly mundane assertion is important because a primary thrust of agrarian reform—perhaps the primary thrust—was to replace large

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farms as the predominant food producer with private farms. Russian liberals and their Western advisors subtly and not so subtly aimed to break up large farms and to end the perceived collectivism that pervaded rural culture. Those efforts failed in large part because they were unrealistic, as well as for other reasons that have been explored.137 But the failure to achieve unrealistic goals does not mean that the agrarian transition failed. As was shown in chapter 3, large farms have the ability to adapt and many have done so, although clearly not all have maximized their adaptive potential. Leadership is a key element, and although retention of the “best and brightest” has proved problematic in some regions, in general large farms have educated and experienced leadership. As Kitching concluded from his fieldwork in four oblasts, “there are no successful farms that are not well led (that is, we have not found any).”138 Large agricultural enterprises possess the requisite social capital infrastructure: links with local agricultural institutes, personal contacts with rural administrators, banks, and input suppliers. Some farms are increasing their trading partners to other oblasts, regions, and even foreign countries. Large farms have access to government credits, loans, and other financial support. Large farms have large tracts of agricultural land and significant productive capacity (animals, labor, and agricultural machinery). Large farms have benefited most of all from government leasing programs to increase access to and use of agricultural machinery. Finally, large farms have shown an ability to survive, and in some cases, prosper. Even in some poorer agricultural regions, during the 1990s, successful large farms consolidated market share, survived the economic depression by keeping land and labor in production, and some farms even increased productivity despite price disparities.139 In addition to those advantages, large farms benefit from the following that makes them the primary source of rural revival: ●

Government policies prioritize large farms.

As noted previously, the main thrust of agrarian policy under Putin has been to rejuvenate production on large farms, and this has been accomplished through debt restructuring and relief, reform of the agricultural credit system, improving agricultural science and technology institutions, and through policy levers. ●

Foreign trade policies protect domestic producers.

Under Putin, agricultural import policies have become decidedly more protectionist for animal husbandry products, with the intent to

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rebuild the nation’s animal stocks and facilitate the profitability of that sector. Large farms are best positioned to benefit from import protection since they hold the largest animal herds and sell the most meat products.140 ●

Large farms sell their production.

Household producers consume most of their production, and only a small percentage of households are engaged in commercial agriculture. Private farmers sell high percentages of several food commodities they produce, but large farms sell even higher percentages of grain, potatoes, vegetables, meat and poultry, eggs, and milk.141 In addition, production on large farms is considerably greater than on private farms. Large farms, therefore, have the singular ability to produce a variety of foodstuffs in quantities that are able to feed the nation. It is not an exaggeration to say that large farms are the most important source for feeding the country, and in this respect there has been little change from the Soviet period. ●

Profitability has increased.

The percentage of unprofitable large farm enterprises decreased from 88 percent in 1998 to 46 percent in 2001, and totaled 50 percent in 2003.142 That improvement meant that the large farms’ aggregate balance went from a loss of 36.9 billion rubles in 1998, to a net profit of 36.3 billion rubles in 2003. It also meant that in 1998, a total of 3,400 large farm enterprises were profitable, a number that increased to 11,600 in 2003.143 ●

Value of production has increased.

The gross value of agricultural production from large farm enterprises increased by more than 339 percent during 1998–2002, thereby outstripping production growth in agriculture as a whole.144 Underlying the increase in the value of production was an increase in productivity. In 2003, annual milk output per dairy cow increased 32 percent in comparison with 1998; 19 percent increase in the number of eggs per chicken; 19 percent increase in kilograms of meat per beef cow; and 30 percent increase in kilograms of meat per pig.145 The argument that large farms are the most likely source of rural revival does not deny that they face very real obstacles: high farm debt, the need for increased capital investment, unfavorable demographics, the need to replenish and modernize their capital stock, and the need to rebuild rural infrastructure.146 Most of these and other problems are resolvable with sufficient government support. In this respect, trends under Putin are generally positive, although a lot remains to be done.

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Overall, however, pragmatic support for agriculture by either the Putin government or regional governments facilitates the consolidation of adaptive trends and rural revival. Conclusion This chapter approached questions about peasants’ moral economy from several different angles. First, the chapter analyzed the effects of rural adaptation, focusing in particular on economic and political effects. This discussion was important because if there had not been adaptation there would have been no effects. Instead, concrete and definite economic effects were shown in the reduction of rural poverty, some evidence of increased material well-being, and increasing stratification along several different measures. Second, the chapter analyzed changes in the policy environment introduced by the Putin government. It was argued that rural policy under Putin introduced significant change from its predecessor and was more supportive. In a political environment in which increased state intervention is considered a collective good, the primary restraint rests with state capacities. In this respect, it is important that the federal influence on producers is mostly indirect. Regional policy levers are more direct and have the potential for a larger impact on rural revival. The most crucial question for regions is how to intervene most effectively. Regional policies vary along an interventionist continuum, from non-interventionist to heavily interventionist. Generally speaking, regions have become more interventionist in recent years in order to ensure food supplies for their populations. It is likely that this interventionist trend will continue in the future. The discussion of federal policies was important for showing that the state is perhaps not as weak as is commonly assumed and still has effective policy levers at its disposal. Moreover, the focus on federal policies was important because it was shown that those policies were intended to support adaptation and to facilitate the development of agrarian capitalism. If the government were concerned that reforms were violating peasants’ moral economy and were increasing chances of political instability, it is likely that different policies would have been adopted, especially given the political strength of the Communist Party in the countryside. But the government did not fear rural instability, and in fact, it was shown that prospects for mass protest and/or demonstration decreased over time (excepting the time around the financial collapse in late summer 1998). In other words, the government did not fear that its market-supporting

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policies would enflame sentiments that peasants’ moral economy was being violated. Finally, the chapter examined sources of rural revival. If peasant behavior were constrained by considerations of moral economy, there would be no adaptation and hence no revival. Therefore, rural revival is inherently linked to peasants’ moral economy by the fact that without adaptation to new circumstances, policies, and environments, there would be no revival. As was shown, however, there are signs of rural revival, although to be fair, the countryside has a lot to accomplish before prereform levels are reached, particularly in the areas of social development and rural infrastructure (the latter being a perennial problem given the size of Russia). The main question is which producer will lead Russia’s agricultural revival. This chapter argued that, for a variety of reasons, neither households nor private farmers are likely to lead the revival. Instead, it was argued that large agricultural enterprises are likely to emerge as the leader, although the extent to which agriculture recovers and the rapidity with which it does so is largely dependent upon the macroeconomic environment influenced by federal and especially regional policies. In sum, rural revival is inherently linked to rural support for reform. Rural “opposition” to reform has been over the negative consequences of reform, not to reform itself. If this argument is correct, it points to the opportunities that the Russian government has to build rural support by using the policy levers at its disposal. To be sure, to assert that there are opportunities to build upon rural support is not to deny that the Russian agrarian transition has experienced many disappointments and unmet expectations. Despite shortcomings in several areas, however, it is fair to say that without a revival of food production, the agrarian transition will be considered to have failed and agrarian capitalism is likely to remain elusive. In this respect, adaptation is key to revival.

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C h ap t e r 6 Peasants’ Moral Economy and Implications for Russia’s Agrarian Capitalism

One of the key variables affecting societal change is the strength of embedded values. For rural societies and populations, the dominant analytical model since the mid-1970s has been the peasants’ moral economy. The moral economy approach sees values as “embedded” in peasant societies, and these values are therefore reflected in the nature of village institutions. Commercialization of agriculture disembeds peasant values and behavior, and displaces existing village institutions with market-based institutions.1 During commercialization, personal networks are replaced with impersonal networks, thereby depriving peasants of the “flexibility” inherent to traditional economies. This book has examined the rural dimension of Russia’s transition from Communism and in doing so has directly challenged the applicability of the moral economy model to the post-communist experience. If peasants’ moral economy was violated anywhere, one could argue that it would be postcommunist Russia, with its centuries-old collectivism and decades of anti-market policies during Soviet rule. However, previous chapters have pursued a core argument that Russia’s postcommunist rural transition has been better characterized by adaptation than resistance, a fact that, so far, some analysts have failed to recognize.2 To the casual observer, the physical appearance of rural Russia might suggest that little has changed during the reform period dating from the early 1990s. But physical appearances are deceiving. Underneath the facade of stasis, significant attitudinal and behavioral change occurred during the 1990s. This book analyzed the nature of behavioral change and explored those segments of the rural population that have adapted the most. To be sure, rural orientations and behavior changed in response to changes in state policies and to different signals sent by urban bias and state withdrawal. Reform policies fundamentally changed the

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economic environment in which rural actors work by changing the economic relations within the rural economy and the nature of economic relations with other economic actors outside the rural economy. Thus, the new economic environment sent entirely new signals and provided a stimulus to adaptation. At its core, however, rural orientations and behavior adapted because three conditions acted together to facilitate change: (1) there was opportunity, indicated by the adoption of government reform policies, combined with relaxation of state regulation; (2) there was need, seen by the necessity to respond and adapt to a hostile economic environment, in part resulting from the inability to use political institutions to defend rural interests; and (3) there were concordant values between opportunities presented by reform and embedded peasant values. The argument that the Russian countryside did not remain in stasis and instead experienced behavioral adaptation is framed by four idealtype scenarios that affect reform outcomes and yield very different results. (1) A weak state and strong moral economy values. This scenario would yield minimal behavioral change, overt resistance to agrarian capitalism, privatization, and market relations. This scenario is the basis for much of the literature on Russian agrarian reform to the extent that it has become the conventional wisdom. (2) A weak state and weak moral economy values. This scenario would yield inertia, minimal behavioral change, and little overt resistance to government reform policies. (3) A strong state and strong moral economy values. This scenario would yield economic and political instability, rural collective action and protest, with the possibility of physical violence. (4) A strong state and weak moral economy values. This scenario would yield significant behavioral change, opportunism, and minimal resistance to reform policies or goals. Which ideal type scenario is correct? The evidence presented in this book suggests that scenario 4 best characterizes Russia’s search for agrarian capitalism. It was argued that state policies of urban bias and withdrawal not only provided impetus but also influenced the way in which rural actors responded during the 1990s. Today, despite privatization and marketization, the state remains influential in the structure, organization, and operation of the agricultural sector through a variety of levers and incentive structures. It is interesting to note in passing that the vast majority of articles in specialized Russian journals analyzed how agricultural production and the rural sector might be revitalized starting with the premise that the role of the federal government should increase. In this

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sense, the political discourse emanating from Moscow is considerably different from that of the early 1990s, when the debate was how to substitute market forces for the roles traditionally played by the state. The argument that scenario 4 is closest to reality is consistent with a previous argument that while the Russian state today is weaker than its Soviet era predecessor, the state is not weak. The state will remain relatively stronger than other contenders because it has not been, nor is it likely to be, supplanted by non-state actors with more policy levers or influence over policy. Because market forces are still in their infancy, no other actor has been able to influence all aspects of the agrarian transition in the manner of the Russian state.3 If this assertion is correct, it means that the state will continue to remain strong in agriculture in the future as it was during the 1990s, and during Putin’s first term this assertion seems to have been borne out.4 Putin has flexed the muscles of the state and defined the parameters of acceptable political and economic behavior vis-à-vis the Duma, the Federation Council, regional leaders, and oligarchs.5 The first years of the Putin presidency reflect recentralization, not more decentralization, which is similar to the economic strategy that former general secretary Mikhail Gorbachev used in reaction to the policies of the Brezhnev period.6 However, to say that the state remains the most important and influential actor in rural reform is not to deny that decentralization may lead to limited state actions in the future. While it is entirely possible that the state will continue to centralize policy decisionmaking, at the same time, it is important to recognize that privatization, particularly of land, creates barriers for state incursions on the rights of individual land owners in the future. Furthermore, the development of the individual sector in agriculture lessens dependence on state regulation. The creation of commercial banks—should they actually become private as understood in the West—may supplant the state as the primary financier and creditor to farms and thus further free economic actors from state influence.7 Thus, the state as the dominant actor may very well be transitional. The key question is, transitional to what? If market reforms are ultimately successful, the day will come when the state is no longer the dominant actor capable of influencing the structure, organization, and operation of the agricultural sector. If the agrarian transition stagnates or even fails, then either the transitional period will extend, or the state will remain the dominant actor.8 In the rest of this chapter, the purpose is to review the evidence and arguments of the preceding chapters, organized by theme, and then to examine the policy implications that flow from the analysis herein.

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A Thematic Review This book has argued that adaptive rural behavior, rather than resistance, best characterizes Russian agrarian reform, thereby creating a foundation from which agrarian capitalism may develop. In making that argument, several themes have run through previous chapters. Theme One: The Nature of the Postcommunist Agrarian Question “The agrarian question” actually has been a set of questions within the field of political history and political economy. The set of questions behind the agrarian question has been approached differently by various authors, with both the questions and approaches evolving over time.9 In the latter seventeenth and into the eighteenth century, the agrarian question concerned how agriculture could pave the way for societal industrialization. In England, traditionally open fields were enclosed and peasants were dispossessed of land. In France, peasants owned small plots of land, but were squeezed for rents and taxes.10 By the late eighteenth century, England was rapidly developing a capitalist society while France, “though long a wealthier nation, and ahead of England in terms of strictly technical sophistication—showed no sign of comparable indigenous development of capitalist social relations.”11 By the latter nineteenth century the Marxist agrarian question was the revolutionary potential of the peasantry in the proletariat’s struggle against capitalism. In the early twentieth century for Preobrazhensky and the Lenin of War Communism, the agrarian question was over the pace of “primitive socialist accumulation” from the rural sector. In the mid-1920s, the agrarian question for the Lenin of NEP was how to establish a strategic alliance with the peasantry and revive agricultural development through deregulation. In the latter 1920s and into the 1930s, the agrarian question for Stalin was again how to extract surpluses from the countryside to the benefit of cities, in order to feed an industrializing nation with a burgeoning urban population. In the 1940s, the Maoist agrarian question was more political than economic, focusing on how to mobilize the peasantry to take power in China. In the 1960s and into the 1970s, much of the literature on the agrarian question focused on ending rural poverty and societal inequity, distributing land to peasants, and the obstacles to using agriculture to facilitate social and economic development in third world states.12 During the past 30 years in particular, the agrarian question in peasant studies has evolved.13 In the latter 1970s, Michael Lipton argued that the agrarian question was the nature and severity of “urban bias,” which

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was conceptualized as discriminatory pricing policies between urban and rural sectors that kept third world peasants poor.14 Urban bias, according to theory, characterizes states in which financial and productive resources are pumped out of the countryside. Urban bias sees state interventions against the rural sector in favor of the urban sector. During the 1970s as well, the agrarian question for James Scott was the nature of the impact of markets and the marketization of agricultural production on peasant communities and their “moral economy” that led to various forms of resistance.15 Lipton’s line of argumentation was followed in the early 1980s by Robert Bates who examined the agrarian question in terms of the political strength of food producers in third world states.16 Thus, the agrarian question has not been just one question, but rather a broad concern with urban–rural relations in societies undergoing transition, broadly defined. Most of the focus was on developing states in third world nations. With the fall of communism in the Soviet bloc, a new geographical focus was warranted and a new analytical prism needed. The “agrarian question” facing postcommunist states in the latter 1980s, during the 1990s, and into the twenty-first century, has been how to make the transition from a command economy in which the rural sector was heavily regulated, to a market-based economy based on farm autonomy, supply and demand, and individual initiative. The “new agrarian question” concerns issues of destatization of farmland and property, privatization of productive assets, and marketization of the rural economy. Central to those efforts are the orientations of rural actors. Thus, this book posited that Russia’s primary agrarian question concerns the nature of rural orientations and how much change has occurred during the transition, that is, how much progress was made toward the achievement of agrarian capitalism. Theme Two: Russia’s Search for Agrarian Capitalism The “failure” of private farming does not mean that Russia’s agrarian transition has failed.17 Instead, the crucial question is what kind of agrarian capitalism is emerging and is likely to continue to develop. In terms of an ideal type, the following criteria would be used to identify an agrarian capitalist system: food production is unregulated by the state and is the decision of farm management; there is a balance of power between producers and wholesale purchasing agents; there is access to accurate market knowledge; wholesale prices are determined by supply and demand; there is a competitive wholesale market; exports are unregulated; and a private banking and credit system are in place. Obviously, these are

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difficult criteria to meet, and even several European Union members would have difficulty meeting these standards. Nonetheless, of primary importance within the concept of agrarian capitalism is that market mechanisms drive agrarian policy, that rural producers respond to supply and demand, and that local production decision-making. Even using the criteria of the ideal model, this book has argued that Russia has made significant progress toward agrarian capitalism. Admittedly, Russia is not there yet, and significant obstacles remain, but progress in the desired direction is undeniable. Theme Three: Rural Change Has Not Been Unique to Russia The agrarian transition in postcommunist European states and former Soviet Union show that there has been significant change in the structure and operation of rural economies in postcommunist states. Chapter 1 surveyed reform results in several European nations, showing that each nation reformed its agricultural system in different ways, but the responses were broadly similar: rural orientations have been pro-market and proprivatization throughout the postcommunist region in Europe. Although states in eastern and central Europe have followed different paths and strategies of reform, they share a common general trend, thereby showing that “giving” reforms provide incentives for recipients to embrace reform and few incentives to resist. That is not to say that all reform experiences in former bloc nations have been successful. In several countries, serious problems continue to exist, and it is possible to separate reform experiences into successful, indeterminate, and unsuccessful case studies, as one set of authors has done.18 At the same time, rural responses to reform policies in postcommunist Europe are significant because these pro-reform orientations occurred despite different social and political cultures, differing historical experiences, and different paths to reform. Moreover, rural orientations throughout the postcommunist region in Europe are significant because they show that pro-reform rural orientations in Russia were not unique. There is considerable evidence that peasants in the postcommunist world want land and the opportunities brought about by privatization. Similar to eastern and central European states, Russia pursued market reforms based upon private ownership, destatization of land and property, price reform, and an open-trade policy. Russia’s agrarian transition was marked by free land distribution—similar to the giving reforms found in postcommunist Europe. Thus, no one should be surprised that rural orientations would support the essence of reform. The surprise would be if they did not.

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Theme Four: Shock Therapy and State Urban Bias Stimulated Rural Change “Shock therapy,” introduced in Russia in early 1992, was intended to change the economic environment in which actors worked, including rural producers. Shock therapy set out to change economic signaling, to create incentives to act in economically “rational” ways by responding to price signals, and to force producers to respond to the forces of supply and demand. Although these structural aspects of shock therapy are most often emphasized, another purpose was to shock people into new behaviors and to change their psychological orientations. There is little agreement on the results of shock therapy, with some analysts emphasizing the positive, and others the negative. On the positive side, shock therapy sent strong signals to producers that change was necessary.19 On the negative side, liberal reformers misunderstood the deformities in the Russian “market” that would arise along the way.20 Proponents of shock therapy argue that Russian reforms were incompletely implemented and did not go far enough. They point to several as key factors in undermining the efficacy of shock therapy. For example, people such as Jeffrey Sachs point to the Russian government’s backtracking on reforms. Also blamed are the ways in which the International Monetary Fund loans were dispersed.21 In addition, the economic consequences of shock therapy are often criticized, and rightly so, for the impoverishment of millions of Russians. Liberal reformers and their advisors did not correctly calculate the depth or degree of deterioration that would result from shock therapy.22 Some economic decline was forecast, even by President Yeltsin himself in October 1991, although this decline was seen as short term. However, virtually no one forecast a decade-long economic depression that gripped the entire economy until the end of the 1990s, accompanied by significant economic contraction, declines in standards of living, erosion of the safety net, and significant hidden unemployment. Shock therapy carried within it not only policy ramifications for the economy as a whole and the state’s social policies, but also defined the parameters of rural policy. Within shock therapy was an intensified urban bias. At first, it might appear odd that rural change could occur in an environment of political weakness and deteriorating socio-economic trends in the rural economy. The existing literature emphasizes two peasant responses to change from above: revolt or resistance. However, if reform is considered from a different angle, the logic becomes clear. If economic conditions for rural actors (farm managers and households) had been more favorable, the stimulus for reform would have been undercut. What would

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be the motivation to change if actors were well-off and comfortable? What would have been the stimulus? The existing literature often lacks a basic explanation on how the rural sector adapts and changes to new stimuli. Given deteriorating economic conditions, and faced with the inability of using political means to obtain policy preferences, the choice for rural actors was clear: do nothing (maintain old behavior) or change. Thus, on the one hand, shock therapy and urban bias forced change upon rural Russia. On the other hand, shock therapy and urban bias contained policies and processes that led directly to significant production declines during the 1990s. The conventional wisdom views the crisis in agriculture during the 1990s as a result of a weak state that could not implement reform. As a result, the agricultural sector remained unreformed, unchanged. What some analysts often fail to note is that individual behavior flowed from the nature of incentives created by reform policies, and those incentives made it less costly to reduce production. Intensified urban bias ushered in change and made it necessary, but it also had political, economic, and social consequences that negatively affected rural Russia’s productive capacity. Various policy outputs were presented as evidence of intensified urban bias in chapter 2. It was argued that the reason for intensified urban bias concerns political representation, unity, and rural interests’ ability to turn policy preferences into state policy. The weakness and division of agricultural interests prevented the development of a cohesive policy agenda or the representation of rural interests as a unified front. Political division and lack of common goals in turn meant that neither rural conservatives nor rural liberals were effective in defending their interests. Contrary to popular belief, rural interests were not effective in turning policy preferences into state policy. Due to their political weaknesses, rural interests had to seek out alliances with urban-based parties, which in turn did not have rural interests at the core of their policy platforms. Urban bias, therefore, brought about worsening economic conditions and an inability to obtain policy relief through legitimate political channels. Thus, state urban bias made change necessary: the socioeconomic environment deteriorated for rural actors, but they were not able to use political means to obtain relief or to turn policy preferences into state policy. Theme Five: Farm Managers and Large Agricultural Enterprises Displayed Significant Change Our knowledge about rural Russia is strongly shaped by two ideas that in part comprise the conventional wisdom. First is the idea that, based

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upon historical traditions and culture, peasants are conservative and anti-risk. The second idea is that farm managers, in particular, were threatened by reform and resisted it, if not undermined it altogether. According to the conventional wisdom, farm managers were opposed to reform and attempted to block reform by engaging in obstructionist behaviors. Further, according to the conventional wisdom, there are strong cultural and attitudinal influences that predispose the rural sector to resist market reforms and privatization. In reality, there are several indicators of ongoing adaptation among large agricultural enterprises: (1) an ongoing farm privatization process, based upon the Nizhnii Novgorod model, which by 2000 had spread to 11 oblasts; (2) significant changes in agricultural production, including curtailing unprofitable production and changing product mix; (3) different marketing strategies and channels of food trade; and (4) a change in farms’ internal operations and decision-making. Whether farms’ adaptation is in the direction of “desired” reforms according to an ideological agenda, or preconceived notions of what Russian agriculture “should” look like is another question. But the fact is that at least some large enterprises have adapted to new economic conditions and changed their operations. Significant evidence was presented to counter the prevailing wisdom about farm manager resistance. First, survey data have shown managerial support for farm reorganization and privatization, and in fact, managers are more receptive to change than farm employees.23 Evidence from several distinct surveys showed that farm managers and specialists (“experts”) supported land reform and land privatization. Contrary to the conventional wisdom, there is elite support for a land market in agricultural land, although most preferred a regulated market, and that is what Putin delivered. Rural elite opposition to a rural land market has been exaggerated. Moreover, it is well to remember that (1) the expansion of the farm privatization model was voluntary; (2) the creation of several hundred thousand private farms occurred as a result of farm managers’ decisions and actions; and (3) the distribution of land shares and land deeds to farm employees could have only been completed with the cooperation of farm managers. Thus, it is fair to conclude that either farm managers were not very ineffective in blocking reform, or they were less opposed than has been assumed. Finally, it is important to remember the ways in which farm managers benefited from reform. Chapter 3 presented evidence that farm managers and specialists benefited from a stratification of opportunity, as well as from income stratification. Drawing from survey data, managerial

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resistance was in response to policies that prevented the attainment or consolidation of elite status, not to market reforms per se. Theme Six: Market Reforms Did Not Violate the Moral Economy of Rural Households Some analysts argue that there is a historical cultural continuity embodied by innate peasant conservatism toward land privatization and market reform.24 From a theoretical basis, if this argument were correct, it would suggest a fundamental inability to reform the rural sector in postcommunist nations. While few would argue the process has been easy, it is fundamentally mistaken to assert that significant rural change—in Russia and elsewhere in former bloc nations—has not occurred.25 The cultural continuity/peasant conservatism argument is overly deterministic and places little emphasis on the abilities and proclivities of peasants to respond in nonrevolutionary or nonresistant ways. It was argued, however, that the peasant conservatism argument is less true than assumed, or at least is true in ways that are different from what was previously understood. Peasants are perhaps the most sensitive of all economic actors to their environment because their livelihood, if not survival, depends upon adaptation to economic conditions.26 Rural actors changed their behavior out of necessity to new economic and political realities. In some sense, reform policies “liberated” orientations that were already evident during the Soviet period, by which I mean the belief among Western analysts that Soviet peasants desired economic freedom and their own land, but were denied by the Soviet regime. From a theoretical standpoint, therefore, it would be misguided to assume a priori that rural values are antimarket. As the Russian case demonstrates, even after a period of prolonged communism, rural actors are not inherently opposed to privatization or marketization. The peasant conservatism position cannot account for evidence that shows attitudinal and behavioral support for pro-market and pro-privatization policies. Nor can it explain evidence showing how reform created opportunities that were seized upon by rural households. Rural households’ embrace of marketization was evidenced by increases in food production and a variegated approach to food marketing in which low preference production was consumed and high preference production was sold. The utilization of opportunities presented by reform led to changes in the structure of household income, lower poverty rates over time, and sharply higher differentiation among households. Russian peasants’ preexisting inclinations to participate in food marketing opportunities were, therefore, reinforced by market reform.

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In addition to increased food production, orientations toward land were shown by the fact that the average size of their private plots doubled by the decade’s end, and private land ownership rates increased significantly. Survey data were presented to demonstrate rural support for private ownership of land and a land market. Data were presented that showed that rural land transactions averaged more than 42 percent of all land transactions over a 6-year period (1996–2002), although the rural population constituted only 27 percent of the total Russian population.27 Moreover, rural households engaged in land leasing—turning land shares into income. Survey data showed that during the 1990s, households increased their leasing and purchasing of land for agricultural purposes. In sum, behavioral evidence suggests that the rural population embraced reform opportunities and was actively engaged in strategies to benefit from reform policies. Behavioral evidence, therefore, represents a source of optimism for successful economic transformation. Theme Seven: Significant Opportunities Exist to Revive Russian Agriculture Analysts of agrarian reform often make three mistakes when assessing the results in Russia: (1) they confuse reform results with policy implementation; (2) they equate declines in food production with lack of rural adaptation; and (3) they confuse reform results with the failure of marketization. The point that Jerry Hough made about economic reform in general is pertinent here: “the fact that the population as a whole was quite unhappy with the course of economic reform . . . did not mean that the majority rejected economic reform altogether.”28 Attitudinal and behavioral evidence of support for reform were presented in chapters 3 and 4, with effects of adaptation considered in chapter 5. The purpose was to directly link adaptation with rural revival. For a variety of reasons, rural households are unlikely to lead the rural revival. Likewise, it was argued that private farmers are also not likely to lead the rural revival. The rural revival will be led by large agricultural enterprises, a process that is already underway. The most important element to this assertion is that the government of Vladimir Putin has prioritized the large farm sector for revival. How well large farms fare and how long the revival continues depends upon two crucial variables: policies of the federal government, and policy levers of regional governments. Regarding the federal government, a number of policy measures were surveyed in chapter 5 that would facilitate rural revival and the economic and productive strength of large farms. The impact of federal policies, however, is largely indirect.

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Regional policies are more direct in their impact and therefore are the real key to rural revival. Policy Implications The argument that adaptive rural behavior, rather than resistance, best characterizes Russian agrarian reform contradicts much of what the conventional wisdom imparts about peasants in general and about Russia in particular. The contemporary Russian rural transition shows that rural actors are able to change their orientations and adapt their behavior, even in unfavorable macroeconomic environments. Rural actors adapted, responded, and in many cases benefited by taking advantage of market reform opportunities, all without recourse to rebellion or violent collective action against the state. Why? What explains these behavioral responses? Preceding chapters have argued that rural actors responded in the way they did for several reasons: 1. Philosophies of reform—markets and privatization—were concordant with embedded rural values, which is to shift the “blame” for dysfunctional markets from peasants to the nature of incentives that flowed from reform policies and to reform policies themselves that allowed distortions, abuses, and manipulations of reform processes. 2. Reform policies were of a “giving” nature rather than a “taking” nature, for instance, in comparison with the collectivization of the 1930s. 3. Reform policies, combined with neoliberal reform policies based on principles of shock therapy, signaled that old behaviors could not be continued and necessitated adaptive responses. 4. Reform policies defined a new economic environment, which posed severe economic penalties to those who did not adapt. 5. Adaptation was an economically rational response, providing means for rural actors to mitigate state urban bias and even benefit from opportunities provided by reform. 6. The sociological composition and economic status of rural Russia was distinct from that found in third world states. Importantly, rural Russians have two safety valves that undercut revolutionary action: (1) they derive smaller percentages of income from agricultural production; (2) their family plots act as a safety net, ensuring that the family will eat and survive. As a result, adaptation did not entail endangering survival.

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7. State land distribution to virtually all rural dwellers ensured that they had a stake in the reform through the distribution of land shares, whether or not directly involved in agricultural production. In the policy realm, there are several implications that affect Russia’s prospects for attaining agrarian capitalism. To begin, the temporal factor is absolutely crucial. Many analysts of Russian agrarian reform rushed to judgment based on early reform outcomes when reform was still in its infancy and reform policies were still being defined, two mistakes that contributed directly to the creation of a conventional wisdom alleging a lack of change. Policy analysts, therefore, need to understand that rural reforms unfold slowly. Policy analysts also need a broader view, with more attention to actual behavioral trends and less reliance on stereotypical characterizations by urban liberals sitting in Moscow. The analysis herein has political policy implications that are discussed below. The Political Policy Realm One of the key policy implications concerns how to build rural support, or at least avoid mass dissatisfaction, during the course of reform. A general association between the level of income and support for reform has resonated throughout the literature on voting and elections in Russia.29 For example, Clem and Craumer found a correlation between persons with higher incomes and support for reform.30 Colton and Brudny found that voters with lower levels of education favored Communist candidates.31 There is also some statistical and voting evidence showing that degradation of one’s standard of living led to “oppositionist” voting behavior in Russia during the 1990s (i.e., voting for Communist Party candidates and other leftist parties).32 From this evidence, imperfect or even partial it may be, it follows that a reasonable hypothesis is that if the macro-environment had been different, or had the rural sector fared better, rural voting and patterns of political support may have been different. In this respect, it is necessary to at least mention the possibility of an alternative model of economic reform that would have been more gradual with fewer negative consequences for economic performance. Hungary, for instance, experienced much less economic decline during the 1990s than did Poland and Czechoslovakia (the Czech Republic starting in 1993).33 The last two states adopted a radical shock therapy strategy, while Hungary did not. Specifically pertaining to agriculture, China followed a more gradual course of reforms in liberalizing its rural sector—the so-called Deng’s

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NEP—that resulted in higher production, more per capita production, and increased peasant incomes during the first 5–6 years of reform.34 Rural opposition in Russia to “bad policies” (or “bad outcomes”) is different from an inherent, visceral, fundamental opposition to the philosophies on which reform is founded. Douglass North has argued that the “interface between economics and politics is still in a primitive state in our theories, but its development is essential if we are to implement policies consistent with intentions.”35 Following his ideas, I have argued elsewhere that the critical question for the agrarian transition and its outcome is the nature of incentive structures created by reform institutions.36 Jerry Hough has argued the point explicitly for reform as a whole: The core assumption of the economic reform was right. Russians possessed the rationality assumed in the neo-liberal economic models, and in that sense they were “normal economic men.” They did, in fact, respond rationally to the incentives they were given. . . . The effort to introduce change must focus on the establishment of real rewards and punishments.37

Therefore, policies need to be designed that reward “correct” behaviors, that is, to “pull” rather than “push” rural actors toward behaviors that support reform goals.38 If you want people to support reform, give them a reason to do so. At the same time, it should be noted that building rural support entails economic trade-offs. The laissez-fare economic policies pursued by the Russian government in the 1990s led to significant deterioration in the rural economic, social, and demographic situation. Increased support for reform is linked to improvements in the material condition of the rural family, and those improvements will occur only with changes in economic policies and strategies. Although far from systematic, coverage by the Russian press suggests that regions where the administration is more actively interventionist, the agricultural sector has experienced improvement. But if increased funding for the agricultural sector is linked to increased state regulation over agriculture—as the Putin administration was leaning toward during its first term in power—the transitional period to agrarian capitalism will be extended. Over time, a prolonging of state dominance in the agricultural economy, and the stunting of non-state, alternative sources of authority and power in the countryside, will affect in fundamental ways the nature of agrarian capitalism that emerges in Russia. A second policy implication in the political sphere is the link between the agrarian transition and broader societal democratization. Although largely decried in the West as “oppositionist” behavior and harmful

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to reform, lobbying attempts by agricultural interests facilitate the development of a democratic polity.39 According to theorists on democracy, the central political struggle in any polity is over the allocation of resources.40 In that struggle, lobby and interest groups compete for resources. How to compete with other groups effectively? By building support from below and becoming a significant sociopolitical force through the creation of parties and movements who in turn force inclusiveness onto the system. Lobbying attempts by agricultural interests facilitate the development of a democratic polity. Political opposition and the ability to voice opposing views is therefore a positive development for democracy in Russia. A third policy implication concerns the efficacy of opponents to the course of agrarian reform. From a theoretical perspective, the presence and activity of oppositionist groups is healthy for the development of democracy, but if they are too strong, it is bad for reform progress. In that regard, an interesting question concerns the future of the Agrarian Party of Russia, which was the primary political representative of rural interests during the 1990s. However, the future of the APR as a significant rural opposition party is in question for the following reasons: 1. As the 1990s progressed, the APR became weaker. The party had fewer representatives in successive Duma elections since 1995, so that it needed to search for urban-based political alliances, and in the December 1999 Duma election, it joined an electoral alliance with Fatherland-All Russia. In December 2003, it ran as an independent party but did not cross the 5 percent threshold to receive seats from its party list. 2. The APR has been beset with political division, both internally and with its main ally, the Communist party. In an effort to recast itself and rejuvenate its political base, long-time APR leader Mikhail Lapshin was ousted at its Twelfth Congress in 2004 and replaced by Vladimir Plotnikov. 3. The APR has not shown itself to be particularly efficacious. One of the main attractions of the APR for rural actors is that it explicitly advocates increased financial and resource flows to the agricultural sector.41 Chapter 2, however, showed how the APR never was very effective in changing the course of reform or stopping the implementation of a core of reform policies along liberal lines. Their main “success” was blocking a new land code during the 1990s, but even this behavior did not prevent the development of a land market nor the purchase of agricultural land. In the Putin period,

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a law allowing agricultural land sales was adopted despite the vehement opposition by the APR. 4. The APR’s program is out of step with the adaptive trends by the rural population. Part of the reason for the decline of the APR is the fact that the Russian countryside and its social characteristics have changed significantly, and the APR has not adapted effectively.42 Considering the way in which large farms and rural households have adapted to reform and taken advantage of the opportunities presented, it is possible that the APR, with its conservative party platform, is in danger of becoming an impotent organization of rural opposition. Indeed, a Western political scientist has characterized the APR as a “government” party instead of a force of real opposition.43 5. The APR is in danger of being supplanted by a new agrarian organization—the Russian Agrarian Movement (RAD), which is headed by Minister of Agriculture Gordeev and therefore has both proximity to and support from the Russian government. The ramifications of the decline of the APR are enormous. If the APR is supplanted, then rural opposition defaults to the KPRF. On those issues where the Communists take a strong stand—for example, prohibiting agricultural land sales—the argument is moot since the issue is already resolved, and in any event, both the rural population and rural elite support a land market. Furthermore, the KPRF itself is in decline and is beset with divisions and weaknesses. Thus, on rural issues, the KPRF is out of step with the times and with popular opinion, and is unlikely to pose an effective oppositionist stance against government policies. The upshot is that “rural opposition” in Russia is likely to be even less effective than it was in the 1990s, and more accommodating to the policy positions of the Kremlin. The final policy implication concerns regional variations in reform, which is to say that regions will display different rates of reform, different tendencies, and different patterns.44 In the south, large farms are prosperous, agriculture is productive, and the rural economy is strong. Generally speaking, rural infrastructure is better in the south. There is abundant evidence of entrepreneurship in the south.45 Households’ incomes in the rural south are higher than in the rural north. Yet, the south was a bastion of electoral strength for Communist political candidates, and the south in general voted conservatively during the 1990s. How to explain this apparent paradox? How can rural dwellers in the south embrace reform, have higher incomes, and vote for antireform candidates?

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One answer lies in the following hypothesis. In the south, social networks are still intact and functioning, in large part because they have not been devastated through out-migration as in the north. In the north, villages have become depopulated, and with depopulation, networks atrophied. Richard Rose has argued that social networks in Russia tend to be “anti-modern,” by which he meant they are based on personal relations among known persons within a network.46 Market reforms are attempting to displace the personal relationships that comprise the foundation of social networks with impersonal, commercial relations.47 Therefore, one hypothesis is that rural dwellers voted conservatively not because they are antireform or prefer communism, but because they resist the erosion of their social networks.48 If this hypothesis is correct, it means that the south will both benefit from market opportunities and be slower to reform social relations. Interestingly, this development has direct relevance to the moral economy model. In Russia’s rural south, “resistance” was expressed through voting, but actual economic behavior was adaptive. Conclusion Flowing from the ideas of peasants’ moral economy, much of the literature on agrarian reform in Russia starts with the premise that rural dwellers are opposed to change. Such views ignore the nature of reform, which has been a “giving” reform, the nature of reform policies that have provided opportunities to break free from Soviet era limitations, and the benefits to be derived from adaptation. But evidence presented in previous chapters has showed substantial adaptation by both the rural elite and the rural population, although to be sure some cohorts within each adapted more than others. Thus, either we need to change our views about rural actors—perhaps reconsidering the analytic approaches used—or we need to conclude that Russian agrarian reform is a historically unique case among post-Soviet states. But Russian reform is not unique, as is shown by contemporary post-Soviet states in eastern and central Europe, discussed in chapter 1. There is, then, a substantial body of evidence to force us to rethink our assumptions about rural orientations and how rural actors react to reform stimuli. How could so much evidence be overlooked, and how could some interpretations of Russia’s agrarian reform be so previously misguided? To be sure, conducting field work in Russia is not easy owing to often primitive rural infrastructure, and the sheer size of the country makes any kind of systemic regional investigation difficult, if not impossible.

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This study has drawn upon and benefited from extensive survey data that served to strengthen the argument, and hopefully, to present a persuasive case. But the problems of interpretation run deeper than primitive infrastructure, obstacles of scale, and the difficulty of obtaining survey data. Much of the problem with previous interpretations of Russia’s agrarian reform is that they were based upon unrealistic expectations, a misunderstanding about the importance of reform institutions and the incentives they produce, and an ignorance of rural politics. Even worse, an ethnocentric view of the world permeates the conventional thinking, as many analysts mechanically apply experiences in the West without considering whether they are replicable—or even appropriate—in Russia. When rural Russians do not rush to decollectivize, or do not stampede to become private farmers, some Western analysts are surprised, calling it “irrational behavior,” and search for scapegoats. The nature of responses to reform policies, and the variance of responses to original expectations should not, however, lead us to overlook the progress, the achievements, the adaptive responses, or the very real changes that have occurred during the first decade of reform in rural Russia. Nor should the nature of Russian reform outcomes lead us to conclude that “because they are different, reform has failed.” Numerous variants of agrarian capitalism existed even before Russian reform. There is no single “right way,” and Western ethnocentrism, on which the conventional wisdom is based, is neither an appropriate analytical framework nor an accurate standard for the measurement of success in Russian agrarian reform. Factors from below (peasant responses) combined with factors from above (federal withdrawal and regional interventions) have and will continue to influence the agrarian transition in Russia. Mine, then, is basically a positive interpretation of Russia’s agrarian transition during the 1990s, with cautious optimism that agrarian capitalism can be attained.49 While Russia’s reform period has introduced substantial change compared to the Soviet era, it is necessary to acknowledge that the combination of factors from below and above are likely to make the Russian style of agrarian capitalism distinct from the expectations that existed when reform was launched. In short, rural Russia has and will continue to change, but the manifestation of that change may look very different from what liberal reformers in Moscow and Western advisors expected when reform was undertaken. An appreciation of that fact will help us understand the nature of the transformation underway in rural Russia.

Notes

Chapter 1 Russia’s Agrarian Question in Historical and Contemporary Context 1. See A. Haroon Akram-Lodhi, “The Agrarian Question, Past and Present,” The Journal of Peasant Studies, vol. 25, no. 4 ( July 1998), pp. 134–49. 2. Stephen K. Wegren, Agriculture and the State in Soviet and Post-Soviet Russia (Pittsburgh: University of Pittsburgh Press, 1998), pp. 63–68. 3. The World Bank, Food and Agricultural Policy Reforms in the Former USSR: An Agenda for the Transition (Washington, DC: The World Bank, 1992). 4. For an extended critique of the moral economy and its main principles, see Samuel L. Popkin, The Rational Peasant: The Political Economy of Rural Society in Vietnam (Berkeley: University of California Press, 1979), pp. 5–17. 5. James C. Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia (New Haven: Yale University Press, 1976). 6. See William James Booth, “On the Idea of the Moral Economy,” American Political Science Review, vol. 88, no. 3 (September 1994), pp. 653–67. 7. James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven: Yale University Press, 1985), p. 29. 8. Ibid.; and Forrest D. Colburn, ed., Everyday Forms of Peasant Resistance (New York: M. E. Sharpe, 1989). 9. James C. Scott, Domination and the Arts of Resistance: Hidden Transcripts (New Haven: Yale University Press, 1990). 10. On adaptation by economic strata in the contemporary Russian countryside, see Stephen K. Wegren, “From Communism to Capitalism: Agrarian Relations in Twentieth Century Russia and Beyond,” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 363–99; and Stephen K. Wegren, “Rural Adaptation in Russia: Who Responds and How Do We Measure It?” Journal of Agrarian Change, vol. 4, no. 4 (October 2004), pp. 553–78. 11. See e.g., Esther Kingston-Mann, “Peasant Communes and Economic Innovation: A Preliminary Inquiry,” in Esther Kingston-Mann and Timothy Mixter, eds., Peasant Economy, Culture, and Politics of European Russia, 1800–1921 (Princeton: Princeton University Press, 1991), pp. 30–34; Jerome Blum, Lord and Peasant in Russia: From the Ninth to the Nineteenth Century (New York: Atheneum, 1967), chap. 19; and V. I. Lenin, The Development of Capitalism in Russia (Moscow: Foreign Languages Publishing House, 1956), esp. chaps. III and IV.

216 / notes 12. Robert H. Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies (Berkeley: University of California Press, 1981). 13. Carol Scott Leonard, “Rational Resistance to Land Privatization: The Response of Rural Producers to Agrarian Reforms in Pre- and Post-Soviet Russia,” PostSoviet Geography and Economics, vol. 41, no. 8 (November–December 2000), pp. 605–20. 14. James Scott, in his book Weapons of the Weak, identified peasant migration as one such weapon, but such a blanket application ignores the multiplicity of reasons why peasants migrate. For instance, it is not clear that the pursuit of economic opportunity is really resistance. 15. Theodore W. Schultz, Transforming Traditional Agriculture (Chicago: University of Chicago Press, 1964), p. 28. 16. Muhammad Yunus, “The Grameen Bank,” in Robert M. Jackson, ed., Global Issues 2000/01 (Guilford, CT: Dushkin/McGraw-Hill, 2000), pp. 188–92. 17. For differences between the Yeltsin and Putin periods, see Stephen K. Wegren, “Russian Agrarian Policy Under Putin,” Post-Soviet Geography and Economics, vol. 43, no. 1 ( January–February 2002), pp. 26–40. 18. Stephen K. Wegren, “Putin and Agriculture,” in Dale R. Herspring, ed., Putin’s Russia: Past Imperfect, Future Unknown, 2nd. edn (Lanham, MD: Rowman and Littlefield, 2004). 19. See Eric R. Wolf, Peasants (Englewood Cliffs, NJ: Prentice Hall, 1966), chap. 2. 20. Most historians and anthropologists agree that significant ruptures in peasant cultural values occur when peasants migrate from the countryside. In addition, another source of cultural change is when village inhabitants depart to the city to work for part of the year, returning during the harvest season. In Russia, these so-called otkhodniki (seasonal migrants) carried with them urban values that over time led to adjustments in peasant culture. See William J. Chase, Workers, Society, and the Soviet State: Labor and Life in Moscow 1918–1929 (Urbana: University of Illinois Press, 1987), esp. pp. 87–89. There were, of course, instances when peasant culture resisted outside influence, e.g., during the “going to the people” (Narodniki) movement in Russia during the 1860s and 1870s, when intellectuals and populists tried to influence peasant culture. See Abbott Gleason, Young Russia: The Genesis of Russian Radicalism in the 1860s (New York: The Viking Press, 1980). 21. For an excellent history of the development of peasant communes, which can be dated to the tenth and eleventh centuries and evolved into the mir, see Blum, Lord and Peasant in Russia, chap. 2. 22. Kingston-Mann notes, however, that in some regions steps were taken to reward innovators and improvers by either allowing them to retain their land or giving them first choice among best-quality land plots. See Kingston-Mann, “Peasant Communes and Economic Innovation,” pp. 42–46. 23. Blum, Lord and Peasant in Russia, pp. 33–42. 24. Terence Emmons, “The Peasant and the Emancipation,” in Wayne S. Vucinich, ed., The Peasant in Nineteenth-Century Russia (Stanford: Stanford University Press, 1968), p. 51.

notes / 217 25. Franco Venturi, Roots of Revolution: A History of Populist and Socialist Movements in Nineteenth Century Russia (Chicago: University of Chicago Press, 1960), p. 65. Parentheses in original. 26. Ibid., p. 69 and chap. 7. 27. Ibid., chap. 7. 28. Emmons, “The Peasant and the Emancipation,” pp. 54–55. 29. Ibid., p. 62. 30. For a contrary view of the reforms, their impact, and how peasants adapted during these reforms, see David A. J. Macey, “Reflections on Peasant Adaptation in Rural Russia at the Beginning of the Twentieth Century: The Stolypin Agrarian Reforms,” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 400–26. 31. There is a large literature on the Stolypin reforms, see e.g., Geroid Tanquary Robinson, Rural Russia under the Old Regime (New York: MacMillan Co, 1932), chaps. 9 and 10; Lazar Volin, A Century of Russian Agriculture: From Alexander II to Khrushchev (Cambridge: Harvard University Press, 1970), chap. 5; and David A. J. Macey, “The Peasant Commune and the Stolypin Reforms: Peasant Attitudes, 1906–1914,” in Roger Bartlett, ed., Land Commune and Peasant Community in Russia: Communal Forms in Imperial and Early Soviet Society (New York: St. Martin’s Press, 1990), pp. 219–36. 32. The Peasant Bank was created in 1882 and sold land to peasants from its own land fund, provided loans for purchasing private land, and granted mortgages. For additional information on the Peasant Land Bank, see Dorothy Atkinson, The End of the Russian Land Commune, 1905–1930 (Stanford: Stanford University Press, 1983), pp. 67–74. 33. George Yaney, The Urge to Mobilize: Agrarian Reform in Russia, 1861–1930 (Urbana: University of Illinois Press, 1982), p. 278. 34. Ibid. 35. Ibid., p. 285. 36. See Orlando Figes, Peasant Russia, Civil War: The Volga Countryside in Revolution (1917–1921) (Oxford: Clarendon Press, 1989), chaps. 2 and 3. 37. These are explained in John L. H. Keep, The Russian Revolution: A Study in Mass Mobilization (New York: W. W. Norton and Co., 1976), pp. 187–88. 38. Ibid., pp. 188–89. 39. Leon Trotsky, The History of the Russian Revolution, vol. 1 (New York: Monad Press, 1980), p. 392. 40. Atkinson, The End of the Russian Land Commune, p. 158. 41. In the nonblack north, agricultural work made less of a contribution to household income, and large landed estates were less frequent. 42. Trotsky divides peasant actions into periods, the first of which was March to July, during which time “peasants during this first period hardly ever resort to measures of open violence, and are still trying to give their activities the form of legal or semi-legal pressure.” Trotsky, The History of the Russian Revolution, vol. 1, p. 404. 43. Ibid., p. 393. 44. Atkinson, The End of the Russian Land Commune, p. 159.

218 / notes 45. Alec Nove, An Economic History of the USSR (New York: Penguin Books, 1982), p. 110; and Volin, A Century of Russian Agriculture, pp. 176–77. 46. Nove, An Economic History of the USSR, p. 86. 47. Chase, Workers, Society, and the Soviet State, pp. 31–35, 73. 48. See also Yaney, The Urge to Mobilize, chap. 11. 49. Volin, A Century of Russian Agriculture, pp. 184–87; and see Edward Hallett Carr, The Interregnum, 1923–1924 (New York: Macmillan Company, 1954), pp. 3–149. 50. Nove, An Economic History of the USSR, pp. 107–109. 51. The Land Code abolished the private ownership of land, subsoil, water, and forests “forever.” All land was expropriated and proclaimed the property of the state. The prohibition on the commercial transfer of land was restated. The household, not the individual, became the legal land holder. Households could hold land in consolidated holdings (khutor or otrub), in communes, or in collectives. Until the late 1920s, communes dominated land usage, followed by consolidated holdings. Collective land usage in the form of state and collective farms was not prevalent. See V. P. Danilov, Rural Russia Under the New Regime (Bloomington: Indiana University Press, 1988), p. 112. 52. Atkinson, The End of the Russian Land Commune, pp. 234–35. 53. Danilov, Rural Russia under the New Regime, p. 92. 54. Ibid., p. 89. 55. Nove, An Economic History of the USSR, p. 106. 56. Subsequent chapters argue that rural “resistance” has been over the consequences of reform, not reform itself. This is a crucial distinction that is often not acknowledged. 57. Volin, A Century of Russian Agriculture, chap. 10. 58. Lynne Viola, Peasant Rebels under Stalin: Collectivization and the Culture of Peasant Resistance (New York: Oxford University Press, 1996), pp. 206–210. 59. The classic work based on archival documents is Merle Fainsod, Smolensk under Soviet Rule (New York: Vintage Books, 1958), chap. 12. 60. The literature on collectivization is quite large. Some of the best-known and notable monographs include Moshe Lewin, Russian Peasants and Soviet Power: A Study of Collectivization (New York: W. W. Norton and Co., 1968); R. W. Davies, The Socialist Offensive: The Collectivisation of Soviet Agriculture, 1929–1930 (Cambridge: Harvard University Press, 1980); Robert Conquest, The Harvest of Sorrow: Soviet Collectivization and the Terror-Famine (New York: Oxford University Press, 1986); Sheila Fitzpatrick, Stalin’s Peasants: Resistance and Survival in the Russian Village After Collectivization (New York: Oxford University Press, 1994); and Viola, Peasant Rebels under Stalin. 61. Tracy McDonald, “A Peasant Rebellion in Stalin’s Russia: The Pitelinskii Uprising, Riazan, 1930,” in Lynne Viola, ed., Contending with Stalinism: Soviet Power and Popular Resistance in the 1930s (Ithaca: Cornell University Press, 2002), pp. 102, 105. 62. Lynne Viola, “Popular Resistance in the Stalinist 1930s: Soliloquy of a Devil’s Advocate,” in Viola, ed., Contending with Stalinism, pp. 17–43.

notes / 219 63. For examples, see Elena A. Osokina, “Economic Disobedience under Stalin,” in Viola, ed., Contending with Stalinism, pp. 184–97. 64. Mark B. Tauger, “Soviet Peasants and Collectivization 1930–1939: Resistance and Adaptation,” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 427–56. 65. Karen Brooks, et al., Agricultural Reform in Russia: A View from the Farm Level, World Bank Discussion Papers no. 327 (Washington, DC: The World Bank, 1996), p. 33. 66. Calculated from Narodnoe khoziaistvo Rossiiskoi Federatsii.1992 (Moscow: Goskomstat, 1992), p. 405. Farms also had to contribute to raion land funds for private farming, and to allocate land to be used for household production. These land uses added to the “losses” experienced by the farm. 67. Based on survey data from 800 rural households in 5 regions, it was found that higher income households tended to use their land shares to expand their land holdings, while lower income households leased their land shares back to the larger farm. The survey method and data are explained in further detail in subsequent chapters. 68. For an extended discussion of peasant resistance during contemporary reforms, see Wegren, “From Communism to Capitalism: Agrarian Relations in Twentieth Century Russia and Beyond”; and Wegren, “Rural Adaptation in Russia: Who Responds and How Do We Measure It.” 69. Yaney, The Urge to Mobilize, chap. 5. 70. Perhaps a definition of agrarian capitalism is best indicated by remembering what the Soviet agricultural system was as recently as the late 1980s and comparing it with what it is today. In the late 1980s, the Soviet agricultural system was not governed by free prices at either the retail or the wholesale level. There was no private land ownership. There was no land market. Private family farms did not exist. State and collective farms dominated in food production. Farm managers had extremely limited autonomy in their farms’ operations. Food production was planned and governed by obligatory quantitative quotas. All food processors were state owned. Food distribution points were state owned and regulated by state planners. The food distribution system was centrally planned and regulated. Farm subsidies were a substantial percentage of farm “income” and accounted for a large percentage of the final retail price. Farm credit was provided by state-owned banks, and only state-owned banks existed. Foreign investment in processing plants or farms was illegal. The curriculum of agricultural training institutes and universities was centrally planned and regulated. Food imports and exports were centrally planned and regulated. All of these aspects, and more, have changed since 1992. 71. David J. O’Brien, Stephen K. Wegren, and Valeri V. Patsiorkovski, “Contemporary Rural Responses to Reform from Above,” The Russian Review, vol. 63, no. 2 (April 2004), pp. 256–76. 72. Wegren, Agriculture and the State. 73. Jerry F. Hough, The Logic of Economic Reform in Russia (Washington, DC: The Brookings Institution, 2001), pp. 31, 57. 74. On Russian liberals’ acceptance of rural changes, see E. V. Serova, “The Impact of Privatization and Farm Restructuring on Russian Agriculture,” in Institute

220 / notes

75. 76. 77. 78. 79. 80. 81. 82. 83.

84.

85. 86.

87. 88.

for Economy in Transition, Farm Profitability, Sustainability, and Restructuring in Russia (Moscow: Agrifood Economy, 1999), pp. 4–35; and see “Outcomes in Institutional Changes in Russian Agriculture,” Farm Profitability, pp. 152–55. Andrew Barnes, “What’s the Difference? Industrial Privatization and Agricultural Land Reform in Russia, 1990–1996,” Europe-Asia Studies, vol. 50, no. 5 (1998), p. 844. Emphasis in original. See e.g., Leonard, “Rational Resistance to Land Privatization”; and Don Van Atta, ed., The Farmer Threat: The Political Economy of Agrarian Reform in Post-Soviet Russia (Boulder, CO: Westview Press, 1993). Robert A. Dahl, Polyarchy: Participation and Opposition (New Haven: Yale University Press, 1971), p. 2. Gabriel A. Almond, Comparative Politics: A Theoretical Framework, 3rd ed. (New York: Longman, 2001), chap. 1. “Interest groups” in the USSR is a term coined by Gordon H. Skilling and Franklyn Griffiths, eds., Interest Groups in Soviet Politics (Princeton: Princeton University Press, 1971). For an example, see Carol Scott Leonard, “Rational Resistance to Land Privatization”; Scott, Weapons of the Weak ; and Colburn, ed., Everyday Forms of Peasant Resistance, chap. 1. Samuel P. Huntington, Political Order in Changing Societies (New Haven: Yale University Press, 1968), p. 375. Eric R. Wolf, Peasant Wars of the Twentieth Century (New York: Harper Torchbooks, 1969), chap. 1. Ibid, chap. 3. For a somewhat different interpretation of peasant responses and the reasons for those responses to CCP mobilization, see John Dunn, Modern Revolutions: An Introduction to the Analysis of a Political Phenomenon, 2nd ed. (Cambridge: Cambridge University Press, 1989), chap. 3; and Lucien Bianco, Peasants Without the Party: Grass-roots Movements in TwentiethCentury China (Armonk, NY: M.E. Sharpe, 2001), esp. chap. 11. Again, the literature is quite large. For representative examples, see Robert J. Alexander, Agrarian Reform in Latin America (New York: Macmillan Publishing Co., 1974); William C. Thiesenhusen, ed., Searching for Agrarian Reform in Latin America (Boston: Unwin Hyman, 1989); and Peter Dorner, Latin American Land Reforms in Theory and Practice: A Retrospective Analysis (Madison: University of Wisconsin Press, 1992). Financial Times, May 8, 2001, p. 3. See Stephen K. Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe (London: Routledge, 1998); and F. M. Swinnen, Allan Buckwell, and Erik Mathijs, eds., Agricultural Privatization, Land Reform and Farm Restructuring in Central and Eastern Europe (Aldershot: Ashgate, 1997). See Zvi Lerman, Csaba Csaki, and Gershon Feder, Land Policies and Evolving Farm Structures in Transition Countries, Policy Research Working Paper no. 2794 (Washington, DC: The World Bank, 2002), chap. 1. Krest’ianskie vedomosti, nos. 1–2 ( January 1–14, 2001), p. 2. Assuming three persons per family, thus yielding a total of 120 million persons, out of a total population of 146 million in 2001.

notes / 221 89. Dorner, Latin American Land Reforms in Theory and Practice, pp. 35–49. 90. The great majority of Mexican land distributions came in two waves: during the latter 1930s under Cardenas and in the 1960s under Diaz. 91. See James W. Wilkie, Measuring Land Reform: Supplement to the Statistical Abstract of Latin America (Los Angeles: UCLA Latin American Center, 1974), pp. 1–26. 92. See Grigory Ioffe and Tatyana Nefedova, Continuity and Change in Rural Russia: A Geographical Perspective (Boulder, CO: Westview Press, 1997). 93. See Stephen K. Wegren, “The Third Wave of 20th Century Land Reform: Post-Soviet States,” in Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe, pp. xii–xxiii; and Zvi Lerman, “Experience with Land Reform and Farm Restructuring in the Former Soviet Union,” in Swinnen, Buckwell, and Mathijs, eds., Agricultural Privatization, Land Reform and Farm Restructuring in Central and Eastern Europe, pp. 311–32. 94. See Mykola Pugachov with Don Van Atta, “Reorganization of Agricultural Enterprises in Ukraine in 2000: A Research Note,” Post-Soviet Geography and Economics, vol. 41, no. 7 (October 2000), pp. 527–40; and Stephen K. Wegren, The Land Question in Ukraine and Russia, Donald W. Treadgold Papers no. 35 (Seattle: University of Washington, 2002). 95. Csaba Csaki, “The Status of Agricultural Reforms in Central and Eastern Europe and the Former Soviet Union,” in Peter Tillack and Eberhard Schulze, eds., Land Ownership, Land Markets and their Influence on the Efficiency of Agricultural Production in Central and Eastern Europe (Wissenchaftsverlag Van Kiel, Germany: Institute of Agricultural Development in Central and Eastern Europe, 2000), p. 21. In the former Soviet Union, one could also include Armenia and Azerbaijan as states that have experienced rapid transition away from state ownership and a communist-type of agricultural system. 96. See Keith S. Howe, “Politics, Equity, and Efficiency: Objectives and Outcomes in Bulgarian Land Reform,” in Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe, pp. 208–23. 97. See Tamas Fricz, “Democratization, the Party System, and the Electorate in Hungary,” in Zsuzsa Kormendy, ed., Transition with Contradictions: The Case of Hungary 1990–1998 (Budapest: Kairosz Publishing Co., 1999), pp. 93–124. 98. Csaba Csaki and Zvi Lerman, “Land Reform and Farm Restructuring in Hungary during the 1990s,” in Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe, p. 225. 99. Ibid., pp. 228–35. 100. Erik Mathijs and Sandor Meszaros, “Privatization and Restructuring of Hungarian Agriculture,” in Swinnen, Buckwell, and Mathijs, eds., Agricultural Privatization, Land Reform and Farm Restructuring in Central and Eastern Europe, p. 163. 101. Csaki and Lerman, “Land Reform and Farm Restructuring,” p. 237. 102. Ibid., pp. 246–47. 103. William H. Meyers and Natalija Kazlauskiene, “Land Reform in Estonia, Latvia, and Lithuania,” in Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe, p. 87.

222 / notes 104. Ibid., p. 97. 105. Alexander H. Sarris and Dinu Gavrilescu, “Restructuring of Farms and Agricultural Systems in Romania,” in Swinnen, Buckwell, and Mathijs, eds., Agricultural Privatization, Land Reform and Farm Restructuring in Central and Eastern Europe, p. 191. 106. Nancy J. Cochrane, “Farm Restructuring in Central and Eastern Europe,” The Soviet and Post-Soviet Review, vol. 21, nos. 2–3 (1994), p. 325. 107. Cited by Sarris and Gavrilescu, “Restructuring of Farms and Agricultural Systems,” p. 193. 108. Ibid., p. 196. 109. Ibid., pp. 197, 201. 110. For more detail on the legislative basis of land reform in Moldova, see Zvi Lerman, Csaba Csaki, and Victor Moroz, Land Reform and Farm Restructuring in Moldova: Progress and Prospects, World Bank Discussion Paper no. 398 (Washington, DC: The World Bank, 1998), pp. 27–35. 111. Mikhael Dumitrashko, “Zemel’naia reforma v Respublike Moldova i razvitie rynka zemli,” in Tillack and Schulze, eds., Land Ownership, Land Markets and their Influence on the Efficiency of Agricultural Production in Central and Eastern Europe, p. 465. 112. Lerman, Csaki, and Moroz, Land Reform and Farm Restructuring in Moldova, p. 38. 113. Ibid., p. 37; and Leonard, “Rational Resistance to Land Privatization,” p. 606. 114. Lerman, Csaki, and Moroz, Land Reform and Farm Restructuring in Moldova, pp. 69, 71, 73. 115. Ibid., p. 79; and Dumitrashko, “Zemel’naia reforma v Respublike Moldova i razvitie rynka zemli,” in Tillack and Schulze, eds., Land Ownership, Land Markets and their Influence on the Efficiency of Agricultural Production in Central and Eastern Europe, p. 465. 116. Csaba Csaki and Zvi Lerman, “Moldova: A Real Breakthrough?” Problems of Post-Communism, vol. 49, no. 1 (January–February 2002), p. 44. 117. Ibid., p. 50. 118. The main distinction between collective farmland and state farm land that was distributed was that the former was distributed as private property, while the latter was distributed as “in use” and not as private property, without the term of use being specified. See Peter C. Bloch, “Picking Up the Pieces: Consolidation of Albania’s Radical Land Reform,” in Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe, pp. 193–94. 119. Ibid., p. 189. 120. I would argue that such an emphasis has been misplaced and more attention should be devoted to how peasants adapt to a changing environment. 121. Eric Wolf, Peasant Wars of the Twentieth Century (New York: Harper and Row, 1969); Joel S. Migdal, Peasants, Politics, and Revolution: Pressures Toward Political and Social Change in the Third World (Princeton: Princeton University Press, 1974); Jeffrey Paige, Agrarian Revolution: Social Movements and Export Agriculture in the Underdeveloped World (New York: Free Press, 1975); Cynthia McClintock, “Why Peasants Rebel: The Case of Peru’s

notes / 223

122. 123. 124. 125.

Sendero Luminoso,” World Politics, vol. 37, no. 1 (October 1984); and Gary Hawes, “Theories of Peasant Revolution: A Critique and Contribution from the Philippines,” World Politics, vol. 42, no. 2 (January 1990). Theda Skocpol, States and Social Revolutions: A Comparative Analysis of France, Russia, and China (Cambridge: Cambridge University Press, 1979). Eric R. Wolf, “Peasant Rebellion and Revolution,” in Jack A. Goldstone, ed., Revolutions: Theoretical, Comparative, and Historical Studies (New York: Harcourt Brace Jovanovich, 1986), p. 174. Scott, Weapons of the Weak ; and Colburn, ed., Everyday Forms of Peasant Resistance. There are other factors as well, including the lack of a revolutionary ideology, the lack of revolutionary leadership, the lack of dual authority (except for a brief two-week period in October 1993), and the lack of power deflation in Yeltsin’s administration. Thus, using the criteria often found in the literature on revolution, Russia never really approached a prerevolutionary situation.

Chapter 2 Why Peasants Adapt: Origins of Behavioral Change Under Yeltsin 1. See Stephen K. Wegren, Agriculture and the State in Soviet and Post-Soviet Russia (Pittsburgh: University of Pittsburgh Press, 1998). 2. See Stephen K. Wegren, “Civil Society in Rural Russia,” in Alfred Evans and Laura Henry, eds., Civil Society in Russia:Continuity and Change (Armonk, NY: M. E. Sharpe, 2005). 3. See Erik P. Hoffman, “Dynamics of State-Society Relations in Post-Soviet Russia,” in Harry Eckstein, Frederic J. Fleron, Jr., Erik P. Hoffman, and William M. Reisinger, Can Democracy Take Root in Post-Soviet Russia? (Lanham, MD: Rowman and Littlefield, 1998), pp. 69–104; and Mikhail Krasnov, “The Rule of Law,” in Michael McFaul, Nikolai Petrov, and Andrei Ryabov, Between Dictatorship and Democracy: Russian Post-Communist Political Reform (Washington, DC: Carnegie Endowment for International Peace, 2004), pp. 195–212. 4. For a discussion of adaptation versus survival strategies, see David J. O’Brien, Valeri V. Patsiorkovski, and Larry D. Dershem, Household Capital and the Agrarian Problem in Russia (Aldershot: Ashgate, 2000); David J. O’Brien and Stephen K. Wegren, eds., Rural Reform in Post-Soviet Russia (Washington, DC and Baltimore, MD: Woodrow Wilson Center Press/ Johns Hopkins University Press, 2002); and Stephen K. Wegren, “Rural Adaptation in Russia: Who Responds and How Do We Measure It?” Journal of Agrarian Change, vol. 4, no. 4 (October 2004), pp. 553–78. 5. Eugenia Serova, “Reform and Economic Behavior in Russian Agriculture,” in L. Alexander Norsworthy, ed., Russian Views of the Transition in the Rural Sector: Structures, Policy Outcomes, and Adaptive Responses (Washington, DC: The World Bank, 2000), p. 103. 6. See Wegren, Agriculture and the State, chaps. 3 and 4.

224 / notes 7. As Popkin points out, these considerations take on short-term and long-term dimensions. Samuel L. Popkin, The Rational Peasant: The Political Economy of Rural Society in Vietnam (Berkeley: University of California Press, 1979). 8. This goes to the root question of peasants’ ability to innovate and change. The seminal argument has been made by Theodore Schultz, who argues that given the correct incentives and a sufficient amount of educational and technical assistance, “traditional” agriculture (and its peasants) can be transformed into a productive and efficient sector in society. Theodore W. Schultz, Transforming Traditional Agriculture (Chicago: University of Chicago Press, 1964). Research on this question, in the Russian context, may be found in Esther Kingston Mann, “Peasant Communes and Economic Innovation: A Preliminary Inquiry,” in Esther Kingston-Mann and Timothy Mixter, eds., Peasant Economy, Culture, and Politics of European Russia, 1800–1921, (Princeton: Princeton University Press, 1991). Some innovations were more successful than others, e.g., in some provinces in European Russia changes were made from a three-field system to a four-field system, with two of the fields used for clover to feed livestock. In addition, there was unmistakable progress in the area of land improvement, as lands were drained, irrigated, and cleared. In other instances, fertilizer use was inhibited by disincentives imposed by landlords. The general conclusion is that peasant innovations “were carried out within a general context of geographic and political constraints.” 9. For two contrasting approaches on this question, see Popkin, The Rational Peasant; and James C. Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia (New Haven: Yale University Press, 1976). For an excellent contribution to this debate, see Robert H. Bates, “Lessons from History, or the Perfidy of English Exceptionalism and the Significance of Historical France,” World Politics, vol. 40, no. 4 ( July 1988), pp. 499–516. 10. Here, “possible” refers to actions that are legally sanctioned by law. 11. Michael Lipton, Why Poor People Stay Poor: Urban Bias in World Development (Cambridge, MA: Harvard University Press, 1976). 12. See e.g., Robert H. Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies (Berkeley: University of California Press, 1981); Bates, Essays on the Political Economy of Rural Africa (Berkeley: University of California Press, 1983); Yahya M. Sadowski, Political Vegetables? (Washington, DC: The Brookings Institution, 1991); Special issue “Beyond Urban Bias,” Journal of Development Studies, vol. 29, no. 4 (July 1993); and William C. Thiesenhusen, Broken Promises: Agrarian Reform and the Latin American Campesino (Boulder, CO: Westview Press, 1995). The eloquence of the model did not make it immune to attack. For a critique of Lipton and the urban bias approach, see T. J. Byres, “Of Neo-Populist Pipe-Dreams: Daedalus in the Third World and the Myth of Urban Bias,” The Journal of Peasant Studies, vol. 6, no. 2 ( January 1979), pp. 210–44. Generally, however, the model was attractive as a number of scholars applied its basic ideas to different regions and individual countries.

notes / 225 13. For an application and critique of state urban bias in contemporary Russia, see Stephen K. Wegren, “Democratization and Urban Bias in Postcommunist Russia,” Comparative Politics, vol. 34, no. 4 ( July 2002), pp. 457–76. 14. See e.g., Bertram Silverman and Murray Yanowitch, New Rich, New Poor, New Russia: Winners and Losers on the Russian Road to Capitalism (Armonk, NY: M. E. Sharpe, 2000). 15. The concept of “state withdrawal” was first presented in Stephen K. Wegren, “State Withdrawal and the Impact of Marketization on Rural Russia,” Policy Studies Journal, vol. 28, no. 1 ( January 2000), pp. 46–67. 16. Cited in Marshall I. Goldman, The Piratization of Russia: Russian Reform Goes Awry (London and New York: Routledge, 2003), p. 29. 17. Increases in monetary flows to agriculture during the 1960s and 1970s, rural investments, farm subsidies and soft loans represented state attempts to partially compensate collective farms for disadvantageous purchase prices, increased labor, and production costs as a result of the mechanization of agriculture. See Alec Nove, An Economic History of the USSR 1917–1991, 3rd ed. (New York: Penguin Books, 1992), pp. 378–82. 18. Mikhail Gorbachev, Memoirs (New York: Doubleday, 1996), pp. 118–20. 19. Ibid., p. 120. 20. See V. S. Pavlov, Radikal’naia reforma tsenoobrazovaniia (Moscow: Finansy i statistika, 1988), pp. 71–72; and Valentin Pavlov, Overhauling the Entire System of Prices (Moscow: Novosti Press Agency, 1987). 21. Gorbachev, Memoirs, p. 121. 22. See Peter Reddaway and Dmitri Glinski, The Tragedy of Russia’s Reforms: Market Bolshevism Against Democracy (Washington, DC: United States Institute for Peace, 2001), pp. 247–54. 23. Boris Yeltsin, Midnight Diaries (New York: Public Affairs, 2000), p. 105. 24. Goldman, The Piratization of Russia, p. 62. 25. For example, Reddaway and Glinski, The Tragedy of Russia’s Reforms ; and Jerry F. Hough, The Logic of Economic Reform in Russia (Washington, DC: The Brookings Institution, 2001). 26. Alan Greenspan, cited in Goldman, The Piratization of Russia, p. 30. 27. Ibid., p. 61. 28. Ibid., p. 31. 29. For a discussion, ibid., pp. 60–69 and chap. 5. 30. Egor Gaidar, Dni porazheniy i pobed (Moscow: Vagrius, 1997), p. 154. 31. See Lynn Nelson and Irian Kuzes, Radical Reform in Yeltsin’s Russia: Political, Economic, and Social Dimensions (Armonk, NY: M. E. Sharpe, 1995); Steven D. Boilard, Russia at the Twenty-First Century: Politics and Social Change in the Post-Soviet Era (Fort Worth, TX: Harcourt Brace, 1998), chap. 4. Contrary to statistical data and widespread consensus by Russian and foreign analysts, Anders Aslund denies that living standards deteriorated or even that Russia experienced production declines. See Anders Aslund, “Russia,” Foreign Policy, no. 125 (July–August 2001), pp. 20–25. 32. Hough, The Logic of Economic Reform, pp. 111–12.

226 / notes 33. In English, see Jerry F. Hough, Evelyn Davidheiser, and Susan Lehmann, The Presidential Election of 1996 (Washington, DC: The Brookings Institution, 1996). For Russian sources, see Monitoring obshchestvennogo mneniia: ekonomicheskie i sotsial’nye peremeny, which is a journal published by the Russian Center for Public Opinion six times a year. 34. Rossiia v tsfriakh (Moscow: Goskomstat, 2000), p. 199. 35. The sections below draw from Wegren, “Democratization and Urban Bias in Postcommunist Russia,” pp. 460–62. 36. Paul R. Gregory and Robert C. Stuart, Soviet Economic Structure and Performance, 3rd ed. (New York: Harper and Row, 1986), pp. 279–82. 37. See Stephen K. Wegren, Russia’s Food Policies and Globalization (Lanham, MD: Lexington Books, 2005), chap. 3. 38. For the relationship between farmgate prices and the consumer price index during 1992–2002, see ibid, table 3.3. 39. N. Rafikova, “Vliianie tsen na sebestoimost’ sel’skokhoziaistvennoi produktsii,” Ekonomist, no. 8 (August 1999), p. 91. 40. O. V. Turkevich, “O tsenovykh proportsiiakh v sveklosakharnom podkomplekse,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 10 (October 2000), p. 39; and V. Kukharenko, “Sovershenstvovanie bazy sel’skogo stroitel’stva,” Ekonomist, no. 11 (November 1998), p. 88. 41. Sel’skaia zhizn’, September 9, 1999, p. 3. 42. I. A. Glazunova and K. A. Vostrukhin, “O probleme dispariteta tsen mezhdu sel’skim khoziaistvom i drugimi otrasliami ekonomiki,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 11 (November 2000), p. 15. 43. Ibid., p. 14; and see Stephen K. Wegren, Vladimir R. Belen’kiy, and Valeri V. Patsiorkovski, “The Challenge of Rural Revival,” in Stephen K. Wegren, ed., Russian Policy Challenges: Security, Stability, and Development (Armonk, NY: M.E. Sharpe, 2003), p. 229, table 12.2. 44. Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), p. 116; and Krest’ianskie vedomosti, nos. 9–10 (March 1–15, 2001), p. 2. 45. See Sel’skoe khoziaistvo v Rossii, p. 120. 46. See Ed A. Hewett with Clifford Gaddy, Open for Business: Russia’s Return to the Global Economy (Washington, DC: The Brookings Institution, 1992). 47. Trade policies were influenced by pressure from international lending institutions for Russia to open its borders if it wanted financial assistance and entry into international organizations. 48. “World Trade: Fifty Years On,” The Economist (May 16, 1998), p. 22. 49. In January 2001, import tariffs on thousands of goods, both food and nonfood, were lowered in response to government instructions down to an average of 11–13. Officials at the Committee on State Customs complained that tariffs were being changed without any clear policy as to which producers the state wants to protect from foreign competition. See The Moscow Times, December 1, 2000, p. 1. 50. Interview, Sergei Kisilev, Moscow State University (May 17, 2004). 51. Calculated from data in FAO databases at: http://apps.fao.org 52. Wegren, Russia’s Food Policies and Globalization, chap. 5.

notes / 227 53. A. Zakhriapin, “Sovremennoe sostoianie agropromyshlennogo kompleksa,” Ekonomist, no. 1 ( January 2000), p. 86. 54. Bates, Markets and States in Tropical Africa, chap. 1. 55. Wegren, Russia’s Food Policies and Globalization, chap. 5. 56. Krest’ianskie vedomosti, no. 3 ( January 18–24, 1999), p. 1; data from FAS website http://www.fas.usda.gov. 57. Wegren, “Democratization and Urban Bias in Postcommunist Russia,” p. 463. 58. Krest’ianskie vedomosti, no. 42 (October 11–17, 1999), p. 1. 59. E. B. Kiseleva, “Tekushchaia situatsiia na miasnom rynke i perspektivy ego razvitiia,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 9 (September 1999), p. 52. 60. Narodnoe khoziaistvo SSSR za 70 let (Moscow: Goskomstat, 1987), p. 275. 61. A. Borisenko, “Strukturnaia politika i investitsionnaia deiatel’nost’ APK,” APK: ekonomika, upravlenie, no. 7 ( July 1997), p. 25. 62. Rossiiskii statisticheskii ezhegodnik 1997, p. 652; Rossiiskii statisticheskii ezhegodnik 1998, pp. 699–700; Rossiiskii statisticheskii ezhegodnik 1999, pp. 533–34; Rossiiskii statisticheskii ezhegodnik 2000, p. 547; Rossiiskii statisticheskii ezhegodnik 2003, p. 596. 63. Goskomstat data, reported in Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 7 (July 1999), p. 48. 64. See Marian Amelina, “Why Russian Peasants Remain in Collective Farms: A Household Perspective on Agricultural Restructuring,” Post-Soviet Geography and Economics, vol. 41, no. 7 (September 2000), pp. 483–511. 65. Anders Aslund, How Russia Became a Market Economy (Washington, DC: The Brookings Institution, 1995), p. 166. 66. Ibid., pp. 164–67. 67. “Broad” and “narrow” rural interest groups are analyzed and their activities discussed in Wegren, Russia’s Food Policies and Globalization, chap. 3. 68. Sel’skaia zhizn’, March 29, 1990, p. 2. 69. This step turned out to be an economic disaster, as it established state prices that were twice as high as those offered through newly formed commodity exchanges. The result was a virtual stoppage of grain trade through commodity exchanges. 70. For rural liberal views on several fundamental differences between the Agrarian Party, the Agrarian Union, and AKKOR, see Rossiiskii fermer, no. 23 ( June 13–19, 1995), p. 3. 71. Ibid., nos. 9–10 (March 14–20, 1995), pp. 3–4. 72. Quotes from APR party program in Zemlia i trud, no. 51 (December 20–26, 1994), pp. 3–4; and Programma Ustav Agrarnoi Partii Rossii (Moscow: APR, 1995), pp. 16–18. 73. When a new Land Code was finally adopted in October 2001 and signed into law by President Putin in November 2001, it omitted rural land transactions. Rural land turnover was so contentious that it was dealt with in a separate law, passed by the Duma in June 2002, which took effect in January 2003. For an analysis of the law on rural land transactions, see Stephen K. Wegren, “Observations on Russia’s New Agricultural Land Legislation,” Eurasian Geography and Economics, vol. 43, no. 8 (December 2002), pp. 651–60.

228 / notes 74. For an early discussion of these weaknesses, see Stephen K. Wegren, “Rural Politics and Agrarian Reform in Russia,” Problems of Post-Communism, vol. 43, no. 1 (January–February 1996), pp. 23–34; and Wegren, “Democratization and Urban Bias in Postcommunist Russia.” Some of the material in this section is drawn from those articles. 75. The literature is already vast on this point, but see M. Steven Fish, “The Executive Deception: Superpresidentialism and the Degradation of Russian Politics,” in Valeri Sperling, ed., Building the Russian State: Institutional Crisis and the Quest for Democratic Governance (Boulder, CO: Westview Press, 2000), pp. 177–92. 76. Even though the APR had representation in the State Duma (45 representatives in the State Duma from the December 1993 election and 20 from the December 1995 election, out of 450 seats), this representation did not necessarily convey much actual political power. 77. For a description of this farm privatization program and how it worked, see Wegren, Agriculture and the State, pp. 96–104. 78. In May 1999, the Duma passed a draft federal law on price parity, which President Yeltsin refused to sign into law. See Krest’ianskie vedomosti, no. 30 ( July 19–25, 1999), p. 2. 79. According to election data at the Carnegie Institute for Peace website: http://pubs.carnegie.ru/ 80. The APR (and conservatives in general) fare better in southern, agricultural regions, the so-called red belt of Russia. See John O’Loughlin, Michael Shin, and Paul Talbot, “Political Geographies and Cleavages in the Russian Parliamentary Elections,” Post-Soviet Geography and Economics, vol. 37, no. 6 ( June 1996), pp. 355–85. 81. For an overview of the political fortunes of the APR, see Stephen K. Wegren, “The Demise of the Agrarian Party in Russia,” RFE/RL Russian Political Weekly, vol. 3, no. 7 (November 27, 2003), available at www.rferl.org/ reports/ 82. In Russia, the risk of bankruptcy was considerably less under Yeltsin, although that policy appears to be changing under Putin. In 1998, e.g., the former head of the board of directors at SBS-Agro bank remarked that “it is hardly possible to declare bankruptcy for 30,000 farms at the same time.” Severnaia pravda, March 31, 1998, p. 4. Instead, the risk for farms has been loss of potential profit and an unknown future. The Putin administration (like those before it) has indicated that resources should flow to the most productive farms. See A. Gordeev, “Stabil’noe i dinamichnoe razvitie APK— pervostepennaia zadacha,” APK: ekonomika, upravlenie, no. 11 (November 2000), p. 9. The preference stated by Minister of Agriculture Gordeev is for insolvent farms to be absorbed by stronger, profitable agricultural enterprises. By mid-2004 there was some evidence of this occurring, often at the initiative of the governor or oblast administration. Interview, Allan Mustard, Minister-Counselor for Agriculture, U.S. Embassy in Moscow (May 12, 2004). 83. Zemfira Kalugina, “Adaptation Strategies of Agricultural Enterprises During Transformation,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, pp. 367–84.

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Chapter 3 How Peasants Adapt: Large Farms and Farm Managers 1. For financial trends on large farms during the first decade of reform, see A. I. Manellia and M. V. Goncharova, “O finansovom sostoianii kollektivnykh sel’skokhoziaistvennykh organizatsii za 1991–2001 gody,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 11 (November 2002), pp. 38–41. 2. Maria Amelina, “False Transformations: From Stalin’s Peasants to Yeltsin’s Collective Farmers,” Paper presented at Workshop on Rural Russia, Woodrow Wilson Center, Kennan Institute, Washington, DC, May 4–6, 1999; and Carol Scott Leonard, “Rational Resistance to Land Privatization: The Response of Rural Producers to Agrarian Reforms in Pre- and Post-Soviet Russia,” Post-Soviet Geography and Economics, vol. 41, no. 8 (November– December 2000), pp. 605–20. 3. On public urban support for privatization, see Lynn D. Nelson, Lilia V. Babaeva, and Rufat O. Babaev, “Perspectives on Entrepreneurship and Privatization in Russia: Policy and Public Opinion,” Slavic Review, vol. 51, no. 2 (Summer 1992), pp. 271–86; Arthur H. Miller, Vicki L. Hesli, and William M. Reisinger, “Reassessing Mass Support for Political and Economic Change in the Former Soviet Union,” American Political Science Review, vol. 88, no. 2 ( June 1994), pp. 399–411; and Matthew Wyman, Public Opinion in Postcommunist Russia (New York: St. Martin’s Press, 1997), chap. 7. Works that argue that privatization has little support include Jerry F. Hough, “The Russian Election of 1993: Public Attitudes Toward Economic Reform and Democratization,” Post-Soviet Affairs, vol. 10, no. 1 (1994), pp. 1–37; Jerry F. Hough, Evelyn Davidheiser, and Susan Goodrich Lehmann, The 1996 Russian Presidential Election (Washington, DC: The Brookings Institution, 1996); and Joan Debardeleben, “Attitudes Towards Privatization in Russia,” Europe-Asia Studies, vol. 51, no. 3 (1999), pp. 447–65. This list is representative and not exhaustive. 4. See e.g., Stephen K. Wegren, “Yeltsin’s Decree on Land Relations: Implications for Agrarian Reform,” Post-Soviet Geography, vol. 35, no. 3 (March 1994), pp. 166–78; Stephen K. Wegren, Agriculture and the State in Soviet and PostSoviet Russia (Pittsburgh: University of Pittsburgh Press, 1998), chaps. 3 and 5; Karen Brooks, et al., Agricultural Reform in Russia: A View from the Farm Level, World Bank Discussion Paper no. 327 (Washington, DC: The World Bank, 1994), chap. 2; and Zvi Lerman and Karen Brooks, “Russia’s Legal Framework for Land Reform and Farm Restructuring,” Problems of PostCommunism, vol. 43, no. 6 (November–December 1996), pp. 48–58. 5. See Marie Lavigne, The Economics of Transition: From Socialist Economy to Market Economy, 2nd ed. (New York: St. Martin’s Press, 1999), chap. 8. 6. Morris Bornstein, “Russia’s Mass Privatization Program,” Communist Economies and Economic Transformation, vol. 6, no. 4 (1994), pp. 419–57; and Aslund Anders, How Russia Became a Market Economy (Washington, DC: The Brookings Institution, 1995), chap. 7. 7. Jerry F. Hough, The Logic of Economic Reform in Russia (Washington, DC: The Brookings Institution, 2001), pp. 68, 92.

230 / notes 8. Leonard, “Rational Resistance to Land Privatization,” pp. 605–09. 9. Hough, The Logic of Economic Reform, p. 77. 10. Calculated from Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2000), p. 372. “Technical crops” include flax, sugar beets, soy, and sunflowers. 11. See Stephen K. Wegren, Russia’s Food Policies and Globalization (Lanham, MD: Lexington Books, 2005), chap. 1. 12. Wegren, Agriculture and the State, pp. 91–94. 13. The first of these laws, entitled the “Law on Peasant Farms,” was passed in November, which legalized private peasant farms and the hiring of labor. Also in November 1990, the RSFSR “Law on Land Reform” was adopted that ended the state monopoly on land and allowed for the transfer of land to individuals. See article 2 of the draft law, “On Land Reform,” Severnaia Pravda, November 15, 1990, p. 2. In December 1990, Yeltsin signed a law “On the Social Development of the Countryside” that guaranteed “all forms of farming have the equal right to organize production,” thereby explicitly putting private farming on an equal footing with state and collective farming. Section 1, article 2, “O sotsial’nom razvitii sela,” Eknomika i zhizn’, no. 4 ( January 1991), p. 19. 14. The decree was entitled “On Urgent Measures for the Implementation of Land Reform in the RSFSR,” Rossiiskiia gazeta, December 31, 1991, p. 3. For a description of the process for land distribution, see Stephen K. Wegren, “Political Institutions and Agrarian Reform in Russia,” in Don Van Atta, ed., The ‘Farmer Threat’: The Political Economy of Agrarian Reform in Post-Soviet Russia (Boulder, CO: Westview Press, 1993), p. 125. 15. In some regions, farm reorganization and division of land and property began even before Yeltsin’s December decree. An account of how a collective farm in Krasnogvardeiskii raion (Belgorod oblast) reorganized and divided shares is found in Znamia truda, April 9, 1991, p. 3. In September 1992, a government resolution equalized land shares for all recipients, and extended the list of those eligible for land shares to include nonproduction personnel such as service personnel, teachers, and medical staff who worked for the farm. See Wegren, Agriculture and the State, p. 175. 16. The name of the resolution was “On the Procedure for the Reorganization of Collective and State Farms,” Zemlia i liudi, no. 2 ( January 10, 1992), pp. 1, 3. 17. Some analysts are disingenuous when they imply that reorganization was intended to directly change the nature of farm operations. In reality, farm reorganization had two purposes. Politically, the intent was to “democratize” large farms by making farm managers accountable to their membership. In the Soviet period, managers had been appointed from above. In the postSoviet period, farm managers are elected in competitive farm elections and can be removed for poor performance. Thus, reorganization was a means to improve farm management. Although nationwide data are not available and regional results vary, the best estimates I have seen are that about one-third of previous farm managers were replaced during reorganization. Another political goal was to make farm members share holders in the farm by distributing land and property shares. Economically, farm reorganization was

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18. 19. 20. 21. 22. 23. 24. 25. 26.

27. 28. 29.

30.

31. 32. 33.

34. 35. 36.

intended to facilitate the farms’ responsiveness to economic signals such as supply and demand, and prices. Znamia truda, April 4, 1992, p. 2. Zemlia i liudi, no. 2 ( January 10, 1992), pp. 1, 3. Wegren, Agriculture and the State, pp. 71–77 for details about farm reorganization; and pp. 152–75 for details about land distribution. Brooks, et al., Agricultural Reform in Russia, pp. 33–34. Ibid., p. 82. For more detail, see ibid., pp. 69–73. The resolution was entitled “On the Course and Development of Agrarian Reform in the Russian Federation,” Krest’ianskie vedomosti, no. 14 (March 31– April 6, 1992), p. 6. The decree was entitled “On the Regulation of Land Relations and the Development of Agrarian Reform in Russia.” For an analysis, see Wegren, “Yeltsin’s Decree on Land Relations,” pp. 166–78. The certificate was based upon share sizes that had been previously established during farm reorganization. That is, property shares were based upon length of service to the farm and amount of work performed, and land shares were equal in size for all members of the farm. The October 1993 decree also established the right to mortgage land if it is held in private ownership. For more detail, see Wegren, Agriculture and the State, pp. 94–106. Resolution 874 from July 27, 1994, “On Reorganization of Agricultural Enterprises Based on the Experience of Nizhniy Novgorod Province,” in International Finance Corporation, Land Privatization and Farm Reorganization in Russia: Annexes (Washington, DC: IFC, 1995), pp. 43–56. For more on this institutional type of change, see Valeri V. Patsiorkovski, “Rural Household Behavior, 1991–2001,” in David J. O’Brien and Stephen K. Wegren, eds., Rural Reform in Post-Soviet Russia (Washington, DC: Woodrow Wilson Center Press/Johns Hopkins University Press, 2002), chap. 5. Trud i zaniatost’ v Rossii (Moscow: Goskomstat, 2001), p. 61. Agropromyshlennyi kompleks Rossii (Moscow: Goskomstat, 2001), p. 13. Susan J. Linz and Gary Krueger, “Russia’s Managers in Transition: Pilferers or Paladins? Post-Soviet Geography and Economics, vol. 37, no. 7 (September 1996), pp. 397–425; and Susan J. Linz, “Red Executives in Russia’s Transition Economy,” Post-Soviet Geography and Economics, vol. 37, no. 10 (December 1996), pp. 633–51. Linda J. Cook and Vladimir E. Gimpelson, “Exit and Voice in Russian Managers’ Privatization Strategies,” Communist Economics and Economic Transformation, vol. 7, no. 4 (December 1995), pp. 465–83. See Gavin Kitching, “The Development of Agrarian Capitalism in Russia 1991–97: Some Observations from Fieldwork,” The Journal of Peasant Studies, vol. 25, no. 2 (April 1998), pp. 11–13. Don Van Atta, ed., The ‘Farmer Threat’, pp. 2–3.

232 / notes 37. Roy L. Prosterman, “Russian Agrarian Reform: A Status Report from the Field,” Communist Economies and Economic Transformation, vol. 7, no. 2 ( June 1995), p. 185. 38. Andrew Barnes, “What’s the Difference? Industrial Privatization and Agricultural Land Reform in Russia, 1990–1996,” Europe-Asia Studies, vol. 50, no. 5 (1998), p. 853. 39. Labor brigades are a continuation of Soviet labor organization and essentially represent the division of labor on a farm, with different tasks assigned to different brigades, separated by skill, difficulty, and remuneration. 40. Don Van Atta, “Agrarian Reform in Post-Soviet Russia,” Post-Soviet Affairs, vol. 10, no. 2 (1994), pp. 159–90; and David Sedik, Christian Foster, and William Liefert, “Economic Reforms and Agriculture in the Russian Federation, 1992–1995,” Communist Economies and Economic Transformation, vol. 8, no. 2 (1996), pp. 133–48. 41. The survey reported that 85% of farm managers supported allocation of land for private farming, but 65% felt that the land should be in lifetime use or long-term lease, and only 20% supported private ownership of land for private farmers. The same survey found that 40% of managers supported the right to own household plots. Brooks, Agricultural Reform in Russia, pp. 33–34. 42. See Cynthia S. Kaplan, The Party and Agricultural Crisis Management in the USSR (Ithaca: Cornell University Press, 1987). 43. See International Finance Corporation (IFC), Monitoring Russian Reorganized Farms: An Integrated Analysis of Economic and Social Change in Nizhny Novgorod, Oryol, and Other Oblasts, Results of 1997 Studies (unpublished document, 1998). 44. For an excellent insight from personal experience into how farms operated, see Andrei Amalrik, Involuntary Journey to Siberia (New York: Harcourt Brace Jovanovich, 1970), esp. chaps. 12–15. 45. Peter Rutland, The Politics of Economic Stagnation in the Soviet Union: The Role of Local Party Organs in Economic Management (Cambridge: Cambridge University Press, 1993), p. 144. 46. See Karl-Eugen Wadekin, “Agriculture,” in Martin McCauley, ed., The Soviet Union Under Gorbachev (New York: St. Martin’s Press, 1987), chap. 6. 47. See Max Spoor and Oane Visser, “Restructuring Postponed? Large Russian Farm Enterprises ‘Coping with the Market,’ ” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 515–51. 48. Reorganizatsiia kolkhozov i sovkhozov Rossiiskoi Federatsii po sostoianiiu na 1.07.1992g (Moscow: Goskomstat, 1992), p. 2. 49. Reorganizatsiia kolkhozov i sovkhozov Rossiiskoi Federatsii po sostoianiiu na 1.07.1993g (Moscow: Goskomstat, 1993), p. 1. 50. Znamia truda, February 6, 1992, p. 1. 51. Ibid., March 17, 1992, p. 1. 52. Ibid., May 23, 1992, p. 1. 53. Ibid., October 6, 1992, p. 3. 54. Toshihiko Kawagoe, “Deregulation and Protectionism in Japanese Agriculture,” in Juro Terahishi and Yutaka Kosai, eds., The Japanese

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55. 56. 57. 58. 59. 60. 61. 62. 63. 64.

65.

66.

67. 68. 69. 70. 71.

Experience of Economic Reforms (London: St. Martin’s Press, 1993), pp. 371–72. S. Seshaiah, Land Reform and Social Change in a Japanese Village (Bangalore: Shiny Publications, 1980) pp. 104–05. Ibid., 109. Sidney Klein, The Pattern of Land Tenure Reform in East Asia After World War II (New York: Bookman Associates 1958), p. 36. R. P. Dore, Land Reform in Japan (London: Oxford University Press, 1959), p. 198. Wegren, Agriculture and the State, chap. 3. Krest’ianskaia Rossiia, April 3, 1992, p. 1. Ibid., May 23, 1992, p. 1. Private farm data from Goskomstat. Amelina, “False Transformations,” p. 2. Soviet farms were inefficient in large part due to irrational price structures that rewarded uneconomic behaviors. It is true that by the late 1990s large farms were even less efficient (measured in terms of output per unit) than the notoriously inefficient Soviet farms had been. However, the reasons are different, and large farms are not entirely to blame. Given the collapse of rural infrastructure, the deterioration of production and social conditions on farms, increasing farm unprofitability, and the lack of investment capital, this result is hardly surprising. Maria Amelina, “Rural Interactions in the Post-Soviet Era,” in L. Alexander Norsworthy, ed., Russian Views of the Transition in the Rural Sector: Structures, Policy Outcomes, and Adaptive Responses (Washington, DC: The World Bank, 2000), p. 21. Starting in 1993, large farms still had to sell certain percentages of output to federal and regional “food funds” at state-defined prices, but these deliveries were no longer termed “obligatory” and the quantity was reduced from previous levels. Nonetheless, it was clear that large farms were required to sign “contracts” for the delivery of food, so in essence contracts replaced state orders. See Stephen K. Wegren, “From Farm to Table: The Food System in Post-Communist Russia,” Communist Economies and Economic Transformation, vol. 8, no. 2 (1996), pp. 149–83. Hough, The Logic of Economic Reform, p. 91. Ibid., chap. 3, esp. pp. 62–63. Znamia truda, March 3, 1992, p. 2. This farm subsequently became the joint stock farm “Verkhososenskoe.” See V. D. Smirnov, Fermerstvo v Rossii—chto eto takoe (Novosibirsk: Russian Academy of Sciences, 2003), p. 39. The number of large enterprises increased from 26,600 at the beginning of 1992 to 27,600 at the beginning of 2000, respectively. Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2001), p. 402. The growth in the number of large agricultural enterprise is due to successful reorganization and privatization, in which previous state and collective farms were divided into several smaller farming enterprises managed by a family or group of families.

234 / notes 72. IFC, Monitoring Russian Reorganized Farms, pp. 30–31. Studying large farms in Leningrad oblast, one Russian academic found that the largest farms— those with more than 500 members—were more efficient than farms with fewer farm members, specifically, less than 200 members. David Epstein, “The Financial Crisis of Russian Agricultural Enterprises and Ways of Overcoming It,” Unpublished paper, 2001. 73. For example, during 1998–2002 Russia received the highest levels of foreign investment in the post-Soviet period, an average of US$13.2 billion. In comparison with Russia, in 2000, total direct foreign investment was more than $100 billion in the Czech Republic, Poland, and Hungary. The Economist, July 21–27, 2001, special insert on “Putin’s Choice: A Survey of Russia.” Direct investment that did go into Russian agriculture flowed into food processing. The food processing branch received an average of 12% of all foreign investment during 1998–2002, although it should be noted that during 2001 and 2002, the percentage was declining from its high achieved in 2000. Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2003), p. 604. Among the most popular sectors of direct foreign investment is poultry processing. See The Moscow Times, July 27, 2001, p. 5. In contrast, domestic investment in food processing plants during the Putin years has increased substantially. In the butter-processing sector alone, annual domestic investments reach 250 million dollars according to experts’ estimates. V. Kaishev and S. Seregin, “Pishchevaia promyshlennost’ v 2003g: itogi, perspektiva,” Ekonomist, no. 6 (June 2004), p. 79. 74. See S. D. Valentei, ed., Problemy sel’skokhoziaistvennogo kredita (Moscow: Russian Academy of Science, Institute of Economics, 1998), pp. 52–62. 75. For an analysis of survival strategies of large farms, see David Epstein and Peter Tillack, “How Russian Agricultural Enterprises are Surviving,” Eastern European Economics, vol. 37, no. 5 (September–October 1999), pp. 52–91. 76. IFC, Monitoring Russian Reorganized Farms, p. 27; Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’no-ekonomicheskii analiz (1994–1997 gg.), p. 112. 77. Epstein and Tillack, “How Russian Agricultural Enterprises are Surviving,” p. 69. 78. A. V. Petrikov, “Krupnye sel’skokhoziaistvennye predpriiatiia—natsional’noe dostoianie Rossii,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 5 (May 2001), p. 7. 79. Interestingly, surveys in some parts of Russia have shown that financially stronger farms are more likely to try to protect farm workers and the weakest farms have shed the most labor. V. Ia. Uzun, ed., Sotsial’no-ekonomicheskii analiz rezul’tatov reorganizatsii sel’skokhoziaistvennykh predpriiatii (Moscow: Entsiklopediia rossiiskii dereven,’ 1999), pp. 61, 65; and Zemfira I. Kalugina, “Survival Strategies of Enterprises and Families in the Contemporary Russian Countryside,” Paper presented at Workshop on Rural Russia, Woodrow Wilson Center, Kennan Institute, Washington, DC, May 4–6, 1999. This finding was supported by findings in other regions as well. See Stephen K. Wegren, “Socioeconomic Transformation in Russia: Where

notes / 235

80. 81. 82. 83.

84. 85. 86. 87. 88. 89. 90. 91.

92. 93.

is the Rural Elite?” Europe-Asia Studies, vol. 52, no. 2 (2000), pp. 237–71; and V. Ia. Uzun, “Privatization of Land and Farm Restructuring: Ideas, Mechanisms, Results, Problems,” in Farm Profitability, Sustainability, and Restructuring in Russia (Moscow: Institute for Economy in Transition Analytical Center, 1999), pp. 42–46. Such “paternal” protective behaviors have been observed in industry as well. A. Gordeev, “Stabil’noe i dinamichnoe razvitie APK—pervostepennaia zadacha,” APK: ekonomika, upravlenie, no. 11 (November 2000), p. 9. Krest’ianskie vedomosti, nos. 9–10 (March 1–15, 2001), p. 2. Information from Allan Mustard, counselor-minister, Foreign Agricultural Service, US Embassy in Moscow, May 17, 2004. For privatized and non-privatized farms, members of strong farms comprised 33% of the sample, average farms 33%, and weak farms 34%. Strong, average, and weak are based on a farm’s gross income and labor productivity per worker, expressed in denominated rubles. In total, 782 workers on privatized farms and 635 workers on farms that did not privatize were surveyed. Uzun, ed., Sotsial’no-ekonomicheskii analiz rezul’tatov reorganizatsii sel’skokhoziaistvennykh predpriiatii, pp. 183–84. Ibid., p. 64. Hough, The Logic of Economic Reform, p. 111. In contrast, northern farms benefited from state protectionism. Cited in Stephen K. Wegren, “New Perspectives on Spatial Patterns of Agrarian Reform: A Comparison of Two Russian Oblasts,” Post-Soviet Geography, vol. 35, no. 8 (October 1994), p. 464. Ibid., p. 465. A. I. Debiatkin, “Reorganizatsiia sel’skokhoziaistvennykh predpriiatiy v raione,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 11 (November 2000), p. 19. Sedik, Foster, and Liefert, “Economic Reforms and Agriculture in the Russian Federation, 1992–1995,” pp. 133–48. Agropromyshlennyi kompleks Rossii (Moscow: Ministry of Agriculture and Food, 2000), pp. 465–66, 475–78, 481–82. In the contemporary period, the decline in animal herds experienced on large farms was offset somewhat by increases in animal herds on private farms and households. See Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), p. 69; and Osnovnye pokazateli agropromyshlennogo kompleksa Rossiiskoi Federatsii (Moscow: Goskomstat, 2000), p. 36. See Wegren, Russia’s Food Policies and Globalization, chap. 4. On this point there is little disagreement among analysts. See Stephen K. Wegren, “Change in Russian Agrarian Reform, 1992–1998: The Case of Kostroma Oblast,” in Kurt Engleman, ed., Agricultural Development in Central Asia, Russia, and the Middle East (Seattle: University of Washington Press, 2001); Kitching, “The Development of Agrarian Capitalism in Russia 1991–97: Some Observations from Fieldwork”; Epstein and Tillack, “How Russian Agricultural Enterprises are Surviving”; and Sedik, Foster, and Liefert, “Economic Reforms and Agriculture, 1992–95.”

236 / notes 94. The “state” refers to federal and regional food funds that issue licenses to act as state procurement agents for the purchase of food. State needs for food include food for schools, hospitals, the military, and reserves. 95. Rossiiskii statisticheskii ezhegodnik (2003), p. 407. 96. See Wegren, Russia’s Food Policies and Globalization, chap. 4. 97. M. P. Kozlov, “Preprinimatel’skaia deiatel’nost’ sel’skokhoziaistvennykh tovaroproizvoditelei v sovremennykh usloviiakh,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 2 (February 1998), p. 48. 98. For example, the director of the state farm “50 let SSSR” (Kostroma oblast), Nikolai Egorov, noted that his farm already processed its own cheese and butter for sale and planned to buy equipment, in the near future, in order to produce milk in small cardboard containers. Interview, July 31, 1998. 99. See Grigory Ioffe and Tatyana Nefedova, “Russian Agriculture and Food Processing: Vertical Cooperation and Spatial Dynamics,” Europe-Asia Studies, vol. 53, no. 3 (2001), pp. 389–418. For more on processors searching for partnerships with farms in Novosibirsk, see also Sel’skaia zhizn’, December 21–27, 2000, p. 3. 100. Spoor and Visser, “Restructuring Postponed?” 101. The methodology and scope of the survey is described in Stephen K. Wegren, David J. O’Brien, and Valeri V. Patsiorkovski, “Winners and Losers in Russian Agrarian Reform,” The Journal of Peasant Studies, vol. 30, no. 1 (October 2002), pp. 1–29. 102. See Epstein and Tillack, “How Russian Agricultural Enterprises are Surviving,” for further strategies of how farm managers are trying to meet these requirements. 103. Sel’skaia zhizn’, August 5, 1997, p. 2. 104. IFC, Monitoring Russian Reorganized Farms, pp. 30–31. 105. See R. V. Ryvkina and L. Ia. Kosals, eds., Sotsial’nye posledstviia rynochnykh reform v Rossii (Moscow: Institute for Socio-Economic Studies of the Population, 1997), p. 229. 106. The literature on this point is already vast, for examples see Richard Rose and Ellen Carnaghan, “Generational Effects on Attitudes to Communist Regimes: A Comparative Analysis,” Post-Soviet Affairs, vol. 11, no. 1 (1995), pp. 28–56; Timothy J. Colton, Transitional Citizens: Voters and What Influences Them in the New Russia (Cambridge: Harvard University Press, 2000); and Yitzhak M. Brudny, “Continuity or Change in Russia Electoral Patterns? The December 1999–March 2000 Election Cycle,” in Archie Brown, ed., Contemporary Russian Politics (Oxford: Oxford University Press, 2001), pp. 154–78. 107. Kitching, “The Development of Agrarian Capitalism in Russia, 1991–97: Some Observations from Fieldwork,” at pp. 11–14; Ioffe and Nefedova, “Russian Agriculture and Food Processing: Vertical Cooperation and Spatial Dynamics,” pp. 389–418; and Wegren, “Change in Russian Agrarian Reform, 1992–1998: The Case of Kostroma Oblast.” 108. Monitoring obshchestvennogo mneniia: ekonomicheskie i sotsial’nye peremeny, no. 3 (May–June 1994), p. 74.

notes / 237 109. IFC, Monitoring Russian Reorganized Farms, p. 45. The survey encompassed 21 large agricultural enterprises in Orel’ oblast and 24 large agricultural enterprises in Nizhnii Novgorod oblast. The total sample consisted of 4,508 persons interviewed. 110. V. Ia. Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’noekonomicheskii analiz (1994–1997 gg.) (Moscow: Znak, 1998), p. 107. 111. The survey was divided into three groups of respondents: one-third were officials in regional and federal government, one-third were managers in agricultural and processing enterprises, and one-third were scientists, academics, consultants, and the media. 112. E. Serova, “Obshchestvennoe mnenie o Rossiiskoi agrarnoi reforme,” Voprosy ekonomiki, no. 7 ( July 2000), p. 24. 113. Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’noekonomicheskii analiz, pp. 104–108. 114. Ibid., p. 105; IFC, Monitoring Russian Reorganized Farms, p. 45. 115. See IFC, Land Privatization and Farm Reorganization in Russia (Washington, DC: IFC, 1995), in particular pp. 34–42. 116. Lapshin was replaced as chairman of the Agrarian Party in May 2004 at the Party’s 12 Congress. See Rossiiskaia zemlia, nos. 17–18 (May 2004). 117. Sel’skaia zhizn’, January 25–31, 2001, p. 3. 118. Reorganizatsiia kolkhozov i sovkhozov Rossiiskoi Federatsii (Moscow: Goskomstat, 1994), p. 1. 119. Barnes, “What’s the Difference? Industrial Privatization and Agricultural Land Reform in Russia,” p. 853. 120. One could extend the argument further by noting that in Volgograd only 23% of state and collective farms retained their status during farm reorganization. In comparison, the corresponding figure for Russia as a whole was 34%, and even more pertinent, 46% for other oblasts located in the Volga economic region. Reorganizatsiia kolkhozov i sovkhozov Rossiiskoi Federatsii, p. 2. 121. The two most productive agricultural regions in Russia are the Volga region and Northern Caucasus region. On January 1, 1992, these two regions contained 15,066 private farms, or 31% of the total number of private farms in Russia. By October 1994, when the major spurt in farm growth peaked, these two regions had 105,224 private farms, or 39% of the total number of private farms in Russia. Thereafter, the growth rate in the number of private farms slowed and even declined nationwide, but the percentage of private farms in these two regions continued to increase, reaching 119,408 private farms, or 44% of the total number of private farms in Russia, in January 1999. 122. IFC, Monitoring Russian Reorganized Farms, pp. 30–31. 123. Interview, farm manager in Rostov oblast, July 1993. 124. Data from 2001 survey. Specific percentages are available from the author upon request. 125. Possible responses included: absolute loser, loser, neither winner nor loser, winner, and absolute winner. Thirty-four percent of farm managers

238 / notes

126. 127.

128. 129. 130. 131. 132. 133. 134. 135. 136. 137.

138. 139. 140.

answered they were winners or absolute winners, second only to private farmers, 80 % of whom responded they were winners or absolute winners. 2001 survey data. L. V. Bondarenko, “Dokhody i potreblenie v sel’skom khoziaistve,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 11 (November 2000), p. 38. On collective farms, farm workers were divided into brigades. Brigades had a leader who was personally responsible for the work of his brigade, and consequently the brigade leader had the highest wage rate. Within brigades labor organization was further subdivided into “links” (zvena). Links were therefore smaller work units, with direct responsibility for the results of their work. In general, links were organized into manual and mechanized labor, depending on the nature of the work performed, and thus brigades were remunerated at different wage rates. 2001 survey data. Ibid. See Stephen K. Wegren, “Socioeconomic Transformation in Russia,” p. 247. Itogi proizvodstvenno-finansovoi deiatel’nost’ kolkhozov Kostromskoi oblasti (Kostroma, Goskomstat, 1991), pp. 14–15. Itogi proizvodstvenno-finansovoi deiatel’nost’ sovkhozov Kostromskoi oblasti (Kostroma, Goskomstat, 1991), pp. 15–16. N. M. Rimashevskaia, ed., Rossiia 1997: sotsial’no-demograficheskaia situatsiia (Moscow: Institute of Socio-economic Problems of the Population, 1998), pp. 232–33. Data provided by David Epstein, department head of Regional Agricultural Policy at the Northwest Institute for Agricultural Economics, St. Petersburg. 2001 survey data. This is not a typical situation nationwide and likely results from managerial incomes in Novgorod, a poor agricultural region, which statistically drags down mean managerial incomes. The data confirm established national trends that document changes in sources of household income, with salaries becoming relatively less important, supplanted by sales of produce and entrepreneurial activities. See Wegren, O’Brien, and Patsiorkovski, “Winners and Losers in Russian Agrarian Reform,” at p. 19. Bondarenko, “Dokhody i potreblenie v sel’skom khoziaistve,” p. 38. There may be an age bias in the sample, as the data also show that 16 percent of farm managers’ income on non-reorganized farms comes from pensions, which would in part also explain the higher percentage from private plots. Only 4% of farm managers’ income comes from pensions on reorganized farms according to the sample. See V. Ia. Uzun, ed., Sotsial’noekonomicheskie posledstviia privatizatsii zemli i reorganizatsii sel’skokhoziaistvennykh predpriiatii (1994–1996 gg.). (Moscow: Entsiklopediia rossiiskii dereven, 1997), p. 84.

notes / 239 141. Experts are defined as persons in local government with expertise, farm managers and specialists, and academics with agricultural expertise. 142. Serova, “Obshchestvennoe mnenie o Rossiiskoi agrarnoi reforme,” p. 22. The same survey also found that 84% of farm managers and farm specialists believed that real land reform had not occurred, which raises the logical question of why farm managers would resist a reform process that was not occurring. “Obshchestvennoe mnenie o Rossiiskoi agrarnoi reforme,” p. 23. 143. Ibid., p. 22. The survey does not take into consideration age and regional differences in the responses. 144. I thank Vladimir R. Belen’kiy for making these data available to me. 145. Restricted ownership was understood to refer to limitations of disposal, i.e., changing land use upon transfer of ownership and selling to any buyer. 146. It is interesting to note that when the Land Code was finally adopted in 2001, it left out provisions on the rural land market because disagreement continued. In 2002, a different law regulated rural land sales, and Russia did not end up with a free (unrestricted) land market. For an analysis of the 2002 law, see Stephen K. Wegren, “Observations on Russia’s New Agricultural Land Legislation,” Eurasian Geography and Economics, vol. 43, no. 8 (December 2002), pp. 651–60. 147. The data are presented in table 4.8 in Stephen K. Wegren and Vladimir R. Belen’kiy, “Change in Land Relations: The Russian Land Market,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, p. 106. 148. Stephen K. Wegren, “Why Rural Russians Participate in the Land Market: Socio-economic factors,” Post-Communist Economies, vol. 15, no. 4 (December 2003), pp. 483–501. 149. Ibid., p. 495. 150. IFC, Monitoring Russian Reorganized Farms, p. 67. 151. Ibid., pp. 32–35. And see Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’no-ekonomicheskii analiz, pp. 64–94. 152. Serova, “Obshchestvennoe mnenie o Rossiiskoi agrarnoi reforme,” p. 29. 153. Ryvkina and Kosals, eds., Sotsial’nye posledstviia rynochnykh reform v Rossii, p. 232. 154. These policies include an increase in domestic market share through trade protection, adequate levels of subsidies and access to production credits, policies that promote food exports, affordable farm inputs, and agricultural prices that cover production costs. None of these desires differ significantly from farmers’ wants in European Union nations, where agricultural production is much more heavily subsidized. 155. Serova, “Obshchestvennoe mnenie o Rossiiskoi agrarnoi reforme,” p. 28. 156. Ryvkina and Kosals, eds., Sotsial’nye posledstviia rynochnykh reform v Rossii, p. 232. 157. M. P. Kozlov, “O putiakh vykhoda agrarnogo sektora Rossii iz finansovogo krizisa,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 2 (February 2001), pp. 17–19. 158. See Leonard, “Rational Resistance to Land Privatization,” who implies that any decision not to become a private farmer was irrational.

240 / notes

Chapter 4 How Peasants Adapt: Rural Households 1. For purposes of this chapter, rural households are defined to include, but are not limited to, households of persons employed on large agricultural enterprises. Of secondary importance, but also included, are pensioners and persons not connected to a large agricultural enterprise but who work in the countryside, such as teachers and other providers of social services. Private farmers, the new class of independent entrepreneurs, are considered only tangentially in the analysis, because it is obvious that they constitute a cohort that responded to reform opportunities the most. However, it should be noted that private farming households are included in the analysis of NCEEER survey data. 2. For data on sources and uses of rural household income, see Statisticheskii biulleten’, no. 1 (March 1999); ibid, no. 1 (January 2000); David J. O’Brien, Valeri V. Patsiorkovski, and Larry D. Dershem, Household Capital and the Agrarian Problem in Russia (Aldershot: Ashgate, 2000), chap. 8; Dokhody, raskhody, i potreblenie domashnikh khoziaistv v III–IV kvartalakh 2000 goda (Moscow: Goskomstat, 2001); Dokhody, raskhody, i potreblenie domashnikh khoziaistv v I–IV kvartalakh 2001 goda (Moscow: Goskomstat, 2002); Dokhody, raskhody, i potreblenie domashnikh khoziaistv v 2002 godu (Moscow: Goskomstat, 2003); and David J. O’ Brien, Stephen K. Wegren, and Valeri V. Patsiorkokvski, “Contemporary Rural Responses to Reform from Above,” The Russian Review, vol. 63, no. 2 (April 2004), pp. 256–76. 3. Gregory Ioffe and Tatyana Nefedova, Continuity and Change in Rural Russia: A Geographical Perspective (Boulder: Westview Press, 1997), chap. 12. 4. Although influential, the moral economy argument is controversial. For an alternative view, see Robert H. Bates, “Lessons from History, or the Perfidy of English Exceptionalism and the Significance of Historical France,” World Politics, vol. XL, no. 4 ( July 1988), pp. 499–516; Thomas Clay Arnold, “Rethinking Moral Economy,” American Political Science Review, vol. 95, no. 1 (March 2001), pp. 85–95. 5. See Eric R. Wolf, “Peasant Rebellion and Revolution,” in Jack A. Goldstone, ed., Revolutions: Theoretical, Comparative, and Historical Studies (New York: Harcourt Brace Jovanovich, 1986), chap. 5; and James C. Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia (New Haven: Yale University Press, 1976). 6. See William James Booth, “On the Idea of the Moral Economy,” American Political Science Review, vol. 88, no. 3 (September 1994), pp. 653–67. 7. James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven: Yale University Press, 1985); and Forrest D. Colburn, ed., Everyday Forms of Peasant Resistance (New York: M. E. Sharpe, 1989). 8. See Karen Brooks, et al., Agricultural Reform in Russia: A View from the Farm Level, World Bank Discussion Paper no. 327 (Washington, DC: The World Bank, 1996); and Maria Amelina, “False Transformations: From Stalin’s Peasants to Yeltsin’s Collective Farmers,” Paper presented at Workshop on Rural Russia, Woodrow Wilson Center, Kennan Institute, Washington, DC (May 4–6, 1999). 9. The most explicit treatment of the survival versus adaptation question is in Stephen K. Wegren, “Rural Adaptation in Russia: Who Responds and How

notes / 241

10.

11. 12.

13.

14. 15. 16. 17. 18. 19. 20. 21.

22. 23.

Do We Measure It,” Journal of Agrarian Change, vol. 4, no. 4 (October 2004), pp. 553–78; this issue is also discussed in David J. O’Brien and Stephen K. Wegren, eds., Rural Reform in Post-Soviet Russia (Washington, DC and Baltimore, MD: Woodrow Wilson Center Press and Johns Hopkins University Press, 2002), especially in part I. A variation of this thesis was postulated by Raymond Duch, though not exactly in the terms stated here. See Raymond M. Duch, “Tolerating Economic Reform: Popular Support for Transition to a Free Market in the Former Soviet Union,” American Political Science Review, vol. 87, no. 3 (September 1993), pp. 590–608. Jerry F. Hough, Evelyn Davidheiser, and Susan Goodrich Lehmann, The 1996 Russian Presidential Election (Washington, DC: The Brookings Institution, 1996), p. 7. Carol Scott Leonard, “Rational Resistance to Land Privatization: The Response of Rural Producers to Agrarian Reforms in Pre- and Post-Soviet Russia,” Post-Soviet Geography and Economics, vol. 41, no. 8 (November– December 2000), pp. 605–06. Jerry F. Hough, “The Russian Election of 1993: Public Attitudes Toward Economic Reform and Democratization,” Post-Soviet Affairs, vol. 10, no. 1 (1994), p. 6. For an extended discussion of the problems with the neoliberal model of reform in Russia, see Jerry F. Hough, The Logic of Economic Reform in Russia (Washington, DC: The Brookings Institution, 2001), chap. 1, particularly pp. 4, 8, 12. Joan Debardeleben, “Attitudes Towards Privatization in Russia,” Europe-Asia Studies, vol. 51, no. 3 (1999), p. 462. The survey data supporting this summary conclusion are drawn from questions in various issues of Ekonomicheskie i sotsial’nye peremeny: monitoring obshchestvennogo mneniia. The survey data supporting this summary conclusion are drawn from questions in various issues of Ekonomicheskie i sotsial’nye peremeny: monitoring obshchestvennogo mneniia. Ekonomicheskie i sotsial’nye peremeny: monitoring obshchestvennogo mneniia, no. 1 (January–February 2000), pp. 76–78. Ibid., no. 2 (March–April 2000), p. 91. Hough, Davidheiser, and Lehmann, The 1996 Russian Presidential Election, table 2.1 on p. 16. See Margaret Paxson, “The Cultural Dimension: Social Organization and the Metaphysics of Exchange,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, chap. 6. Alfred B. Evans, Jr. “The Decline of Rural Living Standards in Russia during the 1990s,” Journal of Communist Studies and Transition Politics, vol. 12, no. 3 (September 1996), pp. 293–314; and Stephen K. Wegren, “The Rise, Fall, and Transformation of the Rural Social Contract,” Communist and Post-Communist Studies, vol. 36, no. 1 (March 2003), pp. 1–27. Personal interview (August 7, 1997). One aspect that supports her contention is food consumption. A survey by Goskomstat of Russian households in 1996 showed that both urban and rural food consumption per capita declined from 1991 to 1996. However,

242 / notes

24. 25. 26.

27. 28. 29. 30. 31.

32. 33. 34. 35.

urban consumption fell more. In 1991, rural food consumption per capita was 18% higher in caloric intake than for an urban dweller, 16% higher in protein, 5% higher in fat, and 25% higher in carbohydrates. By 1996, rural consumption had increased as a ratio to urban consumption: 28% higher in calories, 28% higher in protein, 21% higher in fat, and 31% higher in carbohydrates. L. V. Bondarenko, “Tendentsii v potreblenii sel’skogo naseleniia,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 3 (March 1998), p. 39. Because rural incomes have fallen in real terms since 1991, these data reflect the reality that rural families have seized the opportunity to expand private plot production and therefore have benefited from liberalized policies toward private plots and other small food producing plots owned and operated by the population. On declines in rural living conditions, see Stephen K. Wegren and Frank A. Durgin, “Why Agrarian Reform is Failing,” Transition, vol. 1, no. 19 (October 20, 1995), pp. 50–55. Narodnoe khoziaistvo Rossiiskoi Federatsii. 1992 (Moscow: Goskomstat, 1992), pp. 405, 408. Author’s calculations based on data in Trud i zaniatost’ v Rossii (Moscow: Goskomstat, 1999), p. 309; Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2000), p. 155; and Trud i zaniatost’ v Rossii (Moscow: Goskomstat, 2001), p. 358. Trud i zaniatost’ v Rossii (1999), p. 309; Rossiiskii statisticheskii ezhegodnik (2000), p. 155; and Trud i zaniatost’ v Rossii (2001), p. 358. Trud i zaniatost’ v Rossii (2001), p. 358. David Epstein and Peter Tillack, “How Russian Agricultural Enterprises are Surviving,” Eastern European Economics, vol. 37, no. 5 (September–October 1999), p. 82. Trud i zaniatost’ v Rossii (1999), p. 296; and ibid. (2001), p. 325. See N. M. Rimashevskaia, ed., Rossiia 1997: sotsial’no-demograficheskaia situatsiia (Moscow: Institute for Socioeconomic Problems of the Population, 1998), p. 231; Stephen K. Wegren, “Socioeconomic Transformation in Russia: Where is the Rural Elite?” Europe-Asia Studies, vol. 52, no. 2 (2000), pp. 247–48; and O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, pp. 164–67. V. Ia. Uzun, ed., Sotsial’no-ekonomicheskie posledstviia privatizatsii zemli i reorganizatsii sel’skokhoziaistvennykh predpriiatii (1994–1996 gg.). (Moscow: Entsiklopediia rossiiskii dereven,’ 1997), p. 84. O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, p. 151. This section draws from Stephen K. Wegren, David J. O’Brien, and Valeri V. Patsiorkovski, “Russia’s Rural Unemployed,” Europe-Asia Studies, vol. 55, no. 6 (2003), at pp. 850–51. A. V. Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” in A. V. Petrikov, ed., Ekonomicheskie i sotsial’nye problemy agrarnogo sektora (Moscow: Russian Academy of Sciences, 1998), p. 166.

notes / 243 36. Within the Central Region the oblasts with the highest rates of rural unemployment were Vladimir, Ivanovo, and Yaroslavl’. 37. A. Kruglikov, “Problemy zaniatosti sel’skogo naseleniia,” APK: ekonomika, upravlenie, no. 2 (February 2001), p. 55. 38. V. Mashenkov and V. Malakhova, “Bezrabotitsa na sele i puti eyo smiagcheniia,” APK: ekonomika, upravlenie, no. 3 (March 1996), p. 19. The rural unemployment rate was equal to about 10% of the rural working-age labor force. In contrast, urban unemployment equaled about 5% of the urban working-age labor force, or approximately 6% of those who were employed in a non-agricultural profession during 1994. 39. B. P. Pankov, “Problemy regulirovaniia rynka truda na sele,” in A. V. Petrikov, ed., Rynochnaia trasformatsiia sel’skogo khoziaistva: desiateletnii opyt i perspektivy (Moscow: Entsiklopediia rossiiskikh dereven’, 2000), p. 285. 40. Trud i zaniatost’ v Rossii ( 2001), pp. 38, 61. 41. Zemfira Kalugina, Rural Women of Russia under Agrarian Transformations (Novosibirsk: Institute of Economics and Industrial Engineering, 1999), p. 18; Trud i zaniatost’ v Rossii (2001) , pp. 61, 84. 42. Kalugina, Rural Women of Russia, p. 18. 43. Mashenkov and Malakhova, “Bezrabotitsa na sele i puti eyo smiagcheniia,” p. 20. 44. See World Bank, Local Self-Governance and Civic Engagement in Rural Russia (Washington, DC: The World Bank, 2003), p. 45. 45. Ibid., p. 43. The crowding varies by type of village. In large villages, overcrowding is a problem. In remote villages with small populations, kindergartens and preschools close due to lack of students. 46. Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” pp. 163–64. 47. World Bank, Local Self-Governance and Civic Engagement, p. 45. 48. Ibid., p. 40. 49. Sotsial’no-ekonomicheskoe polozhenie, no. 12 (Moscow: Goskomstat, 1995), p. 65. 50. “Sel’skoe khoziaistvo Rossiiskoi Federatsii v 1996–1999 godakh (ekonomicheskii obzor),” APK: ekonomika, upravlenie, no. 12 (December 2000), p. 23. 51. This summary statement is drawn from data in various issues of Ekonomicheskie i sotsial’nye peremeny: monitoring obshchestvennogo mneniia during 1994–1999, during which time negative responses to whether market reforms should stop were consistently higher than responses that they should continue. 52. For a discussion of how survival behaviors might be differentiated from adaptive behaviors, see Wegren, “Rural Adaptation in Russia.” 53. Over time the contribution to the nation’s food supply as a percentage of total output declined owing to significant production increases in the collective sphere. The volume of privately raised produce sold to the state (state procurement organizations, cooperatives, and large farms) also declined precipitously, largely due to the fact that purchase prices were not allowed to surpass state procurement prices offered to state and collective farms. From the 1960s through the late 1980s, the physical volume of produce

244 / notes

54. 55.

56. 57.

58. 59. 60. 61. 62. 63.

64. 65. 66.

sold at urban collective farm markets also decreased, although those data are suspect and must be treated with care. Kolkhozy SSSR: kratkii statisticheskii sbornik (Moscow: Finansy i statistika, 1988), pp. 214–17. The survey was conducted in three rural raions in Saratov oblast involving 600 persons. The respondents were divided into three age brackets (18–29, 30–44, and 45) and six income brackets (below average and above average for each age group). This motivation was stronger in the below-average income group for all ages and strongest in the 30–44 age bracket, among those most likely to have children, showing that even those who might be considered to be most risk-averse where in fact the most market-oriented. See V. B. Samsonov, “Vladel’tsy lichnogo podsobnogo khoziaistva: tipologiia, obraz zhizni,” Sotsiologicheskie issledovaniia, no. 4 ( July–August 1988), pp. 7–14. Lichnoe podsobnoe khoziaistvo naseleniia v 1988 godu, pp. 9, 11; and Narodnoe khoziaistvo RSFSR v 1988g: statisticheskii ezhegodnik (Moscow: Goskomstat RSFSR, 1989), pp. 583, 586. The size of a plot of land is limited by the 2002 law on rural land transactions. No person, family, or group of related persons may own more than 10 percent of total agricultural land in a given raion. The 2003 law on private plots frees the sale of food production from income tax, and thus some reports suggest that some “private plots” exist up to 50–100 ha, thereby blurring the distinction with private farms, whose food sales are subject to taxation. For an analysis of the 2002 legislation, see Stephen K. Wegren, “Observations on Russia’s New Agricultural Land Legislation,” Eurasian Geography and Economics, vol. 43, no. 8 (December 2002), pp. 651–60; and of the 2003 law on private plots, see Stephen K. Wegren, “Russian Peasant Farms and Household Plots in 2003: A Research Note,” Eurasian Geography and Economics, vol. 45, no. 3 (April–May 2004), pp. 230–39. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (Moscow: Goskomstat, 2003), p. 12. Ibid. Ibid. “Sel’skoe khoziaistvo Rossiiskoi Federatsii v 1996–1999 godakh (ekonomicheskii obzor),” p. 23. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii, p. 31. In 2000, the number of cattle and pigs on large farms had declined 63 and 68%, respectively, in comparison to 1991. The number of cattle in particular declined to levels found in the 1950s. Sel’skoe khoziaistvo Rossii (Moscow: Goskomstat, 2000), p. 69; and Osnovnye pokazateli agropromyshlennogo kompleksa Rossiiskoi Federatsii (Moscow: Goskomstat, 2000), p. 36. Rossiia v tsifrakh (Moscow: Goskomstat, 2002), p. 201. Rossiia v tsifrakh (Moscow: Goskomstat, 2003), p. 201. See “Razvitie individual’nogo sektora sel’skogo khoziaistva Rossii (ekonomicheskii obzor),” APK: ekonomika, upravlenie, no. 3 (March 1999), pp. 57–66; and Z. N. Shuklina, “Zaniatost’ i dokhodnost’ v lichnykh

notes / 245

67. 68. 69. 70. 71. 72. 73. 74.

75. 76. 77. 78.

79.

80. 81. 82.

83.

podsobnykh khoziaistvakh naseleniia,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 6 ( June 1999), pp. 54–56. Rossiiskii statisticheskii ezhegodnik, p. 368; The percentage differences are somewhat greater if 1990 is used as the base year. See Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (1999), p. 35. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (1999), p. 34. Ibid., p. 157. Statisticheskii biulleten’, no. 1 (January 2000), p. 19. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (2003), p. 57. Ibid., p. 12. O’Brien, Patsiorkovski, and Dershem found that households with more labor are able to produce and sell more. See O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, pp. 183–90. A. V. Chaianov, The Theory of Peasant Economy (Homewood, IL: R.D. Irwin, 1966); and for a discussion of the model as it pertains to contemporary Russia, see O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, pp. 26–27. Correlations derived from 2001 survey data, funded by NCEEER. Only the production of fruit was not statistically significant. See O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, chap. 9. Wegren, O’Brien, and Patsiorkovski, “Russia’s Rural Unemployed.” The reported results are taken from that article, at pp. 855–56. Vlasova notes that, nationwide, almost 47 percent of rural unemployed persons searched for work for more than a year, compared to 41 percent of urban unemployed. N. Vlasova, “O polozhenii na rynke truda v sel’skoi mestnosti,” Ekonomist, no. 9 (September 2001), p. 92. The largest difference in the possession of animal production is the number of poultry. Households with an unemployed member had a mean of 13 poultry, while households with no one unemployed had a mean of over 27 poultry. David J. O’Brien, “Entrepreneurial Adaptations of Rural Households, Production, Sales, and Income,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, pp. 350–66. A weighted scale of human capital, using age, education, and health, shows that the lowest category (0.15–1.4) produced four times less food, and sold nine times less than the highest category (3.0 and above). The findings were first published in Stephen K. Wegren, David J. O’Brien, and Valeri V. Patsiorkovski, “Why Russia’s Rural Poor Are Poor,” Post-Soviet Affairs, vol. 19, no. 3 (July–September 2003), pp. 264–87. This discussion draws from that article. See also David J. O’Brien, Valeri Patsiorkovski, and Stephen K. Wegren, “Rural Adaptation and Poverty in Russia,” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 457–88. At the time the survey concluded, the official subsistence level was 1,574 rubles per person per month, equal to about $54 at 2001 exchange rates. Rossiia v tsifrakh (Moscow: Goskomstat, 2002), p. 109.

246 / notes 84. O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, p. 169. 85. See Stephen K. Wegren, Russia’s Food Policies and Globalization (Lanham, MD: Lexington Books, 2005), table 1.6, for data. This discussion draws from the text following that table. 86. Wegren, O’Brien, and Patsiorkovski, “Why Russia’s Rural Poor Are Poor.” 87. Wegren, Russia’s Food Policies and Globalization, p. 18. 88. The number of collective farm markets throughout the USSR declined from 7,522 in 1970 to 6,098 in 1988. Stephen K. Wegren, “Private Agriculture in the Soviet Union Under Gorbachev,” Soviet Union, vol. 16, nos. 2–3 (1989), p. 131. 89. Narodnoe khoziaistvo SSSR za 70 let (Moscow: Finansy i statistika, 1987), p. 445. 90. Ibid., p. 29. 91. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (2003), p. 34. 92. Author’s calculations based on data in Bondarenko, “Tendentsii v potreblenii sel’skogo naseleniia,” p. 39; Prodovol’stvennyi rynok Rossii (Moscow: Goskomstat, 2002), p. 49; Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii (2003), pp. 26, 30, 34. 93. In 2003, a new law on private plots established that food sales from private plot activity is not subject to income taxation. See Stephen K. Wegren, “Russian Peasant Farms and Household Plots in 2003: A Research Note,” Eurasian Geography and Economics, vol. 45, no. 3 (April–May 2004), pp. 230–39. 94. The first survey was carried out in Voronezh, Volgograd, Ivanovo, Smolensk, Kaluga, and Novgorod oblasts, as well as in Altai krai. The survey was designed to capture opinions about land reform and the land market, and, important for our purposes here, attitudes of potential buyers and sellers. In the first survey, a total of 5,841 respondents aged 18 and higher were polled in face-to-face interviews. Survey results were based on 579 responses from agricultural experts, 2,932 responses from actual owners or users of land, and 2,330 responses from potential owners or users of land. 95. The second survey was carried out in eight regions: Voronezh, Volgograd, Ivanovo, Kaluga, and Novgorod oblasts were repeated from the first survey. New regions included Perm oblast, Moscow oblast, and Tula oblast. The 1997–98 survey interviewed a total of 5,608 persons, including 135 rural experts, 2,739 persons wanting to obtain land, and 2,734 persons who owned land or were users of land at the time of the survey and were potential sellers. I thank Vladimir Belen’kiy for making these data available to me. 96. Stephen K. Wegren and Vladimir R. Belen’kiy, “Change in Land Relations: The Russian Land Market,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, chap. 4, table 11. 97. For details on the research design, see O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, pp. 61–78. 98. Ibid., pp. 133–35. 99. Ibid., p. 166.

notes / 247 100. Ibid., p. 151. 101. I thank David O’Brien and Valeri Patsiorkovski for making these data available to me. 102. Novgorod oblast had a mean of 426 rubles, Krasnodar krai had a mean of 495 rubles, and Belgorod oblast had a mean of 627 rubles. 103. Wegren, O’Brien, and Patsiorkovski, “Winners and Losers in Russian Agrarian Reform,” p. 22. 104. The independent variables included size of family, respondent’s age, respondent’s employment status, social type of family (worker, white collar, etc.), husband’s employment position, husband’s educational level, number of cattle, size of private plot, size of rental plot, income from sale of produce, and income from household business activities. 105. Beta is a statistical measure in regressions that indicates the explanatory strength, or causal power, of the independent variable. A perfect beta would be 1.0. 106. Wegren, O’Brien, and Patsiorkovski, “Winners and Losers in Russian Agrarian Reform,” pp. 18–23. 107. L. Khakhulina, “Otnoshenie naseleniiak raznym formam khoziaistvovaniia na zemle,” Voprosy ekonomiki, no. 5 (May 1990), pp. 75–81. 108. Ibid. 109. Brooks, et al., Agricultural Reform in Russia, pp. 33–34. 110. See e.g., the letter from the head of the Duma’s Agroindustrial Deputy group, N. Kharitonov, to President Putin, in Sel’skaia zhizn’ August 17–23, 2000, p. 3. It is important to bear in mind that the speculative side of the land market has always been quite small, as the 1995–96 survey clearly showed. In that survey, land buyers were grouped into four subcategories: (1) Operators, who obtained land for the conduct of small-scale agriculture, for instance, collective vegetable and fruit gardens. Operators comprised 60% of the responses; (2) Dachniki, who were largely urban residents looking for a place for rest and relaxation for family members. Dachniki comprised 20% of the responses; (3) Owners, who were motivated to obtain land in order to pass it to their heirs or to protect themselves from inflation. Owners comprised 17–18% of the responses; and (4) Speculators, who obtained land for the sole purpose of resale. Speculators comprised 2.5% of the responses. See Stephen K. Wegren and Vladimir R. Belen’kiy, “The Political Economy of the Russian Land Market,” Problems of Post-Communism, vol. 45 ( July–August 1998), p. 62. 111. See the article by Peter Baker in The Washington Post, March 25, 2001, p. A23. 112. Stephen K. Wegren, David J. O’Brien, and Valeri V. Patsiorkovski, “Russian Agrarian Reform: The Gender Dimension,” Problems of Post-Communism, vol. 49, no. 6 (November–December 2002), p. 56. Note that this question asked about attitudes toward state policy and land reform, not land reform itself. A person could express a negative opinion about state policy and still support land reform in principle. 113. See Wegren, “Observations on Russia’s New Agricultural Land Legislation,” pp. 651–60.

248 / notes 114. Institute of Land Relations and Land Tenure and Institute of Sociology (Kaluga Oblast), Formirovanie rynka zemli v Rossii: regional’nye aspekty (Kaluga: Institute of Sociology, 1997). 115. “Restrictions” were not defined in the survey, but it is likely that respondents understood the question to mean whether the sale of land would be unrestricted or not, that is, would the right to sell to anyone be restricted, and would the buyer have the right to define land use. 116. See Stephen K. Wegren, “Land Reform and the Land Market in Russia: Operation, Constraints and Prospects,” Europe Asia Studies, vol. 49, no. 6 (1997), pp. 959–87; Wegren and Belen’kiy, “The Political Economy of the Russian Land Market,” pp. 56–66; Wegren and Belen’kiy, “Change in Land Relations: The Russian Land Market,” in O’Brien and Wegren, eds., Rural Reform in Post-Soviet Russia, chap. 4; Louis Skyner, “Property as Rhetoric: Land Ownership and Private Law in Pre-Soviet and Post-Soviet Russia,” Europe Asia Studies, vol. 55, no. 6 (September 2003), pp. 889–906; and Stephen K. Wegren, “Why Rural Russians Participate in the Land Market: Socioeconomic Factors,” Post-Communist Economies, vol. 15, no. 4 (December 2003), pp. 483–501. 117. Rossiia v tsifrakh (2003), p. 204. 118. “O federal’noi tselevoi programme ‘Razvitie zemel’noi reformy v Rossiiskoi Federatsii na 1999–2003 gody,” Sobranie zakonodatel’stva Rossiiskoi Federatsii, no. 27 (July 5, 1999), pp. 6132–33. 119. Wegren and Belen’kiy, “The Political Economy of the Russian Land Market,” pp. 60–61; Svedeniia o sdelkakh s zemlei i platezhakh za zemliu (Moscow: Federal Land Cadastre Service, 2003), p. 18. 120. E. I. Krylatykh, N. I. Kresnikova, and I. V. Semenova, “Razvitie zemel’nogo oborota v Rossii,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 2 (February 2001), p. 12; Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 2000 godu (Moscow: Federal Land Cadastre Service, 2001), p. 111; Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 22. 121. Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 19. 122. Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’noekonomicheskii analiz, p. 40. 123. A survey among pilot reorganized farms in Rostov oblast found that income from leasing of land shares accounted for 35% of farm workers’ income—more than from wage payments from the farm. Farm pensioners received 24% of their income from land leasing, trailing only pension payments and income from private plot production. Uzun, ed., Sotsial’noekonomicheskie posledstviia privatizatsii zemli i reorganizatsii sel’skokhoziaistvennykh predpriiatii (1994–1996 gg.), p. 84. 124. Uzun, ed., Reformirovanie sel’skokhoziaistvennykh predpriiatii: sotsial’noekonomicheskii analiz, p. 96. 125. International Finance Corporation, Monitoring Russian Reorganized Farms (Washington, DC: IFC, 1998), p. 25. 126. Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 25.

notes / 249 127. Roskomzem, Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii za 1995 god (Moscow: Committee on Land Resources and Land Tenure, 1996) p. 76; and Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, pp. 18, 28. Some observers, such as former minister of agriculture Viktor Khlystun, estimate that the number of registered sales are only about one-half of the actual number, in part to avoid taxes and fees. 128. Author’s calculations from data in Roskomzem, Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 1998 godu (Moscow: Committee on Land, 1999) p. 60; Gosudarstvennyi (natsional’nyi) doklad o sostoianii i ispol’zovanii zemel’ Rossiiskoi Federatsii v 2000 godu (Moscow: Federal Land Cadastre Service, 2001), p. 121; and Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 28. 129. Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 28. 130. Ibid. 131. Ibid. 132. Ibid., p.22. Leases of urban land in cities and urban settlements constituted 40% of all lease transactions, and leases of land outside population settlements accounted for the remaining 38%. 133. Interview, Natalia Shagaida, Agrarian Institute, Moscow (May 24, 2004). 134. Ibid. 135. Wegren and Belen’kiy, “Change in Land Relations,” chap. 4, table 5. 136. See Zvi Lerman and Karen Brooks, “Russia’s Legal Framework for Land Reform and Farm Restructuring,” Problems of Post-Communism, vol. 43, no. 6 (November–December 1996), pp. 48–58; and Louis Skyner, “Political Conflict and Legal Uncertainty: The Privatisation of Land Ownership in Russia,” Europe-Asia Studies, vol. 53, no. 7 (November 2001), pp. 981–99. 137. In September 2001, the land code passed its third reading in the Duma by a vote of 257–130. It was then sent to the upper house, the Federation Council, where it was passed in early October 2001 by a vote of 103 to 29, with 9 abstentions. Following approval by the Federation Council, it was sent to President Putin for his signature, thus entering the new land code into law toward the end of October 2001. However, this version avoided the tricky issue of agricultural land sales, which the government announced would be addressed in a separate law. That law was adopted in 2002 and came into effect in 2003, creating a system in which local administrations were able to exercise right of first refusal over farm land plots for sale. See Wegren, “Observations on Russia’s New Land Legislation,” pp. 651–60. 138. Interview, Natalia Shagaida, Agrarian Institute, Moscow (May 24, 2004); and see N. Shagaida, “Zemel’nyi rynok,” in E. Serova and B. Gardner, eds., Rynki faktorov proizvodstva v APK Rossii: perspektivy analiza (Moscow: AFE and IRIS, 2002), pp. 86–116. 139. Institute of Land Relations and Land Tenure, and Institute of Sociology in Kaluga oblast, Formirovanie rynka zemli v Rossii: regional’nye aspekty. 140. In 2002, the number of purchase transactions of land for private plots (lichnoe podsobnoe khoziaistvo) was 123,368, out of a total of 321,508 land

250 / notes

141. 142. 143.

144.

145.

146.

147.

148. 149. 150. 151. 152. 153. 154.

purchases between individuals. Of the 123,368 purchases, nearly 85% (104,337) occurred in rural areas. Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 28. Ibid., pp. 28–29. Interview, Natalia Shagaida, Agrarian Institute, Moscow (May 24, 2004). With regard to the point on human capital, it should be remembered that during the 1990s, the demographic situation in the countryside (as in the nation as a whole) was deteriorating. Starting in 1992 and continuing to the end of the Yeltsin period, the rural death rate per 1,000 persons increased sharply, surpassing rural birth rates. For the nation as a whole, the rural population coefficient declined from 2.2 in 1990 to 7.0 in 1999. While all economic regions in Russia have experienced a deterioration in their birth-to-death ratio since 1990, of particular note were the Northwest, Central, and Central Black Earth regions where the difference between rural birth and death rates per 1,000 persons equaled 16.4, 15.4, and 14.5 in 1999, respectively. This was a trend mirrored in the urban population as well, which dropped from 2.3 in 1990 to 6.1 in 1999. See Demograficheskiy ezhegodnik Rossii (Moscow: Goskomstat, 2000), pp. 83–93. This section draws from Wegren, “Why Rural Russians Participate in the Land Market: Socio-economic Factors,” pp. 493–95; see Wegren and Belen’kiy, “The Political Economy of the Russian Land Market,” pp. 56–66; Wegren and Belen’kiy, “Change in Land Relations,” pp. 88–115. Sources of income indicated in the survey included salary from primary job, salary from secondary job, pension, alimony, child support, pension, income from sale of food production, dividends, income from business activity, and other monetary income. Wegren and Belen’kiy, “Change in Land Relations,” p. 109. This conclusion is based on a survey of more than 5,000 persons conducted in 1995–96. It found that 57% of respondents obtained land to grow food for consumption. A subsequent survey, also of more than 5,000 persons, found that in 1997, 68% of respondents obtained land to grow food. Sale of agricultural production was indicated by 19% of 1995 respondents and 12% of 1997 respondents as a reason to obtain land. Income from business is defined as either agricultural-related or nonagricultural economic activity. If agriculturally related, it might include, e.g., transportation of produce, but does not include production or production sales, activities which were captured by other variables. See O’Brien, Wegren, and Patsiorkovski, “Contemporary Rural Responses to Reform from Above,” pp. 272–75 on changes in household income. Narodnoe khoziastvo SSSR v 1989 (Moscow: Goskomstat, 1990), p. 89. O’Brien, Patsiorkovksi, and Dershem, Household Capital and the Agrarian Problem, pp. 166, 169. Ibid., p. 189. Ibid., p. 169. The responses were scaled 1–5, with 1  “absolutely dissatisfied” and 5  “absolutely satisfied.” The term entrepreneurial is used deliberately, as opposed to alternatives such as “capitalist,” owing to certain constraints and deficiencies in Russian

notes / 251 markets that at present hinder full fledged capitalism. Russian sources do have a word “entrepreneurial” and sources do refer to “entrepreneurial activities” and to “entrepreneurs,” although I have not found Russian sources that use the exact term “entrepreneurial spirit.” By deduction, however, one who engages in “entrepreneurial activities” is likely to have an “entrepreneurial spirit.” 155. Wegren, “Rural Adaptation in Russia,” p. 574.

Chapter 5 Effects of Adaptation and Sources of Rural Revival 1. For example, food production trends in postcommunist Russia stand in sharp contrast to Soviet trends on a number of dimensions: (1) during the 1990s, gross food production declined significantly, measured either in ruble value or in volume; (2) during the 1990s, food production decreased faster than the decline in the Russian population; (3) during the 1990s, decline in food production among large farms was compensated by increased food imports, which in turn generated political concerns over the nation’s “food security.” See Stephen K. Wegren, Agriculture and the State in Soviet and Post-Soviet Russia (Pittsburgh: University of Pittsburgh Press, 1998), chaps. 4–6; and E. V. Serova, “The Impact of Privatization and Farm Restructuring on Russian Agriculture,” in Institute for Economies in Transition, Farm Profitability, Sustainability, and Restructuring in Russia (Moscow: Agrifood Economy, 1999), pp. 4–35. 2. See Maria Amelina, “False Transformations: From Stalin’s Peasants to Yeltsin’s Collective Farmers,” Paper presented at Workshop on Rural Russia, Woodrow Wilson Center, Kennan Institute, Washington, DC (May 4–6, 1999). 3. Ia. V. Uzun, “Privatization of Land and Farm Restructuring: Ideas, Mechanisms, Results, and Problems,” in Farm Profitability, Sustainability, and Restructuring in Russia, pp. 36–50. 4. Ia. V. Uzun, “Formy organizatsii sel’skokhoziaistvennogo proizvodstva v Rossii,” in E. Serova and B. Gardner, eds., Rynki faktorov proizvodstva v APK Rossii: perspektivy analiza (Moscow: AFE and IRIS, 2002), pp. 21–23. 5. The surveys were conducted June–September in each wave of the panel. For a description of the methodology for the sample, see David J. O’Brien, Valeri V. Patsiorkovski, and Larry D. Dershem, Household Capital and the Agrarian Problem in Russia (Aldershot: Ashgate, 2000), chap. 4. The 1995 and 1997 data are available from ICPSR at the University of Michigan. I thank David O’Brien and Valeri Patsiorkovski for making the 1999 and 2003 data available to me. 6. For analyses of rural poverty in Russia, see Stephen K. Wegren, David J. O’Brien, and Valeri Patsiorkovski, “Why Russia’s Rural Poor are Poor,” Post-Soviet Affairs, vol. 19, no. 3 (July–September 2003), pp. 264–87; David J. O’Brien, Valeri V. Patsiorkovski, and Stephen K. Wegren, “Rural Adaptation and Poverty in Russia,”The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 457–88. 7. See Alfred Evans, Jr., “The Decline of Rural Living Standards in Russia during the 1990s,” Journal of Communist Studies and Transition Politics,

252 / notes

8. 9.

10. 11. 12. 13.

14.

15. 16. 17. 18. 19. 20.

vol. 12, no. 4 (December 1996), pp. 293–314; A. V. Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” in A. V. Petrikov, ed., Ekonomicheskie i sotsial’nye problemy agrarnogo sektora (Moscow: Russian Academy of Sciences, 1998), pp. 161–72; A. V. Petrikov, “Sotsial’nye problemy Rossiiskoi derevni,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 3 (March 1999), pp. 37–41; and Stephen K. Wegren, “The Rise, Fall, and Transformation of the Rural Social Contract in Russia,” Communist and PostCommunist Studies, vol. 36, no. 1 ( January 2003), pp. 1–27. O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, pp. 183–90. The husband was used as the unit of analysis because he is the primary income source for the household. In 2003, e.g., total mean monetary monthly income for households in the survey was 6,294 rubles, of which the husband accounted for 4,057 rubles or about 65%. For example, in the 2003 wave of the survey, total household income from business activity was 723 rubles a month, of which the husband accounted for 704 rubles. Stephen K. Wegren, “Rural Adaptation in Russia: Who Responds and How Do We Measure It?” Journal of Agrarian Change, vol. 4, no. 4 (October 2004), pp. 553–78. The definition of “other land” is land that is owned privately such as land shares. Rossiiskii statisticheskii ezhegodnik (Moscow: Goskomstat, 2003), p. 185. Perfect inequality, if such a thing existed, would be represented by a Gini coefficient of 1.0. Russia’s Gini coefficient placed it number 14 in the world in terms of inequality, ranked just after Great Britain with a Gini of .36 and just ahead of the United States with a Gini of .40. See V. Bobkov, “Analiz sotsial’no-ekonomicheskoi defferentsiatsii,” Ekonomist, no. 7 ( July 2003), p. 11. Anders Aslund, “Social Problems and Policy in Postcommunist Russia,” in Ethan B. Kapstein and Michale Mandelbaum, eds., Sustaining the Transition: The Social Safety Net in Postcommunist Europe (New York: Council on Foreign Relations, 1997), p. 129. N. M. Rimashevskaia, ed., Rossiia 2000: sotsial’no-demograficheskaia situatsiia (Moscow: Russian Academy of Sciences, 2001), p. 89. These results are from author’s calculations of the survey data using SPSS. Specific numbers are available from the author upon request. The standard deviation was 1.06 for this variable in the 1997 sample as a whole. The standard deviation was 1.16 for this variable in the 2003 sample as a whole. See Stephen K. Wegren, “Rural Support for the Communist Party and Implications for the Party System,” Party Politics, vol. 10, no. 5 (2004), pp. 565–82. For an excellent booklength study of the Communist Party, see Luke March, The Communist Party in Post-Soviet Russia (Manchester: Manchester University Press, 2002). The literature on elections is already quite large.

notes / 253

21. 22. 23. 24. 25. 26. 27. 28. 29.

30.

31. 32.

33. 34. 35.

For a good starting place, see Christopher Marsh, Russia at the Polls: Voters, Elections, and Democratization (Washington, DC: Congressional Quarterly, 2002); and Timothy J. Colton and Michael McFaul, Popular Choice and Managed Democracy: The Russian Elections of 1999 and 2000 (Washington, DC: The Brookings Institution, 2003). Graeme Gill, The Collapse of a Single-Party System: The Disintegration of the Communist Party of the Soviet Union (Cambridge: Cambridge University Press, 1994). Jerry F. Hough, Democratization and Revolution in the USSR 1985–1991 (Washington, DC: The Brookings Institution, 1997), pp. 165–66. Ibid., p. 167. Mikhail Gorbachev, Memoirs (New York: Doubleday, 1996), p. 281. Ronald J. Hill, “The Communist Party and After,” in Stephen White, Alex Pravda, and Zvi Gitelman, eds., Developments in Soviet and Post-Soviet Politics (Durham: Duke University Press, 1992), p. 78. That pattern was first evident in the 1989 national election, in which the Communist Party did better in smaller cities and in the countryside. Hough, Democratization and Revolution, pp. 168–69. See Ronald J. Hill and Peter Frank, The Soviet Communist Party, 2nd edition (London: George Allen & Unwin, 1982), pp. 35–37. Hough, Democratization and Revolution, p. 297. Timothy J. Colton, “Determinants of the Party Vote,” in Timothy J. Colton and Jerry F. Hough, eds., Growing Pains: Russian Democracy and the Election of 1993 (Washington, DC: The Brookings Institution, 1998), pp. 75–114; Timothy J. Colton, Transitional Citizens: Voters and What Influences Them in the New Russia (Cambridge: Harvard University Press, 2000); Ralph S. Clem and Peter R. Craumer “Urban and Rural Effects on Party Preference in Russia: New Evidence from the Recent Duma Election,” Post-Soviet Geography and Economics, vol. 43, no. 1 ( January 2002), pp. 1–12. Yitzhak M. Brudny, “Continuity or Change in Russia Electoral Patterns? The December 1999–March 2000 Election Cycle,” in Archie Brown, ed., Contemporary Russian Politics (Oxford: Oxford University Press, 2001), pp. 154–78. See Colton, “Determinants of the Party Vote.” This finding is supported by the question in the survey that asked “which party best represents your interests?” Female responses about the Communist Party increased for each age bracket through age 59. For 60 and above, it declined. See Stephen K. Wegren, David J. O’Brien, and Valeri V. Patskiorkovski, “Russian Agrarian Reform: The Gender Dimension,” Problems of PostCommunism, vol. 49, no. 6 (November–December 2002), p. 55. It is notable that rural women of pension age constitute over 15% of the entire rural population, and previous research showed that older and rural voters have higher turnout rates than do younger and urban voters. In 2001, the party Unity changed its name to United Russia. See Ralph S. Clem and Peter R. Craumer, “Redrawing the Political Map of Russia: The Duma Election of December 2003,” Eurasian Geography and Economics, vol. 45, no. 4 (June 2004), pp. 241–61.

254 / notes 36. It was not until 1995 that these specific questions were asked. Previous surveys did not ask these questions, but my feeling is that the percentages were significantly higher for the likelihood of mass demonstrations and individual participation in 1993 and 1994. 37. See e.g., Eric Wolf, Peasant Wars of the Twentieth Century (New York: Harper and Row, 1969); Joel S. Migdal, Peasants, Politics, and Revolution: Pressures Toward Political and Social Change in the Third World (Princeton: Princeton University Press, 1974); Jeffrey Paige, Agrarian Revolution: Social Movements and Export Agriculture in the Underdeveloped World (New York: Free Press, 1975); Theda Skocpol, States and Social Revolutions: A Comparative Analysis of France, Russia, and China (Cambridge: Cambridge University Press, 1979); Cynthia McClintock, “Why Peasants Rebel: The Case of Peru’s Sendero Luminoso,” World Politics, vol. XXXVII, no. 1 (October 1984), pp. 48–84; and Gary Hawes, “Theories of Peasant Revolution: A Critique and Contribution from the Philippines,” World Politics, vol. XLII, no. 2 ( January 1990), pp. 261–98. 38. The rarity of peasant revolution is precisely the reason that scholarly attention turned to the use of passive strategies to resist change (“weapons of the weak”). See James C. Scott, Weapons of the Weak: Everyday Forms of Peasant Resistance (New Haven: Yale University Press, 1985); and Forrest D. Colburn, ed., Everyday Forms of Peasant Resistance (New York: M. E. Sharpe, 1989). 39. On the macroeconomic environment and its effects on reform, see Stephen K. Wegren, “Russian Agrarian Reform and Rural Capitalism Reconsidered,” The Journal of Peasant Studies, vol. 26, no. 1 (October 1998), pp. 82–111. 40. For an analysis of Kostroma oblast and other regions, see Stephen K. Wegren, “Socioeconomic Transformation in Russia: Where is the Rural Elite?” Europe-Asia Studies, vol. 52, no. 2 (2000), pp. 237–71. 41. See for instance, the articles by Minister of Agriculture Viktor Semenov, “Novyi kurs agrarnoi politiki,” Ekonomist, no. 1 ( January 1999), pp. 12–16; and Minister of Agriculture Aleksei Gordeev, “Osnovnye napravleniia gosudarstvennoi podderzhki agrarnogo sektora,” Ekonomist, no. 4 (April 1999), pp. 11–16; “Ekonomicheskii kurs razvitiia APK nuzhdaetsia v korrektirovke,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 2 (February 2000), pp. 6–9. Semenov served as minister of agriculture from March 1998 to August 1999, and was followed by Gordeev in August 1999, who as of March 2005 was still minister. 42. Krest’ianskie vedomosti, no. 7 (February 14–20, 2000), p. 2. 43. The new program was designed to replace the previous program, “The Federal Special Purpose Program for the Stabilization and Development of the Agroindustrial Production during 1996–2000,” which had been largely ignored and was ineffective. The discussion of the program to 2010 is based upon the speech given by Gordeev on July 27, 2000. The program posited three broad tasks: (1) to develop and strengthen market conditions in the rural economy; (2) to stabilize food production, even with limited state resources; and (3) to achieve the first two tasks in the shortest time possible. See Stephen K. Wegren, “Russian Agrarian Policy Under Putin,”

notes / 255

44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57.

58. 59. 60. 61. 62. 63.

Post-Soviet Geography and Economics, vol. 43, no. 1 ( January–February 2002), pp. 26–40. There was a clear recognition that state capacities have diminished, and it is acknowledged that the center no longer is able to carry the entire burden. In fact, Gordeev referred to the “relatively limited material and financial resources of the state” in his July 27, 2000 speech. The basic directions of the program and agrarian policy are also summarized in interviews with Gordeev in Sel’skaia zhizn’, July 25, 2000, p. 1; August 24–30, 2000, pp. 1, 4; December 7–13, 2000, pp. 1, 3; and January 30, 2001, pp. 1, 2. A. Gordeev, “Dobit’sia real’nogo uluchsheniia ekonomicheskoi situatsii v APK Rossii,” APK: ekonomika, upravlenie, no. 9 (Spetember 2000), p. 5. Ibid., pp. 6–7. Krest’ianskie vedomosti, nos. 9–10 (March 1–15, 2001), p. 2. For additional coverage of the conference see Sel’skaia zhizn’ February 27, 2001, p. 1. Statisticheskii biulleten’, no. 3 (October 2003), p. 38. Ibid., pp. 34, 35, 38. “O finansovom ozdorovlenii sel’skokhoziaistvennykh tovaroproizvoditelei,” Sobranie zakonodatel’stva Rossiiskoi Federatsii, no. 28 (July 15, 2002), pp. 7121–30. Sel’skaia zhizn’ July 22, 2003, p. 1. See Wegren, “Russian Agrarian Policy Under Putin,” pp. 36–38. This discussion draws from that section. Krest’ianskie vedomosti, no. 12 (March 20–26, 2000), p. 2. R. N. Chernii, “Problemy formirovaniia effektivnoi finansovo-kreditnoi sistemy po obsluzhivaniiu APK,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 9 (September 2000), p. 24. Krest’ianskie vedomosti, nos. 9–10 (March 1–15, 2001), p. 4. Sel’skaia zhizn’, September 3, 2002, p. 1. A. Gordeev, “Stabilnoe i dinamichnoe razvitie APK—pervostepennaia zadacha,” APK: ekonomika, upravlenie, no. 11 (November 2000), p. 9. For a summary of how the credit system works, see A. V. Shibaikin, “Soverwhenstvovanie gosudarstvennoi podderzhki agroprodovol’stvennoi sfery regiona,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 4 (April 2003), pp. 9–12. A. V. Gordeev, “Lidery Rossiiskogo agrobiznesa,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 1 ( January 2003), p. 8. Krest’ianskie vedomosti, no. 9 (March 17–23, 2003), p. 6. Interview, Allan Mustard, minister-counselor for agriculture, US Embassy, Moscow (May 12, 2004). Russia’s foreign agricultural trade policies are analyzed in detail in Stephen K. Wegren, Russia’s Food Policies and Globalization (Lanham, MD: Lexington Books, 2005), chap. 5. A. V. Gordeev, A. I. Altukhov, and D. F. Vermel’, “Prodovol’stvennaia bezopasnost’ Rossii: sostoianie i meri obespecheniia,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 10 (October 1998), p. 10. Osnovyye pokazateli sel’skogo khoziaistva v Rossii v 2003 godu (Moscow: Goskomstat, 2004), p. 24.

256 / notes 64. Ibid., p. 25; and see Wegren, Russia’s Food Policies and Globalization, tables 5.5 and 5.6. 65. Krest’ianskie vedomosti, no. 43 (October 2003), p. 2. 66. Osnovyye pokazateli sel’skogo khoziaistva v Rossii v 2003 godu, p. 19. 67. Sobranie zakonodatel’stva Rossiiskoi Federatsii, no. 29 ( July 21, 1997), pp. 5689–98. 68. ITAR-TASS news agency, Moscow (September 2, 2001). 69. Krest’ianskie vedomosti, nos. 31–32 (August 16–31, 2001), p. 2. 70. Krest’ianskie vedomosti, nos. 35–36 (September 16–30, 2001), p. 2. 71. Wegren, Russia’s Food Policies and Globalization, chap. 5. 72. Demograficheskii ezhegodnik Rossii (Moscow: Goskomstat, 2002), p. 19. 73. In 2002, the percentage of production that was sold averaged 9.5% for potatoes, 8% for vegetables, 3% for fruits and berries, 32% for meat and poultry, and 18% for milk. Selskokhoziaistvennaia deiatel’nosti’ khoziaistv naseleniia v Rossii (Moscow: Goskomstat, 2003), p. 34. For private plot operators as a whole, the percentage of production that was sold was lower in the early 2000s than in the early 1990s, despite the quantitative growth in the number of households operating a private plot. See A. V. Petrikov, “Prioritety v gosudarstvennoi podderzhke LPKH,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 8 (August 2002), p. 9. As noted in the previous chapter, however, the volume of production and sales varies according to the income group. For further detail on factors that affect household sales, see A. Barlybaev, “Tovarnost’ lichnykh podvorii naseleniia,” APK: ekonomika, upravlenie, no. 10 (October 2002), pp. 43–48, who bases his analysis on the Republic of Bashkortostan. 74. Krest’ianskie vedomosti, no. 46 (November 2003), p. 2. 75. World Bank, Local Self-Governance and Civic Engagement in Rural Russsia (Washington, DC: The World Bank, 2003), pp. 38–39. 76. See L. Bondarenko, “Sostoianie sotsial’no-trudovoi sfery sela,” Voprosy ekonomiki, no. 7 ( July 2000), pp. 67–75; and I. Ushachev, “Osnovnye napravleniia sotsial’no-ekonomicheskogo razvitiia APK,” Ekonomist, no. 6 ( June 2003), pp. 80–90. 77. “O federal’noi tselevoi programme ‘Sotsial’noe razvitie sela do 2010 goda,’ ” Sobranie zakonodatel’stva Rossiiskoi Federatsii, no. 49 (December 9, 2002), pp. 11441–497. 78. See I. Ushachev, D. Toropov, and L. Bondarenko, “O Federal’noi tselevoi programme ‘Sotsial’noe razvitie sela na period do 2010 goda,’ “ APK: ekonomika, upravlenie, no. 7 ( July 2002), p. 7. 79. For a detailed analysis of the law, see Stephen K. Wegren, “Observations on Russia’s New Agricultural Land Legislation,” Eurasian Geography and Economics, vol. 43, no. 8 (December 2002), pp. 651–60. This discussion draws from parts of this article. 80. Author’s calculations from Svedeniia o sdelkakh s zemlei i platezhakh za zemliu (Moscow: Federal Land Cadastre Service, 2003), pp. 25, 28. 81. Wegren, “Observations on Russia’s New Agricultural Land Legislation,” pp. 655–56.

notes / 257 82. Author’s calculations from Svedeniia o sdelkakh s zemlei i platezhakh za zemliu, p. 28. 83. See N. I. Merkushkin, “Regional’naia programma razvitiia podsobnykh khoziaistv naseleniia,” Ekonomika sel’skokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 10 (October 2002), p. 42, where he describes the regional policy initiatives in Mordovia to private plot operators. Specifically, production subsidies are provided according to the volume of produce sold to regional procurement agents and interest rates are subsidized by the republic for loans obtained from Sberbank. 84. Petrikov, “Prioritety v gosudarstvennoi podderzhke LPKH,” p. 10. 85. “O lichnom podsobnom khoziaistve,” Sobranie zakonodatel’stva Rossiiskoi Federatsii, no. 28 ( July 14, 2003), pp. 6870–77. The law itself is rather short, spanning only 11 articles, 10 of which are substantive. For an analysis of this law as well as the law on private farming, see Stephen K. Wegren, “Russian Peasant Farms and Household Plots in 2003: A Research Note,” Eurasian Geography and Economics, vol. 45, no. 3 (April–May 2004), pp. 230–39. This abbreviated discussion draws from this article. 86. Selskokhoziaistvennaia deiatel’nosti’ khoziaistv naseleniia v Rossii, p. 12. 87. The law established that land is the basis for lichnoe podsobnoe khoziaistvo, and a person who loses his right to land, for whatever reason, thereby loses the right to conduct subsidiary agricultural operations (Article 10). 88. Private plot operators do, however, pay land taxes according to their regional tax rate. 89. “O sostoianii sel’skogo khoziaistva Rossiiskoi Federatsii v 1998–2002 gg. (ekonomicheskii obzor),” APK: ekonomika, upravlenie, no. 11 (November 2003), p. 10. 90. Ibid.; and “Sel’skoe khoziaisvto Rossii v 2003 g. (ekonomicheskii obzor),” APK: ekonomika, upravlenie, no. 4 (April 2004), p. 24. 91. Statisticheskii biulleten’, no. 3 (October 2003), p. 22. 92. Ibid., p. 23; and Ushachev, “Osnovnye napravleniia sotsial’noekonomicheskogo razvitiia APK,” p. 83. 93. See Wegren, Russia’s Food Policies and Globalization, chap. 4. 94. See Grigory Ioffe and Tatyana Nefedova, “Areas of Crisis in Russian Agriculture: A Geographic Perspective,” Post-Soviet Geography and Economics, vol. 41, no. 4 (April 2000), at pp. 293–300. 95. Rossiia v tsifrakh (Moscow: Goskomstat, 2003), p. 202. 96. Author’s calculations using data from Sel’skoe khoziaistvo v Rossii (2000), p. 76. 97. Sel’skokhoziaistvennaia deiatel’nost’ khoziaistv naseleniia v Rossii, p. 34. 98. O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, p. 119. 99. P. Podgorbunskikh and T. Matveeva, “Khoziaistva naseleniia: problemy i puti resheniia,” APK: ekonomika, upravlenie, no. 2 (February 2001), p. 43. 100. Ibid., pp. 42–43. 101. Demograficheskii ezhegodnik Rossii (2002), p. 83. 102. Ibid., pp. 83, 85.

258 / notes 103. Iu. Iurkov, “Prognos chislennosti naseleniia Rossiiskoi Federatsii do 2010 goda,” Voprosy ekonomiki, no. 4 (April 1997), p. 101. 104. Demograficheskii ezhegodnik Rossii (2002), p. 21. 105. See Stephen K. Wegren and Vladimir R. Belen’kiy, “Change in Land Relations: The Russian Land Market,” in David J. O’Brien and Stephen K. Wegren, eds., Rural Reform in Post-Soviet Russia (Washington and Baltimore: Woodrow Wilson Center Press and Johns Hopkins University Press, 2002), chap. 4. 106. “Dense” refers to the number of people who know others well. See O’Brien, Patsiorkovski, and Dershem, Household Capital and the Agrarian Problem, p. 93. 107. Ibid., pp. 139–140. 108. Richard Rose, “Uses of Social Capital in Russia: Modern, Pre-modern, and Anti-modern,” Post-Soviet Affairs, vol. 16, no. 1 ( January–March 2000), p. 53. 109. Ibid., p. 37. 110. Private farm data obtained from Andrei Morozov, vice president of AKKOR (May 24, 2004). 111. Rossiiskii statisticheskii ezhegodnik (2003), p. 408. Overall, however, most private farms are small. In 2002, 40% of all private farms were 10 ha or less. The single most common category of a Russian private farm was 21–50 ha (18% of all private farms), and the second most common size was 11–20 ha (15% of all private farms). Ibid., p. 408. 112. See the story of a private farmer and his struggles to become successful in B. S. Kriven’kii, “Fermerskoe khoziaistvo i naemnyi trud,” in A. V. Petrikov and R. E. Praust, eds., Problemy fermerskogo dvizheniia v Pytalovskom raione Pskovskoi oblasti (Moscow: AgriPress, 2000), pp. 35–38. 113. R. V. Ryvkina and L. Ia. Kosals, eds., Sotsial’nye posledstviia rynochnykh reform v Rossii (Moscow, 1997), p. 236. 114. Krest’ianskie vedomosti, nos. 18–19 (May 1–14, 2000), p. 2. 115. Interview with V. Belenk’iy, Moscow (August 3, 2001). 116. For an analysis of state support for private farmers, including how subsidized credits were disbursed, see Wegren, Agriculture and the State, chap. 6. 117. Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv v Rossii (Moscow: Goskomstat, 2000), p. 39. 118. This deputy was president of AKKOR, Vladimir Bashmachnikov. In the 2003 Duma election, the head of AKKOR Liubov Rudikova, was from Voronezh oblast, Fermerskoe samoupravlenie, no. 12 (December 2003), p. 3. 119. Fermerskoe samoupravlenie, no. 3 (March 2004), p. 7. 120. Ibid. 121. Interview, Moscow (May 24, 2004). 122. Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv v Rossii, p. 13. 123. Fermerskoe samoupravlenie, no. 3 (March 2004), p. 14. 124. Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv v Rossii, p. 41.

notes / 259 125. “O deiatel’nosti krest’ianskikh (fermerskikh) khoziaistv Rossiiskoi Federatsii,” Statisticheskii biulleten’, no. 10 (October 2000), p. 13. 126. Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv v Rossii, p. 11. 127. Ibid., p. 37. 128. Itogi khoziaistvennoi deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv Rossiiskoi Federatsii v 1993 godu (Moscow: Goskomstat, 1994), p. 5. 129. V. D. Smirnov, Fermerstvo v Rosii—chto eto takoe (Novosibirsk: Russian Academy of Sciences, 2003), p. 38. 130. A survey found an average of 1.4 members per farm, 0.7 family members per farm, and 1.3 hired workers per farm, for a total of 3.4 persons per farm. This average per farm was then multiplied by the number of registered farms. See Smirnov, Fermerstvo v Rosii—chto eto takoe, p. 34. For somewhat lower estimates, see Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh ( fermerskikh) khoziaistv v Rossii, p. 36. 131. Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2000), p. 18. 132. Wegren, Agriculture and the State, p. 212. 133. “O deiatel’nosti krest’ianskikh (fermerskikh) khoziaistv Rossiiskoi Federatsii,” p. 11. 134. Interview, N. Ivanovich ( July 28, 1998). 135. Problemy fermerskogo dvizheniia v Pytalovskom raione Pskovskoi oblasti (Moscow: AgriPress, 2000), pp. 35–37. 136. For an analysis of economic achievements toward large farms during Putin’s first term, see Stephen K. Wegren, “Russian Agriculture During Putin’s First Term and Beyond,” Eurasian Geography and Economics, vol. 46, no. 3 (April–May 2005), pp. 224–44. 137. Wegren, Agriculture and the State, esp. chaps. 3 and 4. 138. Gavin Kitching, “The Development of Agrarian Capitalism in Russia 1991–97: Some Observations from Fieldwork,” The Journal of Peasant Studies, vol. 25, no. 3 (April 1998), p. 12. Emphasis in original. 139. For examples of each of these elements, see Kitching, ibid.; Stephen K. Wegren, “Socioeconomic Transformation in Russia,” pp. 237–71; and David Epstein, “The Financial Crisis of Russian Agriculture Enterprises and Ways of Overcoming It,” unpublished manuscript. 140. Rossiiskii statisticheskii ezhegodnik (2003), pp. 407, 420. 141. Sel’skoe khoziaistvo v Rossii (Moscow: Goskomstat, 2002), p. 95. See also Sel’skokhoziaistvennaia deiatel’nosti krest’ianskikh (fermerskikh) khoziaistv v Rossii, p. 37; and Smirnov, Fermerstvo v Rosii—chto eto takoe, p. 34. 142. Rossiiskii statisticheskii ezhegodnik (2003), p. 406; and Osnovyye pokazateli sel’skogo khoziaistva v Rossii v 2003 godu, p. 32. 143. Ibid., p. 31. 144. Rossiiskii statisticheskii ezhegodnik (2003), p. 399. 145. Osnovyye pokazateli sel’skogo khoziaistva v Rossii v 2003 godu, p. 18. 146. See e.g., A. Ogarkov, “Obustroistvu sela—nauchnuiu osnovu,” APK: ekonomika, upravlenie, no. 2 (February 2001), pp. 3–7.

260 / notes

Chapter 6 Peasants’ Moral Economy and Implications for Russia’s Agrarian Capitalism 1. See William James Booth, “On the Idea of the Moral Economy,” American Political Science Review, vol. 88, no. 3 (September 1994), pp. 653–67. 2. See e.g., Carol Scott Leonard, “Rational Resistance to Land Privatization: The Response of Rural Producers to Agrarian Reforms in Pre- and PostSoviet Russia,” Post-Soviet Geography and Economics, vol. 41, no. 8 (November–December 2000), pp. 605–20. 3. For an elaboration of this argument, see Stephen K. Wegren, Agriculture and the State in Soviet and Post-Soviet Russia (Pittsburgh: University of Pittsburgh Press, 1998). 4. Jerry Hough sees a strong Russian state in the economy in general. See Jerry F. Hough, The Logic of Economic Reform in Russia (Washington, DC: The Brookings Institution, 2001), chap. 2. 5. See Stephen K. Wegren, ed., Russia’s Policy Challenges: Security, Stability, and Development (Armonk, NY: M. E. Sharpe, 2003); and Dale R. Herspring, ed., Putin’s Russia: Past Imperfect, Future Uncertain, 2nd ed. (Lanham, MD: Rowman and Littlefield, 2004). 6. See Marshall I. Goldman, Gorbachev’s Challenge (New York: W. W. Norton, 1987), chap. 3; Padma Desai, Perestroika in Perspective: The Design and Dilemmas of Soviet Reform (Princeton: Princeton University Press, 1989), esp. chap. 8; and Archie Brown, The Gorbachev Factor (Oxford and New York: Oxford University Press, 1997), chap. 5. 7. On the role of banks, see Hough, The Logic of Economic Reform, chap 2, but esp. p. 40. 8. Two factors exert pressure for the elongation of the transitional period during which the state will play a prominent role: (1) political pressures to protect producers and processors from the most damaging aspects of market reforms; (2) the collapse of the financial system in August 1998, that led to increased reregulation of the economy. 9. See A. Haroon Akram-Lodhi, “The Agrarian Question, Past and Present,” The Journal of Peasant Studies, vol. 25, no. 4 ( July 1998), pp. 134–49. 10. Robert H. Bates, “Lessons from History, or the Perfidy of English Exceptionalism and the Significance of Historical France,” World Politics, vol. XL, no. 4 ( July 1988), pp. 499–516. 11. George C. Comninell, “English Feudalism and the Origins of Capitalism,” The Journal of Peasant Studies, vol. 27, no. 4 ( July 2000), p. 3. 12. See William C. Thiesenhusen, ed., Searching for Agrarian Reform in Latin America (Boston: Unwin Hyman, 1989); Alain de Janvry, The Agrarian Question and Reformism in Latin America (Baltimore: Johns Hopkins University Press, 1981). 13. Common foci have been economic issues such as agricultural development, ensuring food supplies to urban populations, food price policies, food subsidy policies, food trade policies, peasant differentiation, or land distribution to peasant households. See Henry Bernstein, “Agrarian Questions Then and Now,” The Journal of Peasant Studies, vol. 24, nos. 1–2 (October 1996 and January 1997), pp. 22–59.

notes / 261 14. Michael Lipton, Why Poor People Stay Poor: Urban Bias in World Development (Cambridge, MA: Harvard University Press 1977). 15. James C. Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia (New Haven: Yale University Press, 1976). 16. Robert H. Bates, Markets and States in Tropical Africa: The Political Basis of Agricultural Policies (Berkeley: University of California Press 1981); and Robert H. Bates, Essays on the Political Economy of Rural Africa (Berkeley: University of California Press, 1983). 17. Analysts either implicitly or explicitly link reform success to private farming, and thus equate the failure of private farming with overall reform failure. See Leonard, “Rational Resistance to Land Privatization.” 18. See David A. J. Macey, William Pyle, and Stephen K. Wegren, eds., Building Market Institutions in Post-Communist Agriculture: Land, Credit, and Assistance (Lanham, MD: Lexington Books, 2004). 19. Serguey Braguinsky and Grigory Yavlinsky, Incentives and Institutions: The Transition to a Market Economy in Russia (Princeton: Princeton University Press, 2000), chap. 6. 20. Anders Aslund, How Russia Became a Market Economy (Washington, DC: The Brookings Institution, 1995), p. 12. 21. See Marshall I. Goldman, The Piratization of Russia: Russian Reform Goes Awry (London and New York: Routledge, 2003), chap. 5. 22. Peter Reddaway and Dmitri Glinski, The Tragedy of Russia’s Reforms: Market Bolshevism Against Democracy (Washington, DC: US Institute of Peace, 2001), chap. 5. 23. It is important to note that field work has documented a great deal of variation among farm managers, and thus universal classification is not only difficult but ultimately misleading. 24. The best example is Leonard, “Rational Resistance to Land Privatization.” 25. See e.g., Johan F. M. Swinnen, Allan Buckwell, and Erik Mathijs, eds., Agricultural Privatization, Land Reform, and Farm Restructuring in Central and Eastern Europe (Aldershot: Ashgate, 1997); and Stephen K. Wegren, ed., Land Reform in the Former Soviet Union and Eastern Europe (New York and London: Routledge, 1998). 26. This point follows from Samuel L. Popkin, The Rational Peasant: The Political Economy of Rural Society in Vietnam (Berkeley: University of California Press, 1979). 27. This percentage is for individuals only. It does not include transactions for rural land by enterprises or municipalities. 28. Hough, The Logic of Economic Reform, p. 171. 29. Timothy J. Colton, “Economics and Voting in Russia,” Post-Soviet Affairs, vol. 12, no. 4 (October–December 1996), pp. 289–317. 30. Ralph S. Clem and Peter R. Craumer, “A Rayon-Level Analysis of the Russian Election and Constitutional Plebiscite of December 1993,” PostSoviet Geography, vol. 36, no. 8 (October 1995), p. 84; and Clem and Craumer, “The Geography of the Russian 1995 Parliamentary Election: Continuity, Change, and Correlates,” Post-Soviet Geography, vol. 36, no. 10 (December 1995), pp. 587–616.

262 / notes 31. Timothy J. Colton, “Determinants of the Party Vote,” in Timothy J. Colton and Jerry F. Hough, eds., Growing Pains: Russian Democracy and the Election of 1993 (Washington, DC: The Brookings Institution, 1998), pp. 75–114; and Yitzhak M. Brudny, “Continuity or Change in Russian Electoral Patterns? The December 1999–March 2000 Election Cycle,” in Archie Brown, ed., Contemporary Russian Politics: A Reader (Oxford: Oxford University Press, 2001), pp. 154–78. 32. Ibid.; and Colton, “Economics and Voting in Russia.” 33. Marie Lavigne, The Economics of Transition: From Socialist Economy to Market Economy, 2nd ed. (New York: St. Martin’s Press, 1999), chap. 4; and Leslie Holmes, Post-Communism (Durham: Duke University Press, 1997), chap. 8. 34. See Shwu-Eng H. Webb and Francis C. Tuan, “China’s Agricultural Reforms: Evaluation and Outlook,” in Joint Economic Committee, China’s Economic Dilemmas in the 1990s: The Problems of Reforms, Modernization, and Interdependence, Joint Committee Print, 102nd Congress, 1st session (Washington, DC: GPO, 1991), pp. 365–84; and S. Lee Travers, “Getting Rich Through Diligence: Peasant Income after the Reforms,” in Elizabeth J. Perry and Christine Wong, eds., The Political Economy of Reform in PostMao China (Cambridge: Council on East Asian Studies/Harvard University Press, 1985), chap. 4. 35. Douglass C. North, “The Contribution of the New Institutional Economics to an Understanding of the Transition Problem,” (Helsinki: UNU World Institute for Development Economics Research, 1997), p. 16. 36. Wegren, Agriculture and the State. 37. Hough, The Logic of Economic Reform, pp. 4–5. 38. However, policy innovation alone is not adequate. In a very insightful book, Neil Melvin argues that policy innovation was occurring in agriculture even during the Soviet period, in particular the post-Soviet period, but that institutional capacity to implement and fulfill policy was decaying over time. See Neil J. Melvin, Soviet Power and the Countryside: Policy Innovation and Institutional Decay (United Kingdom and New York: Palgrave Macmillan, 2003). 39. Leonard, “Rational Resistance to Land Privatization,” p. 607. 40. See Gabriel A. Almond, et al., Comparative Politics: A Theoretical Framework, 3rd ed. (New York: Longman, 2001), chap. 1; and Charles E. Lindblom, The Policy-Making Process, 2nd ed. (Englewood Cliffs, NJ: Prentice-Hall, 1980), chap. 10. 41. For more on which parties had agrarian planks in their party programs, see Renata Yanbukh, “Driving Forces in Russian Agrarian Policy in the 1990s,” in L. Alexander Norsworthy, ed., Russian Views of the Transition in the Rural Sector: Structures, Policy Outcomes, and Adaptive Responses (Washington, DC: The World Bank, 2000), p. 49. 42. V. V. Patsiorkovski, “Problemy sela,” in N. M. Rimashevskaia, ed., Rossiia— 2000: sotsial’no demograficheskaia situatsiia (Moscow: Institute for SocialEconomic Problems of the Population, 2001), p. 249. 43. Hough, The Logic of Economic Reform, p. 170.

notes / 263 44. For an analysis of regional differences based on survey data, see Stephen K. Wegren, David J. O’Brien, and Valeri V. Patsiorkovski, “Household Responses, Regional Diversity, and Contemporary Agrarian Reform in Russia,” The Journal of Peasant Studies, vol. 31, nos. 3–4 (April–July 2004), pp. 552–87. 45. For example, in Belgorod oblast, large farms distribute strips of land to farm members who grow sunflowers. These strips of land are in addition to household private plots and serve as a type of selective incentive for farm members only. The sunflowers are sold to middlemen, exchanged for oil with the local processor, or the land is rented to the local processor. In short, there are strong reasons to conclude that the south has benefited from market reforms. 46. Richard Rose, “Uses of Social Capital in Russia: Modern, Pre-Modern, and Anti-Modern,” Post-Soviet Affairs, vol. 16, no. 1 (January–March 2000), pp. 33–57. 47. David J. O’Brien, Valeri V. Patsiorkovski, and Larry D. Dershem, Household Capital and the Agrarian Problem in Russia (Aldershot: Ashgate, 2000), chap. 6. 48. I owe this insight to Valeri Patsiorkovski, which was conveyed to me by him on July 24, 2001 during fieldwork in Belgorod oblast. 49. That is not to deny that significant obstacles and constraints exist. Primary obstacles continue to be regional trade policies whereby regional governments restrict the import and export of food from their regions. Also important are federal policies that influence the macroeconomic environment. At the micro-household level, the survey data show that all types of households, the poor and nonpoor, overwhelmingly depend upon personal sources for loans, which means that impersonal networks that characterized market relationships are not very developed. Moreover, both the poor and the nonpoor have similar numbers of personal contacts in the village, in the oblast, and in the country, whereas one would expect to see leading households with more contacts, a fact that would suggest wider economic networks. Finally, in a surprising finding, the members of economically strong households are no more happy or satisfied than poor households, and in some cases are less so. This is important because one would expect that economic success would lead to happiness and satisfaction. In addition, a person’s mood is associated with the proclivity to expand land holdings, so that happy people tend to have larger land plots.

Index

Note: page numbers in italic type refer to figures

adaptation, 61, 71, 138 business income as evidence of, 147–50, 151, 157 and Communist Party political strength, 162–6 economic effects of, xiii, 155–62, 194 economic reasons for, 35, 37, 46 by farm managers: conventional wisdom regarding, 62, 91, 99, 103; and farm operations, xiii, 84–5, 87, 103 and food production, 83, 84–5, 155, 207 and food sales, 129, 147, 155, 157 and land ownership and usage patterns, 159–60, 162, 165–6 by large agricultural enterprises, 59, 62, 77, 79–82, 205 by large farms, xiii, 20, 73, 87, 154, 192 and market reform, xii–xiii and material well-being, 156–7, 194 and the moral economy model, 5, 6, 38 origins of, 36–7, 38 political effects of, xiii, 155, 162–7, 194 political reasons for, 35–6, 37 by privatized farms, 81–2, 83 Putin’s policies to assist, 168–9 and the role of the state in, 16, 38 and rural conservatives, 21, 24, 32, 55, 56, 71

by rural households, 107, 125, 129, 147–50, 151 by rural population, xiii, 127, 197, 212, 213 and rural protest possibilities, 166–7, 167 and rural revival, 153, 207 and values, 1, 8–13, 25, 198 under Yeltsin, xiii, 7 see also peasant resistance; resistance; state urban bias; state withdrawal; survival strategy agrarian capitalism, 5, 6, 12 defined, 17, 201–2, 219n70 and food production, 17, 195, 201 and Putin, 7, 25 regional governments, 179–80 in Russia, xiii, 14, 154, 209–13 and state strength, 1, 17–19 see also marketization Agrarian Institute, 89, 132–3, 136, 171 agrarian lobby, 53–4, 71, 211 see also interest groups Agrarian Party of Russia (APR), 166, 228n80 electoral results for, 57–8, 211, 228n76 reform policy of, 55–6, 57–8, 58, 90, 211–12 agrarian question, xiii, 1, 3, 7, 31, 200–1

index / 265 agrarian reform, 208 goals of, 64, 83–4, 191–2 in Hungary, 26–7 and peasants, 13–16, 32 and private farms, 19, 191–2 in Russia, 14, 18–19, 36, 46, 154 and Yeltsin, 2, 7, 32, 52–3, 65 see also agrarian transition; giving reforms; state urban bias; state withdrawal; taking reforms agrarian transition, 198–9, 210–11 in postcommunist nations, 25–31, 202 see also agrarian reform agricultural enterprises, see large agricultural enterprises Agricultural Land Law (Japan), 75–6 AKKOR, see Association of Peasant Farmers and Agricultural Cooperatives of Russia Albania, 26, 30–1, 222n118 arts of resistance, 4 see also weapons of the weak Association of Peasant Farmers and Agricultural Cooperatives of Russia (AKKOR), 55, 187–8, 258n118 Baltic states, 26, 27–8 bankruptcy, 67, 78, 80, 188, 228n82 barter transactions, 127, 185, 189 Bates, Robert, 4, 201 see also state urban bias Belgorod oblast, 86–7, 180 food sales in, 128, 247n102 reform in, 73–4, 76–7, 78, 263n45 Bolsheviks, 10, 11, 13 Bolshoe Sviattsovo (Tver’ oblast), 128–9 Brezhnev, Leonid, 39, 40, 92, 106, 199 business income and land plot increases, 143–4, 149 in rural households, 145, 146, 147–50, 151

capital investments, 115, 178, 188, 233n64 and shock therapy, 43, 44, 65 and state urban bias, 43, 44, 47, 51–2, 65, 110 and state withdrawal, 40, 47, 51–2 Caucasus, 9, 163 Center on Agro-food Economy, 89, 100, 237n111 Central Black Earth economic region (CBE), 45, 76–7, 250n143 Central region, 45, 112, 243n36, 250n143 China, 22, 49, 200, 209 Chuvashia, 129 see also Chuvash Republic Chuvash Republic, 86–7 see also Chuvashia collective enterprises, 66, 68 see also large agricultural enterprises; state and collective farms collective farms, 55, 68, 76, 84, 125, 225n17 in Hungary, 27 income of, 110, 118, 144 labor brigades on, 238n127 and privatization, 63, 68, 82 in Romania, 29 see also state and collective farms collectivization, 14–15, 26, 28 under Stalin, 14, 40, 85, 208 commercialization, 3, 6, 38, 59, 106, 107, 197 commodity exchanges, 92, 173, 227n69 communes, 9, 10–11, 13, 216n21, 218n51 Communist Party of the Russian Federation (KPRF), 40, 154, 211 adaptation and, 162–6 land market policy of, 166, 212 shock therapy and, 41–2 support for, 83, 194, 209, 253n26, 253n32

266 / index concordant values, 7, 8, 24, 198, 208 Congress of People’s Deputies (CPD), 162, 163 Constitution, 56, 163 credit system, 50, 52, 53, 79 reform of, 170–1, 179, 192 subsidization of, 101, 187, 188, 189 cultural continuity thesis, 161, 206 Czechoslovakia, 209 see also Czech Republic Czech Republic, 26, 27, 209, 234n73 debt, 48 of farms and large agricultural enterprises, 51, 61, 79–80, 99, 115, 189, 193 restructuring of, 101, 102, 169–70, 192 see also bankruptcy; farm unprofitability decollectivization, 65, 67, 103, 131 democratization, 162, 210–11 domestic food producers, 48, 49, 171, 192–3 see also food production Duma, 55, 187, 249n137 Agrarian Party of Russia in, 57, 211, 228n76 elections to, 57, 163, 165, 166, 211, 228n76, 258n118 legislation in, 73, 176, 227n73, 228n78 elections, 57, 162–3, 165–6, 211, 228n76, 253n26 Emancipation, 9–10, 22 embedded values and institutions, 3, 5, 150, 197 and market reforms, 3, 24, 107, 150–1, 197, 208 and the moral economy model, 3, 5, 107, 108, 197

and peasants: adaptation by, 1, 8–13, 25; behavior of, 1, 3, 5, 6–7, 197, 198, 208; rebellion by, 33–4, 166; resistance by, 8–13, 32 entrepreneurism by farm managers, 83–4, 88, 95 and land plot expansion, 143, 144, 151 during reform, 78, 119, 130, 149, 176, 185, 212 European Union, 49, 239n154 experts, 89, 96, 97, 97, 100, 205, 239n141 exports, 19, 54, 171, 201 food, 49, 50, 178, 219n70 prices, 49, 50–1 farm discipline, 72, 79, 87, 91 farm managers, 24, 80 adaptation by: conventional wisdom regarding, 62, 91, 99, 103; and farm operations, xiii, 84–5, 87, 103 entrepreneurism by, 84, 88, 95 and farm discipline, 72, 91 and farm privatization, 89–90, 99–100 and farm reorganization, 15–16, 66, 89, 91, 205 and food processing, 72, 86 food production by, 84–5, 129 income of, 20, 91, 93–6, 205, 238n140 land distribution by, 71, 74, 90, 92, 96, 132, 205 land plot size expansion by, 98–9 and land reform, 91, 92, 96, 205, 239n142 and marketization, 2–3, 22, 61, 87–8, 102, 103 and the moral economy model, 61, 70, 102 obstruction by, 19–21, 87–8, 90, 91, 99, 205

index / 267 opportunism by, 20, 62, 88, 91–3, 205 powers of, 71–3, 139, 230n17 and private farming, 78, 205, 232n41 and privatization: conventional wisdom of attitudes toward, 2–3, 61, 87–8, 91, 96, 102; data on attitudes toward, 88–9, 96, 205 and production mix, 72, 84–5, 91 and reform: attitudes toward, xiii, 19–21, 88, 92–3, 237n125; benefits of, 20, 94–6, 99, 205; desires from, 99–101, 239n154 resistance by: 19–20, 62, 96, 132, 205; early in reform period, 71, 74, 76, 103 in the Soviet era, 20, 71–3, 77, 219n70 standard of living of, 93–4, 93, 100 and wage issues, 72, 94–5, 110, 111 see also farm specialists farm privatization, 27, 55 and farm managers, 89–90, 99–100 Nizhnii Novgorod model of, 56, 57, 58, 68–9, 81, 81, 205 farm reorganization, 30, 52, 76, 78, 100, 131 and farm managers and specialists, 15–16, 66, 89, 91, 205 and farm unprofitability, 66, 67, 68, 81 and labor, 79, 81, 82, 84 and land shares distribution, 74, 230n15, 230n17 and large agricultural enterprises, 66–8, 73, 77, 233n71 and large farms, 15–16, 19, 67, 68, 73 legislation regarding, 66–8, 73, 74, 230n15 and private farms, 90, 91 and state and collective farms, 57, 64, 73, 233n71, 237n120

see also state and collective farms farm specialists, 78, 84, 103, 129 and land privatization, 96, 97, 205 and reform, 92, 93, 94–6, 205, 239n142 see also farm managers farm unprofitability, 77, 99, 103, 168, 233n64 of large and private farms, 48, 61, 68, 115, 188 and reorganization, 66, 67, 68, 81 Fatherland-All Russia, 57, 211 federal food fund, 47, 233n66, 236n94 see also regional food fund Federation Council, 176, 199, 249n137 financial crisis (1998), 70, 111, 156, 188, 194, 260n8 food consumption, 65, 129, 241n23 by households, 59, 109, 126, 173, 184, 193, 206 food market, 80, 86, 87, 189, 205, 206 state regulation of, 55, 168, 172 see also food trade food processing, 52, 54, 83, 179, 243n73 and farm managers, 72, 86 and large farms, 86–7 in the Soviet era, 49, 219n70 food production, 12, 40, 168 and adaptation, 83, 84–5, 155, 207 and agrarian capitalism, 17, 195, 201 and the agrarian lobby, 54, 57 by farm managers and specialists, 84–5, 129 and food sales, 126–7, 151, 181, 193 and household income, 123–5, 141 by households, 119–20, 121–5, 173, 183 and land plots, 119, 124–5, 127, 141, 159, 184 and large agricultural enterprises, 119, 120, 181, 189, 191–2, 193

268 / index food production—continued and large farms, 84–5, 119, 125, 193, 251n1 and private farmers, 24, 129, 186, 186, 191–2, 193 and production capacity, 45, 123, 124, 157 under Putin, 70, 168, 169, 176–7, 192 and reform, 154, 206, 207 and regional governments, 178–9 and rural population, xiii, 119–20, 120, 121 and rural revival, 180–1, 193 and shock therapy, 45, 64, 83 in the Soviet era, 219n70, 251n1 and state urban bias, 39, 64, 65, 83 and surplus labor, 122–3 see also domestic food producers food sales and adaptation, 129, 147, 155, 157 and food market trade, 125, 173 and food production, 127, 181, 193 and household income, 122, 130, 157 by households, 59, 118, 126–7, 129–30, 173, 206 and land plots, 124–5, 127–8, 159 and large farms and agricultural enterprises, 171, 189, 193 by private farmers, 129, 193 and private plots, 125, 177, 246n93, 256n73 and reform, xiii, 107, 206 and rural population, xiii, 112, 118, 126, 126, 151, 157 food security, 171, 251n1 food trade, 40, 49, 55 channels of, 86–7, 125 foreign, 57, 171–2 by large farms and agricultural enterprises, 79, 80, 86–7, 205

and reform, 18–19, 79 see also foreign trade food unions, 54 see also agrarian lobby; interest groups foreign investment, 78–9, 179, 219n70, 234n73 foreign trade, 48, 171–2 and reform, 49, 202, 226n47 and regional governments, 178, 179, 263n49 and rural revival, 178, 179, 192–3 see also food trade; protectionism Gaidar, Egor, 41, 42, 109 Gini coefficient, 160, 252n13 giving reforms, 15, 32 in postcommunist states, 25–6, 31, 33, 202 Russian agrarian transition as, 14, 16, 25, 33, 208, 213 Gorbachev, Mikhail, 49, 162, 163, 199 and agrarian policy, xii, 2, 7, 40–1, 72, 118 Gordeev, Aleksei, 170, 173, 212 and foreign food trade, 171–2 resources to farms, 81, 168, 169, 228n82, 254n43 governmental resolutions, 63, 65–7, 73, 74, 230n15 government leasing program, 188, 189, 192 horizontal integration, 81, 171 see also vertical integration Hough, Jerry and industrial privatization, 63 and reform, 83, 108, 207, 210 and state strength, 18, 260n4 and Yeltsin’s policies, 43, 78 human capital, 122, 140, 245n81, 250n143 and private farmers, 189–90, 191

index / 269 and rural households, 124, 125, 183, 184 and rural revival, 183, 189–90 Hungary, 26–7, 30, 209, 234n73

International Finance Corporation, 68, 89–90, 99, 100, 136, 237n109 Ivanovo oblast, 243n36, 246n94, 246n95

imports, 19, 43, 50, 57, 178, 251n1 and large farms, 171–2, 193 policy positions regarding, 56, 58, 102 protection, 48–9, 64, 109, 193 under Putin, 168, 171–2, 192 in the Soviet era, 58, 219n70 and state urban bias, 47, 48–9, 64, 109 income, 17 differentials, 110–12, 117 of farm managers and specialists, 20, 91, 93–6, 205, 238n140 of farms, 110, 111, 118, 136, 144 and food production, 123–5, 141 from food sales, 122, 130, 157 of households, xiii, 105–6, 144–6, 147, 151, 206 from land leasing, 95, 106, 136, 145 and land market participation, 98, 142 and land plots, 141–4, 149 and reform, 94, 107, 144–6, 206, 209 stratification of, 91, 93–6, 160, 205 see also business income; wages industrial privatization, 63, 70, 78 inflation, 42, 54 Institute of Land Relations and Land Tenure, 96–7, 127, 133–4, 138, 139 Institute of Sociology, 96–7, 127, 133–4, 138, 139 institutions, 18, 38, 107, 197 and embedded values, 3, 5, 150, 197 peasant, 1–3, 5, 6, 8, 59, 150 interest groups, 21, 54, 211 see also agrarian lobby

Japan, 74–6, 77 joint farms, 67, 68, 82 Kaluga oblast, 96, 127, 138, 139, 246n94, 246n95 see also Institute of Sociology Khlystun, Viktor, 88, 249n127 Kostroma oblast, 74, 86, 88, 94–5, 190, 236n98 Krasnodar krai, 47, 86–7, 168, 187, 247n102 Krasnogvardeiskii raion (Belgorod oblast), 74, 78 kulaks, 4, 12, 14, 17 labor, 2, 7, 19, 83, 234n79 brigades, 78, 84, 232n39, 238n127 on large farms and agricultural enterprises, 70, 71, 78, 79, 103 on private farms, 189–90 and reform, 103, 230n13 on reorganized farms, 79, 81, 82, 84 see also surplus labor land certificates, 74, 231n26 Land Code, 30 of 1922, 12–13, 218n51 of 2001, 56, 57, 139, 174, 239n146, 249n137, 227n73; and Agrarian Party of Russia, 211; and land market, 131–2; rural land transactions in, 174–5 land deeds, 63, 90–1, 135, 138–9, 184, 205 land distribution, 25, 31, 76 by farm managers, 71, 74, 92, 96, 132 and reform, 33–4, 73, 202, 209 see also land reform

270 / index land leasing, 67, 80, 128, 131, 138, 207 income from, 95, 106, 136, 145 and the land market, 135–6 land market, 80, 166, 179, 184, 219n70 attitudes toward: elite, 91, 96, 205, 212; farm managers, 71, 96; rural, 55, 131, 207, 212 constraints on the, 138–40 in Hungary, 27 in Japan, 75 and the land code, 131–2, 239n146 and land leasing, 135–6 participation, 98–9, 107, 142, 151 under Yeltsin, 52, 57, 67, 69 land mortgaging, 67, 231n27 land ownership, 26, 29–30, 219n70 attitudes toward: 133–4, 134; farm managers, 71, 96; rural, 91, 131, 151, 207; urban, 130, 131 legislation, 138–9 stratification of, 159–60 under Yeltsin, 2, 67, 136 land plots, 66, 137, 140–1, 244n57 attitudes toward, 130, 131, 132, 133 and entrepreneurism, 143, 144, 151 expansion of, 98–9, 159, 160, 162 and food production, 119, 124–5, 127, 141, 159, 184 and food sales, 124–5, 127–8, 159 income from, 141–4, 149 see also private plots; rental land plot land privatization, 7, 15, 19, 63, 73 attitudes toward: 132–3, 133; expert, 96, 97; farm managers and specialists, 96, 97, 205; rural, 22–4, 130, 131, 151 land purchases, see land transactions land reform, 11, 22–4 in Albania, 30–1

attitudes toward, 96, 131, 132–5, 205, 239n142 in the Baltic states, 27–8 in Bolivia, 23 and farm managers and specialists, 91, 92, 96, 205, 239n142 in Hungary, 26–7 in Japan, 74–6, 77 in Latin America, 23 legislation regarding, 67, 230n13 in Mexico, 23 in Moldova, 29–30 in Romania, 28–9 and rural households, 131, 132–5 land relations, xii, xiii, 130–1, 174–6 land sales, 30, 56, 58, 211–12 attitudes toward, 132, 133 legislation regarding, 67, 249n137 land shares distribution of, 62–3, 80, 90, 205, 209, 231n26 equalization of, 66, 74, 230n15, 248n123 and farm reorganization, 74, 230n15, 230n17 leasing of, 136, 151, 207 legislation regarding, 66, 67, 69, 74, 138, 230n15 land transactions, 63, 75, 90, 128, 227n73 legislation regarding, 138, 139, 174–6, 179, 188, 244n57 municipal market for, 135, 136 numbers of, 135, 136–7, 151, 207 rural, 137–8, 138, 151, 174–6, 207, 227n73 Lapshin, Mikhail, 90, 211 large agricultural enterprises, 52, 56, 90, 110, 136, 228n82 and adaptation, 59, 62, 77, 79–82, 205 and debt, 51, 61, 79, 80, 99, 115, 189, 193

index / 271 and farm reorganization, 66–8, 73, 77, 233n71 financial status of, 79–82 and food production, 119, 120, 181, 189, 191–2, 193 and food sales, 171, 189, 193 and food trade, 79, 80, 86–7, 205 and foreign trade, 192–3 and labor, 70, 71, 78, 79, 103 under Putin, 68, 168, 193 and reform, 78, 191–2 and rural revival, 191–4, 195, 207 and shock therapy, 43, 44, 44 and state and collective farms, 77, 191, 233n71 and state urban bias, 43, 44, 44, 65 see also large farms; state and collective farms large farms, 2, 90, 139, 178, 179, 233n64 and adaptation, xiii, 20, 73, 87, 154, 192 and the credit system, 52, 170–1 debt relief for, 169–70 debt of, 51, 61, 79–80, 99, 115, 189, 193 and farm reorganization, 15–16, 19, 67, 68, 73 and food processing, 86–7 and food production, 84–5, 119, 125, 193, 251n1 food sales by, 171, 189, 193 and food trade, 79, 80, 86–7, 205 imports, 171–2, 193 labor, 70, 71, 78, 79, 103 price policy, 50, 172–3 Putin policy initiatives, 70, 81, 169–73, 192 reform, 19, 24, 64, 69, 83, 212 and rural revival, 24, 183 state orders on, 77, 233n66 state urban bias, 19, 52, 61, 109–10 unprofitability of, 48, 61, 68, 115 see also large agricultural enterprises Latin America, 22, 23

Latonovo (Rostov oblast), 128 Law on Peasant Farms, 30, 230n13 Leningrad oblast, 95, 138, 180, 234n72 Lenin, Vladimir, 4, 40, 200 lichnoe podsobnoe khoziaistvo, 176–7 see also private plots Lipton, Michael, 38, 200–1 see also state urban bias managers, see farm managers marketization attitudes toward, 2–3, 4, 108–9 and farm managers, 2–3, 22, 61, 87–8, 102–3 and the moral economy model, 3, 4, 6, 102, 106–8, 201 and peasant behavior, 1, 3, 4, 23–4, 106–8, 150 and rural households, 24, 150, 151 see also agrarian capitalism market reform, xii–xiii, 32, 43, 116, 202 and embedded values, 3, 24, 107, 150–1, 197, 208 see also marketization material well-being, 116, 156–7, 194 Mexico, 22, 23, 221n90 migration, 5, 113, 126, 213, 216n14 mir, 8, 10–11, 16, 32, 216n21 Moldova, 26, 29–30 moral economy model and adaptation, 5, 6, 38 defined, xii, 3 and embedded values, 3, 5, 107, 108, 197 and farm managers, 61, 70, 102 and marketization, 34, 61, 102, 106–8, 201 and peasants: xii, 3–4, 106–7; behavior of, 1, 6–7, 25, 32, 59; and reform, 153, 194–5; values of, 59, 107, 108 and the political economy model, 25, 32 and privatization, 3, 61, 102

272 / index moral economy model—continued problems with, 3–5, 32 and reform, 153, 194–5, 198 see also Scott, James Morozov, Andrei, 187–8 see also Association of Peasant Farmers and Agricultural Cooperatives of Russia (AKKOR) Moscow, 49, 57, 112, 116, 169, 187 policies from, 36, 73, 199 reformers in, 18, 34, 151, 185, 209, 214 see also Agrarian Institute; Center on Agro-food Economy; Institute of Land Relations and Land Tenure Moscow oblast, 88, 138, 139, 246n95 networks, 98, 150 personal, 3, 197, 213, 263n49 social, 33, 184–5, 213 New Economy Policy (NEP), 12–13, 22, 200 Nizhnii Novgorod model for farm privatization, 56, 57, 81, 81, 205 and farm managers, 89–90, 99–100 origins of, 68, 69 Nizhnii Novgorod oblast, 180 Agrarian Institute survey in, 132, 133 International Finance Corporation survey in, 136, 237n109 privatized farms survey in, 82, 83, 89, 99 Northern Caucasus region, 45, 112, 190, 237n121 Northwest region, 45, 250n143 Novgorod oblast, 87, 180, 246n94, 246n95, 247n102 On Agricultural Land Transactions, 133, 174–6 On Personal Subsidiary Farming, 176–7

On the Financial Renewal of Agricultural Producers, 169–70 Orel’ oblast Agrarian Institute survey in, 132, 133 International Finance Corporation survey in, 136, 237n109 privatized farms survey in, 82, 83, 89, 99 otkhodniki, 106, 216n20 peasant adaptation, 22, 59 and disturbances and rebellion, 6, 33, 167 factor affecting: embedded values as, 1, 8–13, 25; nature of agrarian reform as, 13–16; state strength as, 16–19 and the legal environment, 36–7 see also peasant resistance peasant households, 12–13, 24, 59, 105–6, 109, 110 see also rural households Peasant Land Bank, 11, 217n32 peasant rationality, 37–8, 224n7 see also Popkin, Samuel; Wolf, Eric peasant resistance, 1, 5, 22, 33, 107, 201 causes of, 3–4 defining, 15, 32 factor affecting: embedded cultural values as, 8–13, 32; nature of agrarian reform as, 13–16, 32; state strength as, 16–19, 32 under Stalin, 14–15, 17 see also peasant adaptation; Wolf, Eric peasants, 28, 105, 224n8, 230n13 and the agrarian question, 1, 200–1 and agrarian reform, 13–16, 32 and collectivization, 14–15 disturbances by, 3, 6, 9–10, 217n42

index / 273 and embedded values: and adaptation, 1, 8–13, 25; and behavior, 1, 3, 5, 6–7, 197, 198, 208; and the moral economy model, 107, 108; and rebellion, 33–4, 166; and resistance, 8–13, 32 institutions of, 1–3, 5, 6, 8, 59, 150 and land reform, 22, 24 and marketization, 1, 3, 4, 23–4, 106–7, 108, 150 and migration, 5, 216n14 and the moral economy model: xii, 3–4, 106–7; and behavior, 6–7, 25, 32, 59; and reform, 153, 194–5; and values, 59, 107, 108 and the New Economic Policy (NEP), 12–13 and privatization, 3, 150 rebellion by, 11, 15, 22, 33–4, 166 and reform, xii, 153, 194–5 revolution by, 22, 33, 254n38 under Stalin, 4, 14–15, 17 and state urban bias, 59, 109–10 and state withdrawal, 59, 110 and values, 8, 9–12, 13, 32, 216n20 see also Association of Peasant Farmers and Agricultural Cooperatives of Russia (AKKOR); cultural continuity thesis; peasant adaptation; peasant rationality; peasant resistance peasant-state relations, 6, 40, 59 Poland, 26, 27, 31, 209, 234n73 Popkin, Samuel, 224n7 see also peasant rationality political economy model, 25, 32, 38 poverty, 6, 93, 94, 164, 200, 203 and household food production model, 123, 124, 141, 142 and reform, 155–7, 159, 160, 161, 194, 206 and rural households, 140, 143 Preobrazhensky, 50, 200

presidential decrees, 26, 63–4, 170 by Yeltsin, 65–7, 73, 136, 138, 230n15, 231n27 price liberalization, 40, 41, 42 price parity, 57, 228n78 prices export, 49, 50–1 food, 17, 41, 43, 48, 55, 112 policy, 50, 54–5, 58, 202 purchase: 18, 80, 54, 92, 109, 111, 179, 225n17, 227n69, 243n53; domestic, 49–51, 169; guaranteed minimum, 102, 172–3, 189 wholesale, 48, 72, 201 price scissors, 12, 47–8, 99, 109 private farms, 50, 55, 68, 136, 139, 237n121 and agrarian reform, 19, 191–2 and farm managers and specialists, 78, 205, 232n41 and farm reorganization, 90, 91 food production by, 24, 129, 186, 186, 191–2, 193 food sales by, 129, 193 human capital on, 189–90, 191 labor force on, 189–90 political strength of, 186, 187–8 productive capacity of, 186, 189 profitability of, 188, 190–1 and reform, 24, 93, 94, 185, 237n125, 261n17 and rural revival, 185–91, 195, 207 and state and collective farms, 90, 91, 185 state financial support for, 186, 187, 188–9 subsidies to, 178, 187–9 under Yeltsin, 2, 52, 121, 188 see also Association of Peasant Farmers and Agricultural Cooperatives of Russia (AKKOR); subsidiary agriculture

274 / index private plots, 119, 136, 139, 190, 207, 257n88 food sales from, 125, 177, 246n93, 256n73 under Putin, 176 in the Soviet era, 118, 125 under Yeltsin, 121 privatization, 72, 201 and collective farms, 63, 68, 82 and farm managers: conventional wisdom of attitudes toward, 2–3, 61, 87–8, 91, 96, 102; data on attitudes toward, 88–9, 96, 205 and land share distribution, 62–3 and the moral economy model, 3, 61, 102 paths to, 61–2 and peasants, 3, 150 and rural population: 5, 24, 61, 109, 119, 130; attitudes toward, 1, 2–3, 108–9, 154 state and collective farms, 52, 66 urban attitudes toward, 61, 108–9 under Yeltsin, 41, 52 see also farm privatization; farm reorganization; industrial privatization; land privatization procurement agents, 86, 189, 236n94, 257n83 production mix, 64, 65, 72, 84–5, 91, 205 productive capacity, 45, 46, 123, 142, 143, 176, 192 and private farms, 186, 189 and rural households, 119, 124, 125, 157–9, 160 and rural revival, 181–3, 186, 189 property rights, 27, 63, 71, 74, 80, 138 protectionism, 48–9, 171, 192, 193, 235n85 Pskov oblast, 73, 86, 190 purchasing agents, 101, 173, 201

Putin, Vladimir, 65, 154, 165, 188, 234n73 adaptation policies of, 168–9 and agrarian capitalism, 7, 25 and the credit system, 170–1 debt policy of, 48, 169–70 and the economy, 42, 199 and food production, 168, 169, 176–7, 192 and imports, 168, 171–2, 192 and the land code, 227n73, 249n137 and the land market, 205, 212 and large agricultural enterprises, 68, 168, 193 and large farms, 70, 81, 169–73, 192 and protectionism, 171, 192 role of the state under, 25, 172–3, 199, 210 and rural households policy, 173–7 and rural revival, xiii, 7, 153–4, 207 and state urban bias, 153, 169 trade policy of, 168, 171 quotas, 66, 72, 78, 171 reform, see adaptation; agrarian reform; Emancipation; farm reorganization; giving reforms; land privatization; land reform; marketization; resistance; taking reforms regional food fund, 47, 178, 236n94 see also federal food fund regional governments, 177–80, 194–5, 207–8, 212, 263n49 rental land plots, 125, 159, 165–6 reorganization, see farm reorganization resistance defining, 15, 32, 71, 77 by farm managers: 19–20, 62, 96, 132, 205; early in reform, 71, 74, 76, 103

index / 275 reform, 24, 197–9, 208 by the rural elite, 62, 74 see also adaptation; peasant resistance; weapons of the weak Romania, 26, 28–9 Rossel’khozbank, 170, 176 Rostov oblast, 73, 84, 86, 96, 128, 136, 187, 248n123 rural conservatives, 54, 56 and agrarian reform, 21, 24, 32, 55, 56, 71 political strength of, 58, 204, 228n80 see also rural interests rural elite attitudes of, 91, 96, 97, 101, 104, 205, 212 and the land market, 91, 97, 205, 212 and reform, 62, 70, 73, 74, 104, 213 rural households, 240n1 adaptation by, 107, 125, 129, 147–50, 151 business income of, 145, 146, 147–50, 151 food production by, 121–5, 176–7, 180–1, 207 food sales by, 126, 126, 151, 173, 206 and human capital, 124, 125, 183, 184 income of, 144–6, 147, 151, 206 land leasing by, 145, 207 and the land market, 151, 207 and land reform, 131, 132–5 and marketization, 24, 150, 151 opportunism by, 107, 127, 140, 146–7, 150, 151, 206, 212 poverty of, 140, 143 Putin policy initiatives for, 173–7 and reform, 24, 105, 107, 151, 206, 207, 212 and rural revival, 180–5, 195, 207 see also peasant households; peasants; rural population

rural infrastructure, 52, 114, 195, 212 deterioration of, 110, 115, 116, 233n64 funding for, 56, 58, 115 rural interests division of, 35, 36, 54–6, 204 political weaknesses of, 35, 36, 53, 56–9 see also rural conservatives rural liberals, 54, 55, 56, 56, 204 see also rural conservatives; rural interests rural population adaptation by, xiii, 127, 197, 212, 213 and agrarian capitalism, 209–10 figures on, 105, 126, 138, 183, 207 food production by, xiii, 119–20, 120, 121 food sales by, xiii, 112, 118, 126, 126, 151, 157 income of, xiii, 111, 111–12 and land privatization, 22–4, 130, 134, 138 and marketization, 2–3, 108–9, 130 opportunism by, 117–19, 121, 135, 141 privatization: 5, 24, 61, 109, 119, 130; attitudes toward, 1, 2–3, 108–9, 154 reform: xiii, 108–9, 117, 118; orientations against, 110–17; orientations toward, 22–5, 109–10, 116, 116–17 see also peasants; rural households rural protests, 166–7, 167, 194, 198 see also peasants, disturbances by; peasants, rebellion by rural revival, 17 and adaptation, 153, 207 and food production, 180–1, 193 and human capital, 183, 189–90 and large agricultural enterprises, 191–4, 195, 207

276 / index rural revival—continued and large farms, 24, 183 and private farms, 185–91, 195, 207 and productive capital, 181–3, 186, 189 under Putin, xiii, 7, 153–4, 207 and regional governments, 177–80, 194–5, 207–8 and rural households, 180–5, 195, 207 and state financial support, 186, 187, 188–9 and trade policies, 178, 179, 192–3 rural social development, 173, 174, 179 Russian Agrarian Union, 54–5 Russian Center on Public Opinion, 88, 100, 109 Saratov oblast, 84, 180, 187, 244n55 Scott, James, 3–4, 22, 106–7, 201, 216n14 see also moral economy model; weapons of the weak sel’sovet, 15, 61, 74 shock therapy, 53, 64, 77, 209 and capital investments, 43, 44, 65 defined, 41–2 effects of, 42–3, 45, 46, 203, 208 and households, 110, 112, 113 and production, 45, 64, 83 and rural change, 35, 40 and state urban bias, 40, 43, 64, 203–4 under Yeltsin, 41, 44, 203 see also state urban bias; state withdrawal Smolensk oblast, 188, 246n94 social development, see rural social development social networks, see networks, social social services, 65, 80, 101, 114, 240n1 Stalin, Josef, 2, 7, 49, 200 collectivization under, 14, 40, 85, 208 and peasants, 4, 14–15, 17

state and collective farms, 26, 28, 31, 218n51 and large agricultural enterprises, 77, 191, 233n71 and legal institutions, 64, 66, 67, 69 in Moldova, 29, 30 and private farms, 90, 91, 185 and privatization, 52, 66 reorganization of, 57, 64, 66–7, 73, 233n71, 237n120 in the Soviet era, 47, 105, 144, 219n70 under Yeltsin, 52, 66, 67 see also farm reorganization state orders, 66, 77, 233n66 state urban bias, 35, 63, 155, 208 defined, 39, 200–1 effects of, 43, 45–6, 204 elements of: capital investment, 43, 44, 47, 51–2, 65, 110; import protection, 47, 48–9, 64, 109; price scissors, 47–8, 64, 109; purchase prices, 47, 49–51, 64, 109 large agricultural enterprises, 43, 44, 44, 65 large farms, 19, 52, 61, 109–10 and peasants, 59, 109–10 and production, 39, 47, 48–9, 64, 65, 83 under Putin, 153, 169 and reform, 24, 153 responses to, 64–5 and rural orientations and behavior, 58, 197, 198 and shock therapy, 40, 43, 64, 203–4 and state withdrawal, 39, 40 and urban-rural relations, 38–9 under Yeltsin, xiii, 7, 43, 168 see also Bates, Robert; Lipton, Michael; shock therapy; state withdrawal

index / 277 state withdrawal, 39, 24, 197, 198 and adaptation, 35, 38, 40, 59, 155 effects of, 39–40 elements of: capital investment, 40, 47, 51–2; import protection, 47, 48–9; price scissors, 47–8; purchase prices, 47, 49–51 and peasants, 59, 110 as a state strategy, 35, 38, 39, 53 and state urban bias, 39, 40 under Yeltsin, xiii, 7 see also shock therapy; state urban bias Stolypin reforms, 2, 10–11, 12, 16, 22 St. Petersburg, 49, 57, 79, 116, 191 stratification of households, 157–62, 179, 194, 206 of income, 91, 93–6, 160, 205 of land ownership, 159–60 of opportunity, 91–3, 205 of productive capacity, 157–9, 160 social, 144, 160–1 subsidiary agriculture, 176–7 see also private plots subsidies, 40, 52, 53, 56 agricultural, 43, 57 and the credit system, 52, 101, 187, 188, 189 for private farms, 178, 187–9 production, 80, 85, 178, 257n83 in the reform period, 18, 50, 51, 58, 78, 84 regional governments, 178, 179 in the Soviet era, 47, 50, 58, 219n70, 225n17 surplus labor, 122–3 see also labor survival strategy, 111, 159, 167 versus adaptation, 37, 42, 82, 107, 208 food production and sales as a, 17, 121, 127, 147

taking reforms, 14, 15, 16, 32, 208 see also giving reforms tariffs, 49, 168, 171, 226n49 Tatarstan, 180, 188 taxes, 12, 101, 139, 179, 257n88 technical crops, 64–5, 85, 230n11 transfer payments, 106, 144, 145, 146 see also welfare state Trotsky, 11, 217n42 unemployment, 112–13, 117, 171, 203, 243n36, 243n38, 245n78 United Russia, 164, 165, 253n34 United States, 49, 50, 84, 252n13 Unity party, 164, 164, 253n34 see also United Russia Urals region, 45, 112 urban areas, 61, 106, 130–1, 201, 241n23 attitudes toward privatization, 61, 108–9 income of, 111, 111 see also state urban bias urban bias, see state urban bias urban farm markets, 118, 125, 173, 244n53 values, see embedded values Venezuela, 22, 23 Vengerovka (Belgorod oblast), 128 vertical integration, 80, 81, 86, 179 see also horizontal integration Vladimir oblast, 88, 243n36 Volga region, 45, 112–13, 190, 237n121 Volgograd, 129, 237n120 Volgograd oblast, 86–7, 90, 246n94, 246n95 Voronezh oblast, 180, 246n94, 246n95, 258n118 wages arrears, 72, 99, 110, 111, 127 and reform, 79, 80, 94–5

278 / index War Communism, 12, 13, 14, 40, 200 weapons of the weak, 4, 22, 107, 216n14, 254n38 see also Scott, James welfare state, 39, 105, 106, 144, 151 see also transfer payments Wolf, Eric, 22, 33–4, 106–7 see also peasant rationality; peasant resistance World Bank, 16, 30, 71, 89, 96–7, 131 Yeltsin, Boris, 42, 78, 173, 228n82 and adaptation, xiii, 7 agrarian reform under, 2, 7, 32, 52–3, 65 and farm finance, 46, 51 and farm reorganization, 52, 76 and land market, 52, 57, 67, 69

and land ownership, 2, 67, 136 and land use, 119, 121 and large farms and agricultural enterprises, 2, 52 presidential decrees by, 65–7, 73, 136, 138, 230n15, 231n27 price policy of, 41, 228n78 and private farms, 2, 52, 121, 188 and privatization, 7, 41, 52 reform legislation under, 65–9, 230n13 and shock therapy, 41, 44, 203 and state and collective farms, 52, 66, 67 and state urban bias, xiii, 7, 43, 168 and state withdrawal, xiii, 7