Russia’s Reemerging Bourgeoisie

In the search for a standard-bearer for Russia’s silent majority, Svetlana Ter-Minasova might be a candidate, even though she is far from taciturn and resides in a seemingly microscopic social circle.

Neither rich nor poor, neither corrupt nor exploited, the 57-year-old professor has survived the transition from coddled Communist academic to sleeves-up entrepreneur in Russia’s reemerging bourgeoisie.

Although many in this vast federation contend that the population has been polarized by economic and political upheaval, Ter-Minasova and a growing number of Russians concede that the ranks of the moderately prosperous are beginning to swell. And as Russians ponder their choices in the scheduled June 16 presidential election--soldiering on with reforms or retreating to a Soviet-style welfare state--the slow recovery of the bourgeoisie destroyed by the Bolsheviks is providing some hope.

“I don’t know if I should feel insulted or flattered to be considered middle class,” Ter-Minasova, a faculty chairwoman at Moscow State University and founder of a private commercial college, observes with humor. “But I’ve decided to be flattered. Most people I know would consider that an achievement.”

Indeed, carving out a niche in the realm between ostentatious wealth and grinding poverty has proven much harder for post-Communist Russia than its capitalist revolutionaries ever imagined.

Five years into the process of replacing a lumpen proletariat with a class of property owners, merchants, managers, movers and shakers, the middle-income bedrock of democracy remains a brittlely thin layer.

Worse, most professionals will argue, the intelligentsia that filled this societal void in the Soviet era has been pushed down on the prestige scale by changes that have done little to elevate the poor.

Economists and other observers argue that the slow reconstruction of the bourgeoisie is the most devastating failure of today’s Russian leaders. Without a property-owning mass that has a vested interest in defending its new rights and freedoms, they warn, the fruits of reform will become a vague and unattainable notion for most Russians while reform’s demoralizing hardships on the impoverished minority will remain vividly clear.

But as usual in Russia, where superstition and culture compel people to play down good fortune, the true state of the masses may not be as bleak as many contend. Although a quarter of the population is reported to be living below a poverty line of a meager $50 a month, the traditional trappings of middle-class lifestyles abound, from a tenfold jump in car registrations since the Soviet era to a boom in appliance sales, home repairs and construction and foreign travel.

“I don’t believe the statistics that suggest almost everyone is poorer. Take a look inside these hundreds--thousands--of shops and markets that have opened,” says Oleg V. Kiselev, a physicist of once-modest means who made a fortune with a photo-processing innovation and now heads his own financial empire.

“Who are these people shopping there, buying imported foods and clothing? Are they the 1% or 2% of Russians who have struck it rich? No, they are the 40% or 50% or 60% who are not earning that much but can afford the occasional luxury.”

Ter-Minasova makes the same argument--that the emerging middle class is stronger and broader than appearances suggest because many Russians deliberately understate their prosperity.

“We were all brought up to believe that to be rich was something bad. In our fairy tales and folklore, the bad guys are always wealthy and the hero poor but dignified,” explains the professor. “It is part of our national character to feel that wealth is something shameful and should be concealed.”

An opinion poll taken last summer by the respected Institute for Social and Political Research appears to validate her theory. Only 5% of respondents said they believe that talent and diligence were the prerequisites to earning a good income. Most attributed the prosperity of others to swindling and speculation.

Ter-Minasova and her husband are far from rich, earning about $700 a month between them and helping to support their retired mothers and other relatives across several households and four generations.

But such a sum goes further in Russia than Westerners would imagine because of the token prices most still pay for housing and the highly developed public transport that allows most families to get by without a car.

“A car is still a luxury, as far as I’m concerned. We’ve never owned one,” Ter-Minasova says. “But a good apartment in the city, a dacha [country cottage], a color television and major appliances--these are all quite usual for our middle class.”

Although such candor is rare on the subject of creature comforts, Russians have grudgingly admitted that their lives might be getting just the slightest bit better.

In a December poll of Muscovites by the Opinion research organization, the greatest share of respondents described 1995 as a year in which their living conditions improved. In every previous poll, the majority claimed to have endured further setbacks.

Just how much of society is at least loping along through the transition is a perilously difficult calculation, as there are few reliable indicators on which to base even a guess.

Official statistics claim that the average Russian’s salary is less than $100 per month, yet per capita consumption suggests the true figure is at least three times higher.

A prohibitive tax structure encourages most Russians to hide anything they earn from moonlighting--an activity engaged in by almost every citizen with a car, a sewing machine, building tools or other means of providing a service.

But one clear indicator of improving living standards has been the explosion in foreign travel. Last year, almost 14 million Russians obtained passports and took at least one trip abroad--nearly one in 10 in this country of 148 million.

Despite visible improvements in the quality of clothing, food and entertainment, some spectators of Russia’s transition insist that little has changed for the masses and that skyrocketing consumerism should not be interpreted as evidence of an evolving middle class.

“Maybe a half of 1% of Russians could be said to be in the bourgeoisie. We have no middle class,” claims Vladimir V. Semago, head of the Moscow Business Club and one of the few entrepreneurs aligned with the Communists. “It’s like South America here, where 10% of the population is very rich and the rest are very poor.”

Prominent novelist Alexander A. Kabakov also describes post-Soviet society as split between a struggling and suffering majority and a minuscule, parasitic elite raking in piles of money. Nonetheless, he believes that the country is now on a better course than during the more than 70 years that Communists practiced social leveling and dealt with those at the fringes either with repression or denial.

“We always said we had no homeless, but they were hidden from the public’s view,” says Kabakov, recalling how Soviet dictator Josef Stalin once exiled maimed war veterans to an Arctic Circle island. “Now we have beggars in the Metro [subway]. This is terrible, but normal. But to collect war invalids and expel them to a place to die--this is not normal. I prefer terrible freedom to clean totalitarianism.”

Time is all that is needed to transform today’s polarized society into a more equitable spectrum with a broad middle class, Kabakov argues.

“Our ‘red jackets’ are like your Wild West gold prospectors and bandits,” he says, employing slang for those Russians who have managed to get rich quickly through questionable--if not outright criminal--endeavors. “But we must work our way through the process. Our criminal bourgeoisie will be tomorrow’s ‘old money.’ The theory goes that, if my father was a crook, I won’t have to be one. It will take a few generations to wash our wealth and make our merchant class respectable.”

The first captains of industry in the new Russia also contend that crime and greed have thwarted creation of a true middle class and that this stabilizing development will not occur unless sweeping legislation is enacted and a government rife with corruption conducts a thorough housecleaning.

Alexander S. Orlov is head of the Business Round Table Assn., which groups Russia’s most successful merchants in a lobbying force for greater economic reform and freedom.

He says the growth of a middle class is stunted by a dearth of private property and legal guarantees protecting property rights.

“You cannot have a class of owners when so much remains in the hands of the state,” Orlov complains, accusing the government of President Boris N. Yeltsin of backsliding on privatization and clinging to industrial and commercial assets that would be better managed by the private sector. “A fundamental part of the middle class is small business, and the reality here is that, to start a business, you have to cooperate with criminals and bribe officials. Not everyone is prepared to do this, and, even if you are, there are no guarantees the rules won’t change.”

Prohibitive taxes, a dearth of credits, powerful protection rackets and an uncertain political future have stalled development of this sector, limiting small business to only 9% of the gross domestic product, says Sergei Yegorov, president of the Assn. of Russian Banks.

The constant revoking and revising of programs for parceling out state property have slowed the development of capital, bond and securities markets, further stalling reconstruction of the economy along Western lines.

But Orlov and most champions of private enterprise are pooling their wits and capital to stave off a Communist comeback in the June 16 elections, fearing such an outcome would destroy what modest economic advances have been achieved.

Yeltsin’s latest attempt at land reform may soon give private property to millions of farmers, and the majority of Russian families now own their living quarters through privatization.

But the absence of a mortgage system and a chronic shortage of quality housing have caused any notion of a real estate market to be stillborn and deprived new “owners” of the full value of their property by hindering its trade.

Economist Anatoly B. Chubais, formerly the privatization czar and first deputy prime minister, defends the troubled status quo as predictable in the daunting attempt to correct a failed Communist economic experiment.

“It is true that the middle class is a very narrow part of our society, an extremely narrow part,” Chubais concedes. “But to have a real middle class is not a condition of reform but a final result of it.”

With inflation under control and signs of economic growth on the horizon, Russia has serious prospects of transferring its wealth from the state to the people and expanding the social layer between the current extremes.

The brush-fire spread of consumerism continues to create sales jobs through which the underpaid can meagerly supplement their primary income. It has also fed a flourishing network of “shuttle traders”--enterprising Russians who travel abroad to buy cheap goods in large quantities, then bring them home to sell at ubiquitous open-air markets where mob protection racketeers are less likely to hit.

Lawmaker and private business advocate Konstantin N. Borovoi likens Russia’s emerging middle class to a Prohibition-era speak-easy: crowded with members quick to flout the law but loathe to admit it.

“I had my car stolen recently, which acquainted me with a whole new world of commerce,” says Borovoi, relating how police, registration and insurance workers boost their incomes by offering “express” services for a price, not to mention the theft and fencing rings profiting from Russia’s epidemic of larceny. “I don’t believe statistics in this country because nobody pays taxes and nobody knows what our people have.”

Sometimes unorthodox, often exploitative and usually clever, Russians are bettering their material welfare by hook and by crook.

Even Ter-Minasova, the respectable professor, rolls her eyes on the subject of strict adherence to the rules of propriety.

“Our Western colleagues would shudder if they knew what we did to get by,” she confides of the unspecified moral shortcuts she must sometimes make.

“But I’m doing this to help others to survive and have the opportunity of an education,” she says, “not just to improve my own material welfare.”

In this respect, Ter-Minasova fears she is in a minority.

“As Russians become more prosperous, their views of what is valuable in life are also changing,” she says, defending the social consciousness of the Soviet era as more humanitarian. “I worry that the younger generations are too concerned with making money and not concerned enough with moral things. No society can prosper if members think only of themselves.”