Economic Changes

ThePrivatizationof the Soviet Union.

The following points briefly describe the effects of privatization in Russia following the collapse of the Soviet Union:

• New Business-Political Elite: this elite includes a Russian Mafia that has prospered in the un-regulated markets following the collapse of the public system. Privatization of state-owned property (mines, factories, stores) created a group of "Oligarchs" who amassed great wealth.
• Growing Income Inequality: the impact of market forces was particularly painful on the elderly whose state pensions were no longer guaranteed or protected from inflationary pressures (cost-of-living increases). State-owned housing was privatized leading to homelessness (people couldn't afford the rent increases).
• Unemployment: not a problem under the old Soviet regime. Reduced spending on social programs and privatization of industry led to massive unemployment and increased levels of poverty.
• Generational Differences: many Russians would prefer a return to authoritarian rule rather than the lawlessness, instability and uncertainty they have experienced during the past 25 years of capitalism.

1. What evidence from the above information suggests thatfree-market practices have not benefitted Russian citizens? (1 mark)
2. What evidence from the above information suggests that Russia has not truly embracedprinciples of liberalism? (1 mark)