How Russia was introduced to capitalism.

Review and synopsis of Vodka, a novel by Boris Starling. Published by Harper Collins, London, 2004.

Eamon Dyas

I read this novel shortly after it was published and it struck me at the time that its explanation of the way in which Russia’s transfer to capitalism had taken place was far more convincing than many of the serious non-fiction works that were available at the time. It also brought home to me that sometimes fiction is the most effective means of conveying the reality of how ordinary people experience historic events in ways that escapes an “objective” account formulated with an academic audience in mind.

The novel is set in Moscow between December 1991 and March 1992 against the backdrop of the situation in the city as it experiences the social and economic trauma of the collapse of the command economy of the Soviet Union. The dramatic component that underpins the novel’s main theme is a series of child murders that takes place in the city but that, to my mind, is secondary to the way in which the author sets the context of those murders amongst the changes that were taking place in Russian society at a time of great social and economic upheaval.

We are never told the real name of one of the novel’s central and larger than life characters who is introduced early in the novel. He is a parliamentary deputy, distillery director, criminal godfather and champion weightlifter and, despite his disdain for the Soviet Union at one time had a tattoo of Lenin on his chest and one of Stalin on his back in the belief, apparently shared by many in his criminal underworld, that should they ever find themselves at the rifle end of a Soviet execution squad the soldiers involved would refuse to fire upon these images.

The man involved goes by the nom de guerre Lev and, although he had been a life-long covert enemy of the Soviet system, now looks with disdain and apprehension at the chaos that has erupted in the wake of its collapse. Lev’s immediate concern is that amongst this chaos the rival Chechen mafia are moving into his criminal terrain in Moscow.

“‘No matter how much we hated the old system’ – Lev never used the words ‘Soviet Union’ – it provided a kind of order. It was predictable. But now the authority is gone, the police are weak and afraid to deal with the black-asses from the south – especially the Chechens. They’ve been allowed to establish a presence here in Moscow, and it looks like it’s up to us to send them back home, back to their blood feuds and their tribal armies. We haven’t survived communism just to let a bunch of niggers fuck us in the ass.’” (p.3).

Such were the arguments which Lev used to try to convince two other Moscow criminal overlords to unite as a Slav mafia not only to withstand the potential threat from the Chechens but also to take advantage of the opportunities which the fall of the Soviet Union now presents.

“‘Everything is up for grabs – cars, weapons, haulage, prostitution, gambling, banking, vodka. Everything. Smuggling income is going to go through the roof; each successor republic will now exercise jurisdiction only within its own borders, so goods stolen in Russia can be legally traded anywhere outside. The central finance system is gone to shit, so there’s millions to be had from currency speculation. We’ve a freedom of movement unthinkable even a year ago. The country’s changing day by day. It’s the revolution all over again. If we’re to take our rightful place in the new Russia, now is the time to strike. But in order to seize this opportunity we too must change.” (p.6).

Lev’s idea was that the Moscow criminal underworld of the Soviet era was now well placed to take advantage of the emerging state as it sought to change the Russian economy to a market-based one and where the financial resources accumulated by the corrupt and criminal element could find a legitimate or semi-legitimate outlet in the new economic order. However, Lev is only later to realise quite what this would actually involve.

After Lev we are introduced to another central character in the form of Mrs. Alice Linnell. She is an American banker and advisor to the International Monetary Fund who, previous to her arrival in Moscow, had been instrumental as part of the IMF in the privatisation process of post-communist Eastern bloc countries. She and her team have been invited to Russia by Anatoly Nikolayevich Borzov (a character whom the author admits was based on Boris Yeltsin) and his advisors to establish a template for a national privatisation programme.

The brief

At Linnell and her team’s first meeting with Borzov (the Prime Minister Yeltsin character) which takes place on 27 December 1991, he explains what it is he wants from Linnell:

“‘It’s very simple, Mrs. Linnell,’ Borzov said. ‘Russia is reforming, God knows we’re reforming. Prices are being freed next Thursday, we’re stabilising the money supply, creating a new tax system, protecting property rights and contracts, and so on. . . And the one thing we need to do before everything else, the one thing that’s of paramount importance, is to privatise. The state owns everything, absolutely everything: diamond mines, food stores, oilfields, barbers’ shops. Yes Gorbachev’s reforms have ushered in some new beasts – leased enterprises, joint-stock companies, economic associations, co-operatives – but these are little more than variations on a theme. If we are to be a proper market economy, the state must own nothing, yes? As little as possible, anyway.          So we put out some feelers. ‘Who knows about privatising command economies?’ we asked. We asked everyone – international organisations, other governments, embassies – and the one name came up time and again. Yours.” (p.24).

For Alice Linnell this commission represents the apex of what she had been doing since 1989:

“She’s spent the last two years running privatisation programmes in Eastern Europe, suddenly liberated after the momentous autumn of 1989 when government after government toppled, the Berlin Wall was dismantled and the Ceaucescus were executed by their own people. If there was a single person who’d shuttled between Budapest, Prague and Warsaw more than Alice had in that time, she’d yet to meet them. But she’s always been conscious that, however important her work there had been, it was little more than a dress rehearsal for the big one – Mother Russia herself.” (p.25).

Also at the inaugural meeting is Nikolai Valentinovich Arkin, the Russian Prime Minister, and someone who shares the Yeltsin character’s plans for the Russian economy. He reminds Linnell that what she confronts in Russia is not like anything she had done before in the ex-Soviet economies of Eastern Europe:

“The West thinks every Russian is delirious with gratitude for the end of the Soviet Union. Not so. There are millions, tens of millions, who fear that reform will lead the country to ruin, and they’re well represented in parliament. Forget the resistance you saw during the coup, Mrs. Linnell; parliament is stuffed full of reactionaries who hope and believe we can’t do what we saw we will do. If we don’t prove them wrong and fast, then our window of opportunity will be gone. That’s why something, anything, is better than nothing. We don’t need to run an entire privatisation programme, Mrs. Linnell, not yet. . . . 

“There’s no history of private property in Russia. Communism succeeded        czarism; czarism had succeeded feudalism. Privatisation will be as seismic as introducing money into a barter economy – I don’t exaggerate. This is why we tell you that Russia’s different. We need to hurry, but we also need to be realistic about what we can do. To privatise everything overnight, that’s impossible. But a single factory successfully sold off, to show that it can be done . . . Make that work, and the rest will follow. The dinosaurs will see that privatisation is going to happen whether they like it or not.” (pp.26-27).

Linnell is told that her initial task will be to arrange for the privatisation of a selected state-owned business enterprise which will act as the template for the national privatisation roll-out. Although, based on her previous experience, she has estimated that it would require between nine months and a year to arrange for the privatisation to take place she is told that it must be done before the Russian Parliament meets in the second week in March – a mere nine weeks away.

The selected business enterprise that had been designated as an experimental template for the wider privatisation programme was the Red October Vodka distillery in Moscow – the business that was under the charge of the criminal godfather, Lev. 

On 31 December 1991, four days after her meeting with Bozov, Lindell calls her team for a gathering in McDonalds in Moscow where she mulls over her previous experience at organising privatisations in the Eastern European countries and considers that:

“When it comes to reforming command economies, there are two schools of thought. The first, shock therapy, holds that it’s best to enact all reforms at once; the social and economic upheaval is so great that a short, sharp jolt is preferable to prolonging the torture with a piecemeal approach. The gradualists take the opposite view; for them, reforms should be staggered in order to avoid large drops in output and mass unemployment, which will in turn threaten political stability and therefore the reform process itself.

“Borzov [the Yeltsin character – ED] had decided to go with the former. They were going to raze the entire communist structure – clearly the institutions of the communist state were inimical to the spirit of enterprise – and in its stead erect a market economy. If this was implemented quickly and vigorously, the essentials of such an economy would then gain the momentum it needed. The role of the state was simple: to establish the rules of the capitalist game and watch the new society unfold.” (pp.41-42).

Within that context it was all the more important that the privatisation of the Red October distillery went as smoothly as possible.

Laying the ground

Lev’s deputy at the Red October distillery and also its head of security, is Tengiz Lavrentiyich Sabirzhan, and he is described thus:

“Sabirzhan was KGB to his bootstraps; the Sixth Directorate to be precise, which had been responsible for industrial security and economic counter-intelligence. That the Sixth Directorate had now been subsumed into a new body, the MSB, altered the nature neither of the organisation nor the man. Sabirzhan had been appointed political officer at Red October in Brezhnev’s day – every enterprise had a political officer, to recruit informers among the workforce and ensure ideological hegemony – but, as stagnation had grown deeper under Andropov and Chernenko, so the KGB had been forced to collaborate with the enemies of the state. Only by striking deals with the organised crime gangs could they prevent internal trade from grinding to a halt.” (p.15).

So it was that the likes of Sabirzhan could continue to serve the state that was now embarked on a policy of dismantling the Soviet economic architecture and to do so while still the deputy and head of security at the Red October Vodka distillery that was run by a Slav mafia boss. Sabirzhan is to play an important role in clearing the decks for the privatisation at the Red October plant by pressurising a long serving employee at the distillery, a man named German Kullam. 

“German had worked at Red October for more than twelve years, latterly on the rectifier, one of two columns which formed the still where the vodka was distilled. For nine of those twelve years he’d also worked for the KGB, keeping Sabirzhan apprised of any dissent among the workforce and any deviation from strict Marxist-Leninist principles. Informing, in other words.” (p.64).

As German’s handler, Sabirzhan, now had the task of ensuring that his informing skills were put to use as the means of establishing the level of dissent among the workforce at the distillery when the privatisations plans were announced. With that in mind Sabirzhan visits German’s apartment on 5 January where he explains the situation to him:

“‘Red October is scheduled for privatisation, German, and quickly. We’ve been chosen as the test case for reform; I need hardly tell you how resistant our people can be to change. You’re one of my better assets on the shop floor, German. You’ve served your country with skill and    distinction for almost a decade now; the state is grateful to you, and has rewarded you accordingly. Now is not the time to relax and pat yourself on the back, however. Your services are required more than ever.’” (p.65).

In reply to German’s question as to what he will be expected to do, Sabirzhan replies:

“‘Nothing you haven’t done a hundred times before: talk, and listen. Spread the word among your colleagues; privatisation will be good for them. Whatever fears they have, everything will turn out right for those who trust the management. Far from spelling the end of the workers’ collective, privatisation will enhance their status. A suggestion here, a hint there – you’ll have no trouble steering conversation around to the topic, I’m sure. And while you talk, you listen, and then you report to me: who agrees with you, who’s agitating against our chosen course, who’s wavering and can be turned . . .’” (p.65)

German’s initial response to Sabirzhan’s instructions was to refuse to comply:

“’Because – because it’s not right. You believed in the glory of the socialist ideal, Tengiz Lavrentiych [Sabirzhan’s first names – ED]; you more than anyone. You told me only a few months back how that ideal was being violated by kids and Western rapists, deluded fools and capitalist lackeys. And now you come here telling me how good privatisation will be. What am I supposed to think?’” (pp.65-66).

To which Sabirzhan replies: “You think what I tell you to think, German. We must move with the times.” And after a few veiled threats Sabirzhan leaves in the knowledge that German will do as he has been instructed. It turns out later that German’s son, Vladimir, is one of the children of Moscow who goes missing and he is forced to request the help of Lev before his body is discovered.

Market Day – 2 January 1992

Ahead of the privatisation programme Borzov had designated 2 January 1992 as the day in which the market would replace the command economy at the consumer level. This had been an objective set by Borzov and designed to introduce the idea of a free market at the level which involved single or small traders while the upper reaches of the productive economy still remained in state hands. It was true that many such small enterprises were permitted during the Soviet period but “Market Day” was the event where the idea of state subsidies on things like food and drink were to be removed and the market given free rein for the first time.

On the morning of the set day Alice Linnell has decided to go into the streets of Moscow in order to establish how this was working out in practice and how the population was reacting to the novel experience.

“Alice was out on the streets at nine o’clock sharp, fur hat down and collar up to keep the bare nape of her neck from getting cold. She walked round central Moscow all morning and watched the prices climb with the sun. Staff could hardly keep up with the changes; stock markets had crashed with less rapidity. For decades, bread had been thirteen kopeks; the price was so unchanging it was baked into the loaves. By lunchtime, a loaf was two roubles. In a supermarket on Tvarskaya, Alice heard a woman moan: ‘Bread is all I can afford to buy now.’ Polish sausage had doubled to sixty roubles per kilo; petrol had trebled to one rouble twenty per litre; the price of carrots had risen six-fold, from fifty kopecks to three roubles per kilo; a bottle of vodka was now ten days’ wages. Everything cost what it cost, not what the state decreed it should.

“The rising prices were a good sign, Alice thought. The billions of roubles hidden under mattresses throughout the country had created a vast monetary overhang, an ocean which had to be absorbed before the economy could start functioning properly. And yet, and yet . . . she could appreciate that economic sense dragged with it social trauma. The people hurrying from store to store looked like accident victims: shock and anxiety crowding their faces, eyes glazed and mouths hanging open, the usual reflexes of speech and action working at half-speed. (pp.52-53).

In one incident the extent of just how foreign her world was from that of the ordinary Muscovite was brought home to her:

“On Novy Arbat, a man in a hideous synthetic parka asked her where the market was. ‘I’m sorry, I’m not from round here,’ said Alice.

‘The market, the market. The one they’ve all been talking about, the one which starts today.’ Alice laughed. ‘That market?’ She waved her arm in an expansive arc. ‘It’s all around you.’

‘No. They said a market which starts today.’ Parka Man was convinced that there’d be some physical infrastructure, a material manifestation of this great leap forward. He looked about fifty; he must have spent all his life in pursuit of an ideal which, like Godot, had never come. Alice could hardly blame him for having lost his faith in intangibles.” (p.53).

All concerned in this arrangement anticipated a significant rise in the price of consumer goods as on that day the prices of goods would no longer be set by the state but by the free-for-all of an open market. However, this was not seen as an altogether bad thing as those increased prices would represent the high-water level at which the market would subsequently alleviate by the operation of the supply and demand mechanism. On another level, the increased prices would provide a stimulus for workers and consumers to accept the privatisation programme where their entitlement to the shares and dividends in their privatised enterprises would be viewed as a means by which they could meet the market-driven increase in the cost of living.

The opening of negotiations

 A good part of the novel is taken up with the complicated relationship that evolves between Linnell and Lev as she works towards getting his cooperation with the privatisation of the distillery. On 6 January, Linnell was scheduled to meet Lev and his management team to discuss the actions necessary for Red October to meet the conditions for privatisation. She provides a broad account of what is going to happen:

         “‘In the past, staff have come to work and they’ve been paid,    irrespective of what they have or haven’t done. Now, things are different. State subsidies are on the way out; in their place will come a shareholder’s society, where people will have to provide for themselves. They’ll come to work, they’ll realise production, they’ll get money. Workers should see the link between their own work and the income they receive. Make them shareholders too, and they’ll work harder, because their livelihood is determined by profits. . . .’ 

‘Red October has apartments, a school, kindergarten, a day-care centre, supplementary benefits, yes? You can’t maintain these on the air, you’ll need to start making profits. In a market economy, competition is cruel; it takes decisions independent of your will, as director here, or what the shareholders want, even the government’s desires. The market economy allows only those organisations which have arranged their resources properly to remain afloat.’” (pp.73-74).

But Lev was not prepared to roll over and accuses Linnell and her privatisation project as an attempt to:

“Wreck the Russian economy, [and] maintain Russia in some kind of semi-colonial tutelage to the West. You can keep your expertise and your theories. The one thing capitalists are creating is misery. People begging in the streets, folks dying faster than they can make the coffins, no potatoes in the stores, babies born with only half a face, people who can’t take a piss because they’ve got the clap, pensions worth shit. You lot knock us to the ground and they want to buy the wreckage. That’s not just shit, it’s insulting. 

“You were pushing each other out of the way to get on the plane when that fool Gorbachev rode off into the sunset. ‘Shock therapy,’ you tell us. ‘A few months of pain and it’ll all be over.’ Yes, well, we’re getting the shock all right, but I don’t see much therapy. And what’s the West doing? You sweep in here as if you’re emissaries of light, bringing salvation to the natives living in the dark forest. You think you’re heroes because people give you free drinks and ask your advice. You think that what works for you will automatically work for everyone else. Your teeth are whiter than ours and your clothes better, so suddenly you’re the arbiters of public morality. You assume America’s the ultimate model, and so you judge everything simply by how close it comes to your own ideal. You think you’ve carte blanche to remake Russia in your own image. You don’t, and you won’t – not here.’” (p.76).

The first meeting ended with Linnell’s position being debilitated by a mixture of Lev’s intense hostility to her project and the amount of vodka she consumed. However, this was just the first skirmish.

The next day, 7 January, was the orthodox Christmas and Lev visited the Kazan Cathedral at the north-east corner of Red Square where he prayed for Russia’s future and its soul. 

On 14 January 1992, eight days after their first meeting, Alice Linnell and her team held their second meeting with Lev and his team. This time she approached the discussions by framing the privatisation of the distillery as an opportunity for it and Lev to flourish. She pointed out that as Red October was to be the inaugural business to be privatised it could secure better terms than those businesses that came later to the process. By cooperating Lev would be freed from the influence of apparatchiks and provided with access to Western capital which in turn would help attract a strategic foreign investor. She then outlined the details of how the shares in the privatised company would be:

“‘What I propose is that Red October has minority insider ownership. Twenty-five per cent of shares go free to employees and managers. Another ten per cent will be sold at discount. Then there’s a final five percent which top managers can buy if they want. The remaining three-fifths are sold to the public at auction.’” (p.130).

But Lev rejected this arrangement because, “It doesn’t give the workers enough rights.” He then made a counter-offer:

“‘Insider control – management and workers combined – is set at seventy-five per cent. The remaining twenty-five per cent is offered for sale to the public, with a cap on how much any one individual or institution can own. Oh – and no foreign involvement.’” (p.130).

When Linnell pointed out that American and European firms would bring expertise, cash, technology and access to world supply chains and that foreigners were already involved in the process Lev replied:

“‘As advisers, yes; not as participants. In Poland you planned national investment funds to manage and have equities in privatised enterprises, didn’t you? And who was to manage these funds? Foreign firms. Foreign firms who’d gain control of Polish assets, who’d strip such assets for short-term profits, who’d sell off Polish firms at bargain basement prices or shut them down altogether. You must be a fool if you think I’m going to allow you to repeat that here.’” (p.131).

The author of the novel explains the reasons that were behind Lev’s agitation on the question of privatisation:

“Profit and loss, shareholder rebels, corporate raiders, bankruptcy – these were all alien concepts for Lev, and they made him afraid. The prospect of an annual shareholders’ meeting whose remit included the election of directors, the appointment of the auditing committee and the company’s reorganisation or liquidation was particularly unnerving. One man, one vote, he said. Alice [Linnell -ED] tried to reassure him: the meeting needed to be attended by half of all shares; directors would be elected by a simple majority for a two-year term, at the end of which they could seek re-election as long as they were still alive; reorganisation or liquidation needed seventy-five per cent approval. It was one share one vote, she explained. One man one vote, he argued; one man, one vote, even when she explained that under that system he’d have no more power than the humblest of his workers.

“‘In the old days, Lev hadn’t needed to know – and consequently wasn’t interested in – anything other than what would help Red October meet centrally imposed schedules. Everything else had already been settled at levels high above him, in the upper echelons of central programming. Gosplan set the plan, Gostsen the prices, Gossnab distributed supplies, Gostrud decided labour and wage policy, Gostekhnika directed research         and technology. The disillusioned referred bitterly to Gostsirk, the state circus which specialised in bureaucracy gone crazy.’” (p.132).

By lunch time it was becoming obvious to Linnell that Lev wasn’t going to provide her with all she was demanding. She phoned Arkin to report on the results of the negotiations up to that point and he tells her she’ll have to concede at least to most of Lev’s counter-proposals involving majority insider control and no foreign ownership. 

“Alice thought of the men in Washington, in New York, in Paris and Brussels and Geneva and London and Frankfurt, all wanting a piece of the pie. They had made their help contingent on Russia treading an approved path.” (p.133).

She asked Arkin what would making such a concession achieve as it merely meant replacing one makeshift system with another. Arkin’s reply was that ‘It’ll get property out of state hands’. To which Linnell replies that it would only move it into the hands of Lev and a thousand other like him. She asks where’s the difference. Arkin replies that:

“‘The difference is political. A new class of investor, a new kind of stakeholder. That’s what we need most of all right now. If this is the price we have to pay, then it’s worth it, it’s a necessary evil. [And] ‘Just for now, just to get it through. We haven’t got the time otherwise. You know how fast things change; it will all be different in six months’ time. Don’t sweat the foreign exclusion on this one. There are still plenty of ways into the market: joint ventures, trade agreements, consultancies, and all that.’” (p.133).

The final negotiations

But Arkin’s instruction that she’ll have to concede at least most of what Lev was demanding left her some room to make a final effort to push the negotiations a bit closer to what she had been asking for. In the post-lunch discussions Lev displays the thinking behind his position. This was a mixture of Russian nationalism, Orthodox Christianity, aspects of the old Soviet values and the paternalistic code of the mafia overlord. We witness this when Linnell informs him of the changes that will be necessary to make the distillery fit for market purpose. These included making significant changes to existing work practices, the timetabling different shift patterns and making drastic cuts in the workforce itself. There then follows a long interaction which is initiated by his response:

“The workers: it always came back to the workers. ‘For thirty, forty years, we had a factory sanatorium by the Black Sea,’ Lev said. ‘We sent thousands of workers and their families there every year for their summer holidays. Now, even if they could afford it, they couldn’t go there. It’s Ukrainian territory, it belongs to someone else. Some of my staff go to their allotments, but that’s a matter of survival, not fun. This distillery is my life, Mrs. Liddell.’

‘You’re a vor [the phrase vor v zakone has two distinct meanings in Russian: ‘legalised thief’ and ‘thief who is the law’, – Wikipedia]. You’re a parliamentary deputy.’ ‘I’d give the latter up before this, any day of the week. I know every inch of this place. There are five thousand workers here, and I know most of them by name. I don’t like employing outsiders; I want my people to work here. I want to keep the factory a family business. Administrative procedures are nowhere near as effective in controlling people as peer pressure from their families and friends. That’s why I only take people by recommendation. I don’t have any problems filling vacancies; they’re snapped up in no time. I reward my people, Mrs. Liddell. I keep them fed. Red October owns two farms outside Moscow, and we sell the fruits and vegetables at subsidised prices. I’m proud of the apartments, the school, the orphanage, the sports complex, the cultural palace. How can I let outsiders take a stake in my company? How can anyone know better than me how to run operations here? Who knows the suppliers, the customers, the officials as well as I do? I make all the decisions. If I have to sack people, Mrs. Liddell, I’ll become a caricature of the evil capitalists they warned us about in school.’

‘You must at least consider the possibility of redundancies. There are ways you can hoard labour while reducing wages – pay freezes, direct cuts, delays in payment, reduced working hours, temporary layoffs with minimum pay, unpaid leaves of absence. In economic terms . . .’

‘That’s all you Westerners think about, isn’t it? Economic terms.’ . . .

‘Well, this is Russia, and economics aren’t enough. Have you been listening to me? I can’t dismiss a man in his fifties or a woman with two children. I don’t throw people out in the cold when they become old or tired. The workers wouldn’t stand for redundancies, and I’ve neither the authority nor the power to implement such changes against their will.’

‘Oh, come on. You said it yourself: nothing gets done in this place without your say-so.’

‘Only as long as my say-so doesn’t contradict the wishes of the majority. The manager is expected to be authoritarian, assertive, even inspirational – but he’s also expected to understand and work with grass-roots feeling. An enterprise is a democratic institution. Everyone’s entitled to have his or her voice heard, and even the humblest employees feel free to speak to the boss. If the manager stands up for his workers’ interests, and he exercises his authority with firmness and frankness, then he can count on the loyalty of his workforce.’

‘The more democratic he is, the more dictatorial they let him be?’ He smiled. ‘I couldn’t have put it better myself.’” (pp.134-135).

At this stage Linnell sees Lev in a somewhat different light:

“She saw that this was his own benevolent dictatorship, strong but fair, a place that worked despite itself. Red October was a microcosm of Russia, in every way: and it would change just as the country was changing. Alice was sure of that. She wondered how much he was telling her about himself when he talked about Russia.

“Alice left Lev with a final offer that he said he’d consider. Insider control – management and workers combined – would be set at fifty-one per cent at a multiple of the defined enterprise value; twenty-nine per cent would be offered to outside investors; and the remaining twenty per cent would remain with the state.” (p.136).

This then was the way in which the novel described the arrangements by which the supposedly first enterprise in Russia was privatised. However, as the character, Prime Minister Arkin, told Alice Linnell in the novel, it wasn’t the terms that emerged from this particular negotiation that was important – what was important was that the model for privatisation had been established. After that principle had been established future privatisations would evolve according to different circumstances which would increasingly be moulded by the market in ways that were supposed to serve the better interests of Russian and foreign investors.

After her meeting with Lev had finished Alice Linnell walked the streets of Moscow in order to clear her head. After coming across a long stretch of pavement sales that represented the last resort of an impoverished people seeking to utilise the market in order to scratch out a living she concluded that:

“She was witnessing the beginning of capitalism in Russia. . . Perhaps it took a rare, imaginative gift to see the shivering huddled masses as harbingers of the entrepreneurial spirit. No, it wasn’t aesthetic; nor was it seemly or civilised. But newborn infants aren’t beauties when they first appear; only the parents can see what a gorgeous person will, in time, grow of that crumpled red creature. It was shabby and messy and amateur, but it was there. . . . 

“She knew that market economies always start from trade. When supply is limited and demand great, entrepreneurs concentrate on selling goods with high mark-ups – clothes, perfumes, electronics, liquor – and they do so in big, rich cities. Only when the market is reasonably saturated do they move upstream, from small-scale consumer production to heavier industrial manufacturing. That the traders were here at all confirmed Alice’s view that men and women are natural, instinctive capitalists, and that – regardless of what Lev had said back at the distillery – Russians are no different from anybody else. The planned economy may have held back their inherent entrepreneurial ability, but it hadn’t managed to quench their innate human desire and drive to take risks, accumulate capital and better themselves. These people would be the driving force for change in Russia.” (pp.138-139).

But of course in the real world everyone cannot be capitalist, everyone is not in the position to accumulate capital to invest. So it was with the workers and consumers who were to receive the “seed capital” of the shares and vouchers they received as part of the privatisation process. The pressures of the rising cost of living introduced by the market themselves acted to prevent them being retained for long before they were compelled to sell them to those with the wealth to purchase them whether that be a local oligarch or a corporation.

The attempt to create a Russian “People’s Capitalism” 

In the novel, Prime Minister Arkin held a press conference on 3 February 1992. At the press conference he set the date of the auction of the Red October distillery which was to be four weeks from then. He also used the press conference to introduce a scheme through which the Russian population was to be introduced to capitalism in a personal context. This involved:

“The voucher system under which all privatisations would take place. Every one of Russia’s 150 million citizens was entitled to a free voucher, nominal value ten thousand roubles, which they could either invest directly in a privatised enterprise, put in a voucher investment fund, or sell for cash. (p.230).

However, back in the real world of Russia in 1992 this proved to be a scheme by which the state assets of Russia were handed over to those with the wealth while concealing this from the public. By handing over vouchers that were transferable in this way those designing the scheme knew full well that in the majority of cases, people who are hard pressed would sell them at the first opportunity to those with the wealth who were willing to buy. As the novel itself says, “price liberalisation had wiped out everyone’s savings, so the only people who could lay their hands on vast amounts of cash were foreigners and mafiyosa, and even Arkin couldn’t think of a way to sell either possibility to the Russian people.” (p.231). 

There is little doubt that the author of Vodka had a very good knowledge and accurate insight into what happened in Moscow during the fateful days of Russia’s transference from a command economy to one that was formed around the market. His account of the disaster of the voucher system, introduced by Yeltsin as a means of investing the people in the new capitalism, is confirmed by the British diplomat, Ian Proud. He had worked for the British diplomatic service between 1999 and 2023 and was stationed in Moscow from 2014 to 2019 as the senior advisor to the British Government on sanctions against Russia. During that time his position enabled him to gain a knowledge of the events that had taken place some years earlier in the period when Vodka is set. In his memoir of his time in Moscow (which I reviewed in the May issue of Labour Affairs), he explains the fate of the voucher system:

“After the Soviet Union collapsed, there were no rules or legal framework to manage the bone-crunching transition from communism to a mixed-market economy. Lawlessness ruled across the Russian Federation, and commercial disputes were more often settled by shoot-out than by subpoena. Within this deadly legal vacuum, some smart-minded Russians conjured up schemes to get rich quick: they monetised the Soviet system of credits to grab hundreds of millions of dollars out of thin air, bought up privatisation vouchers from clueless citizens and conned those citizens with pyramid schemes that always collapsed. Vast profits were used to buy ever-larger stakes in Russia’s lucrative oil, gas and mineral companies. Surfing this raging torrent of venality were the new oligarchs, who became multi-millionaires almost overnight. After Russia’s default in 1998, the oligarchs emerged triumphant as billionaires at the summit of Russia’s industrial complex, lifted up by shady loans-for-shares deal with the ailing Yeltsin.” (A Misfit in Moscow: How British Diplomacy in Russia Failed 2014-2019, by Ian Proud, 2023, p.60).

The novel itself describes this reality on pages 263 to 264. Russia had to endure a further almost eight years under the Presidency of Boris Yeltsin as he increasingly ignored legal procedures, popular demonstrations and political opposition in his determination to remove layer after layer of the state economy and transfer it to private hands. In 1995, with the economy in dire straits and weighed down by unprecedented levels of foreign debt, in a bid to induce the support of the rich Russian elite in preparation for the 1996 presidential elections he instituted a new swathe of privatisations. This involved the sale of stocks and shares in some of Russia’s most valuable state assets in exchange for bank loans. This scheme proved to be a repeat of the earlier privatisations and in effect turned into a bargain basement sale of those assets to tycoons in the finance, energy, telecommunications and media sectors. In the meantime, the population of Russia was forced to suffer from changes in the pension, tax, health and housing sectors that undermined the economic security they had enjoyed under the Soviet system. This led to increases in suicides, mental illness, alcoholism and lower levels of life expectancy. It wasn’t until Vladimir Putin became President in 2000 that things slowly began to improve and it is for that reason that he remains the most popular politician in the country.

From the details provided in the novel it is obvious that the author of Vodka researched his subject well. In an interview in the Guardian in the wake of its publication he says that he read hundreds of books on the subject as well as spending some time in Moscow doing further research. In another place he explains that he was further helped by members of the staff of the Swedish Embassy. Before taking up journalism – during which time he worked for several national newspapers – Boris Starling had been employed by a company named Control Risks which specialised in the provision of information and analysis for companies at risk from terrorism and political upheaval. But there remains the suspicion that he may have had other connections that enabled him to gain such an intimate knowledge of what happened in Moscow between December 1991 and March 1992.

With regards the novel. I felt that there were too many characters vying for the attention of the reader particularly around the central theme of child murders and as a result, maintaining the links between them could be challenging. That challenge was further complicated by the author’s attempt to thread their personalities and their actions within the wider events of the time they were living through. However, given his insights into those times the book is well worth reading for that alone. But then again, as someone who is more interested in politics than crime, I realise that the two are not always mutually exclusive.