The Black Market and Institutionalized Corruption

Russia 8

A friend of mine at Virginia Tech was born in Moldova in 1992 and the remnants of an underground economy still existed. He was telling me about how if you gave the men who worked in the passport office good bottles of liquor they would rush your passport and travel documents through quicker. This is what his mom did for the two of them when they were coming to the US in the late 1990s, which was years after the fall of the Soviet Union. However, traces of the black market economy still pervade the countries that used to be part of the Soviet Union. The high levels of institutionalized corruption, including the black market economy, that developed in the Soviet Union carried forward into the post-Soviet period.

The stagnation of the Soviet economy during the Brezhnev years comes in part from the command economy and an inefficient labor force. However, the black market significantly influenced the stagnation felt during this period. The necessity for basic goods for Soviet people made the black market so vital for survival. One estimate states “some twenty million people worked on the black market to supply the demand for 83 percent of the populations” (Freeze,443). The fact that upwards of 80 percent of people needed goods from the black market illustrates how integral and built into the system it was.

During the Soviet period, “everything without exception—was nothing more than an enormous black market” (Handleman qtd in Ostrow, 217), due to the scarcity of resources in the Soviet economy. The conditions that created the black market included:

“an economy of shortages with state-controlled prices way below demand, and the                  gap between artificial domestic and free-market world prices. Malleable property                  rights and unaccounted state assets coupled with low administrative salaries gave                  birth to bribery and corruption.” (Geldern)

One during this period could not escape the black market because it was necessary to achieve a certain quality of life. However, one was subject to serious criminal charges but were not rarely followed through correctly.

The CPSU Central Committee adopted policies to try and improve the system of law and order by improving law-enforcement agencies and get the public involved in promoting law and order. They aimed to eradicate crime in conjunction with the black market economy. Additional tasks taken on to lower crime included improving education, working against alcohol and drunkenness, and the promotion of public order by police. However, “because of rampant corruption, repression of the black market became increasingly symbolic and inconsequential” (Freeze, 443). It did not matter the steps or reforms taken by the government, the black market was so integral and institutionalized corruption allowed it to continue.

 

WORK CITED:

“In the CPSU Central Committee: On Improving Work to Safeguard Law and Order and Intensifying the Struggle against Law Violations.”Pravada. Seventeen Moments, 11 Sept. 1979. Web. 15 Nov. 2014. <http://soviethistory.macalester.edu/index.php?page=article&ArticleID=1980improv1&SubjectID=1980underground&Year=1980>.

Ostrow, Joel M. Politics in Russia: A Reader. Los Angeles: SAGE Publications, 2013. Print.

Von Geldern, James “1980: The Underground Economy” Seventeen Moments in Soviet History. Macalester College, n.d. Web. 15 Nov 2014.  http://soviethistory.macalester.edu/index.php?page=subject&SubjectID=1980underground&Year=1980&navi=byYear

PHOTO: http://soviethistory.macalester.edu/index.php?page=subject&show=images&SubjectID=1980underground&Year=1980&navi=byYear

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3 Responses to The Black Market and Institutionalized Corruption

  1. annapope says:

    Very good post, I especially liked the introduction and the personal story of a native Russian’s first hand experience with corruption and the black market.

  2. gracehemmingson says:

    Great post! I loved the personal connection, the economy was really interesting during this time. The statistics you added were particularly good for showing how widespread the black market was. I think that what Brezhnev did was a good attempt to grow the economy, because the goal of the five-year plan during the 1970s was to grow the standard of living so that people could spend more. The problem was that having the focus on the quotas encouraged a declining quality in goods.

  3. A. Nelson says:

    I agree with Grace — good use of statistics to illustrate the scope of the black market, and the story about your friend’s emigration from Moldova is powerful.

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