Bountiful 'shadow economy' entwined with Soviets' ailing system

September 17, 1990|By Scott Shane | Scott Shane,Moscow Bureau of The Sun

MOSCOW -- Just inside the door to a Gorky Street art shop, a young black marketeer trolls for customers in the steady stream of shoppers. Her bait: an imported blouse and skirt, with the hefty price of 135 rubles scribbled on a scrap of paper.

Down the street, in back of the Anchor seafood restaurant, a white-aproned employee hands over to a favored customer a fat package of fish wrapped in white paper.

At the foot of Moscow's main street, in front of the Intourist Hotel, a shifting crowd of young men in windbreakers and jean jackets conduct furtive trade in dollars, liquor, cigarettes, objets d'art and prostitutes.

These are scenes from the flip side of the long lines and skimpy offerings of Gorky Street's official face. They are glimpses of the Soviet Union's other economy -- the web of illegal, semilegal and unofficial trade known here as "tenovaya ekonomika," the shadow economy.

Forget what you've read about Soviet shortages. On Moscow's thriving black market, you can buy anything from a compact disc player to a submachine gun, from a fine cut of beef to a bottle of Scotch whiskey. Service, by comparison with the official sector, is prompt and attentive. And prices are out of sight.

"The state economy is constantly characterized by shortages, and where there are shortages, the shadow economy automatically comes into play," says Tatyana I. Koryagina, an economist and member of the Russian parliament. "It's everywhere, because it's an inevitable consequence of our economic failure."

Now, as the Soviet Union enters the rocky transition to a legitimate market economy, the significance of the shadow economy is fiercely debated.

Marxist ideologues warn that black marketeers will launder their millions and use them to buy political power.

"The shadow capitalists, in alliance with the criminal world, thMafia and the corrupt apparatchiks they have bought off, throw down a challenge to the workers, to their socialist choice and their social achievements," Alexei A. Sergeyev, a prominent old-line Soviet economist, warned in an article this year.

Market-oriented economists, by contrast, see the shadow economy not as a menace but as an island of near-normality in the madhouse economy built by totalitarianism.

"I have nothing against the shadow economy," says economist Yelena V. Kotova, a key policy-maker for the radical Moscow City Council. "What the law calls 'speculation' is not speculation; it's commerce. It's illegal due to our superstitious legislation. We should combat not the speculation but the legislation."

The latest Soviet economic reform plan proposes to do just that. Under the plan, laws banning "speculation" -- the private sale of goods for more than was paid for them -- would be repealed, and those convicted would be rehabilitated.

Observers of every political stripe agree that the Soviet shadow economy is huge and growing fast.

The Soviet Ministry of Internal Affairs estimates illegal economic activity at 150 billion rubles a year -- more than the total volume of Soviet foreign trade. Many economists doubt such precise estimates, however, saying the official and unofficial economies are so entangled they cannot be separated.

"A good factory director wants his factory to operate smoothly. But he can't get parts from his official suppliers, so he has to make a deal in the shadow economy," says Ms. Koryagina.

"In that sense, the whole economy is a shadow economy."

To be impressed by the scale and professionalism of the street black market, one need only drop by the "commission store" -- where people can sell unneeded items for a 7 percent commission -- on Komsomolsky Prospect, a 10-minute metro ride from the Kremlin. The crowd milling out front is a veritable department store without walls.

"You can get anything you want here, and I mean anything, without exception," brags Viktor, 38, a professional wheeler-dealer in front of the store one recent day. "Any car, including new foreign cars. Any electronics. Any food. Any liquor. It's just that the prices are a little high. Market prices."

He's holding five packs of foreign cigarettes for display in his left hand -- 100 feet from a huge line at a state tobacco kiosk. Few leave the line to check out his smokes. At Viktor's price of 25 rubles -- up from about 15 rubles before the latest cigarette crisis -- one pack of cigarettes costs more than two days' pay for an average worker.

The hundred or so entrepreneurs at "Komsomolka," as the spot is nicknamed, hold out to passers-by the following enticements: Tuborg beer, 15 rubles a can; blank videocassette, 75 rubles; compact hand-held tape recorder, 1,800 rubles; car radio with cassette player, 2,000 rubles; French perfume, 250 rubles; pack of four AA batteries, 10 rubles.

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