Sale of the Century: Russia's Wild Ride from Communism to Capitalism [Hardcover]

Chrystia Freeland (Author)

Book Description

Publication Date: September 12, 2000

In the 1990s, all eyes turned to the momentous changes in Russia, as the world's largest country was transformed into the world's newest democracy. But the heroic images of Boris Yeltsin atop a tank in front of Moscow's White House soon turned to grim new realities: a currency in freefall and a war in Chechnya; on the street, flashy new money and a vicious Russian mafia contrasted with doctors and teachers not receiving salaries for months at a time. If this was what capitalism brought, many Russians wondered if they weren't better off under the communists.

This new society did not just appear ready-made: it was created by a handful of powerful men who came to be known as the oligarchs and the young reformers. The oligarchs were fast-talking businessmen who laid claim to Russia's vast natural resources. The young reformers were an elite group of egghead economists who got to put their wild theories into action, with results that were sometimes inspiring, sometimes devastating. With unparalleled access and acute insight, Chrystia Freeland takes us behind the scenes and shows us how these two groups misused a historic opportunity to build a new Russia. Their achievements were considerable, but their mistakes will deform Russian society for generations to come.

Along with a gripping account of the incredible events in Russia's corridors of power, Freeland gives us a vivid sense of the buzz and hustle of the new Russia, and inside stories of the businesses that have beaten the odds and become successful and profitable. She also exposes the conflicts and compromises that developed when red directors of old Soviet firms and factories yielded to -- or fought -- the radically new ways of doing business. She delves into the loophole economy, where anyone who knows how to manipulate the new rules can make a fast buck. Sale of the Century is a fascinating fly-on-the-wall economic thriller -- an astonishing and essential account of who really controls Russia's new frontier.

Editorial Reviews

Amazon.com Review

Always something of an enigma to Westerners, Russia has become a veritable paradox in the decade following its transformation from communism to capitalism. In Sale of the Century, journalist Chrystia Freeland offers a riveting bird's-eye view of this conversion that should prove fascinating to everyone still hoping to do business there, and to anyone intrigued by the erstwhile superpower. Be forewarned, though: Freeland, who began reporting on the country in 1995 as Moscow bureau chief for the Financial Times, describes a nation of troubling extremes. The nation has evolved into a giddy utopia for some of its citizens, but one unable so far to handle its sudden affluence. The author portrays trendy Versace boutiques and bustling Mercedes-Benz dealerships lining Moscow's fashionable streets, whose sidewalks are patrolled by machine-gun-toting policemen trudging through the corrosive chemical waste used for melting the snow.

In well-written first-person accounts, Freeland goes on to describe how scrappy entrepreneurs made overnight fortunes and then lost them just as quickly to widespread corruption and the 1998 Russian stock market crash. By the end of the 1990s, the economy was half what it had been at the start of the decade, producing less than Belgium and only 25 percent more than Poland. Meanwhile, power blackouts, wildcat strikes, and water shortages had become commonplace. Additionally, the ordinary citizen often grew worse off than before the fall of communism, while a powerful few came to own nearly everything. This cautionary tale ends with a more "workaday economy" emerging from the wreckage, and the author's hope that Russia's economic leaders can stay this new, more-balanced course. All signs to date, however, leave her decidedly pessimistic. --Howard Rothman

From Publishers Weekly

All it takes to derail economic change is a few not-so-good men. That's the message in this page-turning, behind-the-scenes look at Russia's so-far failed attempt to transform its state-controlled economy into a free market. Freeland, who was Moscow bureau chief for the Financial Times beginning in 1995, details how two groupsAformer Communist bureaucrats and a small clique of wealthy Russian menAboth opposed Russia's economic reformers who took power in the early 1990s. The reformers, she shows, had to choose one of the groups to ally with, and they opted for the cliqueAthe oligarchs, as the Russians call them. While this alliance may have been necessary, it hasn't done the governmentAor the countryAmuch good. After a series of barely legal dealings (most notably a 1996 plan in which the businessmen loaned the government money in return for large stakes in government-owned companies), Russian politics quickly descended into palace intrigues between the oligarchs and the government, and, sometimes, among the oligarchs themselves. The oligarchs united to maintain Boris Yeltsin's grip on power in the 1996 elections, but afterwards returned to back-stabbing each other. The effect on ordinary Russians has been to create widespread disillusionment. Freeland, no leftist apologist, quotes one Russian friend as observing, "Everything Marx told us about communism was false. But it turns out that everything he told us about capitalism was true." In an epilogue, Freeland argues that the struggle to reduce the power of the oligarchs and establish liberal capitalism is far from over. As the recent three-day jailing of one of the oligarchs, Vladimir Goussinsky, shows, she's probably right. (Sept.)
Copyright 2000 Reed Business Information, Inc.

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Product Details

• Hardcover: 416 pages
• Publisher: Crown Business; 1 edition (September 12, 2000)
• Language: English
• ISBN-10: 0812932153
• ISBN-13: 978-0812932157
• Product Dimensions: 9.6 x 6.6 x 1.3 inches
• Shipping Weight: 1.6 pounds
• Average Customer Review: 4.3 out of 5 stars  See all reviews (15 customer reviews)
• Amazon Best Sellers Rank: #1,131,470 in Books (See Top 100 in Books)

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22 of 23 people found the following review helpful:

2.0 out of 5 stars Caveat Emptor, March 10, 2005

By 

Igor Biryukov (New Haven, CT) - See all my reviews

This review is from: Sale of the Century: Russia's Wild Ride from Communism to Capitalism (Hardcover)

The book is somewhat entertaining, but its style is a bit too sardonic and her attitude vis-à-vis Russians is patronizing. Even Russians who, admittedly, are not my favorites characters, I feel like defending. She calls Alexander Korzhakov, an influential former head of Yeltsin's Security Service, a Russian illustration of the Peter Principal', because he `climbed to a position of power that far outstripped his intellectual resources'. Granted, Korzhakov is no Socrates, but his college degree in jurisprudence and current post of the deputy chairman of the Duma's (Russian Parliament) Defense Committee is a confirmation that perhaps behind a façade of a simpleton is hidden a smart individual. Even notorious (and wanted by the Russian government) Boris Berezovsky, whom the author calls `a jumped-up car salesman', is much more than that - a highbrow Russian `enfant terrible' with a Ph.D. in mathematics for starters.

However, the most important thing is that the book appears, as the French say, engagé. I believe this book's real purpose is to divert attention from the individuals and institutions, which are really responsible for the debacle of the Russian privatization. For one thing, she mentioned the name of Gregory Yavlinsky only once in her 360-page long book about Russian capitalist revolution and only at the end of the book. Yet, Yavlinsky, who is household name in Russia and twice-also-ran-presidential-candidate, was one of the midwives of Russian privatization. His `500 days' program was written in the late 1980s with Mikhail Gorbachev's blessing. It was supposed to transform Soviet centralized economy into a market economy by the end of 1993. Yavlinsky resigned form the government after Gorbachev rejected the program in 1990. Neither this is mentioned in the book, nor the fact the Harvard University fellows, like Graham Allison, were promoting ideas and giving intellectual impetus to Yavlinsky and Shatalin (another Russian co-author of the program).

In the late 80s and early 90s Boris Yeltsin was competing with Gorbachev for power. He decided that the road to power lies through economic radicalism. Yeltsin assembled a competing set of pet economic advisers - most famous among them were Gaidar and Chubais. These two well-educated English-speaking Russians had even more far-reaching ideas than Yavlinsky. Eventually Yeltsin prevailed over Communists, and Gaidar and Chubais moved into the government. They had their own set of Harvard intellectuals to assist and advise them, among them was the Harvard professor Jeffrey Sachs. Sachs is a very interesting figure, whose liberalism and market fundamentalism are fused into one. Freeland mentioned Sachs only once in passing (on page 75), but his personality and ideas were of paramount importance. He was the real intellectual father of Russian `shock therapy'. All in all, the Harvard advisors look to me like sort of collective `éminence grise' to the Russian privatizers of both camps (Gorbachev's and Yeltsin's). What interesting to me is the fact that the author doesn't mention Harvard in the book, except mentioning in `Acknowledgments' that the Harvard University provided her with nonresident fellowship and `stimulating environment to complete the book'.

As I see it, `shock therapy' came from the West, more precisely from the U.S., and specifically from the group of radical Harvard professors, most notably Andrei Shleifer and Jeffrey Sachs, who both were directly advising the Russian government in 1992-1993. These were the years Russia plunged into abyss. And yet, there is nothing of this in the book. There is also nothing to explain how Yegor Gaidar managed to stumble into `shock therapy' idea. He was, according to Freeland, a big fan of Samuelson's textbook `Economics', which `became his bible'. But there is nothing the textbook about `shock therapy'. Indeed I doubt that Samuelson would have approved such an outrageous idea.

Freeland's conclusion is a master stroke. She likes ideas of Richard Pipes, who was her professor at Harvard (déjà vu). These ideas in a nutshell - the tsarist, communist or re-born capitalist Russia represents hypostases of same imperialist, semi-barbaric, Asiatic despotism, which is driven by the eternal messianic zeal.
For Freeland, the free-market-through-minimum-government regime is the best economic system that Russia could have established, but the neo-Bolshevist zeal of `young reformers' spoiled the whole thing up.

With a straight face she is saying `The problem was not that the young reformers were too radical, but that they were too fanatical'. Or `I am convinced that the central failure of Russia's capitalist revolution was that it did not go far enough' (page 344). It is a folly. Shock tactics of Gaidar and his western advisers didn't work and couldn't have worked in Russia, regardless how far they would go. They caused nothing but pain and social strife. Withdrawing price control and unleashing unregulated free markets had caused a continuous 25% monthly inflation and falling industrial production of 25% per quarter (faster than during the Great Depression in America). The hyper-inflation wiped out most of people's life savings, which in combination with general decline of living standards and crumbling infrastructure, caused millions premature adult deaths in Russia through the 1990s. During this hurried transition to market democracy, Russia became a society with Third world mortality rates and First World birth rates. This should have been mentioned in the book as the real price of Russian privatization. All in all, the book feels to me like a Disney version of events, nothing more than an attempt to divert attention or may be even reassign the blame to vaguely defined by the author `Russian messianic tendencies'.

11 of 11 people found the following review helpful:

5.0 out of 5 stars Best Analysis of post-Soviet Russia, October 7, 2000

By 

Walter Fekula (New York, NY USA) - See all my reviews
(REAL NAME)   

This review is from: Sale of the Century: Russia's Wild Ride from Communism to Capitalism (Hardcover)

Compliments to Chrystia Freeland who has written a comprehensive, intelligent book on how the combination of naive reformers, corrupt officials and ambitious "oligarchs" succeeded in ripping off poor Russia of untold billions as it tried to transform itself from 70+ years of Communism to a free market economy. The West has its share of the blame with its band of greedy investment bankers and other rogues who participated in the heist of the century. An incredible story told with exceptionally clarity by Ms. Freeland , former Moscow bureau chief for the Financial Times of London. I have spoken to people who are very well informed on what is happening in Russia who unanimously support the accuracy of the book and highly recommend it.

12 of 13 people found the following review helpful:

5.0 out of 5 stars A Thorough History of Capitalist Russia, November 17, 2000

By 

Scott Esposito "Readsalot" (Oakland, CA United States) - See all my reviews
(REAL NAME)   

This review is from: Sale of the Century: Russia's Wild Ride from Communism to Capitalism (Hardcover)

The failure of Russia's transition to a market economy easily ranks as one of the most important stories of the 1990s. Unfortunately, while this story is important, it is not well known. In part, this must be blamed on the nature of Russia's market transition: much of it was done behind closed doors in the proverbial "smoke filled room."

This fact makes Crystia Freeland's book all the more valuable, for she, through in-depth interviews with nearly all the important players, has penetrated beyond this haze to give us the real story of the capitalist transition in Russia.

Freeland spent several years in Russia writing for the Financial Times and it shows, as her book echoes with every nuance and detail of this story. Through direct quotes, a myriad of background details, and anecdotes, the leaders of Russia's marketization are transformed from names to living, breathing entities. Furthermore, where other accounts might be satisfied to present only the most oblique facts, Freeland's book digs deep to provide the real story of what happened behind the scenes.

Although the depth of this book is certainly a strong selling point, Freeland's prose is also notable. Often gripping, never cumbersome, her prose exceptionally conveys the details of this story from her notebook to our eyes. Freeland's own analysis and insight gives us a valuable insiders' interpretation of events and adds a personal touch. Where appropriate, irreverent details are sprinkled in providing color to the story as well as quite a few shocks.

Overall, you'd be hard pressed to find a better account of Russia's market transition than the one Crystia Freeland presents in Sale of the Century.