Many of the world’s richest billionaires are Russian, whose average age is 56. Many earned their wealth through the metal, oil, banking industries, and some are even involved in sports. But it looks like they are going to be replaced with a very young team very soon. And Ayaz Shabutdinov is one of them. But first things first…
The Soviet Union was the country that took up a sixth of the globe. And all the wealth of the country that was given to one by nature or what was created by a man, was supposed to belong to everyone. The essential purpose of the Soviet Union was to establish and maintain a classless society in which there was collective ownership of the means of production.
That was a brilliant idea to inspire millions of people to support a brand-new political movement in the country. The Soviet government wanted to entirely replace all exchange relations in the economy with administrative central planning by which is meant the abandonment of prices, of money, of markets, of any kind of relationships in any form. They tried to control every aspect of life and fill it with the Marxian ideology. With administrative central planning the Soviet government was telling 240-billion Soviet citizens what to do and how to do virtually everything. They produced for an impersonal market, a market where you don’t even know where it is going to end up and who is going to use it or why. Production for direct use, not production for markets. And in the totally planned economy, there is also the market – the black market or grey economy that allows people to actually have choices. One had a huge chance to get in jail or even to be shot for having any private enterprise in the USSR. However, there were a lot of people who worked at their own risk. They produced the goods and services that the planned economy was not able to make.
By the mid 1980s, the Soviet economy was in such a sorry state (the economy was sputtering from the second half of the 1970s), that the idea of reform gained support even at the very top. The new party leader, Mikhail Gorbachev, somewhat simplified the life of Soviet private business and attempted to improve the political situation as a whole. Gorbachev truly believed that his policies of openness and Perestroika could transform the economy. Also, he knew that whatever changes would be introduced, would be very painful. But the way he chose combine a planned economy with free markets was not achievable. And the masses knew no other system but that created by Stalin. And all the downsides of Stalin’s period such as bureaucracy, lies, slander, forgery, and bribes affected people all over the country. This system could either reproduce itself or collapse. The economic situation was getting worse and worse, and the existing government could not solve it. And at the end of this story, the USSR fell apart in December 1991.
The next strike for young Russia was privatization. How do you privatize an economy the size of the Soviet economy? No one knew. Privatization had to be carried out, but the new government didn’t have a lot of time nor experience to make it fast and painlessly. There were no wealthy investors who would buy factories and make factories work better. Completely outdated factories were unable to compete in the international market. Foreign goods inundated the country, which resulted in the closing down of factories and very high levels of unemployment. People did not have any resources for the enormously changed conditions. The consequences of that were the decline of the standard of living and an incredible drop in life expectancy. Thus Russians found out what capitalism was and what the market economy meant.
This experience had a great meaning for the country. The word “great” is used in a negative way here. The country has gone through a tremendous economic transformation and it seems like only Russians who were born after the USSR fell apart started dreaming about a serious career in the private business. And Ayaz Shabutdinov is a very bright and good person to look at and follow. He runs a few companies at the same time, helps young and ambitious people to start their own projects all over the country, develops his YouTube channel to show people many opportunities and so on. Check out a short part of the interview with him and write in comments if you want to watch more.