How Did Russia Move To Capitalism

Russia’s Movement Towards Capitalism

Since the end of the Soviet Union, Russia has faced many privations. One of these hardships was to surmount the collapse of the Soviet’s way of operating by the public sector. After the collapse, Russia tried to quickly move towards the private sector/market economy, they ended the governmental control over economic activity. The shift between having a communist system to having a capitalist system was a struggle; there were many challenges faced in trying to switch to a market economy.

Russia took two major actions in 1992 in order for its economy to become a market economy. Russia removed the price controls that was set by the Soviet government on goods sold within the country, and they began to sell government owned businesses to private individuals and companies; this was called privatization. However, many people could not afford these businesses, so the government offered loans that could be used to purchase businesses. The people who got these loans had to pay off their debt with their future profits. This plan did not end very well because many of the businesses were not lucrative, and were not able to pay off their debts. This was one of the factors that led to an economic crash in Russia in 1998. Even though it seemed like a failure, later on, over sixty percent of Russia’s workforce worked in the private sector.
However, the high cost of economic change moving from the public to private sector, was not beneficial to some of Russia’s population. Almost forty percent of the population lived below the poverty light at the end of the twentieth century. This raised questions about whether Russia’s economy was better when it was under the Soviet Union’s