To what extent did the collapse of the Soviet Union impact the socio-economic disintegration of the Russian Federation during its formation in the early 1990’s?

A. Plan of Investigation
In the late 20th century, the U.S.S.R, as a superpower, exerted tremendous political, military, and economic influence around the world. Eventually the U.S.S.R. collapsed, resulting in the formation of 15 sovereign states, bringing about an end to the Cold War. The Russian Federation was the most developed of the formed nations. However, its internal state has deteriorated, causing tremendous socio-economic change in the new nation.
The focus of this investigation is to inquire about the extent to which the collapse of the Soviet Union impacted the socio-economic disintegration of the Russian Federation during its formation in the early 1990’s. Both aspects are closely intertwined together along with the anthropological development of the nation. In order to research the economic impacts, I will be looking at the country’s financial state in terms of nominal GDP, value of the ruble currency (with levels of hyperinflation), and the distribution of wealth amongst the population. As for social changes, I will examine evidence such as rates of corruption, crime, and other social statistics that may suggest the collapse of principles which have been emphasized for preceding centuries in the Russian culture.

B. Summary of Evidence
On December 25th of 1991, the Soviet Union officially fell apart under the leadership of Boris Yeltsin, a newly elected President after a fail coup d’état, after which Gorbachev resigned.1, 2 This caused tremendous economic and social shifts in ideology. Industries, military, and ethnic groups that were once an intertwined network under the Soviet Union were shattered in one of the greatest economic crises of history.3
With the reform of all structures, Yeltsin attempted to transform a centrally planned economy to a capitalist order. Two fundamental goals were to establish macroeconomic stabilization and economic restructuring.4 Yeltsin introduced a free-market economy and a new spending plan that cut government spending and was intended to shrink inflation by as much as 12%. In 1992-1993, the government began to print money and lend credit at a rapid pace. Along with the liberalization of prices parallel to privatization, this action caused hyperinflation, increasing the money supply by 30%.5 Due to large foreign currency deposits, the depreciation of the ruble increased through the years. Russia was forced to declare a debt default and the government placed a moratorium on all payments. In the decade leading to 2001, the GDP fell 39% (See Appendix A).6
Most of Russia’s emerging problems were due to economic inequality, which was supported by privatization.7 Yeltsin introduced the shares-for-loans program which was meant to sell off government property.8 As written by the European Bank at the time, “Under the ‘shares-for-loans’ scheme implemented in 1995, many of the key resource-based companies fell into the hands of a small group of financiers, the so called ‘oligarchs.’ These oligarchs are accused of stripping assets from the companies bought, which “depressed investment and economic growth.”6 Meanwhile the government failed to gain the planned profit from the sale of state enterprises and property.
Russians at this time felt unsatisfied, especially with increased unemployment and economic downturn.9 Due to radical political changes, social dissent grew, as traditional values were slowly lost. The price falling on such products as alcohol and tobacco, as well as increasing psychological stress, caused many people to engage in alcoholism and drug use.10 The rate of depopulation in Russia was a stable 1.6-2%, with more than half of the population aging and mortality rate rising (see Appendix A)11 There was an increase in suicides, estimated to be at 38 per 1000 people by the WHO.12 HIV/AIDS virus became widespread, causing lower life expectancy and infant mortality.13

Political corruption and crime rates rose when the change of governments took place.
“The use of direct violence became commonplace. Several politicians and investigative journalists were assassinated. Entrepreneurs organized ‘contract killings’ of their rivals… Government officials at the center and in the localities were routinely bribed. The police was utterly venal.”14
This became the norm as officials began to sell off Soviet industrial and military equipment to parties that had questionable purposes.15 Felonies, such as homicide and theft rates also increased (See Appendix B).
As travel between the U.S.A. and the former U.S.S.R. was established, many ethnic Russians immigrated. Meanwhile, emigration continued from the former Soviet Republics, most of which were in a worse state economically than Russia. This sparked tensions for jobs and urban space, causing the Russian economy to develop around the regional centers of Moscow and St. Petersburg, leaving the rest of the nation in even deeper poverty. 16

C. Evaluation of Sources
The article, "A Normal Country: Russia After Communism," is a contemporary analysis published in 2005 by Andrei Shleifer and Daniel Treisman, educated scholars in the field of socio-economics and authors on the topic of post-Soviet Russia. The purpose of this publication is to present a thesis on the economic changes that occurred in post-Soviet Russia and how that played a role in the country’s growth, while investigating political and social implications. Its value is very important, since it presents a scholarly thesis describing a chronology of economic events, and the impacts of various policies. Limitations of this source lie in the authors’ thesis, which may be due to their nationality, therefore lack of complete understanding of the events occurring at the time. This can be seen by focusing purely on numerical statistics and lacking anthropological analysis on how the social behavior impacted these movements.
The book, A History of Twentieth-Century Russia, was published by Robert Service in 1998 through the Harvard University Press. The author is a well-known historian, specifically in the field of 20th century Russia. Its purpose is to present a historical account of the Russian nation through its various political regimes and historically significant events. The value of this source is its extensive and detailed narrative, as it encompasses so many events from the Russian history, giving facts, evidence, and analysis. This makes it valuable in researching of the nation’s history, thus allowing for analysis of historical causality in the events leading up to the collapse of the U.S.S.R. Limitations include the fact that the publication date is soon after the researched events, therefore there is a possibility that they were not accurately processed and full consequences noted. This source is limited in the way that many of Service’s perspectives and interpretations are from a Western perspective, therefore presenting a bias in the narrative.

D. Analysis
In the midst of the collapse of the Soviet Union, there were a number of socio-economic changes that played a role in the disintegration of the established paradigm in the Russian nation. Numerous aspects of culture and social behavior changed also, in a way impacting the direction that the country took in the subsequent years.
Many historians speculate that it is the economic recession that caused the Soviet Union to collapse and the recession stretched into the newly formed Russian Federation. The whole system of resource-production delivery that existed amongst the Soviet Union was destroyed and divided up. Government policies at the time seemed to focus upon finding a quick solution to a crisis, such as quantitative easing and privatization, that had roots deeply embedded in political mishaps for previous decades.17 Hyperinflation is a systematic sign of failing societies. This weakens the economy on an internal scale, and on the international market. Shleifer however argues that what historians claim was derogatory to the Russian economy (oligarchs and privatization) were in actuality beneficial to the state in economic terms.18 That is far-fetched as unequal distribution of wealth caused unstable market fluctuation. It can be argued that it is not the collapse of the U.S.S.R. that led to the economic downfall, but rather it was years of poor financial responsibility by the Soviet leaders devoting as much as 17% of GDP to military spending.19 However despite these prerequisites, the actual collapse and lack of leadership was the spark leading to the economic debacle.
As Western influences flowed in, people experienced immense cultural shock. Due to a lack of stable jurisdiction and law enforcement, people began using unfair economic manipulation (financial pyramids), bribery, and engagement in socially degrading behavior.
Population decreased due to high levels of immigration, seeing no positive prospects. Few people wanted to have children at this time due to economic hardships, contributing strongly to depopulation. Since sexual intercourse was often regarded as a social taboo in the U.S.S.R., with its collapse, many engaged in promiscuous sexual exploration often causing unplanned pregnancies and spread of venereal diseases, causing a severe decline in population as the value of a strong family was lost.20
Overall conditions worsened for many, as prices went up exponentially on basic products, and many people lost their savings in the brink of the economic collapse. Robert Service suggests the correlation between the consequences of this crisis and that of the Great Depression during the 1930’s, however, on a much more barbaric and socially impacting scale. As stated by Dick Armey, by 1999, Russia had become “a looted and bankrupt zone of nuclearized anarchy.”21

E. Conclusion
Looking at the collapse of the U.S.S.R., there are many changes that caused socio-economic impacts on the Russian society. Yeltsin’s policies that caused the economy to collapse were closely intertwined with the social behavior of the Russian people, which greatly degraded through the decade. Many values were lost and culturally forgotten. The economic situation forced the country, that was once unparalleled on almost levels, into the lowest ranks of developing nations. Although the political switchover in 1991 was the spark that led to this crisis, many policies leading up to and afterward the collapse were a vital cause in the socio economic degradation of the Russian Federation. Looking at this through a historical perspective, the speed at which the country degraded must be noted, and how a change of political regimes may play an impact on the internal structure of the nation, but also on the surrounding global community. While everyone in the world was still processing the shock of the collapse of the great Soviet empire, the Russian people were struggling to survive in the anarchic chaotic rubble of their once strong society.

F. Bibliography
Eggers, Andrew, Clifford Gaddy, and Carol Graham. “Well Being and Unemployment in Russia in the 1990’s: Can Society’s Suffering Be Individuals’ Solace?” The Journal of Socio-Economics 35, no. 2 (April, 2006): 209-242. https://docs.google.com/viewer?url=http%3A%2F%2Fwww.brookings.edu%2Fes%2Fdynamics%2Fpapers%2Frussiaunemp.pdf (accessed October 17, 2012).

“Fall of the Soviet Union” http://www.coldwar.org/articles/90s/fall_of_the_soviet_union.asp (accessed December 3).

Hoeppler, Christopher. "Russian Demographics: The Role of the Collapse of the Soviet Union." Undergraduate Research Journal for the Human Sciences 10 (2011). http://www.kon.org/urc/v10/hoeppler.html (accessed December 19, 2012).

Rice-Oxley, Mark, Ami Sedghi, Sasha Magill, and Jenny Ridley. “End of the Ussr: Visualising How the Former Soviet Countries Are Doing, 20 Years On.” The Guardian Datablog; Facts are Sacred. Entry posted August 17, 2011. http://www.guardian.co.uk/news/datablog/2011/aug/17/ussr-soviet-countries-data# (accessed December 3, 2012).

"Russia - Economic Reform in the 1990s." Country Studies. http://countrystudies.us/russia/57.htm (accessed October 17, 2012).

Service, Robert. A History of Twentieth-Century Russia. Cambridge, Mass.: Harvard University Press, 1998.

Shleifer, Andrei, and Daniel Treisman. "A Normal Country: Russia After Communism." The Journal of Economic Perspectives 19, no. 1 (2005): 151-174.

Treisman, Daniel The Return: Russia 's Journey from Gorbachev to Medvedev. 1st Free Press ed. New York: Free Press, 2011.

Weiler, Jonathan, Human Rights in Russia: a Darker Side of Reform (Boulder, Colo.: Lynne Rienner Pub, 2004), pg. 36

Appendix A
Data comparing financial and social statistics leading up to and after the fall of the U.S.S.R.22
Statistic
1989
1990
1991
1992
Nominal GDP (US Dollars)
506,500,146,308
516,814,258,686
509,381,638,906
460,205,414,726
GDP Per Capita (US Dollars)
3429
3485
3427
3095
Total Population
147,721,000
148,292,000
148,624,000
148,689,000
Life Expectancy
69
69
68
67

1993
1994
1995
1996
Nominal GDP (US Dollars)
435,060,123,491
395,086,555,837
395,528,488,656
391,721,392,325
GDP Per Capita (US Dollars)
2929
2663
2670
2651
Total Population
148,520,000
148,336,000
148,141,000
147,739,000
Life Expectancy
65
64
65
66

1997
1998
1999

Nominal GDP (US Dollars)
404,926,534,140
270,953,116,950
195,905,767,669
GDP Per Capita (US Dollars)
2749
1844
1339
Total Population
147,304,000
146,899,000
146,309,000
Life Expectancy
67
67
66

Appendix B
Homicide rate in the Russian Federation 1990-2001.23
Year
1990
1991
1992
1993
1994
Total Homicides
15,600
16,200
23,000
29,200
32,300

1995
1996
1997
1998
1999
2000
2001
31,700
29,400
29,300
29,600
31,100
31,200
33,600

Appendix C
Provides a statistical graph representation of HIV/AIDS infected in the Russian Federation.24

Bibliography: Hoeppler, Christopher. "Russian Demographics: The Role of the Collapse of the Soviet Union." Undergraduate Research Journal for the Human Sciences 10 (2011). http://www.kon.org/urc/v10/hoeppler.html (accessed December 19, 2012). "Russia - Economic Reform in the 1990s." Country Studies. http://countrystudies.us/russia/57.htm (accessed October 17, 2012). Service, Robert. A History of Twentieth-Century Russia. Cambridge, Mass.: Harvard University Press, 1998. Shleifer, Andrei, and Daniel Treisman. "A Normal Country: Russia After Communism." The Journal of Economic Perspectives 19, no. 1 (2005): 151-174. Treisman, Daniel The Return: Russia 's Journey from Gorbachev to Medvedev. 1st Free Press ed. New York: Free Press, 2011. Weiler, Jonathan, Human Rights in Russia: a Darker Side of Reform (Boulder, Colo.: Lynne Rienner Pub, 2004), pg. 36 Appendix A