LOST IN TRANSITION: 30 YEARS AFTER THE SOVIET COLLAPSE, WHAT HAPPENED TO THE RUSSIAN DREAM OF A FREE ECONOMY?

• Author: Decker, Jarett

THE SOVIET UNION has been gone for 30 years now, having passed away without ceremony as the red flag was lowered from the Kremlin on December 25, 1991. It was created by a small but disciplined and fanatical sect who saw their chance and made their move in October 1917, when Russia was broken and starving from World War I and nominally governed by a wobbly coalition after the overthrow of the tsar eight months earlier.

"Power was lying in the streets, and we picked it up," said Vladimir Ilyich Lenin, the revolutionary leader and founder of the Soviet state.

After promising "bread and peace," Lenin launched one of the most repressive political and economic systems ever devised. Over a century later, its shadow still looms over Eurasia. For societies held in its grip, reform has proved risky and complex. In Russia, efforts to unravel Lenin's handiwork are incomplete and have partly backfired, helping spur the creation of a new kind of authoritarian structure.

Lenin and his successor, Josef Stalin, conducted a strange and vicious experiment on the populations of Russia and an expanding realm of captive nations. Claiming that private enterprise inevitably leads to exploitation of workers, they sought to eradicate it, using all the violence and terror they could muster. Factories were nationalized. Farmland was confiscated. Livestock and seed were seized.

As his comrades routed the resistance, Lenin vowed that "we will make our hearts cruel, hard, and immovable, so that no mercy will enter them, and so that they will not quiver at the sight of a sea of enemy blood. We will let loose the floodgates of that sea."

And so they did. Historians and statisticians debate the final tally of the dead from the terror campaigns, show trials, summary executions, induced famines, and concentration camps. But they are certainly responsible for one of history's most lethal chapters of mass murder. Stalin biographer Simon Sebag Montefiore attributes about 20 million killings to the Stalin era alone. Yale historian Timothy Snyder estimated 6 million deliberate killings for Stalin, 9 million if other foreseeable deaths are included. Robert Conquest of Stanford put the total deaths for Lenin and Stalin at no less than 15 million.

The Soviet regime was built by men like Vasily Blokhin, awarded the Order of the Red Banner for his "skill and organization in the effective carrying out of special tasks," most notably, delivering a bullet point-blank to the back of the head for 7,000 prisoners in just 28 days. Blokhin worked in a brown leather butcher's apron. It helped with the mess.

The mass violence and terror served to build a new society, in which all significant assets were in the hands of the state and virtually all economic activity was supposed to be controlled by central command. All production, farming, and distribution for the largest country in the world, spanning 11 time zones, were directed from an office complex in Moscow, housing an economic planning super-agency called Gosplan.

Colossal waste and misallocations caused periodic famines and constant shortages. Even in the best of times, ordinary people waited in lines stretching around city blocks to buy necessities and bartered with family and friends to get by. Meanwhile, the communist elite were served by well-supplied shops with display windows discreetly covered in long gray curtains and with admission by invitation only.

Some of the greatest cruelties came after Soviet leaders discovered how much buried treasure there was in the country they ruled. The richest prizes of minerals and fossil fuels were locked tightly in the permafrost of the Arctic Far North and the Siberian taiga. To break through the frozen ground and extract this treasure with ordinary wage labor would have required massive investment upfront in heavy machinery, transportation, housing, and facilities, as well as high wages to attract workers to endure the hardships and risks of life in places not fit for human habitation.

The Soviet leadership found a cheaper way. They developed a network of "corrective labor camps," which provided forced labor to build railways, dig canals, construct factories, and work in mining, processing, and shipment of ores and fossil fuels, as well as in logging and other industries requiring heavy and dangerous labor, particularly in remote areas with the most brutal climate. According to historian Anne Applebaum, writing in the June IS, 2000, New York Review of Books, highlevel planning discussions among Soviet leaders in 1929 about expansion of the camp system focused on "how many prisoners would be needed to extract the resources of the 'underpopulated areas,' a euphemism for the barely habitable far north."

The network of camps that was created came to be known as the gulag, an acronym of the Russian words for "main administration of corrective labor camps." Some of the prisoners sent to corrective labor camps were common criminals, but the majority were people convicted of "political" or (even more commonly) "economic" crimes, which came to be very broadly defined. It is likely that these crimes became so broadly defined and enforced in part to assure an adequate supply of labor for the gulag.

As Applebaum recounts, getting caught twice for being 10 minutes late for factory work could be considered "desertion" and garner a 5-year sentence. According to Alexander Solzhenitsyn, an audience at a political conference vigorously applauded the name of Stalin for 10 minutes, with everyone afraid to be the first to stop because secret policemen were there; a local factory director who was finally the first to stop clapping was arrested and sentenced to 10 years. After 1929, being identified as a kulak--a. peasant farmer who had prospered enough to own land and several head of cattle or horseswas enough to be condemned as a class enemy and dispatched with a bullet or sent to the gulag.

A sentence to the gulag carried a high risk of death, especially for the old and weak. Among the worst was the Butugychag Corrective Labor Camp in the Kolyma mountains of northwestern Siberia. Prisoners there mined uranium without protective equipment. Life expectancy was reportedly measured in months.

Can a people escape a history like this and make a normal life? Now that a full generation has passed since the collapse of the Soviet system, a preliminary assessment can be made. At least for Russia--just one of the 15 countries formed from the vast territory of the Soviet Union--it does not look promising.

But perhaps it could all have been different. In the effort to build a prosperous economy and free society from the husk of the Soviet system in the 1990s and afterward, serious mistakes were made, and some seriously misguided ideas prevailed. While the Russian people are responsible for their own fate, it must be said that some of the mistakes and bad ideas came from the United States.

BURIED TREASURE IN THE FROZEN GROUND

TO UNDERSTAND WHAT happened afterthe Soviet collapse, it helps to track the development of one enterprise, now called Norilsk Nickel, a mining operation named after the city where it was founded. Located deep inside the Arctic Circle, Norilsk is today the northernmost city in the world with more than 100,000 in population. With savage windstorms and temperatures averaging negative 23 degrees Fahrenheit in January, Norilsk appears unfit for human life and work.

But as Stanford historian Simon Ertz relates in the 2003 book The Economics of Forced Labor: The Soviet Gulag, in the early 1930s, the young Soviet regime discovered signs of untold wealth in the barren area that would become Norilsk. A geological survey team identified vast deposits of nickel as well as copper, cobalt, and platinum. Nickel was the most valuable prize for its use in making stainless steel for military production. Estimates of the size of nickel deposits there were regularly raised as new measures were taken, and by 1939 the regime concluded that perhaps more than a quarter of the world's recoverable deposits of nickel were in the area. Large deposits of coal were also conveniently nearby to provide power for smelting and transportation.

But how to recover all of this bounty? Development of the complex was initially under the jurisdiction of the Ministry of Heavy Industry, but little progress was made in building infrastructure. In 1935, responsibility was transferred to the People's...