[MUSIC] Making the economic reforms within the course of global reforming of the Russian society and legal system in 1990s was very important part. We started these reforms from making the free market economy according to the newly established principles in the Russian Constitution. And it was quite hard to make the first step on this road. The people who lived in Russia that time, had almost no property because the Soviet system did not allow them to have any property, but very personal things only. So these people could not have enough financial economic resources to take part in privatization of state property, which could be the only source for making the new economics. And this problem was decided quite in a very specific way. The privatization procedure in Russia during the 1990s was actually when the state just gave its property to those people who could take it. And those people who were close to the government at that time, to those people who could get the plant, being the director or in another position, but having access to these pieces of property. And the state in general tried to make the economy based on a rather private property and private entrepreneurs as the basement for a whole economic system. But in fact, it was the transferring the state property to private persons, and this was the making the private system within the former Soviet plant and state regulated economy. So it was not an easy way to make a new economy and it was made during the reforms, which lasted almost the whole 1990s. And the other task, the other aim within these economic reforms, was to develop the people who should become consumers, and who should become part of the whole economic system based on free market principle. If privatization created a class of new entrepreneurs, all the others need to be the customers in a new economic system, and it was maybe not so easy task as well. So the shock therapy, which was the name for those measures taken by the Russian government in 1991,1992, was just to abolish all state regulations of oil prices control in the market. And the state just let all the entrepreneurs to form their prices by themselves and without any state control. Making some exclusions for very sensitive, for the people, goods, and services, like, goods like medicines or services like, housing services, which was quite crucial for the wealth of the people. But this was just a situation when people lived in one country, in one economic system, and on the next day they waked up in quite a new system. And it was quite difficult for both sides of this new system. And all these reforms caused quite a deep gap between the poorest and the richest. And this social problem is still an agenda in Russia today. But its roots are in the 1990s reforms when the state tried to develop the new economic, the new market system in a few years, in a few months, and sometimes even in a few weeks. So all this new system when these entrepreneurs got their property from the state, made all the system to be taken by the society as not just system, as the system when most of the entrepreneurs got the property in a half semi-criminal way. And of course, this was quite a situation when these people did not believe in the market in general. I would say that the situation with making new customers, making customers in a new economic system, was also not easy. And today I would say that we have several layers of economy. When some people still live in those conditions which are very close to that economic system which existed in the Soviet time. They work for the state, they get money from the state as a salary, and this is quite while they're quite poorly paid, they got not so much money. And they are involved in the economic system only in a very limited space, only as a consumer and in very few services and goods which they could afford to themselves. So this prioritization and this shock therapy was on one hand realization of constitutional principles which were trying to be realized just in one decision or just in a few decisions, but in very short period of time. And talking about the society, and talking about the economic system, we wouldn't say that these principles could be really realized in contemporary situation in Russia. So this free market organization needed probably more long way, but those who wanted to develop market relations in Russia, they insisted that it should be done in very short period of time. So today the ideas of liberal state, the ideas of political democracy and political competition is very much connected with the ideas of free market development. And while many people are not happy about the new economic situation, a new economic system within this market. The political system which is associated with liberal principles with the constitutional principles are still not supported by many people. And many people want to get back to the Soviet system of economic relations, because they did not have the opportunity to develop their skills for being real participants of the new economic. So I would say that the development institutionally was put apart from the development in substantial part of economy. And this was a problem of realization of the legal principles as well. Because they could not be completely realized within this situation of quite a gap between factual and formal sides of the situation. And what we will discuss later, the state involvement in the economic system, is also a consequence of these situation with institutional versus substantial development of the economy.
