The collapse of the Soviet Communist Party has moved the problem of property to the forefront of that country's political life - where it may overwhelm the abilities of politicians.
For 74 years the Soviet people have lived an incredibly deprived life under the most irrational economic system ever constructed.The absence of private property meant that there was no way to hold the productive system responsible for its misuse of resources. Since they produced for the plan and not for market, factories could not go broke regardless of shoddy and even useless products. Scarce housing was allocated by the state, and no builder could go broke constructing substandard buildings.
Gorbachev's efforts to reform the economy failed because he did not address the basic problem of property. According to Gorbachev, his own inclination is socialist. Moreover, fearing communist reaction, he did not want to push ahead with private property for political reasons.
However, Gorbachev inadvertently set in motion an unofficial reform process that no one controlled. He did this by permitting more democracy and challenges to the ruling prerogatives of the Communist Party. Soon the giant Russian Republic was challenging the sway of the Kremlin and claiming jurisdiction over the republic's resources.
Even local mayors began to challenge the Kremlin's hold, and soon the competing jurisdictional claims of Soviet, republic and local governments produced a general paralysis of government.
This government paralysis created the perfect environment for an unofficial privatization of the Soviet economy. Traditional bosses and power-brokers, to whose authority people were accustomed, began acting as the owners of the state resources they controlled. Countless individual acts of plunder shifted resources from the failing state sector to the growing private sector, where they produce more value. As the old system failed, a new one was emerging to take its place.
Now this unofficial privatization process, which was solving the problem of property informally, has been thrown into jeopardy. The failure of the communist coup has broken the political stalemate and given authority to the republic governments. Moreover, the old bosses are discredited, and there will be popular demands to deprive them of their spoils.
It is unfair for members of the fallen nomenklatura to appropriate wealth that would ensure their prominence in the new society, and the pressure will be great to punish and dispossess the de facto owners.
The problem is that with the official economy in chaos, Soviet life today is dependent on the unofficial economy and the web of unofficial property rights that make it possible. Entire distribution networks consist of diverted state resources and products privately produced and transported by equipment nominally owned by the state. Many illicit businesses are earning illicit profits and paying illicit wages to illicit workers.
The political imperative of preventing the discredited members of society from grabbing the country's wealth cannot be achieved without striking at the unofficial economy and intensifying the economic crisis.
Before they disrupt the unofficial economy, the new democratic leaders must first address the problem of privatization. Otherwise, the economic failures that damaged Gorbachev could soon haunt Boris Yeltsin.