Russia’s official privatization program itself consisted of two stages. The first stage began in late 1991 and was completed by the end of 1994. It was called “people’s privatization” or “voucher privatization” and was associated with Anatoly Chubais (b. 1955), the minister in charge of privatization in Gaidar’s government. Over three to four years the mass of state-owned enterprises was to be transformed into joint-stock companies, sold to or distributed among the country’s citizens. A privatization on such scale and within such time limits was unprecedented in world economic history.

The Russian government strove hard to give the semblance of “people’s privatization” to its program. However, it proved to be little more than a simulation of a popular redivision of state assets among the entire population of the Russian Federation. Every single member of Russia’s 150 million-strong citizenry, from newborn babies to old-age pensioners, was to be given a privatization voucher, which conferred the right to own shares.

The value of the voucher was fixed at the end of 1991, when the government could not foresee the scale of inflation that would be inaugurated by the price liberalization in January 1992. One voucher was worth 10,000 roubles, which at the time was a substantial sum of money, equivalent to approximately half the price of a popular Lada car. The reformers hoped that the voucher’s high value would cushion the adverse effects of price liberalization on consumers’ savings and thus help to diffuse their resentment.

The program envisaged that in 1993 the population would be given the opportunity to either sell their vouchers for cash or use them to buy shares in privatized companies. But price liberalization and the consequent rate of inflation rapidly devalued the voucher. By the end of 1993 it had become worthless: 10,000 roubles could now buy just three or four bottles of vodka.