Russia and the Post-Soviet Rent Opportunity

Overview

Post-Soviet Russia is treated in Georgist literature as a large-scale missed opportunity: a state that, briefly, already held nearly all land and natural-resource wealth in public hands and could in principle have raised public revenue by charging rent for their use, rather than by privatizing them and then taxing labor and enterprise instead.[1][2] The 1990 Open Letter to Gorbachev, signed by Nobel laureates including William Vickrey and organized by Nicolaus Tideman, made this case to the Soviet leadership before the USSR's dissolution.[3] Within Russia itself, economist Dmitry Lvov (1930–2007) pursued a similar rent-based proposal through the 1990s — an effort that lost out to the "shock therapy" privatization program associated with Yegor Gaidar, Anatoly Chubais, and Boris Yeltsin, whose most consequential episode was the 1995 "loans for shares" scheme that transferred Russia's most valuable oil, mining, and metals enterprises to a small group of private owners who became known as the oligarchs.[4]

The Road Not Taken: Lvov's Rent-Based Proposal

Dmitry Lvov, an economist associated with the Russian Academy of Sciences, argued through the 1990s that Russia's natural-resource wealth — oil, gas, minerals, and land — should remain formally on the state's books and be charged for as rent, rather than transferred into private ownership.[1] Fred Harrison has described working with Lvov's team on a rent-as-revenue alternative for Russia during this period.[1] In a State Duma address (translated and archived by a third-party outlet), Lvov argued for treating natural-resource wealth as a public asset to be placed "on the books of the state" and its income directed into the treasury, rather than redistributed through privatization.[5] The address has now been located and dated: it is Lvov's testimony of 29 June 2001 to the State Duma official hearing "On Measures To Ensure the Development of the Russian Economy Under Conditions of a Destabilization of the World Financial System," archived (as "Russia Must Initiate Solutions to the Crisis") by the LaRouche-affiliated Schiller Institute. The wiki's paraphrase is confirmed verbatim against that transcript: Lvov says the natural resources "are all public property and belong to all, and the rental income" should not be appropriated privately, urging the state to "Put it on the public balance sheet, put it on the books of the state" so that "everything will flow into the Treasury." The transcript remains a LaRouche/Schiller-Institute translation and reposting, not an official Duma stenographic record: the date, title, and quoted wording are pinned to that archived source, but a primary Duma stenographic transcript has not been located, so the wording is presented as that translation records it.

Independent corroboration: Gaffney's own direct advocacy (2026-07-18). Mason Gaffney's own papers confirm this Georgist advocacy effort was real and international, from a source independent of the Harrison-tweet chain above. "Privatizing Land Without Giveaway: Embracing Capitalism without Kleptocracy" (workpaper WP079) was delivered at a "Conference on Social Collection of Rent in the Soviet Union" in New York and was slated for a 1991 collection edited by Nicolaus Tideman and Adele Wick — the same early-1990s window as the proposals this page documents — arguing against mass privatization of Soviet land on the grounds that a fire-sale would fetch only a fraction of land's value, would hand disproportionate shares to wealthy foreign bidders, and would forfeit perpetual revenue for a one-time windfall governments historically dissipate as current spending.[6] More directly, Gaffney's "The Taxable Surplus in Russian Land" (workpaper WP080) is the transcript of his own testimony to a Duma Parliamentary Hearing on Land Revenues, chaired by Vyacheslav Zvolinsky (Chair, the Duma's Committee on Natural Resources), Moscow, 19 January 1999 — published the same year in the Duma's own proceedings volume.[7] The testimony names Dmitri Lvov as a co-speaker at the same or a closely related hearing series ("Your expert, Dmitri Lvov from the Russian Academy of Sciences... has written that you could cover most of your national budget from your enormous production of oil and gas"), giving a dated, primary-source confirmation — independent of the LaRouche/Schiller Institute archive this page's Lvov citation otherwise relies on — that Western Georgist economists and Lvov's rent-based program were advocated together, directly to Duma committees, as early as January 1999, over two years before the 29 June 2001 testimony documented above.[7] Gaffney's own recommendations to the hearing — untax labor and capital, tax the net product of land alone, and use Alaska's Permanent Fund dividend as a distributional model — track the Lvov program closely but are Gaffney's independent argument, not a restatement of Lvov's.

Shock Therapy and the Rise of the Oligarchs

Russia's government took the opposite path. After the Soviet collapse in December 1991, Yeltsin's administration pursued rapid market liberalization — freeing prices, then privatizing state enterprises — on the advice of Russian reformers and Western advisers; the International Monetary Fund and other Western creditors were, per NPR's account, notable advocates of the speed and shape of this "shock therapy" program.[4] An initial 1992–94 voucher privatization distributed ownership of roughly 15,000 state enterprises (about 70% of the economy) relatively broadly, but the largest and most valuable state assets — oil, mining, and metals companies — remained in government hands into 1995.[4]

The Loans-for-Shares Scheme

Facing a 1996 re-election Yeltsin was expected to lose, his government adopted the "loans for shares" scheme: a small group of bankers loaned the state money against collateral in Russia's most valuable enterprises, at auctions widely reported to have been pre-arranged, on the understanding that the government would default and the lenders would keep the assets.[4] Twelve major enterprises — including oil, mining, and shipping companies — changed hands this way between November and December 1995; NPR reports that Boris Berezovsky and Roman Abramovich acquired a large stake in the oil company Sibneft for roughly $200 million, a stake Abramovich later sold back to the Russian state in 2009 for $11.9 billion.[4] The recipients of these transfers subsequently financed Yeltsin's 1996 re-election campaign.[4] Gaffney and Harrison's Corruption of Economics (2022 revised edition) states flatly that "Russia privatized land under 'shock therapy,' creating oligarchs" — one of three post-1994 cases (with South Africa and China) the book cites as evidence that privatizing rent, rather than collecting it publicly, corrupts governance.[2]

Georgist Assessment

The Russian case is presented in Georgist sources as the clearest large-scale instance of the "missed moment" theme also found in the Open Letter to Gorbachev: a state starting from public ownership of land and resource rents chose privatization-plus-taxation over rent-as-revenue, and the transition produced a small, politically entrenched ownership class rather than the broad-based public revenue Lvov and the Gorbachev letter's signatories argued for.[1][2][3] Harrison's claim (via a 2022 social-media post, not a peer-reviewed source) that the IMF was "the institution most determined to frustrate and demolish" Lvov's efforts is a strong, single-source assertion this wiki cannot independently corroborate; NPR's independent account confirms the IMF's advisory role in shock therapy generally but does not corroborate a specific campaign against Lvov's proposal.[1][4] Whether a Lvov-style rent-based fiscal system was administratively feasible at 1990s-Russia's state capacity — as opposed to normatively preferable — is not addressed in the sources reviewed for this page and would need separate evaluation.

See Also

• Open Letter to Gorbachev (1990) — the earlier, Soviet-era version of the same rent-as-revenue argument
• The Corruption of Economics (book) — the source for the "shock therapy creates oligarchs" claim
• Nicolaus Tideman · Fred Harrison
• Land Rent Could Fund Government

Sources

1. Peter Challen, quoting a Fred Harrison tweet, "Blunt confrontation with the false economy," Christian Council for Monetary Justice, 26 May 2022. ccmj.org.uk — used for Dmitry Lvov's role, his collaboration with Harrison's team, and the IMF claim (attributed to Harrison, flagged as uncorroborated in the Georgist Assessment section).
2. Mason Gaffney, Fred Harrison & Kris Feder, The Corruption of Economics (Shepheard-Walwyn, 1994; revised ed. c. 2022), "Corrupting the Body Politic" chapter. Wiki summary — discovery source book; used for the direct "Russia privatized land under shock therapy, creating oligarchs" claim.
3. "Open letter to Gorbachev," Wikipedia; wiki summary — used for the earlier, 1990 Soviet-era instance of the same proposal.
4. Greg Rosalsky, "How 'shock therapy' created Russian oligarchs and paved the path for Putin," NPR Planet Money, 22 March 2022. npr.org — free web source; used for the shock-therapy timeline, voucher privatization figures, the loans-for-shares mechanics, and the Sibneft example.
5. Dmitri Lvov, testimony of 29 June 2001 to the State Duma hearing "On Measures To Ensure the Development of the Russian Economy Under Conditions of a Destabilization of the World Financial System," archived as "Russia Must Initiate Solutions to the Crisis" by the Schiller Institute (LaRouche movement). archive.schillerinstitute.com — the third-party archive underlying source 1's chain; directly fetched this pass, confirming the "public property," "on the books of the state," and "flow into the Treasury" wording. Lvov's decades-long "natural rent" advocacy is independently corroborated by Petr Ermilin, "Natural rent: The controversy continues," Pravda (English), 5 December 2003 english.pravda.ru, which quotes him arguing Russia "might in general do without any labour and capital taxation" and that "Russia lives off its resources, and so its budget must be 70% or so made up of the rent from them." Both remain secondary or translated sources; no official Duma stenographic transcript was located, so Lvov's words are reported here as those translations render them.
6. Mason Gaffney, "Privatizing Land Without Giveaway: Embracing Capitalism without Kleptocracy," workpaper WP079, delivered at the Conference on Social Collection of Rent in the Soviet Union, New York, for a collection scheduled for 1991 publication edited by Nicolaus Tideman and Adele Wick — used for the independent-corroboration paragraph above. Read in full 2026-07-18; no prior wiki coverage. Free PDF (masongaffney.org); local mirror at sources/gaffney/text/WP079-PrivatizingLandWithoutGiveaway.txt.
7. Mason Gaffney, "The Taxable Surplus in Russian Land," workpaper WP080, testimony to the Duma Parliamentary Hearings on Land Revenues, Moscow, 19 January 1999, chaired by Vyacheslav Zvolinsky; published in Vyacheslav Zvolinsky (ed.), Prirodniye resursi — natsionalnoyeh bogatstvo Rossii [Natural resources — the national wealth of Russia] (Moscow: The Duma, August 1999), pp. 47–60 — used for the Duma-testimony detail and the direct reference to Dmitri Lvov as a co-speaker. Read in full 2026-07-18; no prior wiki coverage. Free PDF (masongaffney.org); local mirror at sources/gaffney/text/WP080-TaxableSurplusInRussianLand.txt.