Shock therapy

Shock therapy is the name given to the rapid market reforms pursued by Boris Yeltsin and Yegor Gaidar after the collapse of the Soviet Union. In the book, it is not simply a set of economic measures: it becomes a test of whether a society formed by collective ownership could be remade quickly, and a mechanism by which public wealth passed into private hands. Its promised future of markets and freedom arrives alongside inflation, mass impoverishment, spectacular fortunes, and a politics increasingly shaped by the winners and the dispossessed.

The case for speed

Aware of his lack of economic expertise, Yeltsin turned to Gaidar, a young economist descended from the Communist nomenklatura who professed an absolute faith in liberalism. The challenge was immense: Russia had never had anything resembling a market economy. Yeltsin and Gaidar believed they had to act very quickly, before reactionary forces could block the reforms, as they had blocked reformers in Russian history before them. Their remedy was called shock therapy, and the narration emphasizes the literal force of that name: the transition was intended to be abrupt, not gradual.

The book places this urgency in a political argument as well as an economic one. A former prime minister, Gaidar, later said that the choice had not been between an ideal market transition and a criminalized one, but between a criminalized transition and civil war. That retrospective defense does not remove the costs from view. Rather, it sharpens the dilemma at the center of the reform: the authorities treated speed as necessary to prevent a worse outcome, while the speed itself helped determine who could seize the opportunities and who would bear the shock.

Prices, vouchers, and the making of oligarchs

The first major measure was price liberalization. Inflation reached 2,600 percent, devastating the purchasing power of ordinary people and rendering the accompanying voucher privatization initiative largely useless. On September 1, 1992, vouchers valued at ten thousand rubles were mailed to Russian citizens over the age of one. The scheme was meant to represent each citizen’s share of national wealth and to turn people, after decades in which work was theoretically performed for the collective, into investors in businesses and private property.

By the time the vouchers arrived, inflation had stripped them of practical value. Their recipients found that a voucher might buy a bottle of vodka; some people sold theirs to buyers offering the equivalent of a bottle and a half. That small, concrete exchange condenses the larger reversal: a claim to a share in the nation’s wealth became an immediately disposable object, while those with money, information, and commercial skill could gather claims at a fraction of their intended value.

Among the buyers who soon became multibillionaires were Boris Berezovsky, Vladimir Gusinsky, and Mikhail Khodorkovsky. The narrator groups them as representative oligarchs, while describing them as young, intelligent, and energetic people who had grown up in a system that forbade the business activity at which they excelled. They were suddenly told to proceed in a country without settled rules, laws, a banking system, or taxation. The result was not merely the creation of private enterprise, but the concentration of assets in a disorderly environment where the quickest and most resourceful could convert the transition into private fortunes.

Unequal consequences

The contrast between the new rich and the majority is central to the book’s account. While a million people enriched themselves through shock therapy, 150 million less quick to seize opportunities were plunged into misery. Prices rose while wages remained fixed. An ex-KGB officer such as Eduard Limonov’s father could scarcely afford two pounds of sausage with his monthly pension. The reforms’ costs therefore appear not as an abstract loss of purchasing power but as a change in what a pension could buy.

The wider social landscape was transformed with startling speed. In Moscow, old street names returned, neon signs crowded the streets, and black Mercedes appeared alongside old Ladas. Goods that visitors had once carried in their suitcases for Russian friends became readily available; a McDonald’s on Pushkinskaya Square was followed by a fashionable disco, and restaurants that had offered little choice began serving imported Kobe beef and oysters. The figure of the new Russian entered popular mythology with cash, luxury, ostentation, and brutality. These signs of abundance did not contradict the misery described elsewhere; they made the unequal distribution of the transition visible.

The human consequences extended beyond household budgets. Russian men’s life expectancy fell from sixty-five in 1987 to fifty-eight in 1993. People once seen in lines outside empty shops now tried to sell possessions in underground passageways: pickles, a tea cozy, or old issues of a magazine. In the same economy, military aircraft and tanks could be sold through fraudulent private companies, while verdicts, official tolerance, and even a capacity for violence became things that could be sold. The narrative’s inventory shows a society in which the market did not simply create legitimate businesses; the absence of functioning rules made public authority and private survival commodities too.

Political backlash and the reform’s legacy

The book connects the reforms to mounting public anger. The old justification that when you chop wood, chips fly had once been used to excuse collectivization, famine, and purges. Under the new order, the free market replaced the dictatorship of the proletariat as the promised horizon, but the same proverb could still excuse those close to power who benefited. The difference, the narrator observes, was that people who considered themselves the broken eggs were no longer afraid of being sent to Siberia, and they spoke out. Demonstrations in Moscow brought together retirees reduced to begging, unpaid soldiers, nationalists mourning the lost empire, Communists nostalgic for equality, and people disoriented by the collapse of their historical certainties.

By the 1996 presidential election, the disastrous effects of shock therapy and the first privatizations had helped turn the post-1989 years into what many Russians regarded as a historic calamity. Yeltsin seemed to have lost control, while the Communist Party—outlawed by him five years earlier—gained support from people fed up with democracy, the market, and the injustice accompanying them. Its leader, Gennady Zyuganov, campaigned less on restoring the Gulag than on opposing corruption and reducing the gap between rich and poor. The book presents this possibility as a direct political consequence of the reform era: the market’s failures made a Communist label newly attractive to voters who had experienced the transition as dispossession.

At the same time, the oligarchs’ economic power was becoming political power. They feared that a Zyuganov victory might threaten a loans-for-shares arrangement under which their banks lent money to the state in exchange for shares in valuable, not-yet-privatized assets, including natural gas and petroleum. Because repayment was due after the election, they had a direct interest in keeping Yeltsin in office. Berezovsky persuaded six other powerful oligarchs to combine their resources; together they used newspapers, radio, and television to press the choice between Yeltsin and chaos, while broadcasts of Soviet crimes warned against a return to Communism. Shock therapy thus shaped not only ownership but also the media campaign and financial alliances that structured electoral competition.

Its political repercussions reached beyond the election. The reforms’ inequality and the perceived abandonment of Russians outside the new Russian state fed Eduard Limonov’s opposition rhetoric. At a demonstration, he denounced the supposed democrats as profiteers and argued that people had suffered more in a year of democracy than in seventy years of Communism. Later, Limonov’s party convention framed the people left outside the benefits of the new order as a constituency to be mobilized, including Russians in former Soviet republics. The book does not reduce this politics to economic grievance alone; it shows how the shock of the transition joined economic loss to disputes over national identity, historical memory, and who had the right to claim the future.

The reform’s most enduring significance in the narrative lies in this double legacy. It helped dismantle the old economic order and made new goods, businesses, and private fortunes possible. Yet it also transferred wealth under conditions in which vouchers could become nearly worthless, rules were absent, and the majority saw little share in the promised prosperity. The resulting resentment weakened faith in Yeltsin’s democratic project and helped create the political terrain on which oligarchs, Communists, and radical opposition movements would compete.