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People and Society, Social Structure

social differentiation, New Rich, entrepreneurial activities, fixed incomes, political elite

During the Soviet period, Communist Party members were granted special privileges. A system of separate stores, cars, hotels, and resorts was reserved for the political elite. For most people, however, the difference in income and access to material goods was relatively small. Private ownership of businesses and capital (goods or monies from which future income can be derived) was illegal, so income in addition to one’s wage from the state was extremely rare and social differentiation was slight. The richest 10 percent of the population earned only four times more than the poorest 10 percent. Since the dissolution of the Soviet Union in 1991 the distinctions between social classes have become much more pronounced. In the mid-1990s the richest 10 percent earned approximately 15 times what the poorest 10 percent earned.

Privatization of property and businesses has been primarily in the hands of a select few. Many government and Communist Party officials have used their political power to control the privatization process and to gain shares of companies. Some people became rich through fraudulent investment opportunities. Organized crime leaders profited through extortion, drug smuggling, and other illegal activities. However, many Russians also became wealthy through innovation, invention, and other entrepreneurial activities.

The wealthy, known as the New Rich or New Russians, often live quite extravagantly. However, approximately a quarter of the population live in poverty and another 25 to 30 percent earn only slightly more than poverty wages. Many of the elderly, mostly women on fixed incomes, are poor. The remainder of Russians, about one-third of the population, have incomes that place them between these extremes and are considered middle class. Many middle-class Russians benefited in the early 1990s from the privatization of housing, which allowed them to purchase their apartments at a price far below market value. Consequently, they can spend a larger portion of their incomes on food and other goods than those who rent housing. The middle class is mostly confined to large cities, such as Moscow. In many rural areas there are few people in the middle class, and the contrasts between incomes are far greater.

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