The local bureaucratic/mafia groupings managed to exclude enterprises from the privatization in several ways.
The most attractive food shops in Usti nad Labem, Liberec and Jablone nad
Nisou were divided from the state enterprise Potraviny and amalgamated into the
Pramen organization (a retail cooperative, hence excluded from the small privatiza-
1. Prague's top restaurant, Moskva, was withdrawn from the first auction two days before the event, when a man turned up claiming to be the long-lost nephew
2. Should an enterprise not be sold for its starting of the 1938 owner.
price, and be placed in the second round, however, then foreigners will be allowed to buy. 23
3. Ecoservice no. 22, November 30, 1990.
4. Ceske noviny, January 1, 1991.
CZECHOSLOVAKIA tion), strengthening Pramen's dealing with the formation of a joint venture with the Netherland's foodstuff's firm, Ahold.S
Some enterprises or workplaces unilat rally declared themse ves to be stat joint-stock companies. Not a movement for workers' self-management, even if supported by workers opposed to private enterprise, this was a legalistic manoeuvre of the managers alone. There is no evidence of workers taking action they saw as defending their enterprises against privatization, such as barring entry to valuers, prospective buyers or new "owners".
Many of these "independence" declarations have been ruled by the privatization ministry to be illegitimate. Only the ministry has the right to create state jointstock companies, the legal form into
Which the bureaucratic enterprise must be transformed before shares in it can be sold. Many enterprises quickly took on apprentices, since enterprises where apprentices worked could not be included in the first round of the privatization process.
Apprentice system collapses
Given the imminent collapse of the apprentice system, enough young people jumped at the chance to train in the relatively efficient enterprises concerned.
One enterprise even applied for exception from the privatization on the grounds that they were intending to transfer the workshops in question to a collective of disenterprises signed agreements, sometimes abled people. Very commonly, illegally backdated, leasing an outlet or unit. This is because those leasing an outlet before 30/11/1990 had the right to buy it at its estimated value without auction.
As has been said, the district privatization commissions were under instructions not to become bogged down in struggles with the bureaucracy at this stage. Thus, it didn't take much effort to persuade the commissions to leave an enterprise untouched for now. This may well prove to have been the largest group of exemptions from the first round of privatization.
Many local governments opposed privatization of services under their control, in some cases virtually boycotting the privatization commissions. The mayor of Liberec justified this opposition by pointing to the fact that under current legislation, the city is obliged to provide the same services until the end of 1992, even though much of their budget is formed by profits from enterprises under their control?
The main winners at the auctions were not usually present. These winners were certainly groupings in the bureaucracy/ mafia, whose gains are measured in terms of the number of enterprises they managed to exclude from the privatization. 24 a way of removing its favourite smaller The mafia now has several months to find
( international Viewpoint #202 • March 18, 1991 enterprises from the privatization process altogether. As a result of all these manoeuvres, the district privatization commissions and ministry have demanded, and will certainly receive, greater powers to overrule and defeat opposition from enterprises and employees to their work in the future.
The small privatization so far is hardly a victory for the nascent Czech bourgeoisie.
The first 16 enterprises auctioned in
Prague brought in some ten times their starting price. This seems both due to their central Prague location, their nature
(including antique and clothing shops)
and their low starting price. Given such prices, it is not surprising that only one enterprise passed into the hands of an independent Czech entrepreneur not acting as an agent of a foreign interest.1°
Some foreign residents operated through
Czechoslovak agents, while some, mainly
Czechoslovak birth were able to buy Viennese, foreign entrepreneurs of openly. Ordinary citizens were unable to compete financially.
There is another aspect of the victory of bureaucracy. State enterprises often registered large amounts of unsalable goods and obsolete material under the inventory of units to be auctioned - thus "selling"
this material for its full price!! to the new owners.
Liberals have centred their defence of the government around the necessity to break up the bureaucratic monopoly over retail. It is, however, already clear that private sector interest is in restaurants and city centre shops. In a large majority of auctions of food shops away from the centre of Prague, only one or two bidders take part in the auction.!2
Supermarkets better value
The most plausible reduction in price and increase in service for the working population comes not from the corner grocer, but from the West European supermarket chains. The Czech Commerce Ministry has long been negotiating with the aim of withdrawing some 10% of food shops from the small privatization for sale direct to those Western buyers able to give certain guarantees of autonomy and investment. An open statement by Commerce Minister Stepova to the effect that a move to foreign domination of the retail system is "inevitable sooner of later, and we have just wanted (with our plan) to save the population time and money" provoked governmental concern, but there has been no theoretical challenge to her assertions. 13 Given the crisis in the food retail system, many suppliers have started selling a part of their produce direct, from stalls or lorries. Despite the appearance of chaos, this trend may be forcing some retailers to drop their prices. 14 The small privatization was originally conceived, against the opposition of the
1 powerful clique around Civic Forum leader vaclay Klaus, as a protected re- er Vaclav Klaus, as a protected redistribution of national property to an emerging middle-class layer of citizens.
Different variants of this scheme allowed for collectives of employees to have the right to purchase or lease their workplace before it was placed on the market, or for cooperatives of citizens to form with the aim of taking over village services, or other enterprises of their choosing.
However, the growing alignment of the bureaucratic centre with international capital, its desire to create large private capital at the expense of small, and its hostility to any kind of collective ownership, have increased. The small privatization project has been assimilated closer and closer to the large privatization. On an ideological level too, the soft, acceptable option of the small privatization has served to introduce people to the hard reality of the large privatization, in which private individuals will be almost totally excluded. By the time the auctions finally started, the government no longer felt constrained to stress the national nature of the privatization. Refusing to confirm or deny allegations that in Prague almost no enterprises were being taken over by ordinary citizens, Czech privatization minister Tomas
Jezek said: "I should be unhappy that foreign capital is coming here?"'15
The bureaucracy will get its injection of cash from the liquidation of national property. The Czech ministry of privatization, along with Vaclav Klaus's federal finance ministry, will continue to grow in power.
Their tight control of the destatization process will continue to strengthen the legitimacy of their "white communism". There will indeed be some sort of private sector, though so far only in commerce and services. What there will not be is any real introduction of competition and price competition among the shops ordinary people use. The cheapest food will continue to be that you buy off the back of a lorгу. * 5. Jiri Leschtina, Mlada fronta dnes, January 31, 1991. 6. Interview with Czech privatization minister Tomas Jezek, Miada fronta dnes, January 31, 1991. 7. Quoted in "Navrat k prirozenosti", Mada fronta dnes, January 31, 1991. 8. These commissions, each of 15-20 members, were named by the minister. According to one report "among them are lawyers, economic workers, entrepreneurs, someone from the town council, town-owned enterprises, and someone from a bank or savings bank". Jiri Leschtina, Mlada fronta dnes, January 31, 1991. 9. Ecoservice, no. 20, January 29, 1991. 10. This claim came from Vlasta Stepova, Czech minister of Commerce and Tourism, quoted in Rude pravo, January 31, 1991. 11. Such stocks were not counted as part of the cost of the enterprise in the auction. Instead, the new owners were required to pay separately a non-negotiable price for stocks to the previous bureaucratic "owner" of the enterprise. 12. Ecoservice, no. 23, February 13, 1991. 13. Zemedelske noviny, January 24, 1991. 14. See my "New behaviour of food producers and 'etailers", Ecoservice, February 5, 1991. .5. Rude pravo, January 31, 1991,
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