A conference held, at beginning of month, in St. Petersburg, was aptly titled "Middle Class - The Myths and Reality". Russia is way poorer than Slovenia, Czech Republic, Hungary, or even Poland. But, as income disparities grow, a group of discriminating consumers with purchasing power to match, is re-emerging, having been submerged by 1998 implosion of financial sector.
The typical salary in large metropolises is now more than $600 per month - four times meager national average. Some 20 percent of workforce in Moscow earns more than $1700 a month, comparable to many members of European Union. Real average wages across Russia have surpassed pre-1998 level in May.
Moreover, Russians are unburdened by debt and their utility bills and food are heavily subsidized, though decreasingly so. Few pay taxes - lately dramatically reduced and simplified - and even fewer save. Every rise in disposable income is immediately translated to unadulterated consumption. Takings are understated - Russia's informal economy is probably half as big as its formal sector.
A study, financed by Carnegie Foundation, found that only 7 percent of Russians qualify as middle class. Another 12 percent or so have some bourgeois characteristics. Sixty percent of them are men, though Komkon marketing research agency says that genders are equally represented.
Figures culled from census conducted this year throughout Russian Federation - first since 1989 - are expected to confirm these findings. About one fifth to one quarter of all Russian households earn more than average monthly income of $150 per person.
Political parties which purport to represent middle class - such as Union of Forces of Right (SPS) - garnered 10-15 percent of votes in 1999 parliamentary elections. Direct action groups of "third estate" may transform political landscape in forthcoming elections.
In a recent study by sociologists from Russian Academy of Sciences' Institute of Philosophy, more than half of all Russians self-flatteringly considered themselves middle class. This is delusional. Even optimistic research firm Premier-TGI pegs number at 19 percent at most.
Businesses adapt to these new demands of shifting tastes and preferences. The St. Petersburg-based cellular operator Delta Telecom, owner of first license to provide wireless-communications services in Russia, intends to test market among middle class clients.
Ikea, Swedish home improvement chain, has plunged $200 million into a new shopping center. French, German and Dutch cash-and-carry and do-it-yourself groups are slated to follow. Russian competitors, every bit as sleek, have erupted on scene. The investment spree has engulfed provinces as well.
Last month, Citibank opened a retail outlet for affluent individuals in Moscow - though its standards of transparency may yet scare them off, as Gazeta.ru observed astutely. A private cemetery in Samara caters to needs of expired newly rich. Opulently-stocked emporiums have sprouted in all urban centers. TV shopping and even online commerce are on up. According to Washington Post, Moscow retail space will have tripled by end of next year from its level at beginning of 2002.
The Russian Expert magazine says that middle class, minuscule as it is, accounted last year for a staggering 55 percent of all consumer goods purchased and generates one third of Russia's gross domestic product. The middle class is Russia's most important engine of wealth formation and investment, far outweighing foreign capital.
Russia's post-1998 fledgling middle class is described as young, well-educated, well-traveled, community-orientated, entrepreneurial and suffused with work ethic and a desire for social mobility. It is almost as if crisis four years ago served as a purgatory, purging sins and sinners alike and creating conditions for revival of a healthier, longer-lived, bourgeoisie.
But being middle class is a state of mind more than a measure of wealth. It is an all-encompassing worldview, a set of values, a code of conduct, a list of goals, aspirations, fantasies and preferences and a catalog of moral do's and don'ts. This is where transition, micromanaged by western "experts" failed.
The mere exposure to free markets was supposed to unleash innovation and entrepreneurship in long-oppressed populations of east Europe. When this prescription - known as "shock therapy" - bombed, West tried to engender a stable, share-holding, business-owning, middle class by financing small size enterprises. It then proceeded to strengthen and transform indigenous institutions.
None of it worked. Transition had no grassroots support and its prescriptive - and painful - nature caused wide resentment and obstruction. When dust settled, Russia found itself with a putative - and puny - middle class. But it was an anomalous beast, very different from its ostensible European or American counterparts.
To start with, Russia's new middle class is a distinct minority.
Prism, a publication of Jamestown Foundation, quoted, in its August 2001 issue, Serbian author Milorad Pavic as saying that "the Russian middle class is like a young generation whose fathers suffered a severe defeat in a war: with no feeling of guilt and no victorious fathers to boss them around, children of defeat see no obstacles before them".
But this metaphor is misleading. The Russian middle class is a nascent exception - not an overarching rule. As Akos Rona-Tas, Associate Professor in Sociology Department at University of California, San Diego, notes correctly in his paper "Post Communist Transition and Absent Middle Class in Central East Europe", a middle class that is in minority is an oxymoron: