Soviet Entrepreneurs in the Late Socialist Shadow Economy: The Case of the Kyrgyz Affair

Abstract

Supported by new archival material, this article delves deeply into one landmark criminal case to explore key aspects of the social, economic, and cultural history of illegal production and markets in the Soviet 1950s–60s. The goal of the article (and the larger project from which it draws) is to use archival research to shed light on major themes in Soviet history. It touches on three important and promising fields: everyday life under late Soviet socialism; the vibrant history of crime and law in this period; and the history of entrepreneurial activities within the hyper-centralized state-planned economy, focusing on the dynamics of the shadow economy. The so-called Kyrgyz Affair, a famous and expansive shadow economy operation centered in clothing factories in Frunze (Bishkek), Kyrgyz Republic, is at the center of the article. I argue that the scope, sophistication, ambition, and success of this and similar operations helps us understand a significant reason why Nikita Khrushchev decided to introduce the death penalty for aggravated cases of theft of state property and bribery in 1961–62. Associated with and fully permeating the shadow economy, one sees many varieties of practices, attitudes, informal institutions and agreements, and relationships.