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Stabilization and welfare services alike have been handicapped by the difficulty of raising adequate tax revenue---or alternatively of cutting public expenditure commitments sufficiently. Arrears and offset arrangements have proliferated, providing disorderly sources of flexibility in the face of immobile resources and inadequate financial mechanisms, including total failure hitherto to establish a viable commercial banking system.  In the consumer sector, income distribution has become (as in other transition economies) markedly more unequal, with regional disparities playing a significant role. State assistance to the worse off has been patchy at best. Mortality and morbidity statistics have deteriorated. But, at the same time, living standards have been supported by continuing non-payment of housing costs and subsidization of household utilities, and have benefitted from external economic liberalization, which has given households access to foreign consumption goods and to dollar bills as a key savings medium and liquidity reserve. Altogether, average living standards have changed little in Russia's first post-Communist decade, despite the massive drop in industrial production and consequential underutilization of capacity. 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Stabilization and welfare services alike have been handicapped by the difficulty of raising adequate tax revenue - or alternatively of cutting public expenditure commitments sufficiently. Arrears and offset arrangements have proliferated, providing disorderly sources of flexibility in the face of immobile resources and inadequate financial mechanisms, including total failure hitherto to establish a viable commercial banking system.    In the consumer sector, income distribution has become (as in other transition economies) markedly more unequal, with regional disparities playing a significant role. State assistance to the worse off has been patchy at best. Mortality and morbidity statistics have deteriorated. 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