Great article by a brilliant man. I like the fact that while he admits his mistakes and points out problems with Putin he does not shy away from pointing out some problems that are completely ignored in the western reporting on Russia -- that the so called "shock therapy" that was urged and urged by western economists and bankers was a total disaster and that the second election of Yeltsin and the first election of Putin were fraudulent.
Shock therapy was not bad economic advice. It worked extremely well in the Eastern Bloc satellites that tried it, and the general trend was that the more drastic the privatization, the faster the recovery and ultimate rise to European living standards.
In the former Soviet Union, though, 'shock therapy' turned into simple looting. The country was too big and the political system too rotten to actually carry out any program of reform.
Wow, I wonder what those "eastern block satelites" where it "worked extremely well" are.
I was born in an eastern block country and still follow the news there, and let me tell you it did not work very well there. In fact it was very similar to a miniature version of what happened in Russia (except for the oil and gas money).
Your last sentence is the typical way the Chicago boys excuse themselves after their repeated failures -- just by using racism. "Our theories are sound but the locals are too rotten for our high minded theories" ...
Our theories are sound but the locals are too rotten for our high minded theories
This isn't racism, this is realism. To use a simple example, America is full of all-you-can-eat buffets, but if you tried to pull a business like this off immediately after the fall of the soviet union, your restaurant would crash and burn. As a novelty, everyone in town would try to "game" it in Russia, until you adjust the written rules to the point where it isn't an all-you-can-eat anymore. I don't even think people would do it because they're particularly hungry, but because they're used to gaming the system every chance they get.
Russia has a multigenerational culture of bribes and gaming the system. You can never root that out in a few years - it takes many decades of very carefully constructed policies to root that out. Just look up the history of early Russian immigration waves to the U.S., and see the kind of scams the Russians pulled here that Americans would never consider pulling en masse (adding water to gas in the gas stations, car and health insurance scams, etc.)
I wouldn't blame Russians - this is a simple adaptation that was required to survive in Russia/USSR for so long. People adapt, and Americans would, too. You were just lucky to have no tzars, no WW on your territory, and, the most important point - no communism.
Communism degrades social trust, in Poland before the WWII we had very cultured and organised population, people were helping each other, etc. We had regained independence after over 100 years.
Even 5 years into the WWII, there were uprising in Warsaw, many young people died for Poland, others were fighting in the England, Italy, on the far east.
In the first 10 years of communism everybody that were active as partisant during the war were either in the jail, killed, has escaped from the country, or vere hiding in the forests. Then, communistic gov said if the remains of Armia Krajowa uncover, there will be now more killing. And of course they lied, like many times before and after that.
After 45 years of communism people in Poland still don't trust each other. People are still gaming the system, current gov aren't helping, at least they are elected in honest elections. Regaining the trust of the people is work for many years, and without the trust gov can do anything with the people.
I think in Russia it has to be even worse - they had communism for much longer, and before that they had just as corrupt system, only less deadly.
"in Poland before the WWII we had very cultured and organised population, people were helping each other, etc"
Poland before WWII was an ethnically fractured state whose population consisted mainly of impoverished peasants. The political system had collapsed into a rightist dictatorship only a few years after independence.
Only the horrific subsequent history of the country makes it possible to look back on this period with any kind of nostalgia.
I'm not suggesting the Russians are to blame, or that there is some genetic aspect to it, or any nonsense like that. I'm merely pointing out that it's not racism, it's a valid phenomenon. Mentality matters a whole lot.
@idlewords:
yes, you are right, also there were big differencies between parts of Poland from Russia, Germany, and Austria.
But my point was - social trust level was very high - in 1920 we have won war with ussr, we have had almost 1 million army made mainly from volunteers, there were many socal iniciatives helping people, etc.
That athmosphere was lost during communism.
PS I agree that Piłsudski regime that come later was bad for Poland.
Communism ended twenty years ago. Blaming it for any aspect of today's Russia would like blaming the Tsar in 1937, which Communists actually did, BTW :-)
Consequences of past events or situations are felt for a long time through the mechanism of culture - which acts as a sort of collective societal memory. People who have not lived the traumatic situations assimilate their teachings through culture.
Blaming Tsar's influence and Communism is perfectly reasonable, just as blaming HDR or McCarthy's heritage in the US.
Those three countries - along with Romania (and sometimes Slovenia) are the case studies for Eastern Europe. They're where the transition from communism went remarkably well and lacked any sort of violence. Hell, in Czechoslovakia, the workers actually put in unpaid overtime to make up for the work that they missed while they were protesting to gain freedom.
// edit: Don't include Romania, actually. ATB pointed out, rightfully, that the Romanian revolution was among the more violent of the revolutions in 1989.
If you look at the Balkans (countries that used to make up Yugoslavia (sans Slovenia), Bulgaria, Albania, etc), the economic story is slightly different. In Bulgaria, for example, the economy only got back up to pre-1989 levels in mid-2004. The economies here were much more tied to the Soviet Union's and its collapse hit them much harder. Or, they just devolved into a series of ethnic battles, which doesn't go over well with the economy.
"Those three countries - along with Romania (and sometimes Slovenia) are the case studies for Eastern Europe. They're where the transition from communism went remarkably well and lacked any sort of violence"
The Romanian revolution was extremely violent: over 1,000 people died and over 3,000 were wounded, and the former dictator and his wife were found guilty in a hasty show trial and executed on the spot. Their former allies then former a post-Communist clique that looted the country for most of the 90s and stole several elections. Romania continues to have one of the highest corruption rates in Eastern Europe.
But yes, aside from that, it went "remarkably well."
Point. Its late for me and I got slightly jumbled up. You're absolutely right that Romania was the most violent of the revolutions and that I shouldn't have included them in the lacking violence part. I've edited the original post to mention this.
Even still, it could have been much worse; the revolution could have failed. And it lead to a stable government that successfully transitioned between parties afterwards. And the Romanian economy is doing fairly well. I'd call that a pretty remarkable success, given how spectacular the failures in Eastern Europe are on the opposite end of the spectrum.
Their former allies then former a post-Communist clique that looted the country for most of the 90s and stole several elections.
I haven't really read much about this, Romanian elections being fraudulent. Don't suppose you could recommend a few good news articles or other data (books or papers, perhaps) on the subject (Romania after 1989, not just elections specifically)? The Wikipedia article doesn't have any citation for it either.
And something more recent to show that the trend has continued? Romania has elections every 4 years, I believe. That paper was published after one round of elections. There's been a few rounds since.
"Extremely violent?" Even the Romanian revolution was practically bloodless compared to what could have been. Recall that there is a large Hungarian minority in Romania, with strong claims to territory, and there were great fears that the Yugoslavian debacle might repeat itself there.
The fact that Romania made it out of the hellish Ceausescu regime with comparatively little violence, and is now a full-on EU member, is one of the great success stories of that time.
You can bemoan the people that died and the slowness of the eventual transition towards more open government, but you must keep a sense of perspective. Even a dysfunctional country like Romania has been able to claw itself to levels of prosperity no one dreamed about in 1989.
"the Romanian revolution was practically bloodless compared to what could have been"
Compare it to the revolutions in the other Balkan states around 1988-1992. It was by far the most violent. How many died in Hungary? In Bulgaria? In Poland? In Czechoslovakia?
"there were great fears that the Yugoslavian debacle might repeat itself there"
There were? Interesting, given that the Yugoslavian Civil War happened several years AFTER those 1000+ Romanians died. How would that repetition have worked?
"You can bemoan the people that died"
Could there be a more callous response to thousands of casualties? As I've shown above, this didn't happen in ANY of the other countries making the same transition. It was only the multi-ethnic and barely-cohesive artificial country of Yugoslavia that did worse. Several years later.
"Even a dysfunctional country like Romania has been able to claw itself to levels of prosperity no one dreamed about in 1989."
Sure, and this is a great thing. However, as my reply quoted, it was in response to "lacked any sort of violence." 1000+ dead and many more injured is a poor definition of "any sort of violence."
Sure, and this is a great thing. However, as my reply quoted, it was in response to "lacked any sort of violence." 1000+ dead and many more injured is a poor definition of "any sort of violence."
And I admitted that I was wrong, right away. You're beating a dead horse to death if this is your main reason behind your statements.
Not lacking any violence at all doesn't mean that Romania had an incredibly violent revolution. Its not that black and white.
1,000 people dying is incredibly sad, yes. But, the death toll could have been much, much worse. The military could have sided with the government, not the people. There could have been an ethnic division within the country. The Soviet Union could have reversed the Sinatra Doctrine and stepped in.
Estonia, Lithuania and Latvia? They weren't satellite states during the Cold War; they were part of the Soviet Union (or Russia, if you go back to before World War 1). They broke off afterwards.
To me, it doesn't make much sense to examine these states the same way you would satellite states. They weren't in the same situation during the Cold War. Although, Estonia, Lithuania and Latvia did simply vote themselves out of the Russian Federation, rather then joining it after the Soviet Union collapsed, so, there's a common thread for success, I suppose.
Why is the distinction important? We're discussing post-Soviet states, including Russia, and how they managed their transition away from communism.
Whether or not they were an integral part of the USSR or just a vassal state has no bearing on this, except to the extent that the ex-Soviet republics tended to be even more of an economic shambles.
After 1990, everyone was in the same boat, and the countries that were able to push through "shock therapy" reforms prospered, while the rest did not.
except to the extent that the ex-Soviet republics tended to be even more of an economic shambles.
Exactly. Thats it. The economic position of the state prior to their transition away from communism absolutely has an effect on how they managed after the transition.
I'd be willing to guess that while part of the Soviet Union and under a planned economy, whatever the Estonian state was responsible for was closer to being services-based and processing raw materials after they were obtained. Not a lot of agriculture or mining.
After 1990, everyone was in the same boat, and the countries that were able to push through "shock therapy" reforms prospered, while the rest did not.
But, why did shock therapy fail in the countries that it didn't work in? I highly doubt it was as simple as "Ukraine wanted it while Croatia didn't."
Why did Estonia (a former Soviet state) not end up with looting as well?
Shock therapy required a short but very sharp drop in GDP, and a large and long-lived jump in unemployment (as make-work public sector jobs were eliminated). It also required people on fixed incomes to endure severe poverty due to anti-inflationary measures.
The countries that had the political resources to stick with this harsh program, and ride out the first two years where none of the positive effects were felt, ended up much better off than the ones that didn't.
Everyone ended up with some degree of looting. It was a matter of which countries had political institutions strong enough to push through this transition, prevent the rise of an organized gangster economy like we saw in Russia, and face up to the magnitude of the challenge.
They're EU members in the Schengen zone, hit particularly hard by a global recession after ten years of the fastest GDP growth rates in the world. "Very badly" is still a hell of a lot better than, say, Bulgaria.
The problem is we only get one shot at history. So it's hard to look back and assign the right reasons for the failure. It's conceivable that a different set of leaders could have made shock therapy work in the former USSR. It's also possible that no political system could have survived the trauma at that scale.
My point is that it was not obviously bad advice. For the countries that managed to push it through politically, it worked extremely well.
"The country was too big and the political system too rotten to actually carry out any program of reform."
In other words it was bad advise for the situation in Russia. If it is not one size fits all then it is not good advise. Also I don't think this Friedman economics worked out so well in Chile either. The industries that work in the U.S. are government subsidized ones like agriculture, pharmaceuticals, and military technology spending. The bank bailouts also do not lead me to believe the U.S. follows its own advise.
If you don't count those who died of starvation because savings were burned in hyperinflation and pensions were (and still are) _tiny_, those who were killed during inevitable criminalization of society, Russians who were killed because of nationalizm in USSR republics, _millions_ of unborn children because of economical and political instabilities, then, yes, it wasn't bad advice.
I'm surprised no one has commented on this thread that The Shock Doctrine by Naomi Klein (leaving her strong political leanings aside) provides an excellent overview of the shock therapy as it was applied to the USSR and other nations. It was by far the most disturbing book I've ever read.
This clown made amazing decisions like taking Bush et al words_ that NATO won't spread to the East, sincerely thinking that West is here to help and so on.
> that the second election of Yeltsin and the first election of Putin were fraudulent.
It was fraudulent since 75% voted for preserving USSR
at 1991.
Can't quote a source, unfortunately, but I read a long essay last month which used the original diplomatic notes to research this "NATO Promise" business. Long story short -- there was never a promise not to expand NATO.
EDIT: Dug up a couple from Google, although they weren't the ones I was referring to.
It's interesting that he called out Medvedev as a voice of reason. Outside of Russia, Medvedev is often seen as a simple puppet of Putin. I'm reminded of a joke I heard a few years ago:
One day, Vladimir Putin and Dmitry Medvedev went out to a restaurant for a fancy dinner. Putin, naturally, ordered first.
"I'll have the steak."
The waiter replied, "Very good, sir. Now, what about the vegetable?"
To which Putin answered, "He'll have the steak too."
Does anyone else marvel at Mikhail Gorbachev's writing appearing the in the New York Times? That, if nothing else, is a sign of how far we've come from the cold war days.
I think any major English language periodical would publish his editorial, which generates more high-brow interest in the English speaking world than in his own country. He has absolutely no influence in Russia today, or for quite some time.
I once had a Ukrainian immigrant barber, who maintained Gorbachev's Russian was very pedestrian, but he had a great English interpretor who could translate on the spot into prosaic English. He (the barber) was very opinionated, and I have never seen anyone make this claim in print.
Gorbachev has a tremendous command of Russian, but he used it in a way somewhat opposite to that of Hemingway. When he was first elected, people were glued to the TVs to listen to a man who could speak quickly, with an energetic voice, discuss the issues, and do it all without reading from a piece of paper (a huge novelty back then). But he could talk for hours without actually saying anything. The English articles are far more matter of fact - they get to the point much faster than Gorbachev ever did in Russian.
I think everyone will agree the core thesis that a "primitive" economy based on natural resources will not make Russia a great country in the future is true.
The implication that it is fear that's keeping a more modern, complex and innovative economy from a evolving is more nuanced.
I think dictatorships like Singapore are not necessary bad for a strong and diverse economy. I think a true democracy is better, but not by much pure in economic terms. I think it's much better for your humanity.
What really plagues Russia is chaos, corruption and lawlessness. That's what's keeping the small and mid sized business down, they are the ones that could diversify the economy.
Being a dictatorship is not inherently bad for the economy. But as you say democracy tends to be better for your humanity, so to speak.
Being a dictatorship magnifies the impact of the quality of the leadership/rulers. In most western democracies our governments are relatively weak. Their ability to help or hinder the economy is somewhat limited as they generally don't directly control the organizations that make up the economy. On the other hand in a country where the government wields absolute power the government's impact is enormous.
Historically most governments around in the world haven't been great so the countries that have done consistently well are those whose governments have limited influence over the economy ie democracies.
Its not that democracy helps your economy. It just dilutes the governments ability to fvck it up.
I don't think anyone would disagree that, in theory, the ideal government is a wise, benevolent dictator. The primary problem, in practice, is finding such a dictator (the secondary problem, of course, being how to get rid of him when he turns out to be insufficiently wise and/or benevolent after all).
Democracy is actually a pretty terrible way to run things; as Churchill said, it is the worst form of government, except for all the others that have been tried so far.
The party’s top bureaucracy organized the attempted coup in August 1991, which scuttled the reforms.
This bit made me laugh for some reason. Using "scuttle" makes it seems like a rather whimsical take on one of the more important events of the 1990's. If anyone doesn't know what he's referring to, its the KGB and other branches of the Soviet government taking himself (Gorbachev) hostage and throwing a coup. In turn, Boris Yeltsin led protests to restore Gorbachev to power.
Due to his actions, Yeltsin gained popular support and was, in effect, the leader of the Soviet Union as the president of Russia; Gorbachev had resigned a few days after the coup. And the Soviet Union was nearing its end as well; it ceased to exist just over four months later.
1 : to cut a hole through the bottom, deck, or side of (a ship); specifically : to sink or attempt to sink by making holes through the bottom
2 : destroy, wreck; also : scrap 2
I'm 24, which means I'm just young enough to only know about Gorbachev's premiership through history textbooks. This is not the first time I've seen him back in the headlines, but it's still an incredibly weird feeling every time that I do. It's like hearing from a ghost.
I actually thought the article was very reserved at criticizing Putin. The point is basically that Putin destroyed all progress toward democracy, but the article never assigns blame to him exactly. It tends to refer to an abstract entity ("Russia") rather than a specific person (Putin).
I hope this history is not lost on my fellow Americans: "The Soviet system, created on the precepts of socialism amid great efforts and sacrifices, had made our country a major power with a strong industrial base. The Soviet Union was strong in emergencies, but in more normal circumstances, our system condemned us to inferiority."
We're at a similar brink, though via dissimilar circumstances. While we properly are looking for ways to repair and improve, I hope that there is a strong resurgence of both Democratic and Capitalist principles. The alternative, as some are leaning towards, has a well-documented trajectory. It would condemn us to inferiority.
Yes obviously spiraling military costs (aka security costs) had nothing to do with it. We should focus on stopping all infrastructure improvements, and all services and instead funnel that money to the Homeland Security and DoD. They only spend a few trillion a year.
How do you get that from my statement? I never claimed capitalism is just military spending. Nor did I claim that communism did not fail. I was however reacting to your implication that some social programs are full on communism.
It is pretty accepted that one of the major reasons for Soviet collapse was massive military spending (unsustainable...). You are suggesting that the way the US is moving recently will make us collapse just like the Soviets. You fail to mention the periodic and massive increase in military spending, which is not recent. This spending now constitutes a very very large portion of the US budget. I worry far more about the constant growth of that spending than about some new programs that cost and order of magnitude less.
The second part is a citation of a 15-year old popular joke on Gorbachev, about his incompetence combined with wishful thinking combined with unwillingness to admit his own mistakes.
A world I was referring to is a so called Second World, that was a Soviet block. Being second here does not mean to be somewhere between the first and the third, it means standing on par with (self-proclaimed) First World. And Soviet Union really was a developed, technologically and culturally advanced world. Now we see degradation everywhere, we are on a clear path to the Third World, and we need this modernization. Well, Russia has undergone some successful modernizations in the past, all of them were quite painful. Last one was led by Stalin so you can get an idea of what I mean by "painful", and failed modernizations were even worse. So, it is arguable that Gorbachev made more evil for his people than Stalin did.
I'm always wery surprised, that for some people USSR and company was as good as "the West". I mean - ok, you were sending rockets to space, but at that time people in eastern block were many times less wealthy than people in the west, were less free, couldn't even choose the gov.
It was not sustainable, without Gorbachev it would have ended the same, only later and probably more violent.
When you build your civilization on power and military strength and keep people on your side without their consensus, it isn't surprising that you have to spend on military a lot. And when you add inefficient economy to the mix, it's obvious it will fail.
people in eastern block were many times less wealthy than people in the west
Less wealthy, yes, but not many times less wealthy, provided that all basic (and many not so basic) living needs were covered virtually for free, including guaranteed employment, free medicine, free education and so on. Also, it's easy to be wealthy with a 14-digit national debt.
...were less free, couldn't even choose the gov
That's propaganda. Soviet Union was a pretty democratic state at all levels, and anyyone could choose to go with a party career if he liked to.
It was not sustainable, without Gorbachev it would have ended the same, only later and probably more violent.
Hm, in Poland before 1989 we had to vote "right", also we always had 98%-99% participation in elections. "Slightly" suspicious, isn't it? Now it's sth like 30-60%.
About going with party career - yes, to have good job people even had to be in the party. What I mean by "less free" is - there was one real party, you had to accept party line to be politician, people couldn't choose other party. People couldn't go out of country without permission, and it was strictly controlled, who are allowed to travel where. Simply put it was totalitarian state.
About the fall of the USSR: because in 1989 and later transferrable rubels were worth almost nothing, there were big inflation, satelitte countries were freeing themselves, and atomic war wasn't an option to anybody sane. It had to end that way.
