A bear dragged to market

Lost Opportunity
March 10, 1995

From August 1991 hordes of foreigners came to Russia to see history in the making. How enthusiastic they were - and absolutely sure that as from tomorrow, Russia would stop threatening the world and start sharing western values. At the same time many Russians were certain that as soon as the country got rid of communism, their life would become as beautiful and bright as pictures in glossy western magazines.

Reality proved different. As Marshall Goldman remarks in the preface of his book, "For those of us who study the region, it is almost like academic tenure - you know there will still be a job tomorrow because there will be something new to explain."

Goldman believes that Boris Yeltsin and Yegor Gaidar and their western advisers can and should be blamed for concentrating too much on monetary, fiscal and price reforms and not enough on institution and infrastructure building. His book will be particularly useful in educating those who hope to act as advisers on economic reforms in Russia. Yeltsin's (and Gorbachev's) western advisers, being experts in market economics, failed to take into account the special conditions of post-communist Russia as well as Russia's cultural and historical traditions. At the same time Soviet economists, having written volumes on the transition from capitalism to socialism, had no idea how to switch into reverse gear. Goldman comments: "The institutional differences created by the rigid central-planning process over 60 years differentiated the Russian economy from that of most other countries. Relatively unfamiliar with Soviet practices and culture as well as institutions, most of the foreign advisers and, for that matter, many of their Russian counterparts did not fully appreciate the degree to which Russian market institutions and market behaviour had been destroyed. They did not fully understand that the gigantic state industrial enterprises and the underdeveloped distribution network that were both structured to facilitate central planning were also designed to inhibit the development of a market economy and booby-trapped in such a way that anyone attempting to re-institute a market system would cause enormous chaos."

Some of the most interesting chapters of the book are dedicated to economic reforms in postwar Germany and Japan, in post-communist Hungary and and Poland and in communist China. Comparing them with Russian reforms, Goldman repeatedly warns the reader that no comparison can be perfect. But he comes to the very encouraging conclusion, in contrast to that expressed by several politicians in present-day Russia, that radical economic restructuring does not require an authoritarian regime to be successful.

Goldman should be credited for his understanding of the Russian character, of historical and cultural traditions. He relates Russian resistance to change in part to the centuries-old struggle between westernisers and Slavophils, who maintain that Russia should pursue its own path of development and oppose the forces that pull Russia nearer to the West. Moreover, Goldman grasps that individualism has never been respected in Russia as it has been in the West. After living in a centralised state for centuries, Russians "feel relatively comfortable with more centralised control, rather than with a freer market economy". Results of opinion polls and the national vote in December 1993 demonstrate vividly how very many Russians are ready to accept a more authoritarian rule.

Perhaps the book's main value lies in assembling useful statistics and in providing many illustrations taken from the author's personal experience. But it seems strange that Goldman refers mainly to articles published in western newspapers and books published in the West.

Overall, the book is written with enthusiasm and respect for Russia. Though its title is Lost Opportunity, Goldman believes in a future for economic reforms in Russia. "Reforms will come to Russia, but slowly and sometimes gradually and sometimes in fits and starts. After all, societies much less well endowed have been able to reform themselves. Eventually, Russia will work its way out of what occasionally appears as a hopeless morass. Centuries of czarism and 70 years of communism have created a combination of obstacles that makes Russia a special case and its reform effort unusually difficult."

Russians, says Goldman, have always been famed for their patience, and at the same time their "greater tendency than many other peoples to fall back on extremist solutions". But even Russian patience has its limits. "The government's challenge is to produce positive results before that limit is reached."

Dmitri Antonov is at the Center for International Education, Moscow State University, and currently teaches in London.

Lost Opportunity: Why Economic Reforms in Russia have not Worked

Author - Marshall I. Goldman
ISBN - 0 393 03700 2
Publisher - W. W. Norton
Price - £16.50
Pages - 290pp

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