Market Bolshevism against Democracy
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a_kleberReview
Uppsala University STEFAN HEDLUND
Europe-Asia Studies, Vol. 54, No. 1 (Jan., 2002), pp. 144-147
Peter Reddaway & Dmitri Glinski, The Tragedy of Russia's Reforms: Market Bolshevism against Democracy. Washington DC: The United States Institute of Peace Press, 2001
THE FINANCIAL MELTDOWN that struck Moscow in August 1998 was to have a number of profound consequences, not the least of which was a reorientation of perceptions of Russia in the West. With the passage of time, initially hostile sentiments, caused by substantial losses of both money and prestige, have given way to a salutary reconsideration of what 'systemic change' was really about. In this latter perspective, August 1998 may be seen as an important watershed-between a time of simplicity and a time of growing sophistication in Russia-watching.
Throughout the near-decade that ran from the dissolution of the Soviet Union until the collapse of Russia's financial markets, policy making on Russia in the West was marked by the 'Washington Consensus'. The mainstay of this dogma was that cultural specificity had no relevance to economic policy. Thus, what could be shown to work in an undergraduate economics textbook, based on the functioning institutional environment of a model Western society, would also work in real life in Russia.
In the wake of August 1998 this grossly simplified view of the world began to crumble. As 'soul searching' became the agenda of the day, there was a steadily growing awareness of the importance of historical and cultural factors in determining the feasibility of various types of reforms.
The real turning point was reached in the spring of 1999, when Joseph Stiglitz, then Chief Economist at the World Bank, addressed the Bank's annual conference on development economics. In a firebrand speech, he accused the Russian reformers and their Western advisers of having failed not only to understand the specific needs of Russia. Even worse, they had also failed to realise what the market economy is really about. It was time for the doctors to rethink their prescriptions.
Perhaps the most important outcome of the subsequent rethinking has been to demonstrate the difference between bad economics and economics as a whole being bad. In a growing number of publications, which deserve their own reviews, leading members of the economics profession have implicitly responded to a growing wave of accusations by non-economists holding that economics as such has been at fault.
By taking apart the arguments that were used as justifications for shock therapy, and by underscoring the striking role that was played in shock therapy thinking by ideological and purely political arguments, at the expense of solid economic theorising, they have shown that a balanced and considered application of standard economic theory could have produced a better design for Russian reform.
The new consensus that has now begun to emerge rests on gradualist arguments, and on the need to take into account factors of cultural specificity, as represented by widely different institutional realities of different societies. The main problem, obviously, is that 2001 is not 1991, and that what might have worked then will be vastly more difficult to implement today, following the added pathologies of shock therapy.
In his speech cited above Stiglitz used the notion of 'market Bolsheviks' to describe the approach of Russia's neoliberal economic reformers. He argued that they used the same dogmatic tactics of forced reforms from above as once did Lenin and his comrades in arms, and suggested that the only real difference lay in the textbooks used-from Karl Marx to Adam Smith.
The origin of this notion of 'market Bolshevism' may be traced back to the authors of the work that is reviewed here. In a one-line summary, one might say that The Tragedy of Russia's Reforms was caused by a victory of El'tsin's 'market Bolsheviks' over those who tried to stand up for democracy, and thus also for a functioning market economy.
Phrased in this way, the real drama of Russia's first decade of post-Soviet existence is moved out of the academic realm of economic policy and into the corridors of power. It was there, in intricate games of Byzantine intrigue, that Tsar Boris and his counsellors determined which of his boyar-kleptocrats would be allowed to get rich quick, at the expense of the state and the population at large.
Throughout El'tsin's time in power it was striking how many Western observers refused to see the evolution of these destructive games for power and wealth as anything but a steady strengthening of the basic institutions of democracy. Not even the televised images of tanks shelling the Russian parliament, in October 1993, could shake the leading Western supporters of El'tsinism out of their publicly professed beliefs.
Needless to say, there were dissident voices, tirelessly insisting that the Emperor was indeed naked. Throughout the years when the mainstream of the profession of Russia-watching was still beholden to the Washington Consensus, and to the belief in a coming Russian economic boom, Peter Reddaway was one of the few who cautioned not only against excessive optimism but also against being gullible about the qualities of Russia's 'young reform economists'. The extent to which he then succeeded in angering the shock therapists and their political supporters may also be taken as a measure of the credit he may rightly claim today, when he has been proved right.
In The Tragedy of Russia's Reforms he has joined with co-author Dmitri Glinski in assembling what amounts to a powerful indictment of those who devised, implemented and supported Russia's radical reforms. Presenting more than 750 well-researched and well-documented pages, the main ambition of the argument is to convince the reader that it all could have been done differently, and better.
An effective method used in this ambition is to undertake a systematic and successful destruction of the rhetorical imagery that was employed to present shock therapy as the one and only way leading to a market economy. The authors show how El'tsin and his men successfully monopolised the rights of labelling-of determining, for example, who was a 'hard-liner' and who was a 'reformer'.
Since such labels would play a crucial role in deciding not only who would get foreign financial assistance but also who would be listened to by high-powered foreign audiences, this monopoly on presentation was to play a crucial role in excluding from consideration all dissenting reform proposals.
Having ploughed through all the evidence that is laid out by Reddaway & Glinski, the reader can have little doubt that, by accepting and acting on the labels that were thus being offered, the West in general and the governments of the G7 in particular were sadly instrumental in legitimising and supporting what in effect was a conscious strategy by El'tsin to destroy and/or marginalise all opposition to shock therapy, and to the promotion of his own autocracy.
While the authors demonstrate justifiable anger and frustration at this process, the scope of their book is both wider and richer than simply pointing fingers and seeking to apportion blame. In eloquent prose, they tell the story of yet another troubled decade in Russian history. Analysis and detailed factual accounts are combined in a way that no doubt will make the book a standard reference text, a must on the bookshelf of any serious Russia-watcher.
Truly dramatic events are portrayed so as to preserve the sense of drama, without sacrificing the least bit of academic stringency. The events of August 1991, for example, are given interpretations that surpass in insight and good judgement most if not all that the present reviewer has read elsewhere.
The same holds for the account of how El'tsin, aided by his 'market Bolsheviks', succeeded first in marginalising his former supporters in the Democratic Russia movement and then in bringing the political confrontation to its final explosion in October 1993. To Reddaway & Glinski, the latter represented an effective closing of the window of opportunity for Russian democracy.
Although the book obviously does have a message about the causes of the tragedy, which is consistently and successfully driven home, the authors also strive to preserve balance. The latter is achieved by offering careful and amply documented examinations of the lack of internal cohesion among such forces as might have presented successful challenges to the regime.
One example is the early problems of Democratic Russia, where disillusioned intellectuals who might have provided valuable input instead fell silent. Another is the failure of the opposition in the Supreme Soviet to unite against El'tsin's policies, and a third the failure of Zyuganov's communists to defeat a hugely unpopular El'tsin in 1996.
In their ambition to explain how El'tsin and his men could be so successful in exploiting the weaknesses of their opponents, Reddaway & Glinski make good use of a theoretical model that is likened to a seesaw. As soon as one of the many camps that constantly surrounded the president showed signs of gaining in prominence, other forces were immediately coopted and/or promoted in order to maintain the balance.
Only on a very few occasions did the Kremlin lose control over the seesaw, but when it did so the alarm bells immediately went off. A case in point was the time when Evgenii Primakov was appointed to the premiership, and subsequently allowed Prosecutor General Yurii Skuratov to initiate criminal proceedings that might have resulted in a radical transformation of the rules of the game-had they been allowed to result in open court cases.
In an epilogue, the book offers its readers an overview of the bequest that has been left to Russia by market Bolshevism. While many of the problems are deeply disturbing, above all in the sense that they may represent a new institutional equilibrium that may prove hard to dislodge, there is also a faint but solid ray of light. By also providing a list of all the opportunities that were missed, the authors leave the reader convinced that it all could have been done differently, and that some day it may indeed be done differently-and better.
Returning to what was said at the outset of this review, we may conclude by noting that The Tragedy of Russia's Reforms forms a perfect companion to the new consensus that is emerging amongst the economists. Where the latter have undertaken to show in narrow economic detail why the belief in shock therapy was so fallacious, Reddaway & Glinski bring into play broader social theories, including the sweep of Russian history and of 'populism' in a positive sense.
Taken together, these manifestations of a growing sophistication in Russia-watching serve to illustrate the importance above all of the state in directing and promoting the growth of such institutions that make a functioning market economy possible. In so doing, they also indicate in which direction we must be looking when we set out to issue recommendations for Vladimir Putin and his men. The time of simple sloganeering finally appears to be over.
Uppsala University STEFAN HEDLUND
Europe-Asia Studies, Vol. 54, No. 1 (Jan., 2002), pp. 144-147
Peter Reddaway & Dmitri Glinski, The Tragedy of Russia's Reforms: Market Bolshevism against Democracy. Washington DC: The United States Institute of Peace Press, 2001
THE FINANCIAL MELTDOWN that struck Moscow in August 1998 was to have a number of profound consequences, not the least of which was a reorientation of perceptions of Russia in the West. With the passage of time, initially hostile sentiments, caused by substantial losses of both money and prestige, have given way to a salutary reconsideration of what 'systemic change' was really about. In this latter perspective, August 1998 may be seen as an important watershed-between a time of simplicity and a time of growing sophistication in Russia-watching.
Throughout the near-decade that ran from the dissolution of the Soviet Union until the collapse of Russia's financial markets, policy making on Russia in the West was marked by the 'Washington Consensus'. The mainstay of this dogma was that cultural specificity had no relevance to economic policy. Thus, what could be shown to work in an undergraduate economics textbook, based on the functioning institutional environment of a model Western society, would also work in real life in Russia.
In the wake of August 1998 this grossly simplified view of the world began to crumble. As 'soul searching' became the agenda of the day, there was a steadily growing awareness of the importance of historical and cultural factors in determining the feasibility of various types of reforms.
The real turning point was reached in the spring of 1999, when Joseph Stiglitz, then Chief Economist at the World Bank, addressed the Bank's annual conference on development economics. In a firebrand speech, he accused the Russian reformers and their Western advisers of having failed not only to understand the specific needs of Russia. Even worse, they had also failed to realise what the market economy is really about. It was time for the doctors to rethink their prescriptions.
Perhaps the most important outcome of the subsequent rethinking has been to demonstrate the difference between bad economics and economics as a whole being bad. In a growing number of publications, which deserve their own reviews, leading members of the economics profession have implicitly responded to a growing wave of accusations by non-economists holding that economics as such has been at fault.
By taking apart the arguments that were used as justifications for shock therapy, and by underscoring the striking role that was played in shock therapy thinking by ideological and purely political arguments, at the expense of solid economic theorising, they have shown that a balanced and considered application of standard economic theory could have produced a better design for Russian reform.
The new consensus that has now begun to emerge rests on gradualist arguments, and on the need to take into account factors of cultural specificity, as represented by widely different institutional realities of different societies. The main problem, obviously, is that 2001 is not 1991, and that what might have worked then will be vastly more difficult to implement today, following the added pathologies of shock therapy.
In his speech cited above Stiglitz used the notion of 'market Bolsheviks' to describe the approach of Russia's neoliberal economic reformers. He argued that they used the same dogmatic tactics of forced reforms from above as once did Lenin and his comrades in arms, and suggested that the only real difference lay in the textbooks used-from Karl Marx to Adam Smith.
The origin of this notion of 'market Bolshevism' may be traced back to the authors of the work that is reviewed here. In a one-line summary, one might say that The Tragedy of Russia's Reforms was caused by a victory of El'tsin's 'market Bolsheviks' over those who tried to stand up for democracy, and thus also for a functioning market economy.
Phrased in this way, the real drama of Russia's first decade of post-Soviet existence is moved out of the academic realm of economic policy and into the corridors of power. It was there, in intricate games of Byzantine intrigue, that Tsar Boris and his counsellors determined which of his boyar-kleptocrats would be allowed to get rich quick, at the expense of the state and the population at large.
Throughout El'tsin's time in power it was striking how many Western observers refused to see the evolution of these destructive games for power and wealth as anything but a steady strengthening of the basic institutions of democracy. Not even the televised images of tanks shelling the Russian parliament, in October 1993, could shake the leading Western supporters of El'tsinism out of their publicly professed beliefs.
Needless to say, there were dissident voices, tirelessly insisting that the Emperor was indeed naked. Throughout the years when the mainstream of the profession of Russia-watching was still beholden to the Washington Consensus, and to the belief in a coming Russian economic boom, Peter Reddaway was one of the few who cautioned not only against excessive optimism but also against being gullible about the qualities of Russia's 'young reform economists'. The extent to which he then succeeded in angering the shock therapists and their political supporters may also be taken as a measure of the credit he may rightly claim today, when he has been proved right.
In The Tragedy of Russia's Reforms he has joined with co-author Dmitri Glinski in assembling what amounts to a powerful indictment of those who devised, implemented and supported Russia's radical reforms. Presenting more than 750 well-researched and well-documented pages, the main ambition of the argument is to convince the reader that it all could have been done differently, and better.
An effective method used in this ambition is to undertake a systematic and successful destruction of the rhetorical imagery that was employed to present shock therapy as the one and only way leading to a market economy. The authors show how El'tsin and his men successfully monopolised the rights of labelling-of determining, for example, who was a 'hard-liner' and who was a 'reformer'.
Since such labels would play a crucial role in deciding not only who would get foreign financial assistance but also who would be listened to by high-powered foreign audiences, this monopoly on presentation was to play a crucial role in excluding from consideration all dissenting reform proposals.
Having ploughed through all the evidence that is laid out by Reddaway & Glinski, the reader can have little doubt that, by accepting and acting on the labels that were thus being offered, the West in general and the governments of the G7 in particular were sadly instrumental in legitimising and supporting what in effect was a conscious strategy by El'tsin to destroy and/or marginalise all opposition to shock therapy, and to the promotion of his own autocracy.
While the authors demonstrate justifiable anger and frustration at this process, the scope of their book is both wider and richer than simply pointing fingers and seeking to apportion blame. In eloquent prose, they tell the story of yet another troubled decade in Russian history. Analysis and detailed factual accounts are combined in a way that no doubt will make the book a standard reference text, a must on the bookshelf of any serious Russia-watcher.
Truly dramatic events are portrayed so as to preserve the sense of drama, without sacrificing the least bit of academic stringency. The events of August 1991, for example, are given interpretations that surpass in insight and good judgement most if not all that the present reviewer has read elsewhere.
The same holds for the account of how El'tsin, aided by his 'market Bolsheviks', succeeded first in marginalising his former supporters in the Democratic Russia movement and then in bringing the political confrontation to its final explosion in October 1993. To Reddaway & Glinski, the latter represented an effective closing of the window of opportunity for Russian democracy.
Although the book obviously does have a message about the causes of the tragedy, which is consistently and successfully driven home, the authors also strive to preserve balance. The latter is achieved by offering careful and amply documented examinations of the lack of internal cohesion among such forces as might have presented successful challenges to the regime.
One example is the early problems of Democratic Russia, where disillusioned intellectuals who might have provided valuable input instead fell silent. Another is the failure of the opposition in the Supreme Soviet to unite against El'tsin's policies, and a third the failure of Zyuganov's communists to defeat a hugely unpopular El'tsin in 1996.
In their ambition to explain how El'tsin and his men could be so successful in exploiting the weaknesses of their opponents, Reddaway & Glinski make good use of a theoretical model that is likened to a seesaw. As soon as one of the many camps that constantly surrounded the president showed signs of gaining in prominence, other forces were immediately coopted and/or promoted in order to maintain the balance.
Only on a very few occasions did the Kremlin lose control over the seesaw, but when it did so the alarm bells immediately went off. A case in point was the time when Evgenii Primakov was appointed to the premiership, and subsequently allowed Prosecutor General Yurii Skuratov to initiate criminal proceedings that might have resulted in a radical transformation of the rules of the game-had they been allowed to result in open court cases.
In an epilogue, the book offers its readers an overview of the bequest that has been left to Russia by market Bolshevism. While many of the problems are deeply disturbing, above all in the sense that they may represent a new institutional equilibrium that may prove hard to dislodge, there is also a faint but solid ray of light. By also providing a list of all the opportunities that were missed, the authors leave the reader convinced that it all could have been done differently, and that some day it may indeed be done differently-and better.
Returning to what was said at the outset of this review, we may conclude by noting that The Tragedy of Russia's Reforms forms a perfect companion to the new consensus that is emerging amongst the economists. Where the latter have undertaken to show in narrow economic detail why the belief in shock therapy was so fallacious, Reddaway & Glinski bring into play broader social theories, including the sweep of Russian history and of 'populism' in a positive sense.
Taken together, these manifestations of a growing sophistication in Russia-watching serve to illustrate the importance above all of the state in directing and promoting the growth of such institutions that make a functioning market economy possible. In so doing, they also indicate in which direction we must be looking when we set out to issue recommendations for Vladimir Putin and his men. The time of simple sloganeering finally appears to be over.
