The devaluation of the ruble, the default on the government’s domestic debt, and a moratorium on payments to foreign creditors by the country’s private commercial institutions on August 17 marked the end of Russia’s first post-Communist regime, with its objectives of democracy, free market reforms, and privatization and its symbol, engine, and protector in President Boris Yeltsin.
The antireform backlash and the leftward lurch are not new in post-Communism. The political price of a free market transition and the ways in which democracy shapes the content, speed, and direction of the reforms have been at the heart of politics in all post-Communist nations in the past nine years. Indeed, it was in precisely those countries where the initial reforms were more consistent and comprehensive—Lithuania, Hungary, Poland—the voters first returned the Left to power between 1993 and 1995.
Both the severity of the economic crisis and the radicalism of the Left opposition set the Russian case apart. In many ways the same two factors will dictate the policies of a new regime and its ability to sustain them. Yet the scenarios for Russia’s immediate economic and political future will also be shaped by the resilience of the political and economic institutions erected since 1992 and now threatened with at least partial dismantling. In the end, both the extent of the socialist restoration and its staying power will be determined by the outcome of the political contest in a country deeply divided along demographic and geographic lines between the millions of people who benefited from economic and political liberties of the past seven years, demilitarization, and the dissolution of the Soviet empire and the millions who were badly hurt by these developments.
Between Mitterrand and NEP?
Judging by what has already been made public, the Primakov-Duma government at the least will resort to the same measures that socialists all over the world invariably attempt upon coming to power, especially in a crisis: price, wage, and import controls; limits on currency convertibility; an "industrial policy" of state planning and the nationalization of the largest banks and industries; and the "reflationary" (and, invariably, inflationary) strategy of reviving the economy by increasing public spending and expanding the public sector. All these policies (plus a tax on "large fortunes"), for instance, were part of the "clean break with capitalism" during President François Mitterrand’s first year in office, 1981–1982.
But the new regime may go beyond the standard socialist agenda. In addition to Mikhail Gorbachev’s favorite economists—academicians Leonid Abalkin, Oleg Bogomolov, and Nikolai Petrakov, who are reportedly the new government’s top advisers—the day-to-day management of the economy and finance will be in the hands of Yuri Maslyukov, first deputy prime minister, and Viktor Gerashchenko, chairman of the Central Bank. The last chairman of Gosplan, the Soviet Union’s economic headquarters, Maslyukov was a leader of the Communist faction in the Duma and the Communists’ top economic expert. "Gosplan always knew what the country needed and where to get it," Maslyukov said in 1996. "Gosplan was a great achievement in the principles of planning."1
The chairman of the Soviet Union’s Central Bank from 1989 to 1991 and of the Central Bank of Russia from 1991 to 1994, Gerashchenko is a firm believer in printing money to pay salaries and pensions and to prop up failing enterprises with cheap state "loans." During the Soviet period under Gerashchenko’s stewardship, the "hidden" inflation (manifested in shortages because of controlled prices) reached 100 percent a year. Between 1992 and 1994, he presided over an annual inflation rate of 2,500 percent—and charged enterprises an annual interest rate of 25 percent on loans extended by the Central Bank. It took the dissolution by Yeltsin of the Supreme Soviet (to which the Central Bank was then subordinated) in September–October 1993 for Gerashchenko to raise the interbank lending rate above that of inflation. He was fired in October 1994 after the ruble lost 30 percent of its value in one day.
Since the same men were involved in drafting the economic section of the electoral platform for Gennady Zyuganov’s 1996 presidential campaign, variations of at least some policies spelled out in that document2 are likely to be tried in the next few months. This agenda, which Zyuganov promised to implement if elected president, centered on "the leading role of national [state] ownership and state regulation of production." The Communist candidate intended to restore or to continue the state ownership of "vitally important" industries, such as transportation, energy, and communications. All natural resources would become the state’s property and their export the state’s monopoly. While those entrepreneurs who "want to work honestly and be useful to the Motherland" would not be "expropriated," Zyuganov urged the adoption of the "law on nationalization," which would spell out conditions and procedures for the state’s taking over private businesses.
In Zyuganov’s blueprint, industrial modernization would begin with the "urgent state support" of the military-industrial complex, the funding of which had been cut by almost 90 percent between 1992 and 1998. Investments in "aviation, space hardware, and armaments" were specifically singled out as the engine for economic recovery.
Heavy import duties would discourage the consumption of foreign products. Special efforts would protect clothing, textile, and food-processing industries devastated by competition with better and cheaper goods from abroad. Prices on fuel and raw materials would be lowered by decree, and salaries raised. "Regulation" would secure "affordable prices" for essential food products, public transportation, utilities, and rent.
Many of these planks have already been included in the new government’s plans. Of greatest immediate concern is the monetary policy. Coupled with the devaluation of the ruble, the transfer of billions of rubles from the Central Bank to the largest commercial banks has raised a monthly inflation rate to 67 percent and is likely to bring it to around 250 percent for the year. (In 1997, prices grew by 11 percent.) Abalkin dismissed the danger of hyperinflation. In fact, he advocat ed "an automatic mechanism of a controlled emission" that would be activated anytime the federal government could not meet its "social and financial obligations." Abalkin added that inflation was not a "direct function of increasing money supply" and that an annual inflation rate of 40 percent would only stimulate the growth of economy.3
Both the relative openness of the Russian market and the convertibility of the ruble will effectively end if, as intended, the government moves to limit Soviet-style "export privileges" to a handful of companies licensed for export and import. Only such companies would be allowed to buy foreign currency from the state and would be required to sell back to the state, at a price set by the state, all their hard currency earnings.
Most alarming in the longer run are the plans to revive the defense industry. Echoing Zyuganov’s platform, Abalkin wants state "support" for the military-industrial complex as part of "science- and technology-based industries." Among other alleged benefits, rearmament would recapture for Russia a world market in weapons, in which, according to Abalkin, "we had the same position as the U.S. . . . and now we’ve lost this position."4 Primakov reportedly was contemplating the creation of a ministry overseeing the defense industry.
If implemented fully, these plans would approximate the New Economic Policy (NEP). Launched by Lenin in 1921 and lasting until 1928, it tolerated small and medium-sized private enterprises while keeping the "commanding heights" (heavy industry, banks, energy, natural resources, land, transportation, and foreign trade) firmly in the hands of the state.
A Constitutional Coup d’État
The standoff between August 23, when the Kiriyenko government was dismissed, and September 11, when Evgeny Primakov was confirmed as prime minister by the Duma, was marked by a little-noticed development that, if made permanent, will dramatically alter the country’s governance. In what can be characterized only as a constitutional coup d’état, a parliamentary system replaced a presidential republic. Begun by the Duma’s unprecedented and extraconstitutional insistence that Acting Prime Minister Viktor Chernomyrdin submit to Parliament a detailed economic program and a complete list of ministers before the confirmation vote, the process culminated in the legislature’s ultimate demand that the Duma, rather than the acting prime minister appointed by the president, produce both the program and the list. The acceptance of both documents by the Kremlin was the condition for the prime minister’s confirmation.
Although Chernomyrdin was not confirmed, his successor, Evgeny Primakov, consulted the Duma so extensively on both appointments and policies that his government became, in effect, responsible to the legislature rather than to the president. After his confirmation, Primakov urged Yeltsin to sign a formal agreement on a redistribution of power. In the words of the Duma’s speaker, Communist Gennady Seleznyov, the document "enshrined the president’s obligation not to interfere in the government’s business."
From now on, any Russian president will have extreme difficulty in exercising his constitutional right to dissolve the Duma and in scheduling new elections when the two branches of power are deadlocked over the government’s policies or the candidate for prime minister. The president may not be able to dismiss a government—or even appoint individual ministers—without the legislature’s consent.
The constitutional coup d’état bodes ill for Russia’s ability to govern itself. "An all-powerful Assembly is satisfactory when the Assembly knows what it wants," the great French philosopher and political commentator Raymond Aron wrote in 1960. "But when there is no majority in an all-powerful Assembly, nothing results but chaos."5 Given this Duma’s record, the emergence of an all-powerful legislature would complicate the already grave political crisis. Since its election in December 1995, the Duma has failed to agree on virtually anything except its opposition to the president. Raucous, fractious, and occasionally coming to blows, it could master a majority only on a handful of occasions, mostly when overriding Yeltsin’s vetoes.
A mere enumeration of the Duma laws vetoed by Yeltsin and then passed over his veto gives a fair idea of the legislature’s proclivities: a lan d code that prohibits selling, buying, or mortgaging of land; the so-called trophy art law, which prohibits the government from returning to Germany art masterpieces plundered by the Soviet army in 1945; a law on religious freedom that, its name notwithstanding, restricts "nontraditional" denominations; and a law restricting the foreign ownership of the state-controlled government monopoly from 30 to 25 percent (the passage of this measure precipitated the final plunge of the Russian stock market this past May). In addition, since March 1997 the Duma has furiously resisted the badly needed tax code proposed by the government. In July, with the country already in a deep crisis, the Duma refused to pass a set of revenue-enhancing measures desperately needed to reduce the budget deficit. The stock, bond, and ruble selloffs followed.
If the shift of power from the president to the Duma were to become permanent, it would lead to a political paralysis at least as deep as that of the French Fourth Republic, where twenty-four governments and seventeen prime ministers came and went between 1946 and 1958, when, on the verge of a civil war, Charles de Gaulle forged a presidential republic. Like the Fourth Republic, Russia is riven by sharp ideological divisions and unable to engineer a consensus on some of the most fundamental political and economic matters. As in France (both then and now), the overwhelming majority of "parties" and "blocs" are ephemeral structures that serve not to mediate between the political class and society, but to further ambitions of their leaders and to go out of existence once these ambitions are either satisfied or abandoned. Again, as with the French socialists and Communists, the only truly mass party is that on the Left, the Communist Party of the Russian Federation, or the KPRF.
Commenting on General de Gaulle’s monarchie républicaine, Aron noted that when the nation was "so profoundly divided, you get no common will," but with the constitution of the Fifth Republic, there "perhaps will be a will."6 The Fifth Republic did indeed prove the most stable nonabsolutist political regime France ever had. For all its obvious and serious flaws, Yeltsin’s presidential republic did provide "a will" that made Russia governable during five years of wrenching economic transition without resorting to a dictatorship or degenerating into fascism and while maintaining the most open and most tolerant regime in Russian history. With the de facto installation of the parliamentary system of government, that will is gone.
The Hedge of the Usable Past
At the moment, solid majorities within both the political class and the Russian public are inclined to seek a panacea in greater state involvement in and control of the economy. Market reforms and capitalism have few open defenders: when Yegor Gaidar’s party, Russia’s Democratic Choice, held a rally on Pushkin Square to protest the new government’s economic agenda, fewer than 300 people participated.
Yet the real test of the popular acceptance of the fundamental shift in economic priorities—from low inflation, fiscal austerity, and strict control over the money supply to profligate monetary policy, expansion of the public sector, and inflat ed budgets—will occur later, when the first results of these measures become evident. Although obscured today by fallout from the crisis, much in the legacy of the seven years of the Yeltsin regime will likely act as a hedge against a sharp turn to the left and will moderate and perhaps thwart some of the more extreme economic policies. What might be called the anti-Gosplan constituency is larger than generally assumed.
In the case of the Western general public, the misperception is due to the media’s grotesque portrayal of Russia as a land of a few superrich "oligarchs" in a sea of starving children. To the experts, both the number and the income of those who profited from the pre-August 17 policies (first among them, Russia’s new middle class) are obscured by the universal diminution or concealment of income to avoid the taxman and organized crime alike. The same is true of the real size of the Russian economy and the growth of the gross domestic product between 1994 and 1998, which gave rise to the Russian middle class. Both Russian and foreign experts agree that at least 40 percent of Russian GDP is in the shadow economy and never reported, as is the 50–70 percent of trade transacted in cash. Thus, the Russian economy may have grown by 6–8 percent since 1994 instead of the official 0.7 percent in 1997.7
Russian families may be underreporting their actual income by the same amount—40 percent; as much as 90 percent of all private sector production may be concealed from tax authorities.8 For millions of those whose salaries were paid by the state (teachers, physicians, scientists), this unreported income comes not from an "official" job but a "second" job (or jobs), which often paid several times the "official" amount. Russian authorities estimated off-the-book earnings for 1996 at $46 billion—or one-tenth of the GDP.
In addition to unreliable statistics, differences in terminology occlude the search for Russia’s hidden "middle class." Any comparison with a European, let alone American, counterpart is meaningless. As in every developing nation, only the very rich (no more than 3 percent) approximate the living standard of the Western middle class. In Russia, such a standard is the privilege of those whose monthly incomes range between $4,000 (in Nizhny Novgorod) to $10,000 (in Moscow).9 Instead, the most prized possessions of Russia’s post-Soviet middle class are comparable to those of a European middle class just after World War II: an apartment of one’s own (in the Russian case, recently renovated to include a dishwasher, a modern stove, and perhaps a washer and dryer), a small car, a dacha (a wooden shack in the country), and an annual trip abroad.
In a pre-August 17 Russia, such possessions and pursuits were within reach of those making more than $300 (or $1,000 in Moscow). With precise quantification impossible because of the universal hiding of income, Russian experts put the size of this income category at one-fifth to one-third of the country’s population. The stratum includes skilled workers in "successful industrial and commercial enterprises," small-scale and medium-scale entrepreneurs, middle-level managers, lawyers, accountants, teachers, journalists, programmers, drivers, and tailors.10
The gap between the middle class and the rest of the country was not wide. The "official" average monthly family income was $120-130. Yet, according to extensive regional surveys conducted by a Western market research firm in Moscow, the average household reported spending more than that amount each month "just for food and utilities." The firm estimated the average income to be about twice as large—a guess made more plausible by the fact that the volume of trade turnover in Russian regions is 1.5-2 times the "official" wage total.11
Secondary data help further to gauge the middle class’s parameters. The incidence of car ownership in Russia has grown from 18 per 100 families in 1990 to 31 in 1997: an increase of 72 percent, or about 10 percent annually.12 With one car per family in all but a handful of instances, 31 percent of all Russian households own a car—at least 11 million families in all.
In 1997, 16-20 million Russians traveled abroad for business or pleasure (compared with fewer than 100,000 annually in Soviet times)—or about one in nine Russians. According to the World Tourism Organization, in 1996 of twenty-five top country-by-country spenders, Russian tourists were tenth, behind Americans, Germans, and Japanese but ahead of South Koreans, Brazilians, Spaniards, and Chinese.13
Most growth in personal income has been limited to large and middle-sized cities, where about half the Russian population live. Prosperity was slow to come to the perennially depressed and depopulated countryside, which never recovered from Stalinist collectivization and World War II losses, and to the small towns, especially in the "rust belt" industrial areas. Yet where it occurred, the revival of urban Russia was nothing short of spectacular, as any visitor with memories of Soviet times would testify.
Hundreds of ATM machines sprang up throughout the country in 1996 and 1997. (There were twenty such machines in the smokestack Ural city of Chelyabinsk, 900 miles east of Moscow.)14 The publishing industry thrived. Absolutely free to publish anything they wanted—from romance novels to Bill Gates and from the memoirs of Yegor Gaidar to books about Brigitte Bardot—Russian publishers were doing a brisk business. Several thousands of new titles, with a total print run of 5 million, went on sale every month in Moscow alone. Between 1994 and 1997, Russia’s personal computer market grew by 115 percent. Another typical middle-class pursuit, charity, has also taken root: the number of independent charities has grown from 0 to 60,000 in the past ten years.15
As everywhere, one of the most accurate indicators of a country’s disposable income is the entrepreneurs’ investment in goods and services on which such income is spent. In the Russian case, the examples include McDonald’s, which had continuously expanded its chain of restaurants (in Russia, they are a middle-class franchise)—as did the Venezuelan firm Rosinter, which in 1998 operated thirty-two restaurants and planned to open seven more by year’s end. The candy makers Mars (American), Cadbury (British), and Nestlé (Swiss) built or refurbished factories to produce more than 100,000 tons of chocolate. The American entrepreneur Paul Heth, who had opened several movie theaters in Moscow, planned to build 105 more throughout the country in the next five years.16 Procter and Gamble, which employed 2,000 Russian workers, spent several hundred million dollars on its Russian operations, including the acquisition and upgrading of a plant to produce soaps, detergents, and shampoos. Coca-Cola invested $750 million and employed 10,000 people. The beverage was produced at twelve new bottling plants. The company estimated that for each of the direct jobs within its Russian operation ten additional jobs were created in the economy at large.
Beyond the New Middle Class
There are reasons to suspect that the anti-Gosplan constituency might extend beyond the middle class. One reason is the outcome of the 1996 presidential election. Its enormous importance was largely missed at the time and is still misunderstood. Yeltsin won because he managed to frame the election as a stark choice between more of the same—free market, privatization, and demilitarization—and the return to the Soviet past. He succeeded in parlaying himself into a symbol and guardian of reform.
The chance to compare his program with that of Gennady Zyuganov was given to Russians by the pro-Yeltsin national television and Moscow-based press, as well as by 150 pro-Communist local and national newspapers and magazines and hundreds of thousands of door-to-door Communist organizers. The Communist candidate also presented his case to the voters in the three and a half hours of free time on the three state-controlled television networks. In the end, 40 million (54 percent) chose Yeltsin’s vision of the country’s future, and 30 million (40 percent) preferred Zyuganov.
The demography of that fateful choice is important. Yeltsin enjoyed astronomical leads among Russians under forty, as well as professionals and white-collar workers. He carried 86 of Russia’s 100 largest cities. Even in the heavily Communist agricultural "Red belt" south and southwest of Moscow, the president won every regional capital by at least 15 percent. In Moscow and St. Petersburg, where Russian revolutions have traditionally been decided, Yeltsin trounced Zyuganov—77 percent to 18 percent and 74 percent to 21 percent, respectively.
Without a doubt, many of those who voted for Yeltsin in 1996 feel betrayed by the August 17 devaluation. Some may have forever turned against the reforms. Whether most have remains to be seen. But the Communists cannot automatically count on those who make revolutions (or counterrevolutions) everywhere: the young and the urban.
Finally, even among those who voted for Zyuganov in 1996, many might have second thoughts about a sharp turn to the left if new policies bring back the memories of the late 1980s: the worthless ruble, and hours’ long lines around the block, the absolutely bare shelves of state stores, sacks of potatoes piled on the balconies of apartments, the complete disappearance of meat and butter, and ration coupons for everything from tea and sugar to soap, toothpaste, and underwear.
Even without privatization of agricultural land, which the Communists in the Duma have blocked for almost five years, the efficient allocation and distribution brought about by market-set prices cut the enormous losses that had plagued the transportation and storage of grain in Soviet times. As a result, since 1995 Russia stopped importing millions of tons of wheat annually, as it had done since the mid-1960s. Even this year, with one of the worst harvests in three decades (and 37 percent lower than last year), Russia will need to import only 2 million tons of grain, several times less than it routinely bought abroad every year before 1992. For the first time since the late 1920s, the country gained self-sufficiency in grain.
Unlike Soviet times, not only did milk become regularly available to Russian children everywhere without lines or rationing, but so did such formerly exotic produce as bananas. As one of the most knowledgeable and objective Western reporters in Russia, Chrystia Freeland of the Financial Times, put it:
After seven years of painful market reform, Russia has not made much progress in restructuring the industrial behemoths that were the foundation of the Soviet economy. But in the retail and consumer sectors, the transition has been a dazzling success. Once a country in which oranges were a rarity, Russia has become a place where even the most obscure Siberian village has access to full capitalist cornucopia of goods, ranging from computers to kiwi fruit.17
In the words of a popular Russian magazine, capitalism brought to Russia "sneakers, jeans, modern clothes, television sets that did not explode, automatic washing machines, personal computers, effective medications, and much more."18
In short, while the lifting of price controls and a drastic reduction in state orders and state subsidies have hurt millions of Russians (especially retirees, workers of the giant military-industrial complex, and collective farmers), the capitalist revolution has significantly improved the lives of millions of others.19 From 1995, when Deputy Prime Minister Anatoly Chubais brought inflation under control, to August 17 of this year, more Russians had greater access to quality food, goods, and services than at any other time in their country’s history. A sizable part of the Russian population stands to lose from a return to a socialist or semisocialist economy.
Political Liberties and Decentralization
The ability of this anti-Gosplan constituency to organize will depend on the preservation of political and civil liberties. The habit of democracy may prove Yeltsin’s greatest legacy. The past seven years have implanted in Russia the irreducible tripartite core of a modern democracy: a press free from government censorship, freedom of political opposition, and the ability of voters to choose freely among political alternatives through honest elections, with polling stations open to the opposition’s observers.
Of course, while necessary, these are not sufficient conditions for a permanent liberal demo-cratic order. Still, at the least, an attempt to tamper with, much less abolish, these liberties will fly in the face of a strong national consensus. In virtually every national poll over the past seven years, regardless of their political affiliation, most respondents refused to sacrifice their political and civil rights. Even in 1994, with monthly inflation in double digits, Russian pollsters found that only 29 percent of their sample agreed to restrict "citizens’ political rights" to "solve the country’s economic problems," while 51 percent did not think "it would be all right to do so." Similarly, in the same year, less than half (47 percent) agreed "to give up some of their rights and freedoms" to reduce crime, and 38 percent were unwilling to sacrifice "any" of their rights. In 1997, 55 percent of those polled opposed a dictatorship even if it would "restore order," while 35 percent said that they welcomed the possibility.
Finally, an attempt at "industrial policy" and "planning," which by definition would require a concentration of power in Moscow, will have to overcome another legacy of Yeltsin’s rule: unprece-dented political and economic decentralization. By concluding "power-sharing" agreements with the leaders of most of the eighty-nine Russian regions and giving a green light to free and fair regional elections, Yeltsin has laid the foundation for a genuinely federalized nation. For the first time in its history, Russia was capable of being both whole and self-ruling. The election of regional legislatures and governors between 1995 and 1998 boosted the legitimacy of local authorities and sharply diminished their political dependence on Moscow. According to surveys, Russians’ trust in regional governments nearly doubled between 1992 and 1997 and was twice as high as their trust in federal authorities.
As a result, many regions not only pursued their own economic polices (from impoverished Ulyanovsk with its Soviet-style price control to a laissez-faire, booming Ekaterinburg) but also conducted their own foreign trade, especially the mineral-rich Urals and Siberia. Depriving the regions of home rule, or even limiting it, would require a mammoth political effort and would meet the spirited resistance of regional elites and the public alike.
Three Scenarios
In the end, the economic policies of the new Russian regime may add up to three broad scenarios. One, "Red October," would take the country all the way back to state socialism amid economic and political collapse. Another possibility is NEP: an economic system in which small and mid-size private businesses would be permitted, but the state would own all the largest plants, factories, and banks, as well as land, natural resources, transportation, energy, and communications and would reestablish a monopoly on foreign trade. Finally, there could emerge a populist regime with an enormous public sector, a backward and closed economy, an impoverished but vast welfare state, and subsidies to bankrupt industries financed by budget deficits and highly inflated currency. Reminiscent of Argentina before Carlos Menem (or, in the worst case, Peru before Alberto Fujimori), such a system could, in the longer run, become a classic fascist dictatorship if a charismatic nationalist leader appeared.
None of these scenarios will be easy to implement or sustain. The Red October option is especially vulnerable. As it contemplates further destabilization through mass civil disobedience during its much advertised "October battle" this month, the Communist leadership will have to reckon with the possibility of a violent backlash. Much as they revere Stalin and like to commune with roaring crowds waving his portraits alongside red banners with the hammer and sickle, the leaders of the KPRF seem to lack Stalin’s resolve and stomach for violence. The burden of responsibility for a giant country on the verge of collapse might prove too heavy. Killing hundreds or thousands—an action for which one must be prepared to be successful in such a project—is beyond the "mainstream" Communists.
Another powerful constraint on the Red October scenario, which would feature demands for Yeltsin’s resignation or impeachment, is the prospect of General Alexander Lebed’s presidency or dictatorship. Unsoiled by the corruption and infighting of the Moscow political class, the forty-eight-year-old general (who this past May won a landslide victory for the governorship of the largest Russian region, the Krasnoyarsk Krai) is a hands-down front-runner in public opinion polls. He is also a declared anti-Communist. "He [Zyuganov] can offer me anything. We are through with Communism," Lebed stated after the first round of the presidential election in 1996, in which he came in third, with 10 million votes, or 15 percent of the total. Whether a de Gaulle or a Pinochet, the anti-Communist Lebed is potentially a greater threat to the KPRF’s plans than the current sick and politically eviscerated president.
While more plausible and politically more sustainable, the other two scenarios might be interrupted by a Bulgarian version of events, in which economic deterioration under a socialist regime leads to national protests and the installation of a right-of-center reformist government through presidential and then early parliamentary elections. Mirroring Bulgaria in 1996 and 1997, such developments might be possible as early as a year from now in the Duma election at the end of 1999 and in the presidential poll in 2000—provided, of course, that the elections are held.
Its back broken by the enormous political cost of radical market reform in a democracy, by official corruption and incompetence, and by the rapacity of its robber barons, the Russian transition to capitalism has been set back by a leftist backlash and a change of regimes. Yet, in the absence of economic upturn, sooner or later new policies will collide with expectations bred by the past few years: low inflation, the ready availability of food and goods, and, for many, expectations of a steady improvement.
How soon such a clash occurs, what forms it takes, and what adjustments (or even reversals) in policies it may force depend on a multitude of variables, chiefly the state of basic political liberties and democratic institutions, the Communists’ real agenda and their determination to implement it, and the size and intensity of the anti-Gosplan opposition. The most crucial test of Russian capitalism and Russian democracy is still ahead.
Notes
1. Alessandra Stanley, "Red Scare," New York Times Magazine, May 26, 1996, p. 46.
2. "Rossia, Rodina, Narod! Predvybornaya platforma kandidata na post prezidenta Rossiyskoy Federatsii Zyuganova Gennadiya Andreevicha" (Russia, Motherland, People! Electoral platform of Gennady Andreevich Zyuganov, a candidate for President of the Russian Federation), Sovetskaya Rossia, March 19, 1996, p. 2.
3. Arkady Ostrovsky, "Monetary Policies: Call to Spur Industry," FT.com (the web site of Financial Times), September 16, 1998. See also Daniel Williams, "New Challenges Bring Calls to Old Economists in Russia," Washington Post, September 18, 1998, p. A25.
4. Ibid.
5. Raymond Aron, France: The New Republic (New York: Oceania Publications, 1960), p. 47.
6. Aron, France, p. 36.
7. Avi Shama, "Notes from Underground: Russia’s Economy Booms," Wall Street Journal, October 24, 1997, p. A10.
8. Ibid.
9. Andrei Savin, "Bogatymi v Rossii stanovyat’sya po blatu" (One needs connections to become rich in Russia), Izvestia, April 22, 1998, p. 6.
10. Harley Balzer, "Russia’s Middle Classes," Post-Soviet Affairs 14 (2) (1998): 172, 173, 176.
11. Ibid., p. 177.
12. Steve Liesman, "Surprise: The Economy in Russia Is Clawing Out of Deep Recession," Wall Street Journal, January 28, 1998, p. A11.
13. "Round and Round They Go. And Where They Stop and Shop," New York Times, April 12, 1998, p. 5.
14. Balzer, "Russia’s Middle Classes," p. 181.
15. Economist, "Russian Love in a Cold Climate," August 15, 1998, p. 37.
16. Erlen Berenshtein, "Okna rosta v Pizanskoy bashne" (Windows of growth in the tower of Pisa), Novoye Vremya 7 (February 1998), p. 25; and"Crisis? What Crisis? Some in Russia Remain Unfazed," Russia Today (www.russiatoday.com), August 7, 1998, p. 1.
17. Chrystia Freeland, "Moscow: A Flash in the Pan," FT.com (the web site of Financial Times), September 8, 1998, p. 1.
18. Berenshtein, "Okna rosta," p. 25.
19. The iconoclastic Russian empire economist Igor Birman, who has had an exceptionally good track record in taking on the conventional wisdom of Washington, concluded in December 1997 that "nearly three-fourths of Russian citizens live better today than they did under Communists." "Na Rusi zhivyotsya luchshe, chem schitayetsya" (People live better in Russia than is commonly assumed), Izvestia, December 4, 1997, p. 2.
Leon Aron is a resident scholar and the director of Russian Studies AEI.
