Russian reforms (un)successful?

[ni...@glasnet.ru]

From: "nikst" <ni...@glasnet.ru>

Kennan Institute for Advanced Russian Studies
Washington DC
Meeting Report
Achievements and Failures in Russian Reform
by Nancy Popson

Anders Aslund, Senior Associate at the Carnegie Endowment for
International Peace, Washington, D.C., and Timothy McDaniel, Professor of
Sociology at the University of California in San Diego, represented very
divergent views on the achievements and failures of the Yeltsin era at a
Kennan Institute lecture on 13 February 1997.

According to Aslund, it is crucial when judging the transition to
democracy and the market in Russia to use a broader comparative
perspective.

This perspective shows that the decline in output in the former Soviet
Union
was much higher than in Central Europe. In Aslund's view, this is because
in the former USSR economic distortions were greater, the financial and
state
structures collapsed more completely, and civil society was far less
developed.

Aslund ascribed the large decline in output and income differentials in
Russia to the elite's massive rent-seeking. This rent-seeking (making money
off the state through state regulations or subsidies) took three forms:
subsidized credits, export rents, and import subsidies. Individuals were
able to use their connections to buy goods at subsidized prices and sell
them at an easy profit. It is this rent-seeking, stressed Aslund, that has
enriched Russia's elite. Since 1995, however, the sources of these
rent-seeking opportunities have
disappeared and income differentials have stagnated.

This evidence shows, in Aslund's opinion, that transitions are the
periods of greatest danger. Therefore, only radical stabilization, radical
liberalization, fast privatization, democratization, and conditional
foreign
assistance could have quickly vaulted Russia beyond the transition period.
Aslund emphasized that Yeltsin's reformers were not radical enough in their
implementation of economic and democratic reforms. He rated privatization
a success, but lamented that conditional foreign assistance was lacking.

According to Aslund, Russia is unique in some ways, but not to the
extent
often claimed. It is different in that its elite is particularly vicious,
it carries the burden of an imperial inheritance, and has large raw
material
resources. However, what should have been most important upon the collapse
of communism was not Russia's uniqueness, but rather the implementation of
comprehensive radical economic reforms checked by democratic controls and
reinforced by public education programs.

McDaniel, on the other hand, emphasized that Russia is unique in certain
respects. Throughout the whole modern period, Russia and then the USSR was
a great industrial power while avoiding social modernization and
rationalization. This, according to McDaniel, has led to a situation where
Russia lacks many of the facilitators of democracy and capitalism, such as
generalized trust, a system of meritocracy, society based on the logic of
competing interests, and formal rules and laws. In place of modernization,
a system has
emerged that is based on personal power and which sees the state as both
protector of order and promoter of societal change.

This anti-modernism is what McDaniel has termed the "Russian Idea."
Throughout much of the last two centuries, Russia claimed that this idea
was
superior to the Western model. McDaniel stated that by accepting this
alternative model, Russia injected an anti-modern antibody into society and
politics. Thus many of the problems of today's Russia should be ascribed
not only to the years of Communism, but to this whole pattern of Russian
modernization.

McDaniel contended that an adequate understanding of these distinctive
traits leads to a deeper understanding of the challenges of reform and a
more skeptical evaluation of what has happened since 1991. Had such an
understanding been the basis of reform early on, there would have been more
concern over the institutionalization of political power, the emergence of
a logical social contract, the importance of respect for mutual rights in
society, the development of societal trust, and the legitimization of
private property and the social hierarchy. Each of these issues should have
been addressed, McDaniel claimed, so as to overcome the traditional Russian
pattern of a swollen, bureaucratized, and unjust state seen as alien to the
society.

To the contrary, the Yeltsin government acted in just such a way as to
impede these deeper social changes. According to McDaniel, this was done
through the dictatorial methods of introducing reforms without societal or
institutional support. It also alienated the population by communicating to
them that the new system would be based on "survival of the fittest."
McDaniel concluded that as a result of these mistakes, Russia is plagued by
an illegitimate elite, an alienated government, and a system whereby
arbitrary power has been left intact without the constraints of the old
Communist political mechanisms.

In response, Aslund portrayed a very different picture of present-day
Russia. In his view, Russia is a messy market economy that is
predominantly
privatized, has achieved financial stabilization, and enjoys an
extraordinary level of pluralism. Russia is democratic, as it has gone
through two democratic presidential and parliamentary elections, has
adopted
a constitution, and has full freedom of speech and association. It is
important to note, Aslund continued, that there has been little to no labor
unrest in Russia, which may be proof that the situation is not so dire. The
basic issue, concluded Aslund, is whether one favors more or
less disruption. The negative tendencies that remain today could have been
resolved had there been more disruption from the start.

McDaniel, while not in favor of continuity with the Soviet regime,
argued
that there should have been much more thought about what the sources of
growth might have been. He noted that the sources for the stability and
lack
of labor unrest visible in Russia are apathy, despair, a lack of connection
to the government, and a sense of powerlessness. This, he concluded, does
not legitimize either the reform process or the current state of the
economy and society.

"Achievements and Failures in the Yeltsin Era" sponsored by the Kennan
Institute for Advanced Russian Studies, was presented 13 February 1997 by
Anders Aslund, Senior Associate, Carnegie Endowment for International
Peace,
Washington, D.C. and Timothy McDaniel, Professor of Sociology, University
of
California, San Diego. Nancy Popson is Program Associate, Kennan Institute
for Advanced Russian Studies.

JRL, 18.04.97
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