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A Critical Perspective on the Yeltsin Economic Reform Program
Working paper
Lynn Nelson
November 1993 |
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The Yeltsin-Gaidar economic program of 1992 and the Yeltsin government’s continuation of most of the same policies this year was based on inadequate attention to reform solutions which could have helped to creatively transform Russia’s production system on the way to a market economy. A number of reform alternatives have been worked out by Russian economists, some of which take into account unique features of the Russian political and economic landscape more comprehensively than the program initiated under Gaidar’s direction. The re-entry of Gaidar into the Yeltsin government, while probably a positive sign to some democrats in Russia and many Western leaders, suggests that many mistakes of the past two years may be repeated. The radical reforms have been too eager to see the old system quickly wrecked, rather than being transformed in ways which would more effectively utilize the production system’s resources and potential. In pursuit of their objectives of achieving momentous change as rapidly as possible, the reformers have largely ignored the negative social consequences that were certain to follow. Western-backed economic policy initiatives in smaller East European countries were themselves based on questionable logic which is vigorously debated in the economics literature. Attempts to shape Russia to the East European mold introduced additional distortions. It is true that the Yeltsin-Gaidar plans were never fully implemented in the way that foreign advisors and officials of Western financial institutions wanted them to be; but I find little empirical basis for the contention that their proposals could have been efficacious under other circumstances, either. The Eastern European examples which are often offered in evidence do not provide an affirmative answer to this now-theoretical question.
The political crisis Yeltsin helped create in late 1992, with his aggressive stance towards the legislature, restored much of his symbolic capital both in Russia and in the West. By increasing his political leverage through confrontation, however, he not only increased the risk of political fragmentation but also diverted emphasis away from pressing economic problems. This was not the first time Yeltsin had played this card to buy more time; but in the past, between periods of confrontation, his performance had left large numbers of people dissatisfied, if not disillusioned. If Yeltsin had chosen a more gradual economic reform approach in late 1991, as many reformed-minded Russian economists had urged without success, some of the costly developments of 1992 and 1993 might well have been avoided. And in trying to eliminate the threat of Communist resurgence through rapid economic reorganization, I suspect that the reformers in Yeltsin’s government inadvertently heightened the risk that the authoritarian forces in Russia might enjoy increasing momentum. In this case the authoritarian strain may have been nurtured on several fronts, both outside and within the government. I fear that the support Yeltsin has received for his calculated moves to discredit and ultimately dissolve Russia’s legislature and, in the wake of that triumph, to move quickly against other institutional sources of opposition in Russia as well, may soon offer unblinking testimony to the error of encouraging economic and political transformation through manifestly undemocratic means. |
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| Last updated on: 12/15/2006 |
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