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Saturday, February 24, 2018

Experts have compared the collapse of the Soviet economy with the state of modern Russia

In the 25 th anniversary of the coup, which was followed by the collapse of the Soviet Union, it is time again to think about the question: do you paid in the 1990s is too high, moreover, unnecessary price to pay to put the state economy to a market economy? We interviewed on this subject economists, who for a quarter of a century ago occupied influential government positions, and younger experts.

photo: Gennady Cherkasov

25 years have passed since then, both in our country was launched by the mechanism of final elimination of the Soviet economy, which at least was based on 7 deadlock from the point of view of world history principles.

Let them remember.

1) the Comprehensive state ownership of all means of production.

2) the state Monopoly on foreign trade.

3) Artificial and hard calculation of exchange rates.

4) the Planned management of the national economy.

5) Full price control over all goods and services.

6) Prohibition on private initiative and competition.

7) And finally, most importantly — a conscious use of one of the key levers, the temporarily survival of the whole artificial system of scarcity of consumption.

Valerian Kuibyshev, Chairman of the Supreme Council of national economy in 1929, wrote that we cannot allow competition between producers, otherwise we will have to return the enterprises to their former owners. But we can provide the deficit of the goods and thereby forcing workers to compete for the right to receive them. In fact, the famous movement of “Stakhanovite” was created off the rails.

So, questions to the experts.

1. 25 years ago the Soviet Union after the coup and the Soviet economy rapidly collapsed. The government of Boris Yeltsin began to rebuild the country to a market economy. Whether this was done? What it led to in retrospect after a quarter of a century?

2. Are you satisfied with this result? Maybe today we need some serious and radical reforms? And maybe go back to the planned state economy?

Andrey Nechaev, 1991 Deputy Director on scientific work of Institute of economic policy of national economy under the Government of the USSR and Academy of Sciences of the USSR from November 1991 to February 1992 — first Deputy Minister of economy and Finance of the Russian Federation from February 1992 to March 1993 — Minister of economy:

De facto the Russian economy in all respects on the eve of the coup expected the collapse. The Committee seized the moment and launched a propaganda among the population that his policies will bring the country out of severe crisis. Someone believed it, some didn’t. However, at first glance, this smacks of blatant populism, what it was.

Then I was Deputy Yegor Gaidar for science at the Institute of economic policy. We Gaidar and our colleagues wrote a paper, which I remember to this day. It was called “the Economic program of the junta”.

We discussed become known by the time the intentions of the coup. We sent this program on radio and television, in Newspapers and magazines. And, in fact, to Boris Yeltsin. We did a very serious analysis of what we impose the “coup,” and gave an explanation of why all this was an absolute populism. Slogans about a return to stable and balanced life is offered, but no real means of achieving this purpose were not invited.

As a result, after the defeat of the coup had to take the most drastic and very painful measures. First of all, January 1, 1992 was liberalized prices. Despite all the consequences it led to deliverance from a grocery shortage. But since this measure was belated, and extremely forced, it has led to runaway hyperinflation and the loss of Bank deposits.

Still, many economists and politicians argue whether it was possible to use other, more soft, already tested tools. For example, to use the Chinese model of economic reform.

This model, which was implemented in China in the late 1980’s-early 1990-ies, is as follows. “A majority of” the largest state companies and banks remains in the hands of the Central Committee of the Communist party of China. Beijing has allowed the use of market mechanisms only to small and medium businesses, foreign investors, and, most importantly, in the agricultural sector.

The results are obvious. The Chinese economy over the past 30 years has increased several times. In the early 2000 years it’s been growing at 10-11% per year. And only in recent years — only 6-7%. Which countries can boast of such achievements?

We missed the opportunity. Something could be done before the Chinese Prime Minister of USSR Alexei Kosygin, implementing its economic reform 1965-1967 years. However, General Secretary of the CPSU Central Committee Mikhail Gorbachev could also return to this subject in 1985-1987. But this did not happen.

In 1991-1992, it was clear that such measures were too late. Therefore, the required radical steps that were undertaken such as the liberalization of prices.

What to do now? It is obvious that a return to a planned economy is futile. We need fundamental reform. The necessary reforms of the social sector, education system, pension system and healthcare.

The methods that were used 2000 years, shouldn’t repeat. Then, our country relied on the commodity component. Do not forget that then was widely used corrupt methods of doing business. This prevented the development of the Russian economy as a whole.

Along with this “tighten the screws” on the part of the state is absolutely impractical.

Nikita Maslennikov, head of Finance and Economics” Institute of contemporary development, in 1991 the editor of the magazine “Free thought” (formerly the journal “Communist”), in 1993-1998 — Deputy Chairman of Russian Government Viktor Chernomyrdin:

— No one doubts that the emergency Committee finally brought down the Soviet Union and its economy. Then there was only one way to put the country to a market economy. Otherwise we are threatened with the economic, financial, political, and most importantly, the food was a disaster.

You can now argue that the correct way it was made. But one thing is clear — the other way did not exist. And the way chosen by the government of Boris Yeltsin, was due to certain political factors. Therefore, the reforms of Yegor Gaidar difficult to judge.

With regard to privatisation processes, which then began, it was possible, of course, to do otherwise. You can start with larger enterprises related to the oil and metallurgical sector and from small and medium-sized production, particularly with retailers. But because of the circumstances of the time everything was done the way it was done.

Shows 25 years of experience in the development of Russia, all this has led to the fact that currently our economy is “neurinoma”. About 60% of the enterprises, banks, infrastructure and so on is owned by the state. So look for new ways of development, structural reform is essential. In the current environment of oil and other raw sources are able to give a 1.5–2% of GDP.

Needs a serious “reset” of the budget expenditures. Need to cut inefficient spending of the Treasury in favor of the needy in the financing of the sectors. It is no secret that health care, education, sports, infrastructure is still lacking the necessary funds. Also need to reboot the pension system.

In the end you need to put part of the cost of the public sector by stimulating small and medium businesses.

Nikolay Vardul, chief editor of “Financial newspaper”, in 1991, columnist for the “Kommersant”:

— Attitude to the coup and subsequent reforms in our country is changing waves. Initially, members of the Committee believed “the guys shaking hands”. Most actively glorified the actions that are carried out by Yeltsin and Gaidar, believing that market economy is exactly what Russia needs. It was believed that only such actions will lead to the rise of country in the civilized Western level.

It seems like now we have “civilized”. And then there was talk that the putsch was not so wrong. At present, our country risks to fall back to the place from which you started 25 years ago.

This is the saddest thing. For domestic policy is: first, catch one side, being sure that there is no other way. Then, with the same slogans climb in the other direction. Moreover, neither our political leaders do not follow through. They constantly step on the same rake, with the result that ordinary citizens, far from politics, hang out in the same hole.

Vladislav Isaev, Deputy Chairman of JSC “FINAM” in 1991 a student of the history Department of the Astrakhan pedagogical Institute:

— It is necessary to understand that in a number of circumstances, Yeltsin and his team had no choice. The Soviet economy continued to 1991 to operate, but many sectors have already been brought to a complete paralysis. Decentralize management destroyed the Union Ministry through which coordinated interaction of thousands of businesses. As a result, the country found itself in a situation of depreciation of money and the trade deficit. To solve these problems could be due to the transition to more stringent regulation, but this was contrary to the position of Russian separatism, which, in fact, Yeltsin came to power. That is, for such a policy, he would have to push supporters to join in a confrontation with the allies in the West.

But I would not call these “rails” to which were transferred the country at the moment, market. The market was thrown “humanitarian aid” with a zero for the sellers cost, which is deprived of the chance of competition of domestic manufacturers, who simply take the product to market had cost more. Privatization was carried out in conditions of depreciation of savings of the entire population, that is, the market itself did not exist — even the vouchers were distributed to administrative “for consumers, in the spirit of communal land tenure, that is, regardless of how many people earned this and how much could accumulate.

The foreign exchange market also functioned in non-market conditions — virtually all received foreign loans were purposefully thrown on the market to hold an undervalued exchange rate is easier for the authorities maintaining relative social stability. The interbank financial market is also operated in abnormal conditions — few could compete on the rates of t-bills that were actually “pyramid”. Of course, over time paralyzed the efforts of “perestroika” and “ideological marketeers” Yeltsin market arrangements work, but it was not the result of their conscious choice, but rather occurred as a result of the collapse of the policy of patching holes.

Elements of state regulation and state ownership is quite strong now, and they are significant in all significant world economies. But the revival of the planned economy in the form in which it existed in the USSR in modern conditions is almost impossible, and not necessary. You have to understand that the Soviet Union was forced to total nationalization terms of domestic and foreign policy — from the boycott, declared to the Soviet government by private banks in response to the Decree on land, affecting their interests (landlords ‘ land was long ago mortgaged to banks with foreign, mainly French, capital, which also owned all the grain trade), through sabotage of the owners of firms against the background of the Brest peace withdraw funds through the sale of shares in Germany, which the Soviet government under the contract was obliged to pay all charged securities, to the “gold blockade” forcing the Soviet Union to conduct industrialization to go to the collectivization of agriculture.

There were, of course, and ideological excesses, for example, during the reign of Khrushchev, who, being an extreme Trotskyist beliefs, which almost completely eliminated collective property, as well as the utility of the farm, thus having loaded the state with additional social obligations. But in General the Soviet economy as the economy of the Yeltsin era, evolved in those forms which it has acquired, under the pressure of circumstances. That is a reasonable basis for returning to the model, can only be a new hit in similar conditions. If Russia will again be in a position of economic and military encirclement, then the response may be similar. But now the world has changed a lot — the external market has become more main potential buyers of Russian products and sellers of those goods which are not produced in Russia, too numerous to anyone was a political decision to cut us off from all markets.


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