Russia's Capitalist Revolution Preview Chapter 4
04--Ch. 4--129-156 9/27/07 4:03 PM Page 129 4 The Rise and Fall of State Enterprise Managers: 1994–95 The conventional wisdom about Russia in the 1990s may be summarized: “Russia had embraced big-bang market reforms but collapsed in a cor- rupt mess.”1 A group of Russian communist economists and American Nobel Prize winners stated: “In spite of the hopes of the reformers for a flourishing private business which supports the economy, their program generated economic collapse, a strengthening of the mafia and growing political instability, which is destructive for the business climate.” Their key point was “the necessity to reinforce the role of the government in the process of transformation” (Bogomolov 1996, 17–18).2 This view is tainted by at least three serious misconceptions. First, as ar- gued in chapter 3, Russia did not launch a comprehensive radical reform. Only some reform measures were radical, but virtually all of them were successful, while all “moderate” policies failed.3 Second, the reformers were in power for only half a year, from Novem- ber 1991 until May 1992. How can all of Russia’s problems be blamed on them? This is a baseless accusation. From June 1992 until March 1998, the 1. Sebastian Mallaby, “Finishing What Wolfowitz Started,” Washington Post, May 18, 2007, A23. 2. The five Nobel Prize winners were Kenneth Arrow, Lawrence Klein, Wassily Leontief, Douglass North, and James Tobin. They were joined by John Kenneth Galbraith and Mar- shall Goldman (Bogomolov 1996, 21–23; Klein and Pomer 2001). Their joint declaration in apparent support of Gennady Zyuganov, the presidential candidate of the newly formed Communist Party of the Russian Federation, was published in Nezavisimaya gazeta, July 1, 1996, just before the presidential elections on July 3 (Mau 1999).
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