The New Russia: Transition Gone Awry

Article excerpt

Lawrence R. Klein and Marshall Pomer, eds. The New Russia: Transition Gone Awry. Stanford: Stanford University Press, 2001. 454 pp. $24.95, paper.

The New Russia: Transition Gone Awry is a collection of twenty-seven essays by noted Russian and American economists and analysts, including Oleg Bogomolov, Leonid Abalkin, Georgi Arbatov, Marshall Poorer, and Lawrence Klein (winner of the 1980 Nobel Prize in economics). The book is divided into three main parts ("Economic Role of Government," "Economic Crisis," and "Policy Agenda") and contains a foreword by Mikhail Gorbachev. This volume resulted from the activities of the Economic Transition Group (ETG), an international network of economists set up in 1994 on the initiative of Marshall Poorer (Macroeconomic Policy Institute, Santa Cruz, California) and Alexander Nekipelov (Institute of International Economic and Political Studies, Russian Academy of Sciences). The purpose of the ETG was to bring together prominent economists, many of them Nobel Prize winners, to re-examine the early Yeltsin years and develop an alternative economic strategy that would strengthen democratic government but also "minimize harm in human terms." The contributors advocate a balanced approach to reform that avoids both unrealistic free-market ideals and excessive government control. The chapters are clearly written and cover a wide range of topics, including the shortcomings of the competitive-equilibrium model, origins and consequences of "shock therapy," privatization, corrupt banking and "pyramid schemes," poverty and social assistance, real estate markets, agriculture, coal industry, energy efficiency, human capital, government leadership, and trade within the Commonwealth of Independent States.

In the first essay, Poorer warns against attributing the failures of Russian economic reform to "bad implementation of good policy." He believes that Russian reformers paid too little attention to the government's role and placed too much faith in the free market (21). The Western-oriented competitive-equilibrium model (the "neoclassical paradigm") was unsuitable for the Russian economy. "The proposition that the market would adjust on its own without an activist government proved fallacious in Russia," Poorer writes (23). Russian citizens were not ready for "shock therapy." The foreign competition and radical price liberalization (beginning in January 1992) stunned industry. This led to a sharp drop in living standards.

In their essay on crime and corruption, Svetlana Glinkina, Andrei Grigoriev, and Vakhtang Yakobidze point out that perestroika actually fuelled corruption (234). …