Low Fidelity: Russia's Pretend Capitalism

By Postrel, Virginia | Reason, November 1998 | Go to article overview

Low Fidelity: Russia's Pretend Capitalism


Postrel, Virginia, Reason


Bill Clinton had hundreds of affairs early in his marriage, he told Monica Lewinsky, but after he turned 40 he resolved to be faithful to his wife. He cut back on his sexual adventures. Yet Clinton still committed adultery, and he still got in trouble.

The conclusion is obvious: Fidelity is a crock, a "utopian religion," "the great illusion of our era." If it weren't for his blinkered devotion to the foolish ideology of fidelity, Clinton wouldn't be facing the possibility of impeachment.

Not even the fiercest Clinton defender would make such a ludicrous argument. No one in his right mind would claim that Clinton's reckless sexual behavior and its consequences stem from a zealous dedication to marital fidelity. And no one who offered such a patently ridiculous line would be respectfully interviewed on PBS news shows or published in The Washington Post.

But if you're talking about Russia, a different standard applies. It's conventional wisdom that fidelity leads to adultery.

From experts both inside and outside Russia, we hear that the country's economy is falling apart because of unregulated free markets and too much reform. Leftists are ecstatic. Ever since the collapse of the Soviet Union they've been looking for a club with which to beat back the idea that markets lead to progress and prosperity. What could be better than economic turmoil in Russia? It's even the same country that made socialism look so bad.

Economics columnist Robert Kuttner puts it most rhetorically, calling the "Russian implosion" a casualty "of the great illusion of our era - the utopian worship of free markets . . . an almost lunatic credulity in pure markets and a messianic urge to spread them worldwide . . . . With serious aid, we could have helped true reformers build an effective democratic state and a modern mixed economy. Instead, the Russians got laissez-faire gangster capitalism." Markets equal the mafia.

NYU professor Stephen Cohen, a former Sovietologist and Gorbachev devotee, is more measured, as befits a man whose talking head appears regularly on PBS. But, like Kuttner, he blames Russia's troubles on an "American crusade to transform Russia into a replica of American democratic capitalism," a model he doesn't like much anyway. He says, "We have to drop this dogma about the notion that there's only one way to reform the country. Russia's changing course . . . . The state is coming back to try to save the nation." In this morality tale, the Russian state apparently withered away in 1991, taking with it all business regulations and social spending; it is only now reviving.

Now that Russia is done with its foolish experiment in free market capitalism, goes this line of argument, the country's economic policies can be pragmatic and humane. "Now there is hope for a more realistic policy," former Gorbachev economics adviser Oleg Bogomolov told The New York Times after the ascension of Prime Minister Yevgeny Primakov brought communists back into economic-policy positions. "Now it is not just one side that can express their ideas, like our liberal radical economists. We are all in favor of reforms, but not reforms for their own sake, but reforms which serve people."

From these accounts, and less tendentious ones as well, you might well think that Russia has been following some sort of laissez-faire model for the past seven years: that Moscow had become the new Hong Kong. Like Bill Clinton's ventures in fidelity, however, Russia's experiment with "free markets" combined a small change in behavior with a lot of good-sounding talk. In truth, Russia no more adopted a market economy - even in a mixed, social-democratic, European way - than Clinton stayed faithful to his wife.

What Russia is actually experiencing is the second collapse of socialist planning. It is true that under international pressure Russia adopted "shock therapy" policies: freeing prices, privatizing some industry, and curtailing inflation. …

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