Russia in the New Century: Stability or Disorder?

Russia in the New Century: Stability or Disorder?

Russia in the New Century: Stability or Disorder?

Russia in the New Century: Stability or Disorder?


Seventeen distinguished scholars from the USA, Russia, and Europe analyse the institutions, social forces, and ideas that are transforming Russia and are, in turn, being transformed in Russia today.


Clifford G. Gaddy The Brookings Institution Barry W. Ickes Pennsylvania State University

The much-heralded "transition to the market" in Russia is now widely recognized to be a far more complex and open-ended process than many at first expected. Boris Yeltsin's last state-of-the-federation speech to the Duma reflected this realization: "We are stuck halfway between a planned, command economy and a normal, market one. and now we have an ugly model--a crossbreed of the two systems" Yeltsin's mixing of metaphors--the spatial with the biological--reflected the fundamental confusion in logic that has plagued economic policy- making in post-Soviet Russia. a hybrid--the biological mixture of two genotypes--is not a halfway point. If it were, the current dilemma would be simpler to resolve.

This chapter offers an analysis of the evolution of Russia's current economic system, which due to its unusual (some would say unique) characteristics has been referred to here as the "virtual economy." We pay particular attention to the interaction between economic reform policies and the adaptive behavior of enterprise directors, which has blunted the efficacy of attempted reforms. in concluding, we explore the dire implications of the virtual economy for Russia's internal stability and development as well as for its international security.

The critical question for Russia's future development is whether the current situation represents a transitory detour or a fundamental crisis of transition. the future success of the Russian experiment depends on a successful economic transi-

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