The Invisible Thread: Free Market Forces
in Pre- and Post-Soviet Russia
Robert B. Charles
This paper presents a simple thesis: 1 Current and historic free market forces inside the former Soviet Union suggest that the region's economic redevelopment will occur more rapidly in the absence of near-term political reunion among the republics than in the presence of such a constraint. 2
In October 1991, 12 republics reached a tentative accord on economic cooperation. 3 In December 1991 the Commonwealth of Independent States was declared. 4 During the same month, Gorbachev ceded the Union's nuclear arsenal to Boris Yeltsin's reconstituted Russia.5 The significance of these events and their impact on countervailing republic and subrepublic claims to "economic sovereignty" 6 remain unclear. What is clear is this: Most former republics, and subrepublic nationalities, recognize a need for economic cooperation; at the same time, they maintain a strong "desire for national self- assertion,"7 which threatens to destabilize any near-term political reunion.
This paper's thesis rests on three beliefs: (1) The former Soviet Union will require extensive foreign investments to redevelop. 8 (2) Foreign investment will be attracted only by stable economic conditions. 9 (3) Stable economic conditions will result more swiftly from decentralized, politically and economically sovereign, albeit cooperative, nation-states than from a premature political reunion. 10 The first two beliefs should not be controversial. The third requires some defending.
Four reasons explain why the former republics, or in some instances subrepublics, should be encouraged to develop independently: (1) cultural cohesion can be a positive economic force; (2) all-Union economies of scale are illusory; (3) pre-Soviet economic history reveals inherent entrepreneurial spirit; and (4) post-Soviet economic history confirms the Russian, and more generalized, indigenous entrepreneurial spirit.