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Analysis & Opinion
25.12.09 Gaidar’s True Place In Russia’s History
Introduced by Vladimir Frolov

Contributors: Vladimir Belaeff, Stephen Blank, Ethan S. Burger

Yegor Gaidar, the father of Russia’s market reforms, died last week of heart failure at the age of 53. He was, by any measure, one of the most controversial figures in Russian history. For supporters, he saved the country from civil war and put Russia on the path to democracy. For detractors, he destroyed the Soviet system and unleashed an era of unimaginable economic hardship for ordinary people. So what will be Yegor Gaidar’s resting place in Russia’s history? How will he be remembered by future generations of Russians? What was his real contribution to building a modern Russian state? And was he a modern-day Pyotr Stolypin?

For those who shared his vision of Russia as a liberal democracy and a competitive market economy, he was a brave visionary who rose to save his country from the ruins of the communist system, staved off mass hunger, averted a civil war, and in many ways helped create the modern Russian state. He was a man who sacrificed his political career, and in large measure his personal reputation, to implement highly unpopular reforms that saved the nation from disaster and put it on a path to peaceful democratic evolution.

For those who lost their personal savings to the hyperinflation that accompanied Gaidar’s reforms, who lost prestigious jobs at state enterprises that were downsized, restructured or simply closed in the massive economic shift from a Soviet planned economy to a chaotic market economy, he was a reviled figure, an epitome of evil who destroyed their traditional way of life and made their past sacrifices worthless.

Yet few would deny that his impact on Russia’s historic trajectory was immense. He had a vision for the country and the will and the courage to mercilessly implement it. He brought together a team of dedicated loyalists who have risen to become the captains of Russian business and government, and he projected a political philosophy, initially alien to this country, that has now taken deep root in Russia.

Historic analogies are difficult and misleading. But if there is in Russia’s history a person who had a comparable impact on the nation’s economic and political development, and who also suffered the personal tragedy of being so squarely misunderstood by his contemporaries, it is, perhaps, Prime Minister Pyotr Stolypin in the early 20th century.

Like Stolypin’s, Gaidar’s reforms attempted to expand private property rights and economic freedom in Russia, and were only partially successful in doing so, not in the least through the fault of the reformers themselves.

What will be Yegor Gaidar’s resting place in Russia’s history? How will he be remembered by future generations of Russians? What was his real contribution to building a modern Russian state? Was he a modern-day Stolypin?

Ethan S. Burger, Adjunct Professor, Georgetown University Law Center, Washington D.C.:

Yegor Gaidar was an idealistic revolutionary who may have had his heart in the right place, but who lacked the ability to convince the Russian population and the country's political elite that his vision would lead to prosperity. Some observers have remarked that Gaidar’s Bolshevik-like (or perhaps Bolshevik-lite) views condemned the country to its current state.

Few intellectuals have well-developed political acumen and Gaidar was no exception. He was not sufficiently skeptical when he listened to Western advisors and Russia’s so-called reformers, many of whom placed their own financial well-being ahead of that of the country. And maybe this contributed to his failings. There are very few economists who make good politicians.

Gaidar served as acting prime minister, never as prime minister. His "shock therapy" reforms contributed to the impoverishment of a large segment of the Russian population. While he was operating in "unchartered" waters during the 1990s, he never instilled enough confidence in his navigation skills to win the support of the Russian people. Arkady Gaidar, a writer of children's books, will probably always enjoy far greater popularity in Russia, than his grandson.

Then-President Boris Yeltsin had to initiate Gaidar's privatization program (co-authored by Anatoly Chubais) by decree because he lacked the votes to enact laws in this area. Even when Yeltsin enjoyed popular support, there were not enough votes in the State Duma to confirm Gaidar as prime minister - he simply did not inspire confidence. He was never able to convince the Russian political elite or the Russian people to accept him as the architect of a new Russian economy. He and his allies shared a common set of objectives: to avoid a civil war, to ensure that the country did not undergo famine and to stop the communists ever returning to power. In these areas he might be regarded as a success.

Gaidar tied his fate to Yeltsin, a courageous, albeit highly flawed individual. The Russian president's personal deficits were numerous: he valued loyalty in subordinates above all else; he refused to make the creation of a social safety net a top priority; he was intolerant of political criticism; he failed to appreciate the corrosive effect of corruption on the new Russian state; he was susceptible to flattery, was not skeptical of the motives of others, and loved to drink.

But unlike Yeltsin, Gaidar lacked the common touch. He was never a man of the people. Today Russia is a state without a vibrant and independent press, it is moving away from a market economy, it has failed to establish an independent judiciary free from external political and economic pressure, and it is slow to address the numerous other problems afflicting the country. Can these be counted among Gaidar's failures?

Perhaps it is still too early to make a final judgment. But I imagine Gaidar was greatly saddened by the current state of the Russian economy and its political system. Gaidar joins a list of prominent Russian reformers. I wonder if, someone were to write a play centering on an exchange between Yegor Gaidar, Andrei Sakharov, Tsar Alexander II, Alexander Herzen, Nikita Khrushchev and Pyotr Stolypin, just what those characters would talk about. I would not be surprised if the play ended with them all drunk and in tears.

Vladimir Belaeff, President, Global Society Institute, Inc., San Francisco, CA:

“De mortuis nil nisi bonum…” If one is to obey this maxim, discussion of the late Gaidar should go no further. However, with due apologies to Diogenes La?rtius, let us attempt a brief assessment of the deceased man, sine ira et studio.

To reactionary Marxists Gaidar is the person who destroyed the admirable Soviet planned economy. This is a view that is comfortable to the Marxist faithful because it removes the need to confront the true cause of failure – the structural incompatibility of the Marxist model with genuine, lasting progress and true social freedom.

To his admirers Gaidar is the person who destroyed the abominable Soviet planned economy. This perception is false. The non-viability of the Marxist economic system was implicitly recognized by the introduction of the New Economic Policy (NEP) as far back as the 1920s, and was later reflected in regular spasmodic attempts to adjust the system over the decades of Soviet rule. By the time Gaidar came on the scene, the Soviet planned economy had already failed – due to internal causes, and not as an accomplishment of Gaidar and his associates.

Another hyperbolic claim is how Gaidar “filled empty store shelves” with consumer products. What is not mentioned in these paeans to Gaidar, is that the hyperinflation unleashed by his improvised and erroneous policies made those products on the formerly empty shelves inaccessible to most consumers – so the “empty shelf effect” was in fact preserved, with the added insult that during Gaidar’s tenure the Russian consumer instead of seeing empty shelves where there was nothing to buy, saw full shelves where he or she still had nothing to buy, because of hyperinflation, and eventual de-monetization of the economy.

In 1992 I was invited by then-President Boris Yeltsin to evaluate Gaidar’s reform strategy, laid out in the documentation produced by his team. The reviewed strategy was appallingly vague and tragically simplistic. My evaluation, delivered to Moscow, gently pointed out major missing components and suggested a move away from the berserker style of implementation. I also warned about the emerging negative consequences of improvisation and blind faith in unproven theories. Regrettably, these recommendations and warnings were not heeded, and eventually Gaidar’s policies demonstrably failed.

In effect, Gaidar and his team, including his Western advisors, provided Marxist reactionaries with valuable arguments and facts, which are continuously used to attack Russia’s economic and political modernization. This unwitting outcome is the result of a very characteristic lack of understanding of the real world and how it works. To those who are raised with a pious attitude toward academia, this observation may seem like blasphemy – nevertheless it is true. Intellectual academics like Gaidar and his ilk are least suitable as leaders of substantial reform.

Proposing a parallel between Gaidar and Pyotr Stolypin can be seen as a poor understanding of the plans and deeds of both individuals. Stolypin’s reforms were applied to a fully working, market economy; he used business structures already well-established and working in that economy. Stolypin’s goal was to extend an already working system of private land ownership to a broader section of the Russian population engaged in agriculture. To achieve this, Stolypin carefully prepared legislative, financial and technical infrastructures that would support his reforms. Unlike Stolypin, Gaidar improvised the construction of a new macroeconomic system, known to him by textbook hearsay, in a completely unprepared environment; specifically ignoring infrastructure requirements.

Stolypin’s reforms succeeded, caused negligible disruption and survived him after his murder by a terrorist in 1911. Gaidar’s reforms led directly to Russia’s default of 1998.

Professor Stephen Blank, the U.S. Army War College, Carlyle Barracks, PA:

I would hope that Gaidar be remembered as a man who saved Russia from civil war and mass starvation at the price of very great sacrifices. Many of those sacrifices were needed because the economy he inherited was on the verge of starvation, was bankrupt and based wholly on illusory understandings of modern economics and rent-seeking. He failed to create a truly capitalist economy for private property, which is still not safeguarded in Russia. But this was not solely his fault. Yeltsin's lust for power, the anti-reformers' refusal to accept any reforms, the new capitalist class's greed and rent-seeking proclivities that led them to become the oligarchs, and foreign incomprehension of what truly needed to be done as well as his own mistakes helped undermine the reforms. Thus the analogy with Stolypin is not farfetched. Both men were distinguished by their patriotism and sense of responsibility for the welfare of the state and society as a whole, but both had to reckon not only with their own shortcomings, as do we all, but with the ingrained resistance of so many elites to a regime based on genuine rights of private property and of liberalism, not to mention democracy.
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