Transition without Transformation: Russia's Involutionary Road to Capitalism

The messianic reformers of the Soviet transition, whether Western or Russian, considered the socialist economy so moribund, so inefficient and so obsolete that it was an article of faith that markets could only bring economic improvement. But conditions have only got worse, much worse. Over the last 10 years Russia’s Gross Domestic Product has fallen by more than half; living standards for most have plummeted along with increased material insecurity; and the population continues to shrink with falling life expectancy. A decade of market reform has been a decade of unprecedented economic decline. The advocates of shock therapy have their pet explanations for degeneration – Jeffrey Sachs (1994) writes of the betrayal of the IMF, Anders Aslund (1995) of the sabotage of ex-Stalinist managers, Clifford Gaddy and Barry Ickes (1998) of a collective collusion to support hidden subsidies for loss making enterprises. In their views this was an incomplete application of shock therapy -the political will, whether domestic or foreign, for economic restructuring was missing. Evolutionary economists (Murrell, 1991, 1992; Poznanski, 1996; Stiglitz, 1999), on the other hand, were critical of shock