Architect Of The Post Communist Russian Economy example essay topic

Many critics and skeptics forecast doom for post-communist Russia when 1991 saw the end to the Soviet-Union. It was believed that a collapsed economy, hurt pride, and rampant nationalism would all soon drive Russia to some sort of neo-communist or neo-fascist state. It has been almost 10 years now since the dissolution of the Soviet-Union, and this scenario has failed to arise. Some experts feel, pointing to the decisive defeat of the communists in the presidential election in July, that at this point the predicted doom is not likely to occur at all. Richard Layard and John Parker, in their book The Coming Russian Boom, predict that the Russian economy will soon grow by 4% a year for at least a decade.

While some skeptics still scoff at such optimism, the authors make a good case for their prediction. The factors that they list in Russia's favor include a highly educated workforce, exceptional natural resources, a potentially huge domestic market and the fact that the Russian economy has been largely privatized with much of the financial and legal framework for commercial enterprise now in place. As long as Russia maintains competent political management and a post-communist constitution, it is quite likely that Russia will experience an economic boom. All of this predicted success, however, does not to mean that the new Russian society does not have problems. Often the transition from communism to capitalism has been a rocky one; however, despite these difficulties the future holds promise.

In January of 1992, The Russian Federation was recognized by the United Nations as the legal successor to the USSR. The key issue for the new Russian government under Boris Yeltsin was to create multi-party competitive political system and a market economy based on privatized enterprise. After the termination of the Warsaw Pact, an open political and economic frontier to the West was formed. As this has take place, nearly every aspect of Russian life has undergone change. This paper will take a brief look at several aspects of those changes in Russian society. Crime Unfortunately, one byproduct of loosening state control was the creation of a void of power.

Once the state gave up its power, organized crime immediately recognized this void and exploited it. Soon after privatization, the Russian mafia put itself in position as one of the key power holders. A 1994 study prepared under the direction of the Yeltsin administration discovered that at least 70% of private enterprises and commercial banks had connections with organized crime. In a separate study, it was found that 55% of enterprise capital and 80% of voting shares of stock were in the control of criminal elements. Essentially, it was discovered that many Russian businesses were controlled by an elite few that had multiple ties to the Russian mafia. This has created a scenario where the mafia and these elite few have a stranglehold on Russia's business sector.

The control is so pervasive and the power held so great that the government is having a great deal of trouble combating the problem and dispersing the power. In addition to problems with organized crime, the Russian criminal system has had to deal with a staggering rise in the crime rate during the early 1990's. Reported crimes rose from 1.62 million to 2.76 million from 1989 to 1992. Hampered by problems such as under-funding and a lack of new recruits, the police have had little success in combating such growing problems as drugs, racketeering and violent crime. While much of the crime problem is external, much it has also resulted from internal problems.

Since the fall of communism, efforts have been made to make the new Federal Intelligence Service (FKS) and the Ministry of Security, which are the two main successors to the KGB, subordinate to the rule of Parliament and the courts. The FKS and the Ministry of Security were formed to operate under a totally new set of rules, which would have them fighting organized crime, maintaining the security of nuclear weapons, and attending to other major threats against the state, rather than damaging political opposition as such organizations have done in the past. However, since the personnel, internal structures and organizations of these security forces remained essentially the same, the public has retained suspicions that these institutions are merely old wine in new bottles. If the new regime had attempted to identify and punish those responsible for abuses in the past, it might have inspired more public confidence and they might be more effective at achieving their intended purposes. Another internal problem is that of reforming the Russian legal system.

Transforming the system inherited from the Soviet Union has been an incredibly difficult task that is complicated by the absence of a tradition of legality throughout most of Russia's history. In the past, law has been subordinate to the interests of the government. Unlike Western countries, courts have usually operated under the presumption that the accused was guilty, with defense procedures and juries not a part of even the most serious cases. Sentences were often extremely harsh. Since the end of communism, reform measures have been made in several areas.

For example, the last of the political prisoners were released in February of 1992. There are procedural changes underway which will reverse the orientation of the legal system to having to prove guilt instead of the defendant's innocence. Efforts are also being made to improve the quality of training for the judiciary and increase judiciary independence. Most significantly, a Constitutional Court has been created which is intended to anchor laws within the framework of a higher legality and consolidate the practice of judicial review. Economy Reshaping and privatizing the Russian economic system, was arguably the most daunting task facing the new government.

If one man who could be solely called the architect of the post-communist Russian economy it would be Anatoly Chubais. Chubais, an economist, has essentially been in complete control of privatizing Russia's economy. It was Chubais who coordinated the massive privatization drive of industry in 1992 that placed 75% of the Russian economy in private hands in just a few years time. The most recent crisis that Chubais has dealt with occurred in October of 1998. When the Asian stock markets started having difficulty, foreign investors, which included many Korean banks, started dumping their Russian securities to cover their losses in Asia.

The Russian equity markets lost 20% of their holdings within a few hours. Chubais later commented, We found ourselves on the edge of a nationwide financial catastrophe. We understood that we could not simultaneously keep down domestic interest rates and support the ruble. In order to save the ruble, it was decided to let domestic interest rates soar. Through decisions such as this, Chubais is not popular in Russia, but he is very much admired abroad for his handling of the Russian economy. Russian standards of living According to national polls only one out of eight citizens in the former Soviet Union felt that their income was adequate in 1987.

After the Soviet Union's collapse, economic and price control ended, and prices of many domestic goods went up. Wages, however, didn t, and many state employees didn t get paid at all. Consequently, the number of people who considered themselves to have a good income actually went down. This statistic would make it appear that the living situation has worsened since the Soviet Union's collapse.

On the other hand, while only 36% were satisfied with their family's food supply in 1991, 45% were satisfied with their food supply by 1993 which shows that some areas of life are improving. Those individuals who have some form of higher education working in the private sector in large cities are twice as likely to have a good or very good standard of living as before. Conversely, rural inhabitants, the old, and the unskilled feel that they are significantly worse off then they were under communism. For many life is easier in several important respects than it was under communism. In the old Soviet Union, hours of daily time were spent on hunting or lining up scarce items. This is no longer necessary.

There is a trade-off, however. The Soviet social contract enabled the people to take a relaxed attitude toward work. In exchange for political and individual freedoms, people received a right to leisure. A free and competitive market place, however, is doing away with such habits. Previously, employers to a great extent had to tolerate absenteeism. These days there are new pressures and consequently new patterns of time use at work and at home.

Laws of supply and demand have already created some interesting inequalities. One young man earns 100-200 thousand roubles a month as mover with his privately owned truck while his wife, who has a higher education, makes only 15-20 thousand a month working as an experienced kindergarten teacher. Since hospitals and scientific institutions are still state run, doctors have had a difficult time. One doctor, an experienced specialist and head of the surgical department at his hospital, made only 6,600 roubles in January of 1993, and his wife, a laboratory assistant, received 3,300 roubles; however, the couple considered themselves lucky since the government had given the hospital enough money to make a full salary payment. For many people, having the supports provided by the old Soviet system removed has caused considerable hardship. One study outlined the situation of a Russian family where the father was unemployed and the mother only received a small social compensation from the state for maternity leave.

The family, as a whole, was undernourished. The children looked pale, thin, and younger then their years, and were frequently sick. The father obviously had a drinking problem, and the family had few possessions. The family lived in a small room of only 13.5 sq. meters with the parents of the husband occupying the other room and a two-room apartment.

While the shortage of goods, which was a persistent curse under the Soviet economy, is no longer a problem, commodities necessary for everyday life must now be bought with money. Russia is facing a situation of large-scale poverty. One-third of the population as of May 1995, according to national statistics, did not make the income necessary to cover the most elementary of needs. There are groups that have attained rather quickly a level of affluence, which would have been unimaginable under the old system.

Social connections and key positions have been a family's most valuable assets during this transitional period. An increasing number of households, rather then try to compete in the new market economy, have endeavored to withdraw from the monetary economy and to compensate for the gap between the devalued wages and rising prices by increasing activity in the informal economy. Essentially, due to the instability of the currency, barter and trade has become a common and accepted method of exchange between people and business. This being the case, government statistics, which base standard of living solely on income levels, may not be offering a completely accurate picture. Impact on Women The recent changes in Russian society have had a particularly strong impact on Russian women. Under the reign of the Soviet government, women were disadvantaged in a number of areas, politically and economically.

First, under Gorbachev and then, in the 1990's, under Yeltsin, economic pressures and political reforms have begun to push women back into the domestic arena. The number of women participating in political life has decreased dramatically in recent years. Still, some female political activities manage to hang-on despite a changed political climate. A women-only political movement formed in mid-December of 1993, and managed to win 24 seats in the new State Duma. When the Soviet Union vanished, so did its slogans such as women are active builders of Socialist society.

These were replaced with a new philosophy that can be summed up as a woman's place is in the home. The government has taken the stand that the natural role of women was distorted during the Soviet years, and the main orientation of women should be toward family and child rearing. Sociological studies and statistics show that women are often relegated to positions, which are at best secondary, when it comes to direct participation in policy-making. Maria Arbat ova, a Russian playwright in her forties, expressed the stereotypical attitude of her generation by having one of her characters say, A full-fledged woman must mop floors, stand in line, copy recipes for the salads in fashion, gossip, read detective novels at bedtime, keep count of what's left of the paycheck and be glad she has the chance to do it all.

Russian expert Olga Zdravomyslova feels that this movement backwards is profoundly Russian in nature. For the last several generations, women have been workers in Soviet society with the role of housewife reduced to a minimum; however, during that time, traditional prejudices against women working have remained firmly in place. In surveys, Russian women have frequently stated that they work from 9 to 5 because their job is not very important. The survey results have showed conflicting perspectives exist despite the long-standing presence of women in the Russian workplace. Forty-three percent of Russian women rejected the idea of building a career, and one-third responded that if the husband earned enough, they would prefer not to work at all outside the home.

Conclusion The transition from a socialist state to a capitalist one has caused many problems and changes in Russian society. The new market economy is characterized by instability. Unexpected market fluctuations, incoherent legislation, bureaucracy, crime, corruption, and insecurity concerning the political prospects of Russia all combine to keep society in a state of flux. With all of the problems that have to be overcome, it can only be hoped that Russia continues to strive toward a political system that continues to offer greater personal freedom and an economy that can provide a better life for the Russian people.

The situation might look bleak at times, but Russia has the economic resources to pull itself out of such trouble and place itself in position as a major force economically. As pointed out by Layard and Parker at the beginning of this paper, there is hope that Russia will pull through her economic difficulties and succeed, resulting in a much more stabilized and dependable society.

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