Lynn D. Nelson - Radical reform in Yeltsins Russia : political, economic, and social dimensions

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Radical Reform
IN Yeltsins Russia

Radical Reform
IN Yeltsins Russia

POLITICAL,
ECONOMIC,
AND SOCIAL
DIMENSIONS

Lynn D. Nelson
Irina Y. Kuzes

First published 1995 by M.E. Sharpe

Published 2015 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright 1995 Taylor & Francis. All rights reserved.

No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notices
No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use of operation of any methods, products, instructions or ideas contained in the material herein.

Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility.

Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Library of Congress Cataloging-in-Publication Data

Radical reform in Yeltsins Russia : political, economic, and social
dimensions / by Lynn D. Nelson and Irina Y. Kuzes.
p. cm.
Includes bibliographical references and index.
ISBN 1-56324-479-9 (alk. paper). ISBN 1-56324-480-2 (pbk.: alk. paper)
1. Russia (Federation)Economic policy1991
2. PrivatizationRussia (Federation
3. Russia (Federation)Economic conditions1991
4. Russia (Federation)Politics and government1991
I. Nelson, Lynn D., 1943 II. Kuzes, Irina Y.
HC340.12.R33 1995
338.947dc20 94-41114
CIP

ISBN 13: 9781563244803 (pbk)
ISBN 13: 9781563244797 (hbk)

To Grigorii Kaganov

Contents

This study examines political, institutional, and organizational factors that shaped Russian economic reforms from late 1991 until mid-1994, and further inquires into the implications of the reforms for both economic and noneconomic institutions in Russia. This work continues the stream of research on which our earlier volume, Property to the People (1994), was based. That book title was inspired by Boris Yeltsins proclamation, as voucher privatization was about to begin, that Russia needed millions of owners rather than a few millionaires. The interviews for that study (which numbered more than 5,700) were conducted in mid-1992. Our positive initial judgment about the direction of Russias reforms is reflected in the title of that book. But our findings forced us to modify our point of view, if not the works title, during the course of the project.

Our research for this book included interview data that were collected in mid-1993 in Moscow, Ekaterinburg, Voronezh, and Smolensk, as well as primary and secondary material from a variety of sources. The 5,019 respondents included political and opinion leaders at the federal and local levels, directors and other administrators of privatized and privatizing enterprises, privatization administrators, and general population subsamples in each of the four cities. (Details are provided in

Our earlier work had made us skeptical about the course the reformers had set. In this continuation project, however, we pointedly attempted to search as widely as possible for critical data related to the studys themeswhatever conclusions those data might supportand to utilize as fully as we could these varied materials in developing our interpretations. Our claim is not to unquestionable comprehensiveness and objectivity, certainly, but rather to have engaged in inquiry more than advocacy in the study.

Our analysis combines elements of both what has been termed the state-centered approach, which tends to emphasize the causal influence of the political sphere, and society-centered analysis, which focuses more on the dependence of political outcomes on changes in other spheres of society, including the economy. Throughout this study, we attend closely to the significance of Western perspectives about preferred economic reform strategies for Russia. These influences have come from a variety of sources. Western advisers were active proponents of a perspective on economic reform that we identify as the Western approach, and international financial institutions as well as leaders of Western governments, especially in the United States, were also prominent players on the Russian political stage as reforms were being planned and implemented.

Russia diverges sharply from the familiar Western pattern in the influence that economic actors command over political decision making. Rueschemeyer and his coauthors speak of a special dependence on the interests of capital owners and managers in capitalist countries, which, they argue, is the basic dependence constraining state autonomy in these nations.

Russias political terrain is further distinguishable from characteristic Western arrangements in the absence of a robust civil society tradition that could provide institutional supports for citizen action. Post- Gorbachev Russia shows few signs of moving away from highly centralized elite domination through the development of pluralistic structures. Political parties are weak and unappealing to most of the electorate, and Russias current executive leadership has strongly resisted the sharing of power with other branches. Efforts among Russian lawmakers and quasi-organized citizen groups to prevent the resurgence of centralized decision making, in the aftermath of the democratic experiment that was initiated under Gorbachev, illustrate Rueschemeyer and Evanss observation that state apparatuses, in the real life of a society, will inevitably become arenas of social conflict.

In , we review aspects of Russias historical experience that prepared the ground for reform developments from 1991 onward, and we describe important features of the approach to reform that has characterized the Yeltsin years through late 1994. Because the demise of the Soviet Union is integrally tied to Yeltsins consolidation of power in Russia, on the one hand, and Russian reform challenges, on the other, we highlight features of this development that underscore the books principal themes.

Chapters two through four consider different but related aspects of the Western approach to Russian economic reform, a strategy that was strongly urged on Russia by prominent Western advisers, Western policy makers, and representatives of international financial organizations such as the International Monetary Fund (IMF) and the World Bank. We suggest in focuses on the fit of the Western approach with requirements for effective reform that were presented by specific features of the Russian economy. We conclude that by neglecting critical considerations in all of these areas, the Western approach both recast and magnified distortions that had long characterized the Soviet economy, while impeding progress toward the realization of a normal market economy.

Voucher privatization was the centerpiece of the Russian privatization program during 1993, and in we discuss achievements and failures of the program, as well as coordination issues that have been central to this approach to enterprise restructuring.

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