Soviet Media in Transition: Structural and Economic Alternatives [Elena Androunas] on leondumoulin.nl *FREE* shipping on qualifying offers. This study, written by.
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Opening domestic markets to foreign trade and investment, thus linking the economy with the rest of the world, was an important aid in reaching these goals. The Gorbachev regime failed to address these fundamental goals. At the time of the Soviet Union's demise, the Yeltsin government of the Russian Republic had begun to attack the problems of macroeconomic stabilization and economic restructuring. By mid, the results were mixed. Since collapse of the Soviet Union in , Russia has tried to develop a market economy and achieve consistent economic growth. In October , Yeltsin announced that Russia would proceed with radical, market-oriented reform along the lines of " shock therapy ", as recommended by the United States and IMF.
Assuming the role as the continuing legal personality of the Soviet Union, Russia took up the responsibility for settling the USSR's external debts , even though its population made up just half of the population of the USSR at the time of its dissolution. Such a figure may be misleading, however, since much of the Soviet Union's GDP was military spending and the production of goods for which there was little demand.
The discontinuation of much of that wasteful spending created the false impression of larger than actual economic contraction. Critical elements such as privatization of state enterprises and extensive foreign investment were rushed into place in the first few years of the post-Soviet period. But other fundamental parts of the economic infrastructure, such as commercial banking and authoritative, comprehensive commercial laws, were absent or only partly in place by Although by the mids a return to Soviet-era central planning seemed unlikely, the configuration of the post-transition economy remained unpredictable.
In January , the government clamped down on money and credit creation at the same time that it lifted price controls. However, beginning in February, the Central Bank, headed by Viktor Gerashchenko, loosened the reins on the money supply. By the end of , the Russian money supply had increased by eighteen times. This led directly to high inflation and to a deterioration in the exchange rate of the ruble.
The sharp increase in the money supply was influenced by large foreign currency deposits that state-run enterprises and individuals had built up, and by the depreciation of the ruble. Enterprises drew on these deposits to pay wages and other expenses after the Government had tightened restrictions on monetary emissions. Commercial banks monetized enterprise debts by drawing down accounts in foreign banks and drawing on privileged access to accounts in the Central Bank.
Trends in annual inflation rates mask variations in monthly rates, however. Instability in Russian monetary policy caused the variations. After tightening the flow of money early in , the Government loosened its restrictions in response to demands for credits by agriculture, industries in the Far North, and some favored large enterprises. In the pattern was avoided more successfully by maintaining the tight monetary policy adopted early in the year and by passing a relatively stringent budget.
For the first half of , the inflation rate was However, experts noted that control of inflation was aided substantially by the failure to pay wages to workers in state enterprises, a policy that kept prices low by depressing demand. An important symptom of Russian macroeconomic instability has been severe fluctuations in the exchange rate of the ruble.
Prior to July , the ruble's rate was set artificially at a highly overvalued level.
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But rapid changes in the nominal rate the rate that does not account for inflation reflected the overall macroeconomic instability. The announcement reflected strengthened fiscal and monetary policies and the buildup of reserves with which the government could defend the ruble. By the end of October , the ruble had stabilized and actually appreciated in inflation-adjusted terms. It remained stable during the first half of Another sign of currency stabilization was the announcement that effective June , the ruble would become fully convertible on a current-account basis.
This meant that Russian citizens and foreigners would be able to convert rubles to other currencies for trade transactions. In the Soviet era all enterprises belonged to the state and were supposed to be equally owned among all citizens. Privatization transferred much of this wealth into the hands of a few, making them immensely rich. Stocks of the state-owned enterprises were issued, and these new publicly traded companies were quickly handed to the members of Nomenklatura or known criminal bosses.
For example, the director of a factory during the Soviet regime would often become the owner of the same enterprise. During the same period, violent criminal groups often took over state enterprises, clearing the way by assassinations or extortion. Corruption of government officials became an everyday rule of life.
Under the government's cover, outrageous financial manipulations were performed that enriched the narrow group of individuals at key positions of the business and government mafia. Many took billions in cash and assets outside of the country in an enormous capital flight. The largest state enterprises were controversially privatized by President Boris Yeltsin to insiders [6] for far less than they were worth. Government efforts to take over the credit expansion also proved ephemeral in the early years of the transition.
Domestic credit increased about nine times between the end of and The credit expansion was caused in part by the buildup of interenterprise arrears and the RCB's subsequent financing of those arrears. The Government restricted financing to state enterprises after it lifted controls on prices in January , but enterprises faced cash shortages because the decontrol of prices cut demand for their products.
Instead of curtailing production, most firms chose to build up inventories. To support continued production under these circumstances, enterprises relied on loans from other enterprises. By mid, when the amount of unpaid interenterprise loans had reached 3. The government also failed to constrain its own expenditures in this period, partially under the influence of the post-Soviet Supreme Soviet of Russia , which encouraged the Soviet-style financing of favored industries. This budget deficit was financed largely by expanding the money supply.
In late , deteriorating economic conditions and a sharp conflict with the parliament led Yeltsin to dismiss neoliberal reform advocate Yegor Gaidar as prime minister. Gaidar's successor was Viktor Chernomyrdin , a former head of the State Natural Gas Company Gazprom , who was considered less favorable to neoliberal reform.
Gorbachev's new system bore the characteristics of neither central planning nor a market economy. Instead, the Soviet economy went from stagnation to deterioration. At the end of , when the union officially dissolved, the national economy was in a virtual tailspin. In the Soviet GDP had declined 17 percent and was declining at an accelerating rate. Overt inflation was becoming a major problem. Between and , retail prices in the Soviet Union increased percent.
Under these conditions, the general quality of life for Soviet consumers deteriorated. Consumers traditionally faced shortages of durable goods, but under Gorbachev, food, wearing apparel, and other basic necessities were in short supply. Fueled by the liberalized atmosphere of Gorbachev's glasnost and by the general improvement in information access in the late s, public dissatisfaction with economic conditions was much more overt than ever before in the Soviet period.
The foreign-trade sector of the Soviet economy also showed signs of deterioration. The total Soviet hard-currency debt increased appreciably, and the Soviet Union, which had established an impeccable record for debt repayment in earlier decades, had accumulated sizable arrearages by In sum, the Soviet Union left a legacy of economic inefficiency and deterioration to the fifteen constituent republics after its breakup in December Arguably, the shortcomings of the Gorbachev reforms had contributed to the economic decline and eventual destruction of the Soviet Union, leaving Russia and the other successor states to pick up the pieces and to try to mold modern, market-driven economies.
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At the same time, the Gorbachev programs did start Russia on the precarious road to full-scale economic reform. Perestroika broke Soviet taboos against private ownership of some types of business, foreign investment in the Soviet Union, foreign trade, and decentralized economic decision making, all of which made it virtually impossible for later policy makers to turn back the clock. Chernomyrdin formed a new government with Boris Fedorov , an economic reformer, as deputy prime minister and finance minister. Fedorov considered macroeconomic stabilization a primary goal of Russian economic policy.
In January , Fedorov announced a so-called anticrisis program to control inflation through tight monetary and fiscal policies. Under the program, the government would control money and credit emissions by requiring the RCB to increase interest rates on credits by issuing government bonds, by partially financing budget deficits, and by starting to close inefficient state enterprises.
Budget deficits were to be brought under control by limiting wage increases for state enterprises, by establishing quarterly budget deficit targets, and by providing a more efficient social safety net for the unemployed and pensioners. The printing of money and domestic credit expansion moderated somewhat in In a public confrontation with the parliament, Yeltsin won a referendum on his economic reform policies that may have given the reformers some political clout to curb state expenditures.
In May , the Ministry of Finance and the Central Bank agreed to macroeconomic measures, such as reducing subsidies and increasing revenues, to stabilize the economy. The Central Bank was to raise the discount lending rate to reflect inflation. Fedorov's anticrisis program and the Government's accord with the Central Bank had some effect.
It also substantially moderated the expansion of credits during that period. The improvement figures were exaggerated, however, because state expenditures had been delayed from the last quarter of to the first quarter of In June , Chernomyrdin presented a set of moderate reforms calculated to accommodate the more conservative elements of the Government and parliament while placating reformers and Western creditors.
The prime minister pledged to move ahead with restructuring the economy and pursuing fiscal and monetary policies conducive to macroeconomic stabilization. But stabilization was undermined by the Central Bank, which issued credits to enterprises at subsidized rates, and by strong pressure from industrial and agricultural lobbies seeking additional credits. By October , inflation, which had been reduced by tighter fiscal and monetary policies early in , began to soar once again to dangerous levels.
Although experts presented a number of theories to explain the drop, including the existence of a conspiracy , the loosening of credit and monetary controls clearly was a significant cause of declining confidence in the Russian economy and its currency. In late , Yeltsin reasserted his commitment to macroeconomic stabilization by firing Viktor Gerashchenko , head of the Central Bank, and nominating Tatyana Paramonova as his replacement. Although reformers in the Russian government and the IMF and other Western supporters greeted the appointment with skepticism, Paramonova was able to implement a tight monetary policy that ended cheap credits and restrained interest rates although the money supply fluctuated in Furthermore, the parliament passed restrictions on the use of monetary policy to finance the state debt, and the Ministry of Finance began to issue government bonds at market rates to finance the deficits.
But this figure underestimates the size of the Russian economy. During most of , the government maintained its commitment to tight fiscal constraints, and budget deficits remained within prescribed parameters. However, in pressures mounted to increase government spending to alleviate wage arrearages, which were becoming a chronic problem within state enterprises, and to improve the increasingly tattered social safety net.
In fact, in and the state's failure to pay many such obligations as well as the wages of most state workers was a major factor in keeping Russia's budget deficit at a moderate level.
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Conditions changed by the second half of The members of the State Duma beginning in , the lower house of the Federal Assembly, Russia's parliament faced elections in December, and Yeltsin faced dim prospects in his presidential reelection bid. Therefore, political conditions caused both Duma deputies and the president to make promises to increase spending. In addition, late in Yeltsin dismissed Anatoly Chubais , one of the last economic reform advocates remaining in a top Government position, as deputy prime minister in charge of economic policy.
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In place of Chubais, Yeltsin named Vladimir Kadannikov, a former automobile plant manager whose views were antireform. This move raised concerns in Russia and the West about Yeltsin's commitment to economic reform. Another casualty of the political atmosphere was RCB chairman Paramonova, whose nomination had remained a source of controversy between the State Duma and the Government.
As of mid, four and one-half years after the launching of Russia's post-Soviet economic reform, experts found the results promising but mixed. The Russian economy has passed through a long and wrenching depression. But other major sectors such as agriculture, energy, and light industry also suffered from the transition. To enable these sectors to function in a market system, inefficient enterprises had to be closed and workers laid off, with resulting declines in output and consumption.
Analysts had expected that Russia's GDP would begin to rise in , but data for the first six months of the year showed a continuing decline, and some Russian experts predicted a new phase of economic crisis in the second half of the year. The pain of the restructuring has been assuaged somewhat by the emergence of a new private sector. Western experts believe that Russian data overstate the dimensions of Russia's economic collapse by failing to reflect a large portion of the country's private-sector activity. The Russian services sector, especially retail sales, is playing an increasingly vital role in the economy, accounting for nearly half of GDP in The services sector's activities have not been adequately measured.
Data on sector performance are skewed by the underreporting or nonreporting of output that Russia's tax laws encourage. An important but unconventional service in Russia's economy is "shuttle trading" — the transport and sale of consumer goods by individual entrepreneurs, of whom 5 to 10 million were estimated to be active in Traders buy goods in foreign countries such as China, Turkey, and the United Arab Emirates and in Russian cities, then sell them on the domestic market where demand is highest.
Shuttle traders have been vital in maintaining the standard of living of Russians who cannot afford consumer goods on the conventional market. However, domestic industries such as textiles suffer from this infusion of competing merchandise, whose movement is unmonitored, untaxed, and often mafia-controlled. The geographical distribution of Russia's wealth has been skewed at least as severely as it was in Soviet times.
By the mids, economic power was being concentrated in Moscow at an even faster rate than the federal government was losing political power in the rest of the country.
Economic history of the Russian Federation
In Moscow an economic oligarchy, composed of politicians, banks, businesspeople, security forces, and city agencies, controlled a huge percentage of Russia's financial assets under the rule of Moscow's energetic and popular mayor, Yuriy Luzhkov. Unfortunately, organized crime also has played a strong role in the growth of the city. Opposed by a weak police force, Moscow's rate of protection rackets, contract murders, kickbacks, and bribes — all intimately connected with the economic infrastructure — has remained among the highest in Russia.
Most businesses have not been able to function without paying for some form of mafia protection, informally called a krysha the Russian word for roof. Luzhkov, who has close ties to all legitimate power centers in the city, has overseen the construction of sports stadiums, shopping malls, monuments to Moscow's history, and the ornate Christ the Savior Cathedral. In Yeltsin gave Luzhkov full control over all state property in Moscow. Soviet media in transition: Request this item to view in the Library's reading rooms using your library card.
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