| Periferiiny Kapitalizm (Peripheral Capitalism)|
By Grigory Yavlinsky
159 pages, Moscow: Integral-Inform, 2003 (in Russian)
In Russia, the pro-market economic determinism of the 1990s created
the illusion that capitalism's benefits would eventually produce a country
of staunch democrats. Instead, Russia's experience proved that economic
growth can trigger nationalist nostalgia for a long-past superpower role.
Derailed en route to democracy, Russia now sits idle in a way station
strength mingles with impotence, powerful bureaucracies constrain
authoritarian leadership, and thriving private businesses uneasily coexist
with state-run enterprises.
Of course, most transitional societies are hybrids of some kind. (Just
look at China.) But precisely what kind of hybrid is Russia? What path
President Vladimir Putin envision for the country in his second term?
he find the courage to undo the bonds between power and business, between
those who make the decisions and those who influence them? And what fate
awaits Russia if he does not?
Grigory Yavlinsky attempts to answer those questions in his book
Periferiiny Kapitalizm (Peripheral Capitalism). As a professional economist
and one of Russia's most prominent opposition leaders, he has both the
smarts and the street credentials to tackle these issues. Yavlinsky first
emerged as a promising young deputy prime minister in Russia's first
post-Soviet government in 1990, under then President Boris Yeltsin. In
bold and rare move, he later left the government voluntarily and led his
pro-democratic opposition Yabloko party into the Duma (Russian parliament),
where he spent a decade storming the barricades of Russia's soft
authoritarian rule. First, he presented the "500 Days" plan
to transform the
Soviet economy in 1990. In 1991, he crafted the "Grand Bargain,"
to incorporate Russia into global markets. And then came the "Nizhni
Novgorod Prologue" in 1992, which sought to implement bottom-up economic
reforms in Russia's regions without waiting for decisions from the Kremlin.
In addition to these large-scale initiatives, Yavlinsky authored a series
reformist laws, including an oil-production sharing agreement that won
praise of Western oil companies by insulating their investments from
fluctuating exchange rates and shifting tax regimes.
Indeed, Yavlinsky is popular among Western entrepreneurs, intellectuals,
and nongovernmental organizations. While much of Russia's political class
still speaks a statist dialect rooted in the belief that Russia is a unique
country destined to move in its own semiauthoritarian orbit, Yavlinsky
is one of the few who talks openly about the rule of law and the need
to integrate Russia into the global economy. Yet popularity abroad has
not translated into political success at home. Yavlinsky and his Yabloko
party failed to win a single seat in the December 2003 parliamentary elections.
They owed their defeat in part to Putin's power of incumbency. Opposition
parties get short shrift in the media because television and radio stations
are stacked with ostensibly neutral commentators who serve as little more
than mouthpieces for the Kremlin. Yet Yabloko also suffered from a popular
backlash against liberalism, which is forever linked in the minds of Russian
voters with the chaos and corruption of Yeltsin's quasi-reform era. In
effect, the Russian people blamed Yabloko for policies that the party
never implemented. "Our party's main problem is that we failed to
convince Russians that we are not these business-democrats who acted exclusively
in their own interests," acknowledged Yabloko Deputy Chairman Sergei
Ivanenko following the defeat.
Peripheral Capitalism appeared just before the elections and doubled
as the author's campaign manifesto. Its key argument rests upon a Lewis
Carroll-like conundrum that "Russian reality is capitalism and not
capitalism and not capitalism at all." Unlike its Soviet predecessor,
Russian economy is tied to world markets, but in Yavlinsky's view it
survives only on the most distant margins of the global economy. Despite
Putin's first-term pledge to dismantle the oligarchic economic system,
entire swaths of the Russian economy remain monopolized by tycoons, many
with insider ties to powerful bureaucrats who dominate sectors such as
agriculture, defense, oil, and natural gas. Little has changed since the
Stalinist era, Yavlinsky observes. Instead of planning the economy, the
government now manages business.
Likewise, Yavlinsky is unimpressed with Russia's economic growth,
which now hovers at around 5 percent of gross domestic product (GDP) per
year. Those gains, he notes, have less to do with Putin's policies than
rising oil prices. In fact, while Russia's State Statistics Committee
that the energy sector comprises only 9 percent of the country's GDP,
recent World Bank report estimates the figure is closer to 25 percent.
although oil revenues and Central Bank reserves may be at record highs,
resources are directed toward building a middle class or a high-tech sector
that would reduce dependence on commodity markets. Russia's economy today
displays "growth without development," Yavlinsky contends. Only
of the population enjoys an average, modern standard of living.
Can Russia's capitalism be brought in from the periphery? Yavlinsky
insists that economic reforms will continue to fail until "fundamental
political and institutional problems" are resolved. He proposes rolling
public servants' reach into the economy and divorcing judges from
prosecutors; an independent judiciary is the only guarantee of property
rights, the critical underpinning of a market economy. But any reform
will be doomed, Yavlinsky argues, without a party government that is more
accountable to the parliament and the people. He does not suggest a
super-empowered Duma; Russia has bad memories of the gridlock that prevailed
when Communist and leftist parties banded together to oppose reform efforts
in the early 1990s. Instead, he envisions checks and balances similar
those in France, where elected parties form the government, and executive
power is divided between a president and a prime minister.
Yavlinsky hardly lacks for good ideas. Yet, as all economists know,
there is little future for a product that has abundant supply but little
demand. Russian society is suffering from chronic reform fatigue after
enduring countless initiatives that produced many losers and just a handful
of winners. Among Russians, stability and order are the preferred options,
suggesting the possibility of yet another reformist experiment in
Russia-this time, with harsh authoritarianism. Without institutional
reforms, Russia is destined to remain on the periphery, growing more
disenchanted and hostile toward the West. In that sense, Yavlinsky's book
not just a blueprint for reform, but a warning of the dangers of inaction.
Lilia Shevtsova cochairs the Russian Domestic Politics and Political
Institutions Project at the Carnegie Endowment Moscow Center. She is the
author of Putin's Russia (Washington: Carnegie Endowment for International
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