Continuity and Revolution in Russian Economy

Vladimir A. Mau

Working Center for Economic Reform (RF Government)

Institute for the Economy in Transition

1. The Logic of Transformation and the Logic of Development

Two major factors define the course of Russia’s development. One is universal: the mainstream trend manifesting itself in all, or almost all, countries in the world today. The other factor is the specific nature of Russia’s transition from communism. Consequently, it is possible to speak about two mutually defining processes that are at work in Russian society and economy today.

How exactly are these two factors working? What is the relative weight of the universal and the specific? These are the questions I intend to address in my paper.

2. The Universal Trend In Economic and Political Development

Modern history may be seen as the movement of countries and regions through three crises, or phases. The way they experience these crises, in large measure, defines their subsequent development. These three phases may be described as follows:

Countries that have undergone these crises possess specific common, or comparable, economic and social characteristics (e.g., the per capita GNP, literacy, share of agriculture in the GNP). A country’s history, then, may be measured not only by the simple chronological clock, but also by the socio-economic "clock" which gives us the basis for comparing it to other countries.

As the process of development has progressed throughout the world, as it has become globalized, the development of different countries may become synchronized, as may their experience of particular crises.

A country may experience two or more such crises simultaneously, a phenomenon that has as much to do with the country’s relative backwardness as with the globalization of the crisis of industrialism.

3. The Post-industrial crisis

"The third wave of democratization" (Samuel Huntington) corresponds to the third crisis of socio-economic development.

Russia’s present-day crisis may be seen as part of the universal crisis of transition to post-industrial society. What makes the Russian case different is the impact of the energy crisis on Russia’s development.

The confluence of these two factors helps explain the magnitude of the industrial production decline in Russia and serves also as an indicator for predicting future growth trends.

It also makes possible the use of the "socio-economic clock" in diagnosing Russia’s condition.

4. The Question Of Russia’s Peculiarity & Post-Communist Transformation

Looking for Russia’s unique traits is a favorite pastime of Russian historians and political scientists. But one can also look at Russia through the prism of the "Civilizations Approach." Two factors command attention: what appears as the universal laws of post-communist development and the specifics of the Russian case.

The standard laws of post-communist transformation may be defined as follows:

1. price liberalization and ending shortages of goods
2. the problem of non-payments
3. the monetary character of inflation

In other words, theses phenomena may be observed everywhere in the post-communist world and make possible comparison among different countries.

However, there also problems that are specific to Russia:

1. at the tactical level: persistence of inflation and the depth of the budget crisis
2. at the strategic level: the revolutionary nature of change in Russia

5. Peculiarity of Revolutionary Transformation

Change in Russia, by contrast with other post-communist countries, has been revolutionary in character.

1. Defining revolution. The inadequacy of the definition based on the use of violence.
2. The problem of changing of the elites. Continuity and renewal of the elites.
3. The problem of a weak state. A systemic transformation under the conditions of a weak state is precisely a revolutionary transformation.
4. The weak state and its impact on Russia’s present-day development. The laws, especially, economic laws of a revolutionary transformation.
5. The weak Russian state and how it may impact Russia’s future development (comparison with English, French, German history). The specific nature of post-revolutionary development: importance of social forces.

7. Conclusion

Alternative models of economic policy (economic growth). These models are well known and have a bearing on Russia as well: