Still In The Red. - Review - book reviews

Commonweal, Oct 8, 1999 by Susan McWilliams

Kapitalizm
Russia's Struggle to Free Its Economy
Rose Brady
Yale University Press, $30, 289 pp.
Russia under Western Eyes
From the Bronze Horseman to the Lenin Mausoleum
Martin Malia
Harvard University Press/Belknap,
$35, 514 pp.

Russia today is floundering. The "reforms" begun eight years ago have failed to bring stability, far from prosperity, and Russian citizens are fighting to survive amid vastly devalued currency, employers who don't pay wages, a nonexistent social net, money-laundering schemes abroad, and terrorist acts at home. Former Prime Minister Yevgeny Primakov, the one Russian politico who seemed likely to subdue the crisis, got his walking papers last summer and has formed an opposition party. President Boris Yeltsin, still in questionable health and coming to the end of his term, is butting heads with a hostile parliament.

From the Western perspective, Russia's disarray is disheartening. A few years ago, Russian reformers promised that their privatization push would soon bestow the gifts of market capitalism on citizens and investors alike. It would be a painful transition, they warned, but swift. The West- led by U.S. economists who helped engineer the reforms and the Clinton administration's resolute support-accepted this scenario. Now, as Russia's stores and factories empty once again, we must wonder what went wrong.

Rose Brady, Moscow bureau chief for Business Week magazine from 1989 to 1993, explains the immediate roots of this turmoil in Kapitalizm. Through interviews with both winners and losers in Russia's new capitalism, Brady constructs an absorbing story of Russia's reform attempts from 1991 to 1998. Hers is a sweeping saga, describing the political and personal travails of a country in transition. Most valuable, perhaps, is her in- depth coverage of the Vladimir Tractor Factory, which in its turbulent privatization serves as a microcosm for the whole nation. Vladimir's workers-turned-shareholders objected to placing competition over "deep personal contacts," electing to keep a Communist boss and resisting capitalist realities. Soon, after a stint of continued production without corresponding demand, the factory's resources disappeared, and a Harvard- educated director came in. But despite his ambition, Vladimir's new director struggled: Shoddy bookkeeping and poor planning had left the company $4 million in debt; half-finished tractors rusted on the assembly line while unneeded parts clogged warehouses; and Russia's massive interest rates prevented refinancing. With no market supports in place (such as worker protections, the promise of government bailout, or even an established banking system), Vladimir's director had to fire or give "extended vacations" to the majority of employees, impoverishing the factory-dependent community.

Brady has a talent for personalizing the plot, for bringing large issues down to their day-to-day operations, and she makes the crucial point that Russian capitalism, with its roots unavoidably set in Soviet soil, is a unique proposition-not at all identical to Western economic systems. (Hence, Kapitalizm.)

Brady's limitation, however, comes from the very same love of Russians and Russianness that allows her to chronicle the country so well. Her prognosis for the coming years, which she admits is rooted in sympathy for the reformers, may be unduly roseate. Even after describing the difficult tensions that plague Russia's political life, Brady, in her words, "still hoped for the liberal

alternative." That hope obscures, at times, the distinct possibility that Russia may turn back the clock.

Brady's story can be filled out, to a certain extent, by the themes in Russia under Western Eyes, Martin Malia's attempt to make sense of the relationship between Russia and the West. As Malia, professor emeritus of history at Berkeley, points out, Russia's place in the Western mind is inherently subjective. We tend to view Russia with romantic eyes, as either emerging hero or despotic villain. Time and again, Western thinkers have dramatized the turns of top-level Russian ideology and neglected empirical ambiguities.

In fact, as Malia's book illustrates, the West's current disillusionment with Russian reforms is not unfamiliar. In the first half of the eighteenth century, Russia came into favor with European philosophes, who idealized Peter the Great, Catherine, and their efforts to convert Russia into a "civilized" Western model. In a way that is eerily similar to recent celebrations, Westerners vaunted Russia's transformations on a fundamentally superficial level, ignoring the serfs, the corruption, the complexities. Inevitably, this kind of simplistic view, focused on the doings in Moscow and Saint Petersburg, withers when confronted with the sheer size, diversity, and entrenched beliefs of the Russian people. And it can only lead to disappointment.

It has been Russia's fate to suffer when people try to apply, more or less directly, ideologies or political institutions that are not appropriate to the nation. Just as it was inadvisable to apply Marxism, a Western European industrial theory, to a fundamentally agricultural society, it was inadvisable to apply capitalism to a country with a seventy-year Communist history. What has been created in Russia today is an oddly Marxist-tinged form of capitalism, which emphasizes economics as primary. It neglects the fact that capitalism has succeeded only in countries which have very elaborate political systems that support, and contend with, market forces.