Russia's agony - economic crisis - Editorial

Progressive, The, Oct, 1998

A joke currently making the rounds goes as follows: It took Russia seventy years to become completely disenchanted with Communism. But it took just seven years to become completely disenchanted with capitalism.

Free-market cheerleaders in the United States should pause a moment to reflect on the meaning of the current Russian disaster. After emerging from decades of repressive Communist rule, Russia found itself pushed to the opposite extreme by the United States and the International Monetary Fund. The results have been catastrophic. David Kotz, a Russia expert and a professor of economics at the University of Massachusetts at Amherst, points out that the nation's output has fallen by half over the last seven years; money is so scarce that half of all economic transactions are conducted through barter; and the former Soviet Union's most valuable properties now belong to a small group of influential insiders, while the majority of the population has been plunged into poverty.

So what did President Clinton do when he visited Russia, in the midst of that country's darkest hour? He proclaimed that Russia must go forward with its economic "reforms" at all costs.

"This is not an American agenda. These are imperatives of the global marketplace," he said. As if Russia were suffering from a natural, rather than a man-made disaster, Clinton denied culpability for policies the U.S. government, through the IMF, has deliberately imposed on Russia as a condition of aid, and called for more of the same bitter medicine.

"The IMF's plan is similar to a demand that, at the depth of America's Great Depression, our government should have cut public spending, raised taxes, and restricted credit," Kotz points out. "Any elementary economics textbook teaches that such policies only make a depression worse. Russia needs a New Deal, not an old Herbert Hoover plan."

And it needs new leadership. But Clinton still sides with Boris Yeltsin.

"Bill supports his friend Boris to this day ... in spite of demonstrations and strikes throughout Russia demanding Yeltsin's resignation," writes Boris Kagarlitsky, a sociologist who lives in Moscow. "Yeltsin is hastily reorganizing the security forces. Newspapers are reporting that the successor organizations of the KGB are investigating the labor movement, opposition activists, environmentalists, and other dissidents.... The police are being instructed in how to combat strikers." It is inhumane for the United States to continue obdurately pushing the failed economic "reforms" on the Russian economy. And it is downright foolish to ignore the possible consequences. The world cannot afford to let a major nuclear power disintegrate into anarchy.

The Western nations should band together and buy, at top dollar, every ounce of plutonium and other nuclear-weapons technology remaining.

In the interest of peace and security, the United States should also offer financial aid, but without the conditions of belt-tightening policies that have helped bring Russia to the brink. It is not too late to rethink the wisdom of free-market boosterism.