In personal consumption, the Soviet Union was 77th in the world in 1989. In 1989 the minimum pension was raised to 50 rubles in cities and 40 rubles on collective farms. A nurse after 40 years of work received a 70-ruble pension, but 31 percent of pensioners in cities and 84 percent in the countryside received less than 60 rubles a month. In all, 57 million Soviet citizens were at or below the level of “underprovisioning.” Pensioners were especially hard-pressed. figure was 15 percent.Īt the end of the 1980s, what was delicately called the “underprovisioning” threshold (the line between those who had enough to eat and those who did not) was set at 70 rubles a month. An average Soviet family with two full-time earners spent 59 percent of its income on food, at a time when the comparable U.S. A pair of women’s winter boots and a sheepskin parka (necessities in the Russian winter) cost 120 rubles and 800 rubles respectively.
Indeed, once market prices were introduced in 1992, 80 percent of these companies became bankrupt overnight.īut what about the sunny garden of Soviet socialism, in which there were no poor and hungry, we are told, and which Boris Yeltsin inherited, then wantonly despoiled? In 1989 the average Soviet salary was 200 rubles a month–$ 33 at the official exchange rate, $ 13 on the street. (Every third loaf of bread was made from imported grain.) But the enterprises that produced all this “wealth” could not survive without government subsidies. It is true that Soviet Russia’s GDP grew annually, as the country churned out millions of tons of steel for tanks, thousands of giant harvesters that cost a million rubles each and fell apart after one season, and fertilizer dumped in the millions of tons on exhausted fields to no effect whatsoever. Horrendous waste, obsolete equipment, and exceedingly low productivity left enterprises taking in more in raw materials and labor than their end product was worth.
But if in 1991 Russia rolled out between 5,000 and 7,000 heavy tanks at a cost of over $ 1 million each, and in 1997 it produced none, is the attendant “economic decline” or “de-industrialization” to be bemoaned–or celebrated?ĭuring the glasnost years of 1988-91, it emerged that most of the Russian economy was operating at a loss. Even if their figure is high, it should be obvious that after Yeltsin slashed defense funding by 90 percent, Russia’s industrial production and GDP were bound to shrink. Under the Soviet regime, a huge portion of the Russian economy was militarized–70 percent, according to recent statements by two of the most knowledgeable Gorbachev officials, Yevgeny Primakov (speaking before he became prime minister) and Alexander Yakovlev. The point about the decline of Russia’s industry and GDP is especially embarrassing. Yeltsin took over a Switzerland and, by his drastic and heartless free-market reforms, turned it into a Somalia. In this telling, subtle as agitprop, Russia amounts to seven fatcat oligarchs in a sea of starving children. Everyone but the handful of super-rich is worse off. The country’s industrial production and GDP have shrunk to half what they were in 1991. In most pundits’ view, market reform brought Russia only misery. maintain the democratic institutions installed by the most open and tolerant regime in Russia’s history, the Third Russian Republic, 1993-98–on how far back toward a socialist economy the public is willing to go. Yet both the radicalism and the staying power of the new economic policies will depend–assuming that Prime Minister Primakov et al. Already the old policies of low inflation, painful fiscal austerity, and tight money are being replaced by the printing of money, expansion of the public sector, state support for industry, and bloated government budgets. To be sure, the advent of the Primakov-Duma government marks a fundamental leftward shift of economic priorities. Like the Great Depression as depicted in Comintern propaganda, the crisis of August 17–the day that Moscow devalued the ruble, defaulted on domestic treasury bonds, and froze private foreign debt–is portrayed as an epochal event, a final verdict of failure on the Russian capitalist experiment. This summer’s financial crisis, we are told over and over, means the obliteration of all that has been accomplished in Russia in the past five years. Is there a usable free-market past somewhere under the debris from Russia’s financial meltdown? If the recent flood of media pontificating is to be believed, the answer is a resounding no.
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