Fri, Apr 07, 2017 - Page 9 News List

Post-communist Russia stagnates under ‘illiberal democracy’

By Joseph Stiglitz

Today, a quarter-century after the Cold War’s end, the West and Russia are again at odds. This time, though, at least on one side, the dispute is more transparently about geopolitical power, not ideology.

The West has supported in a variety of ways democratic movements in the post-Soviet region, hardly hiding its enthusiasm for the various “color” revolutions that have replaced long-standing dictators with more responsive leaders — though not all have turned out to be the committed democrats they pretended to be.

Too many countries of the former Soviet bloc remain under the control of authoritarian leaders, including some, like Russian President Vladimir Putin, who have learned how to maintain a more convincing facade of elections than their communist predecessors.

They sell their system of “illiberal democracy” on the basis of pragmatism, not some universal theory of history. These leaders claim that they are simply more effective at getting things done.

That is certainly true when it comes to stirring nationalist sentiment and stifling dissent.

However, they have been less effective in nurturing long-term economic growth. Once one of the world’s two superpowers, Russia’s GDP is now about 40 percent of Germany’s and just more than 50 percent of France’s. Life expectancy at birth ranks 153rd in the world, just behind Honduras and Kazakhstan.

In terms of per capita income, Russia ranks 73rd in terms of purchasing power parity — well below the Soviet Union’s former satellites in Central and Eastern Europe.

Russia has deindustrialized: The vast majority of its exports now come from natural resources. It has not evolved into a “normal” market economy, but rather into a peculiar form of crony-state capitalism.

Yes, Russia still punches above its weight in some areas, like nuclear weapons, and it retains veto power at the UN.

As the recent hacking of the Democratic Party in the US shows, it has cyber capacities that enable it to be enormously meddlesome in Western elections.

There is every reason to believe that such intrusions will continue. Given US President Donald Trump’s deep ties with unsavory Russian characters, themselves closely linked to Putin, Americans are deeply concerned about potential Russian influences in the US — matters that might be clarified by ongoing investigations.

Many had much higher hopes for Russia, and the former Soviet Union more broadly, when the Iron Curtain fell. After seven decades of communism, the transition to a democratic market economy would not be easy.

However, given the obvious advantages of democratic market capitalism to the system that had just fallen apart, it was assumed that the economy would flourish and people would demand a greater voice.

What went wrong? Who, if anyone, is to blame? Could Russia’s post-communist transition have been managed better?

We can never answer such questions definitively: History cannot be rerun. However, I believe what we are confronting is partly the legacy of the flawed Washington Consensus that shaped Russia’s transition.

The framework’s influences was reflected in the tremendous emphasis reformers placed on privatization, no matter how it was done, with speed taking precedence over everything else, including creating the institutional infrastructure needed to make a market economy work.

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