BORIS AND THE ECONOMISTS
BROOKS, DAVID
BORIS AND THE ECONOMISTS by David Brooks THESE DAYS, RUSSIA'S ECONOMY depresses everyone. But it's worth remembering that just a few years ago, it was a glamorous and promising story. In the early...
...Everything would gradually sort itself out...
...It's not clear that with a different set of Western advisers, or even no advisers at all, Russia would be in better shape than it is...
...He had already smashed what was left of the power of the Communist state...
...And the most famous and purportedly influential Western advisers were economists from the IMF and the universities...
...As Russian president, he backed the privatization plans, which, however insufficient in themselves, were the best hope for dispersing economic power...
...Foreigners always remarked on Russians' rudeness, which made life more brutal than in, say, Central Europe...
...David Brooks is a senior editor of THE WEEKLY STANDARD...
...And the president now seems sad and pathetic...
...In Russia in the early nineties, everyone understood the importance of establishing the rule of law, but somehow when discussion among the policy johnnies at places like Harvard's Kennedy School got going fast and furious, economic considerations always seemed more significant than cultural, moral, and political-theory questions...
...These people were like public-policy rock stars, and hordes of us reporters followed them around like groupies, hoping to get a smidgen of the wisdom they were pouring into the ears of the new Russian reformers...
...In his own earthy way, he understood how power could shift and flow, even if he never understood how capital could shift and flow...
...But once the marketplace got established, the efficient bureaucrats would thrive and the bumbling ones would go bankrupt...
...But somehow these cultural understandings were rarely factored into people's perception of the economic landscape...
...Privatization plans, currency plans, fiscal plans...
...Nonetheless, it is arguable that advice from law and order experts like FBI agents should have been given as much priority as advice from macro-economists...
...The magazine International Economy used to print plans side by side, and it was like looking at the gold-star book reports tacked up on the wall in a fifth-grade classroom...
...Lacking much economic knowledge, he at least knew how to deal with concentrated power...
...It is also deeply revealing of how our policy world works that in this great historic moment of the founding of a regime, the people who were most prominent in Russia and in the West were economic specialists...
...The oligarchs have won...
...Most of the economic advice was no doubt sound...
...Of course Yeltsin has failed...
...If you had stood up in a hard-currency restaurant in Moscow and bellowed, "Did anybody drop a plan for ruble convertibility in the lobby...
...But more embarrassing in hindsight was the amount of slavering attention that was given to all the different plans and their authors...
...The prevailing view in those years, as I recall it, was that of course the nomenklatura was enriching itself...
...In the years since, despite all his erratic behavior, Yeltsin has sometimes tried to break up the oligarchy (at other times, of course, he's clung to it for survival...
...And they had plans...
...Nor is there an obvious answer to the question, "What advice should have been given instead...
...The inhabitants didn't even trust one another enough to work together to make their common areas safe and habitable...
...Even the firing of the Chernomyrdin government five months ago can be seen as a last desperate effort to do that...
...It was economists in Russia like Yegor Gaidar who were the shining knights of reform...
...In the early nineties, when communism was freshly dead, Moscow was awash with Western experts telling the Russians how to reform their economy...
...But I suspect history will regard Boris Yeltsin as a giant...
...There was a huge and absurd gap between the specificity of their economic programs and the actual chaos of Russian life...
...When you went into a Russian apartment building, you'd notice the apartments were neat and nice, but the hallways were dark and stank of urine...
...But for a whole host of reasons, in part having to do with the cultural prejudices of our policy community, law and order didn't seem as pressing as monetary policy...
...Looking back, the person who had the best grasp of events may have been Boris Yeltsin...
...you would have seen everybody in the place dive for his briefcase...
...A few of the visiting profs used to talk like superstar surgeons rescuing their patients...
...Looking back, it was sheer hubris to think that a bunch of economists could reshape or even importantly influence the entire Russian economy...
...In retrospect, that reasoning seems painfully innocent...
...Well, things didn't work out the way we all envisioned...
...The false supposition was that the guys holding the press conferences were running the country...
...We didn't anticipate the extent to which a few rich oligarchs would grab everything and crush competition and change, the way in which thugs would stoop to kill bankers, the extent to which bribery and corruption would replace normal economic logic when it came to doing deals, the extent to which smart Russians would see that plunder was a good way to get rich while entrepreneurialism was fruitless...
...of course the top Commies were privatizing things to themselves...
...We also didn't appreciate how much cultural capital, in the form of basic qualities like trust, it takes to run a modern economy...
...Economics doesn't determine everything...
...Most important, the technocrats and their camp followers underestimated the human capacity for evil...
...A middle class would be established that would perpetually support reform...
...At bottom, he learned from the failure of Marxist theory...
...In the academic world especially, economists seem as hard-headed and self-confident as the political theorists seem detached and confused...
...There were relatively few of the sort of political generalists America was lucky enough to have on hand at its own founding, like Alexander Hamilton and James Madison...
Vol. 3 • September 1998 • No. 49
