Should-Read: Joe Stiglitz attempts to diagnose the “Weimar Russia” that currently anxiously paces the global stage:

Joseph Stiglitz: Illiberal Stagnation: “What went wrong? Who, if anyone, is to blame?…–stiglitz-2017-04

…Could Russia’s post-communist transition have been managed better?… I believe what we are confronting is partly the legacy of the flawed Washington Consensus that shaped Russia’s transition. This 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…

Joe has long believed this. But I have never been able to see it. As I understand things, the moment that Yegor Gaidar and Boris Yeltsin decided that they needed to either (1) decontrol agricultural prices or (2) send the Red Army into the countryside to collect the harvest at gunpoint, the die was cast. They were not going to do (2): Lenin and Stalin had tried that, with very bad results. And once the die was cast, they needed to do two things at once, immediately:

  • Build the institutional infrastructure to make a market economy work, as Joe says.
  • Privatize Russian industry immediately in as distributed a fashion as possible, for otherwise the nomenklatura would tunnel all of the assets out of state-owned enterprises into their own newly-created shells and Russia would win up with an economy of Oligarchs.

Doing the first without doing the second would have landed us in something very like our current situation in terms of its disappointing aspects, and would have done so sooner…