John Lloyd article on Russian collapse
lnp3 at SPAMpanix.com
Wed Aug 18 07:20:11 MDT 1999
I don't know how many people have read FT reporter John Lloyd's "The
Russian Devolution" in last Sunday's NY Times Magazine section yet, which
is online at
but it is really indispensable.
Some comments are in order. Lloyd portrays Joseph Stieglitz in highly
complementary terms, as somebody who warned that "shock therapy" would have
a devastating effect on the Russian economy before it was implemented.
Stieglitz emerges as somebody whose views on Russia are fairly
indistinguishable from Stephen Cohen's. On the other hand, Jeffery Sachs,
who pushed "shock therapy" on Russia in his official role as financial
adviser, and Lawrence Summers, acting in a similar capacity, are seen as
fairly villainous. Lloyd's message is that the Sachs-Summers strategy
resulted in a devastated Russia, the victim of a financial neutron bomb.
Buildings remained standing while people have been wiped off the face of
the earth. I would suggest, for reasons explained in the next paragraph,
that this policy was quite consistent with the class interests of western
Lloyd estimates that over the last seven years, up to 1/2 trillion dollars
in capital has disappeared from the former Soviet Union at the hands of
"byizhnesmen." The west loaned strategically placed managers cash in
exchange for shares in shaky "privatization" auctions, but the cash grew
wings and flew off. Isn't it entirely possible that one of the key elements
of the American bull market for the past 7 years is exactly this cash
infusion from a country which we in effect ran from the Kremlin? Yeltsin
emerges a complete lackey. If the whole idea was to drain Russia of
financial capital, what better mechanism than to keep him in office?
Ancillary to that question is the role of the Communist Party which comes
off as a neoliberal wannabee. At one point a group of western investors,
with George Soros acting as their gang-leader, is telling the Yeltsinites
that their days might be numbered because they lack the ability to keep the
"new Russia" sham alive. He warns them that the Communist Party might be a
better choice of western banks because they are not as blatantly corrupt.
Soros is quoted as saying "Boys, your time is over. You've had a few good
years, but now your time is up." The Yeltsinites decided to fight back and
threw millions of dollars into the old drunk's election campaign, openly
bribing journalists who were working for pro-Yeltsin media to begin with.
The article has a cautionary aspect. It is clear that what worries the west
is that the total collapse of the Soviet Union might usher in forces that
are beyond their control. When it is openly admitted everywhere that this
once powerful country suffered an economic collapse that percentage-wise is
equal to any collapse suffered during the Great Depression, nobody seems to
have the guts to discuss what would logically be the consequence: a massive
turn against the capitalist system such as occurred in the 1930s.
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