Liberalization and its Consequences

Liberalization and its Consequences

A Comparative Perspective on Latin America and Eastern Europe

Edited by Werner Baer and Joseph L. Love

The essays in this volume describe, analyse and compare the achievements and the failures of societies that adopted market-based economies within a democratic polity after a long period of communist rule (Russia and Eastern Europe) or military authoritarianism (Latin America). Together, they also trace the rocky course of liberal economic policies over the whole twentieth century.

Chapter 9: The Russian oligarchs: not your typical robber barons

Marshall I. Goldman, Edmund Amann and Diane P. Koenker


Marshall I. Goldman I It is widely accepted that the transition, as it is called in Eastern Europe, or liberalization, as it would be in Latin America, will bring with it a reduced government involvement in economic matters and a more effective operation of the economy. By reducing the scope of political patronage, non-government and independent policymakers are more likely to base their decisions on economic rather than political or personal criteria.1 That brings with it greater efficiency, higher productivity and rates of economic growth, and more widespread prosperity. This does not guarantee a higher standard of living for everyone in a society, but that certainly is a possibility, and in many countries it has indeed happened. Just such expectations explain why, after the collapse of communism, Boris Yeltsin’s commitment to economic reform and a market were so widely applauded both within and outside Russia. The key elements of this reform effort, just as in other countries undergoing similar moves to the market, are price liberalization and the privatization of state assets. Since price reform and privatization are central to all such efforts, it might appear, superficially at least, that the process in Russia should not have been very different from what went on elsewhere in Eastern Europe and Latin America. However, this was definitely not the case. Seventy years of communism and the fact that the market in Russia had only just begun to take shape prior to World War I meant that the transition process would evolve in...

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