Chapter 1 Preface
When Russia emerged from the collapse of the Soviet Union and communism in 1991, many people predicted a bright future for the nation. Instead, the Russian people have endured numerous hardships as the nation has attempted to transform itself from a dictatorship into a democracy and from a command economy to a market economy. Russia’s gross domestic product (GDP) contracted by almost 50 percent during the 1990s. The savings of many people were wiped out by inflation and currency troubles, including a monetary crisis and devaluation of the ruble in August 1998. Sixty million people—about half the population—live below the official poverty line. Many workers have gone without a paycheck for months. The life expectancy in Russia has declined to levels comparable with some developing nations. Corruption within the government is widespread, and organized crime became an endemic and serious problem. Billions of dollars of capital have been taken from the country.
Many observers, both in and outside of Russia, have blamed reforms encouraged by the United States for Russia’s economic and social difficulties. With U.S. support and assistance, the Russian government under President Boris Yeltsin removed government controls on the prices of goods, made the ruble convertible to foreign currency, and placed state-owned companies and assets into private ownership. These so-called “shock therapy” reforms have been controversial. Critics charge that they have provided more shock than therapy and have enabled an oligarchy of businesspeople, former communist officials, and organized crime figures to cheaply obtain public assets and gain a stranglehold on Russia’s economy and government. Defenders of shock therapy, such as Harvard economist Jeffrey Sachs, argue that similar reforms have worked as intended in Poland and other countries, but that in Russia these reforms have not been implemented correctly or completely and have not been fully supported by other nations. The authors of the following viewpoints provide several perspectives on the origins of Russia’s social and economic troubles.