Russia is ready to mark the 25th anniversary of economic liberalization, which took place immediately after the collapse of the Soviet Union. Why did it fail and what impact did it have on Russians?


Left-right: Russian journalist Timur Gaidar (1926-1999) and Russian economist Yegor Gaidar (1956-2009), the architect of the post-Soviet liberalization, joined a rally in Moscow in 1990. Photo: RIA Novosti

This December Russians will mark the 25th anniversary of the collapse of the Soviet Union. Shortly after, in early January 2017, the country will look back at the liberal economic reforms undertaken by prominent economist and intellectual Yegor Gaidar. The reforms sought to transform the Soviet-style command economy into a functioning market economy, as well as foster a harmonious transition.

However, these initiatives didn’t fulfill their goals and, moreover, disappointed many Russians. According to Alexei Levinson, social research director at Levada Analytical Center, in 1997 the majority of Russians — 57 percent — saw the reforms as harmful and deleterious. From their perspective, there was no need to conduct them. Even though the number of skeptics decreased in 2012 — down to 47 percent, the number of the supporters of the reforms is still miniscule. Only 4 percent of respondents supported the liberal initiatives of Gaidar. Why did these reform fail? Why don’t Russians support them? And how long is it necessary to wait to implement similar reforms in Russia? In an attempt to answer these questions, Russian economists and political experts came together at Carnegie Moscow Center in late October.

In general, the disappointment of Russians in the liberal reforms partly explains why liberal ideas are not popular in today’s Russia. One of the mistakes of the Russian reformers is that they didn’t take into account all the historical, social and cultural factors of Russian society. This is an especially important factor, given the fact that the reforms were conducted during the period of a real national emergency, according to Andrei Kolesnikov, the head of the Russian Domestic Politics Program at the Carnegie Moscow Center. It was a matter of keeping the entire country afloat economically.

However, one of the reasons why they failed is the policy of the authorities, which dragged their feet on implementing the reforms and debated them a lot, Kolesnikov said. Likewise, today’s fervent debates about Russia’s economic future between liberals and conservatives are hardly likely to lead to economic breakthroughs, according to him.

Dmitry Travin, an economist and a professor at the European University in St. Petersburg, agrees. He argues that the current authorities are not able to launch sweeping reforms. This means that Russia is expected to face stagnation or a period of gradual fading.

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Travin believes that the idea to liberalize the Russian economy was right and fair in its nature because these steps were supposed to improve the lives of ordinary Russians who “were interested in these reforms.” Yet, when implemented, they failed to meet the demands of the people and, instead, satisfied other interest groups.

To quote Travin, the problem stems from the fact that, historically, the Soviet economy was created to fulfill tasks that are incompatible with the principles of a market economy. These tasks primarily included the militarization of the country and the build-up of its military-industrial complex, which could not be incorporated into the new market economy. Millions of those involved in this field lost jobs after the implementation of the reforms and could not adjust to a new reality. No wonder, then, that many Russians criticized the reforms. It is a matter of perception within a rational behavioral framework: People remember a positive experience and associate it with the Soviet Union, when they had jobs, and remember the negative experience of living in a newly liberalized Russia.

The paradox is that these ideas were fair and convenient for the people, but they didn’t support the reforms conveying these ideas because they were among the losers, added Travin. However, when Russian President Vladimir Putin came to power, their well-being and incomes skyrocketed because of the rising price of oil.

Naturally, people came to conclusions that Putin was right, because their living standards improved, while Gaidar was wrong because his reforms provoked the crisis and unemployment. This is what has been misleading many people since the 2000s. The argument that Putin came to power at the right moment – when oil prices were very high — doesn’t work for dozens of millions who lost their jobs in the 1990s and survived the crisis. They were vulnerable to manipulation. This was the time when the Russian authorities launched an information campaign to impose ideological clichés on depressed people.

Cultural brainwashing

“For the last 25 years, there has been cultural indoctrination in Russia,” said Daniil Dondurey, a cultural critic and editor of Iskusstvo Kino (The Art of Cinema) magazine, pointing out that the Russian authorities, through television and movies, imposed a set of beliefs on Russians, while straddling between conservative and liberal values.

The current perception of Russians results from the hard work of the pro-government ideologues and spin-doctors, which Dondurey sees as “the producers” of ideological schemes, stereotypes, moral clichés and behavioral tactics.

Dondurey explained how the Kremlin has been using Russian history, philosophy and language to bring people together and promote its political goals. This trend received a second wind when Putin returned to the presidential office in 2012 and then introduced the term “state-civilization” during his address to the Federal Assembly.

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According to the expert, the concept of state-civilization permeates the Russian mentality and mindset and is seen as an essential part of the nation’s post-Crimea ideology, with people viewed as a tool in the hands of the government and the object of government policy. It is a situation, in which the national interests trump the interests and independence of the individual. Within such an ideological framework, the government is supposed to be the key value. It overshadows such important categories and values as “globalism,” “business,” “personal freedom” and so on. “People in Russia are perceived as the objects of the government’s guardianship,” said Dondurey.

They are not alive, they cannot dream and hope, or be in depression. They are just objects. This is how the Kremlin sees people, according to the expert. Any attempts to put into question the sacred nature of power and government will backfire in such a system.

Dondurey argues that the Russian authorities succeeded in building a post-Soviet economy, yet it works in accordance with peculiar Russian rules — the system of informal agreements, which are incompatible with a healthy market economy and Western values. In fact, the cultural brainwashing, undertaken by the authorities, aimed at refuting the European system, which fosters entrepreneurial culture and pays a great deal of attention to human personality, not to the government.

“Russian television serials have been portraying businessmen as villains and morally ugly creatures since the mid-1990s,” said Dondurey, adding that today many Russians don’t want to accept the European culture and are reluctant to see themselves as Europeans.

When more than 70 percent of Russians don’t trust other people, this means that doing business in Russia becomes increasingly challenging, the expert said.

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Distrust and devaluation of the truth

Thus, cultural brainwashing as well as general disappointment with liberal reforms leads to distrust in everything that is associated with the liberal agenda. However, Leonid Gozman, a democratic activist, argues that the snobbish attitude toward ordinary people by those who conducted reforms partly accounts for the fact that Russians view liberalization in an unfavorable way. The reformists didn’t meet the demands of the people, because they saw them as a mob that was incapable of understanding them. And this intellectual gap played its role.

Another problem that strengthened the distrust toward the liberal reforms among people is the fact that looking for the truth is no longer a primary goal for politicians and the population. “The value of trust is lost,” said Gozman. “People are coming up with their own worldviews that help boost their self-esteem.”

With the lack of tactical attempts to educate people and encourage intellectual work, the situation is hardly likely to change and the majority of the population remains apathetic, according to the experts. The state creates the illusory vision of honest democratic elections, while the population pretends to be law-abiding citizens going to vote at the polling stations, Dondurey concluded.