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Further, its overall perspective is one of assuming that those who formed
the governments of the post-communist states had wide, even limitless,
scope to choose between a range of possibilities, from neo-liberalism to
the ‘communism without the party’ which the leaders of Belarus, and
some of the Central Asian states, now essay. Almost wholly lacking is
any sense of the crises which faced the post-communist governing
elites—especially those in the former Soviet states, confronted with the
collapse of an empire, a trading system, an industrial and economic
structure and a ruling party. This is not to deny that political choices
were made and that these were both conscious and decisive. Gowan,
however, implicitly denies the overwhelming importance of the pres-
sures of particular crises on the decisions that were made. For example,
the fact that many post-communist governments sooner or later raised
prices, usually to or near to market-clearing levels, pointed to the com-
mon crisis of subsidization—a crisis which had long existed under, and
sapped the remaining strength from, the communist regimes, but which
they had been unable to radically reform because they rightly feared that
their hold on power was too fragile to withstand the demand for a gen-
eral belt-tightening. Those which did not so raise prices have subsidized
basics as a more or less explicit indication that their governing elite will
retain the powers and privileges of an authoritarian state, granting cheap
minimal upkeep as such a state’s traditional concession to the populace.
In Gowan there is no recognition of such a crisis, nor of the trade-offs its
resolution demands: in his account, choice is a matter of good and bad
alternatives, almost—at times—between good and evil. In fact, ‘Shock
Therapy’ was much more than a series of desperate efforts to stem the
total collapse of state finances than a cocktail of measures freely chosen
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from a menu.
Nowhere is this duality between good and evil more apparent than in
Gowan’s brief excursion into Russian politics—that is, his use of the
conflict between Boris Yeltsin and the Russian Supreme Soviet in 1993
as an example of the legitimate protest by a democratic institution
against the effects of Shock Therapy, and its ruthless backing by
unbridled presidential power. In this passage, he most clearly chimes
with the views of the cprf and the Russian nationalists. It is not false to
say that their opposition to economic reform did in part come from
below: many of the Supreme Soviet deputies’ constituents—and it was a
partly democratic assembly, however much Yeltsin and others might
seek to portray it as wholly unrepresentative—were suffering from the
huge hike in prices which the January 1992 and subsequent price liber-
alizations had ushered in. But that was far from the limit of their opposi-
tion, or even the most important part of it. Absent from Gowan’s
narrative are the following facts:
In April 1993, fifteen months after radical reform began, both
Yeltsin and economic reform were backed in a popular referen-
dum.
The alliance of Supreme Soviet speaker Ruslan Khasbulatov and
Vice President General Alexander Rutskoi had continually reneged
on agreements made with Yeltsin.
The constitution which governed the Russian Federation, a
patched-up version of the Soviet-era Russian constitution, in effect
prescribed a struggle for power between the different levels of
authority in the trackless political desert which was post-commu-
nist Russia—since it did not endow any one level with a coherent
set of rights and duties.
The Supreme Soviet had not simply been asking Yeltsin to surren-
der—which Gowan denies they did—its leadership had been
actively pursuing his impeachment, and this months after the main
architect of Shock Therapy, Yegor Gaidar, had been dismissed by
Yeltsin and replaced by Victor Chernomyrdin.
The Supreme Soviet leadership had openly sought to build up an
independent armed force which, as the confrontation between it
and the President deepened, came under the leadership of self-
declared fascists.
The sins of the account are not only those of omission. Gowan says of
Yeltsin that he ‘responded to a march on a radio station with a military
assault on the Parliament building’. The ‘march on the radio station’ was
an armed attack, explicitly ordered by General Rutskoi, on the Central
Television station, following an assault on one of the buildings of the
Moscow mayoralty opposite the Supreme Soviet. I was a witness to all of
these events. There is a reasonable dispute as to how far the Supreme
Soviet deputies who remained in the building after it had been dissolved
by Yeltsin—unconstitutionally, as Gowan emphasizes—were deliber-
ately tempted by the pro-Presidential forces into armed insurrection. I
do not believe there is evidence to say that this was so: both Jonathan
Steele in Eternal Russia and Bruce Clarke in his recent An Empire’s New
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Clothes believe there is. But there is no dispute that the central feature of
the day, before units of the Russian army mounted an attack on the
White House, was not a ‘march on a radio station’.
Far more than any other Western advisor or institution, Sachs during the
years 1992–93 called for massive g7 assistance, opposed any attempts,
including these of the imf, to hold the rouble zone (the former Soviet
states) together, launched public and vitriolic attacks on those officials
he thought were opposing reform—most particularly Victor Gerash-
chenko, chairman of the Russian Central Bank from mid 1992 to
October 1994—and berated the communist, nationalist and other par-
ties in the Supreme Soviet for their efforts to oppose the reform measures,
especially privatization. He was a central figure in any narrative of these
years. But he is not what Gowan seeks to make him.
However, the largest puzzle about the Gowan piece is the fact that its
central contention appears to be, not just weak, but almost wholly
wrong. At the core of his intent is a desire to show that Shock Therapy
has wreaked most damage where it has been most slavishly followed. In
fact, those countries which have instituted some or other brand of it have
First, he says that gradualism produces better results than Shock Ther-
apy, contrasting the cases of Hungary and Romania: ‘Romania’, he says,
‘has revived far more strongly than wide-open Hungary or the Czech
Republic’. This is simply not so. On the latest figures, the ebrd’s—
which are an amalgam from the statistical authorities of the countries in
question, from the imf, the World Bank, the oecd and the unece—
Romania’s gnp over the years since 1990 shrank by 6, 13 and 10 per cent
to 1992, revived by 1 per cent in 1993, 3 per cent in 1994 and 4 per cent
in 1995. Hungary’s shrank by 4, 12, 3 and 1 per cent up to 1993, then
grew by 2 and 3 per cent in 1994 and 1995. In 1995, Romania’s gnp
stood at 81 per cent of what it was in 1989, while Hungary’s stood at 86
per cent.3 This does not show that Romania revived ‘far more strongly’
than Hungary.
In fact, the premise of the comparison is also debatable. Hungary has been
generally seen as—until the past year, under a government composed
mainly of former communists—balking many of the necessary stages of
Shock Therapy. Its privatization process only really went into gear last
year, trade restrictions were retained, though reduced, wage controls con-
tinued to 1993. Yet even leaving this aside, and treating it, as Gowan
does, as a prime example of Shock Therapy in the raw, it is clear that there
is no outcome of the kind he advertises. Hungary declined by signifi-
cantly less than Romania, and is growing insignificantly more slowly.
Second, he says that it will take the Central European countries twenty
years to return to the living standards of the last years of communism. We
should first remember that the last years of communism in Hungary and
Poland saw the regimes borrowing desperately to keep up consumption
levels, while the hard-line regimes of Czechoslovakia, East Germany,
Albania and Romania simply snapped—in differing ways—like the rigid
structures they were, once they were challenged to deliver higher stan-
dards. We should also note that, in all post-communist economies, the
official figures are distorted in two ways which have a similar result: the
gnp and consumption data were distorted upwards in the communist
period to show compliance with the plan and for propaganda reasons.
After communism, they tend to be distorted downwards, since much pri-
vate activity does not appear in statistics for tax-evasion reasons—this is
especially true in Russia and other post-Soviet states, and partially
explains why, when the gnp has more than halved, consumption, though
declining, has not followed it so sharply downwards. But these points
aside, the ebrd data show that Poland’s gnp in 1995 stands at 97 per cent
of 1989 levels, the Czech Republic’s at 85 per cent and Hungary’s, as
above, at 86 per cent. Even were the high (5 per cent plus) rates of growth
predicted for them not to materialize, they would recover 1989 levels by
2000, or a year or two after—five or six years from now, not twenty.
Finally, Gowan rightly highlights the misery visited upon the popula-
tions of the post-communist countries—with declining incomes and
standards of health, and rising unemployment and mortality rates. These
are certainly strongly present in the former Soviet Union, where male
mortality, having been near the mid-sixties a decade ago, is now at the
low figure of fifty-nine—the female rate is much higher, and indeed is
comparable with that of developed countries. This is the most poignant
and affecting part of the article for here, it seems, is the core of the mat-
ter: the West’s desire to slash and burn the post-communist economies is
so fanatically pursued that it results in the premature deaths of hundreds
of thousands of people who would otherwise have lived longer, more
healthily and more fully.
But, as far as one can tell, this is false. The countries which have not
undergone radical change, or which, like Russia, have begun it but not
followed through, prolonging an agony while delaying its relief, show
the worst results, in the social as in other spheres: those which have taken
the shock are now improving, and doing so strongly. Again, the latest
evidence ‘indicates that those countries that have moved most firmly in
transition and stabilization have suffered the lowest costs in the process
and are starting to see the rewards. These rewards have not come
instantly but they can and do begin to appear within two to four years of
decisive transition measures being implemented. While living standards
will take some time to recover, in historical terms four years must be
regarded as a remarkably short period for the returns on such a radical
economic and social change to begin to emerge. The arguments for fur-
ther advance of reform for countries in early stages of transition are now
observable and powerful’.4
And, directly to the social point, another passage from the same source:
‘all of the late and slower-reforming countries... have experienced a dra-
matic deterioration in social indicators since 1989. Far from improving
4 Ibid, p. 7.
127
these dimensions of the standard of living, it is clear that low or post-
poned market-oriented reform has been associated with a sharp deterio-
ration in indicators of social development. This superior performance of
the faster-reforming countries is of great significance. It translates into
large improvements for the population in social development in those
countries relative to [the slower movers].’5
For much of his argument, though not all of it, Gowan appears to accept
that the goal is and should be some form of capitalism: his argument
appears to be with the method chosen. There is thus no fundamental dif-
ference of view between him and those he criticizes as to eventual out-
comes: his concern is to reduce the costs, both to the industries and to the
population.
5 Ibid., p. 24.
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