Russia in the Fall of 1997 (fwd)

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

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Date: Fri, 14 Nov 1997 21:42:31 -0400 (EDT)
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From: "LYNN TURGEON, PROFESSOR EMERITUS OF ECONOMICS, HOFSTRA UNIVERSITY, ECOELT@xxxxxxxxxxxxxxxx" <ECOELT@xxxxxxxxxxx>
To: POST-KEYNESIAN THOUGHT   <pkt@xxxxxxxxxxxxxxxx>
Subject: Russia in the Fall of 1997
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	Moscow authorities are doing their best to remove Lenin from the
contemporary Russian scene. His monument on Oktyabriaskaya Square remains in
the shadows in a city that at night reminds one of Disneyland with floodlights
everywhere even on the seven Stalinist skyscrapers which were formerly lit only
on special occasions. There has been no changing of the guard at Lenin's tomb
since 1993, and there is a serious threat to bury his body in St. Petersburg.
	Yet in one respect Lenin's ideas seem appropriate in describing the
contemporary Russian condiion, as observed on a three-week visit to Moscow,
Nizhnyi Novgorod, and the Upper Volga in September and October 1997. Lenin is
associated with the development of the so-called "law of uneven development,"
and the capitalist tendency for the rich (individuals or regions) to become
richer, sometimes at the expense of the poorer individuals or regions.
	After Lenin's death, the socialist Soviet Union set about to reverse
the above tendency of capitalism noted in Lenin's early 20th century writings.
The less developed Central Asian Republics could henceforth receive more
favorable treatment -- what we would label "affirmative action" today -- such
as considerably higher prices for their cotton exports. At the sametime,
Russian collective farmers gave up the cultivation of flax and were the source
of capital accumulation or industrialization that would make possible the defet
of the fascist invaders in World War II.
	After World War II, with the extension of the Soviet system to Eastern
Europe, the same Leninist principles would be used to hold back the relative
development of Bohermia and Moravia in order to permit the relatively faster
development of Slovakia, which before World War II was referred to as the "poor
man" of Europe.
	Within the postwar Soviet Union, higher priorities were assigned to
developing the newly added Baltic Republics and the new Moldavian Republic in a
futile ffort to build popular support for the Soviet system among peoples who
were more nationalist than socialist internationalist.
	In June 1991 I was asked to give a lecture at the relatively new
Klaepida University in Western Lithuania. When I advised them that their moves
towards independence would result in a cut in their standard of living as a
result of the elimination of affirmative action, they agreed that this would
result  but declared that it was a price worth taking.
	Since the ouster of Gorbachev and the break-up of the Soviet Union in
late 1991, capitalism has flourished in Moscow. Earlier that year when I
introduced "team teaching" at the Academy of Foreign Trade, there was no
mention of capitalism but only the market system which was on the "left"
politically More recently countries such as Hungary and Poland have dropped
this subterfuge and regard social democrats (former Communists) as the left and
the extreme free marketers as on the right. Both left and right basically
subscribe to the dictates of monetarism and the dictates of the
International Monetary Fund.
	On my latest 3-week trip to Moscow, Nizhnyi Novgorod and areas of the
Upper Volga in late September and early October, I was especially interested in
comparing present conditions with thoseexisting over the past years. I had
never been to Gorky or Nizhnyi Novgorod before since it was still aclosedcity
when I led an Upper Volga cruise in 1990. However, the relative success of
Nizhnyi Novgorod is attributed to the leadership of Boris Nemtsev, and was the
basis for Yeltsin's calling him to Moscow, where he has successfully come
across as a relatively honest politician.
	In general,Gorky (which is still used on rail tickets) was a huge
disappointment. a 24-hour MacDonalds and several"I love America" pizza houses
do not impress anyone watching changes in Moscow. More depressing were the
deterioratingconditions of Kostroma and Furmanov, which I had last seen in
1994.
	I had expected Ivanovo to be even sorse since it was the cener of the
Russian textile industry, which has been hard hit by the independence of
cotton-producing Uzbekhistan. Strangely, unlike Kostroma, Ivanovo had not
deteriorated over the past 3 years. I can only explain this in terms of its
high dependence ona military payroll connected with the maintenance of a large
military airport which still appears to be active. The positive or stabilizing
effect of military spending has apparently developed incapitalist Russia.
	The state farms in this area are dying on the vine since the members
have received no monetary payments for two years. Thus,they have reverted to
the old system of payment used before Khrushchev, the "trudoden'" method of
payment in kind that is completely demonetized.
	Conditions in the upper Volga remindedme of the Great Depression of my
youth."New Russians"or those gainingfrom capitalism are assisting their losing
relatives in evening out famiily development.In addition,automobile producers
such as the VAZ or Volga works near Nizhnyi Novgorod are being
forced to sell their cars on credit at very high real interest rates, something
that was non-existent in the chronic seller's market of the Soviet Union.
	As Janos Kornai has recognized, "a seller's market under the pervasive
conditions of socialist scarcity changed brutally to the "buyer's market"
inherent in capitalist competition."In the farmer's markets, rental space
is scarce in comparison to demand and farm products asre selling at lower
pricess, as
a reflection of the deflastion that the Yeltsin Depression has produced outside
the dynamic Moscow scene.            Lynn Turgeon


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--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx