The End of the Yeltsin Era

The End of the Yeltsin Era

The collapse of the Soviet Communist regime in 1991 is widely explained as the failure of a utopian experiment. In reality communism ceased to be much of an experiment within months after the October Revolution. The true failed utopian experiment was Russia’s adventure in free-market capitalism from 1991 until this year. The cumulative disaster of this course was evident early on to anyone not disabled by the ideological blinders of the Chicago School economists, but the crisis of August 1998 finally drove home (to everyone but President Clinton and his advisers, it seems) the futility of proceeding on the path of Yeltsin-style “reform.”

Russian economic policy under Boris Yeltsin, like the breakup of the Soviet Union, was driven neither by ideology nor by practicality, but rather by Yeltsin’s personal vendetta against Mikhail Gorbachev and a determination to undo everything the latter stood for. Having faced down the coup plotters of August 1991 and having presided over the collapse of Communist Party rule, Yeltsin embraced the free-market theory touted by Yegor Gaidar and the new school of Russian economists enthralled with the antigovernment doctrines of the Chicago School. Under Gaidar as the first postcommunist economic chief and acting prime minister, Russia launched into reform: price controls were removed, inflation soared, and state-owned assets were indiscriminately privatized, all to the advantage of former Soviet managers and the banking conglomerates that quickly sprang up. The disruptiveness of Gaidar’s reforms aroused the ire of the existing parliament—the Russian Supreme Soviet elected in 1990—and Yeltsin compromised in December 1992 by installing the former gas-industry minister Viktor Chernomyrdin as prime minister. Chernomyrdin was inclined to a centrist balance of markets and state management, but to keep his new job he had to bend to Yeltsin’s will throughout the crisis year of 1993.

A second, even harder-edged period of “reform” set in after Yeltsin blasted the old Parliament out of existence and imposed a Constitution made to order for his own authoritarian instincts. Nothing then stood between Russia and dictatorship. The newly elected Duma, though its majority were oppositionists of the Communist and nationalist persuasions, was virtually powerless, and the prime minister served at the pleasure of the president. The only thing that saved the country from the scenario of Napoleon III in France in 1851 or that of Augusto Pinochet in Chile in 1973 was the president’s state of health and his cycles of inactivity. Yeltsin turned economic policy over to the arch-privatizer and free-marketeer First Deputy Prime Minister Anatoly Chubais, and Chernomyrdin had to go along again despite repeated humiliations. He was tolerated as Chubais’s nominal chief and frontman, to avoid the confrontation with the Duma that the required confirmation of a new prime minister would provoke.

Under Ch...