Insiders’ History. Armonk, NY: M. E.Sharpe. Hough, Jerry. (1997). Democratization and Revolution in the USSR, 1985-1991. Washington, DC: Brookings Institution Press.
The label applied to a group of moderate Russian Social Democrats at the end of the nineteenth and the beginning of the twentieth century.
An offshoot of the legal Marxists, the economist group emphasized the role of practical activity among industrial workers. According to their theories, activism at the rank-and-file level would lead to social change: Agitation for a ten-hour day, limitation on fines for petty infractions, better sanitation in the workplace, and so forth would ignite conflict with tsarist officialdom. Class conflict would provoke revolutionary political demands and eventually lead to a bourgeois-liberal revolution, which all Russian Marxists of the time thought necessary before the advent of socialism. For the time being, though, these economist Marxists were willing to follow worker demands rather than impose an explicitly socialist agenda on the laboring class. Workers involved themselves in strikes, mutual aid societies, and consumer and educational societies to raise their class consciousness. Thus this faction criticized the leading role assigned to the revolutionary intelligentsia by scientific Marxists such as Georgy Plekhanov and Pavel Axelrod.
Organized as the Union of Social Democrats Abroad, the economists published the newspaper Rabochaia Mysl from 1897 to 1902 in St. Petersburg, Berlin, and Warsaw. While mostly concerned with worker grievances and local conditions, this newspaper (at first produced by St. Petersburg workers) did bring out a “Separate Supplement” in issue 7, written by Konstantin Takhtarev, that was critical of the more radical Marxists. The economists also sponsored the journal with a more political and theoretical character: Rabochee Delo, published from 1899 to 1902 in Switzerland. Economism is sometimes linked to the leading German revisionist Marxist Eduard Bernstein (1850-1932).
In 1899 one of the economists, Yekaterina Kuskova, wrote a “Credo,” which came to the attention of Vladimir Ilich Lenin, who penned a protest the same year. That group’s practical and local emphasis continued to be attacked, somewhat unfairly, by Lenin and his supporters in Iskra (Spark) and later in “What Is to Be Done?” (1902). Lenin argued that the opportunist notions of economism, as opposed to his revolutionary activism, justified a split in Russian Social Democracy the following year.
Several of the leading economists, for example, Sergei Prokopovich, later became liberals, like the more famous legal Marxist Peter Struve. Both Prokopovich and Kuskova became anticommunists and participated in an emergency relief committee during the 1920-1921 famine. Soon afterward they were arrested in the general crackdown on Lenin’s opponents. See also: LENIN, VLADIMIR ILICH; MARXISM
BIBLIOGRAPHY
Harding, Neil. (1977). Lenin’s Political Thought, vol. 1. London: Macmillan. Lenin, Vladimir Ilich. (1978). Collected Works, vol. 4. Moscow: Progress Publishers.
Establishing a market economy and achieving strong economic growth remained Russia’s primary concerns for more than a decade after the breakup of the Soviet Union in 1991. By the middle of the decade, Russia had made considerable progress toward creating the institutions of a marECONOMY, POST-SOVIET ket economy. Although the process of privatization was flawed, a vast shift of property rights away from the state toward individuals and the corporate sector occurred. The main success of economic reforms were macroeconomic stabilization (gaining control over the inflation, relative reduction of government deficit, and so forth) as well as initial steps toward creating a modern financial system for allocating funds according to market criteria. The banking system was privatized, and both debt and equity markets emerged. There was an effort to use primarily domestic markets to finance the government debt.
In contrast to other ex-Soviet countries in Central Europe, Russia could not quickly overcome the initial output decline at the beginning of market reforms. Russia’s economy contracted for five years as the reformers appointed by President Boris Yeltsin hesitated over the implementation of the basic foundations of a market economy. Russia achieved a slight recovery in 1997 (GDP growth of 1%), but stubborn budget deficits and the country’s poor business climate made it vulnerable when the global financial crisis began in 1997. The August 1998 financial crisis signaled the fragility of the Russian market economy and the difficulties policymakers encountered under imperfect market conditions.
The crisis sent the entire banking system into chaos. Many banks became insolvent and shut down. Others were taken over by the government and heavily subsidized. The crisis culminated in August 1998 with depreciation of the ruble, a debt default by the government, and a sharp deterioration in living standards for most of the population. For the year 1998, GDP experienced a 5 percent decline. The economy rebounded in 1999 and 2000 (GDP grew by 5.4% in 1999 and 8.3% in 2000), primarily due to the weak ruble and a surging trade surplus fueled by rising world oil prices. This recovery, along with renewed government effort in 2000 to advance lagging structural reforms, raised business and investor confidence concerning Russia’s future prospects. GDP is expected to grow by over 5.5 percent in 2001 and average 3-4 percent (depending on world oil prices) from 2002 through 2005. In 2003 Russia remained heavily dependent on exports of commodities, particularly oil, natural gas, metals, and timber, which accounted for over 80 percent of its exports, leaving the country vulnerable to swings in world prices. Macroeco-nomic stability and the improved business climate can easily deteriorate with changes in export commodity prices and excessive ruble appreciation. Additionally, inflation remained high according to international standards: From 1992 to 2000, Russia’s average annual rate of inflation was 38 percent. Russia’s agricultural sector remained beset by uncertainty over land ownership rights, which discouraged needed investment and restructuring. The industrial base was increasingly dilapidated and needed to be replaced or modernized if the country was to achieve sustainable economic growth.
Three basic factors caused Russia’s transition difficulties, including the absence of broad-based political support for reform, inability to close the gap between available public resources and government spending, and inability to push forward systematically with structural reforms. Russia’s second president, Vladimir Putin, elected in March 2000, advocated a strong state and market economy, but the success of his agenda was challenged by his reliance on security forces and ex-KGB associates, the lack of progress on legal reform, widespread corruption, and the ongoing war in Chechnya. Despite tax reform, the black market continued to account for a substantial share of GDP. In addition, Putin presented balanced budgets, enacted a flat 13 percent personal income tax, replaced the head of the giant Gazprom natural gas monopoly with a personally loyal executive, and pushed through a reform plan for the natural electricity monopoly. The fiscal burden improved. The cabinet enacted a new program for economic reform in July 2000, but progress was undermined by the lack of banking reform and the large state presence in the economy. After the 1998 crisis, banking services once again became concentrated in the state- owned banks, which lend mainly to the business sector. In 2000 state banks strengthened their dominant role in the sector, benefiting from special privileges such as preferential funding sources, capital injections, and implicit state guarantees. Cumulative foreign direct investment since 1991 amounted to $17.6 billion by July 2001, compared with over $350 billion in China during the same period. A new law on foreign investments enacted in July 1999 granted national treatment to foreign investors except in sectors involving national security. Foreigners were allowed to establish wholly owned companies (although the registration process can be cumbersome) and take part in the privatization process. An ongoing concern of foreign investors was property rights protection: Government intervention increased in scope as the enforcement agencies and officials in the attorney general’s office attempted to re-examine priECONOMY, TSARIST vatization outcomes. The most significant barriers to foreign investment and sustainable economic growth continued to be the weak rule of law, poor infrastructure, legal uncertainty, widespread corruption and crime, capital flight, and brain drain (skilled professionals emigrating from Russia). See also: BLACK MARKET; FOREIGN DEBT; PUTIN, VLADIMIR VLADIMIROVICH; RUSSIAN FEDERATION
BIBLIOGRAPHY
Gregory, Paul R., and Stuart, Robert C. (2001). Russian and Soviet Economic Performance and Structure. Boston, MA: Addison Wesley. Gustafson, Thane. (1999). Capitalism Russian-style. Cambridge, UK: Cambridge University Press.
