powerful austerity measures designed to break spirals of very rapid inflation. More recently, it has been used as a blanket term for policies designed to reform the postsocialist economies of Eastern Europe and the former Soviet Union. The latter also is where the main controversies have arisen.
The divergence of opinion concerning reform policy can be attributed in large part to the disparate nature of the tasks involved. Setting out to break inflation is different from seeking to undertake a broad socioeconomic transformation from failed centrally planned economies into functioning market economies. Above all, the political implications are very different.
In a first stage, beginning after the fall of the Berlin Wall in 1989, postsocialist governments in Central Europe embarked on economic reform programs that featured rapid liberalization and broad-based privatization. It has been held by some that those who succeeded did so because they applied shock therapy. Others, notably so people from the region, have rejected such claims, arguing that foreign advice had little to do with their achievements.
The main test of shock therapy came in the first half of 1992, when the Russian government of Yegor Gaidar sought to implement rapid and radical systemic change. The bulk of all prices were liberalized and state owned enterprises were informed that their life support systems, in the form of direct financial links to the state budget, would be terminated.
It was believed that this “shock” to the system also would bring a form of therapy in its wake. As enterprise managers realized that they could no longer count on automatic subsidies from the state budget, they would be forced into producing goods that could be sold on real markets, at prices that would cover their costs. It was expected that within a period of one-half of one year or so the transition should be completed. From there on the Russian economy would be growing at a healthy pace, and no more foreign economic support would be needed.
By the summer of 1992 it became painfully evident that the project was failing. Enterprises had responded to the government’s austerity measures not by cultivating markets, but by developing a subsequently chronic practice of non-payments. Losses of government subsidies were met by reduced payments on due taxes and wages. Failures to receive payments from customers were met by refusals to pay suppliers. Reduced government orders were met by reductions in output, but could not result in closures since there was no bankruptcy law.
It was also clear that the associated ambitions of bringing stability to government finance had met with equal disaster. Inflation was spiraling out of control, ending up at well more than 2,000 percent for the year as a whole, and persistent deficits in the state budget would come to haunt the government for several years to come.
Ten years later the evidence remains fairly bleak. Between 1991 and 1998, the Russian economy lost around 40 percent of GDP and more than 80 percent of capital investment. There was mass impoverishment of the population, serious decay of the country’s infrastructure, and a general widening of the technology gap against the industrialized world. In August 1998, a brewing financial crisis produced a massive crash, leaving investors with tens of billions of dollars in losses.
In the policy debates that surrounded the initial failures of rapid systemic change, two different sides emerged. One side, representing many market analysts, argued that the reason behind the initial failures was linked to insufficient shock. In their view, the crash of 1998 actually was a good thing, laying the groundwork for the economic upturn in 2000 and 2001.
The other side, representing mainly non-economists and a minority of uninvolved academic economists, held that the policy of shock therapy as such has been at fault, and that a set of alternative policies would have allowed much of the destruction to be avoided. Today it would seem fair to say that the latter represents the majority view.
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See also: ECONOMY, CURRENT; GAIDAR, YEGOR TIMURO-VICH; PRIVATIZATION; YELTSIN, BORIS.
Aslund, Anders. (1995). How Russia Became a Market Economy. Washington, DC: Brookings Institution. Hedlund, Stefan. (1999). Russia’s “Market” Economy. London: UCL Press. Nelson, Lynn D., and Kuzes, Irina. (1995). Radical Reform in Yeltsin’s Russia. New York: M.E. Sharpe.
Shockworkers (udarniki), a term originating during the Russian Civil War to designate workers performing especially arduous or urgent tasks, reemerged during the late 1920s and was applied thereafter to all workers and employees who assumed and fulfilled obligations over and above their work assignments. The rise of the Stakhanovite movement in 1935 reduced the prestige of the shockworker title, and it all but disappeared during the late 1940s and early 1950s, only to resurface again under the guise of shockworkers of Communist labor. From about ten million in 1966, the number of such workers increased to 17.9 million in 1971 and twenty-four million (or twenty-six percent of all wage and salary workers) by 1975.
The checkered history of shockwork in the USSR faithfully mirrors changing approaches by the Communist Party to the task of mobilizing workers and stimulating their commitment to raising labor productivity. If during the Civil War it was associated with voluntary Communist Saturdays (subbotniki), then during the late 1920s it arose primarily among young industrial workers who were eager to demonstrate their skills on new equipment and methods of production. From 1929 onward, shockwork invariably was linked with socialist competitions in which brigades of workers overfulfilling production quotas or meeting other obligations assumed in competition agreements were rewarded with prizes and privileged access to scarce goods and services.
But as the number of shockworkers increased to slightly more than forty percent of all industrial workers, the value of the title became debased. Moreover, the brief period of extra physical exer1386 tion (known as “storming”) associated with shock-work was ill suited to complex and interrelated production processes. Shockwork became a regular feature of Soviet industrial and agricultural life in the post-Stalin era as a result of the responsibility placed on lower-level trade union, Komsomol, and party officials to exercise leadership and record progress along bureaucratically predetermined lines. Workers seeking to extract favors from these organizations or demonstrate their suitability for promotion into their ranks went along with the game. See also: INDUSTRIALIZATION, SOVIET; STAKHANOVITE MOVEMENT; SUBBOTNIK
BIBLIOGRAPHY
Kuromiya, Hiroaki. (1988). Stalin’s Industrial Revolution: Politics and Workers, 1928-1932. New York: Cambridge University Press.
(1905-1984), Russian writer and Soviet loyalist who won the Nobel Prize for literature in 1965.
Mikhail Sholokhov was born in the Don Cossack military region in 1905. During the civil war he joined the Bolsheviks, twice being on the verge of execution for his views. In 1922 he moved to Moscow to pursue a career as a writer. In 1924 he published his first short story and then published regularly throughout the 1920s. After 1924 he moved back to the Cossack regions to remain close to his stories.
The first volume of his most important work, the Quiet Flows the Don (Tikhii Don, 1928-1940) was published in 1928. It is a portrayal of the struggles of the Don Cossacks against the Red army in Southern Russia, and is noted for its objectivity and lack of positive Bolshevik characters. The work was an instant success. Sholokhov would publish three more volumes in the course of his lifetime. This work has been tainted by unsubstantiated claims of plagiarism.
His second major novel was the story of the triumph of collectivization in the early 1930s, entitled Virgin Soil Upturned (Podnyataya tselina, 1932-1960). This work was trumpeted as one of the masterpieces of Socialist Realism.
ENCYCLOPEDIA OF RUSSIAN HISTORY
Sholokhov joined the Communist Party in 1932 and was a loyal adherent to the party line for the rest of his
