The greatest failure of neo-liberal experiments came in Russia, traces David Priestland in ‘The Red Flag’ (www.landmarkonthenet.com). By 2000 Russia’s economy had shrunk to less than two thirds of its 1989 level – a more devastating recession than America’s Great Depression, he narrates.
“Rapid privatisation amounted to little more than the asset-stripping of state enterprises by government crony capitalists, and lawlessness deterred investment and encouraged capital flight. The problem lay, as before, in the weakness of the state, which could not raise taxes, impose legal norms and contracts, or prevent organised crime and bureaucratic-cum-capitalist larceny.”
The author paints the contrasting picture of countries where there was a reasonably strong state machine and where elites had already begun to disengage from Communism by the 1980s, such as Poland, Hungary, Slovenia and the newly split Czech Republic and Slovakia.
Here, the neo-liberal ‘shock therapies’ were largely implemented and were successful in restoring growth, although at the cost of poverty for many, he opines; “the promise of European Union membership – with its emphasis on the rule of law – also helped.”In much of the former Soviet bloc, states were already very weak and neo-liberal assaults on them merely enfeebled them further, Priestland chronicles. Governments lacked the power and authority to enforce market reforms and instead ‘kleptocratic economies’ emerged, as unhappy half-way houses between state control and the market, he notes.
“Businessmen and ex-officials soon ‘captured’ these struggling states, bribing officials to give them preferential treatment; taxes were left uncollected, foreigners refused to invest, and capital, rather than flowing in, poured out into shady offshore accounts.”
Detailed account.
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