Russia Communism & the end of the Czar Gorbachev Yeltsin Putin – The return of the Czar?

End of the Czar By the end the Czarist rule, Russia’s economy was still pre-industrial –Low standard of living –2/3 of labor force was agriculture-based –Culturally fragmented 100 nationalities & languages Dispute over how to modernize –Model economy on the West (capitalism) –Build an alternative path (socialism/communism)

Bolsheviks won Marxism: capitalism will eventually fail b/c it exploits the proletariat (workers) –Profit is stealing from workers (surplus value--what they SHOULD get paid) –Leninism: Communist Party is the Vanguard of the Proletariat & will be catalyst for the revolution Basic Tenets of Communism –State ownership of the means of production –Central Planning – develops plans for production & economic growth –Democratic Centralism: everyone gives their input, but leaders make the decisions

Soviet Economy Soviet economy was in decline since 1970s –Had to import grain & meat for the first time up to 1/3 of the USSR’s farm output spoiled –Low standard of living Though some communist countries (like Czechoslovakia) had a decent standard of living

Gorbachev’s Reforms Perestroika—restructuring Cut subsidies; allowed free-market pricing Glasnost – openness More personal freedom to promote more individual initiative Had real debate & dissent Results –Inflation –Resurgent nationalism –Rise of criticism against govt Led to Coup attempt, blocked by Yeltsin Yeltsin dismembered the USSR

Russia under Yeltsin New Constitution –Strong President--can rule by decree appoints Prime Minister w/ Parliament’s approval –Bicameral Federal Assembly Council of the Federation –represents regions Duma –combo of proportional representation & Single-Member districts –Federal System Sent the military to attack the Duma

Economic Reforms Shock Therapy –Free market liberalization –Privatization (Klepto-capitalism) Wealth confiscation, not wealth creation Anything of real value was sold off to Yeltsin’s allies for a fraction of what it was worth Capital flight to the west --West was complicit in corruption Failure of Shock Therapy –1998 –Economic chaos (devalued ruble) 7 Oligarchs control ½ the economy Helped get Yeltsin elected –De-industrialization of Russia –Falling living standards

Putin -- Return of the Czar? Cracked down on corruption Arrested some of the oligarchs – –See photo on the next page Re-invaded Chechnya after series of 1999 apartment bombings in Moscow Economy has improved –Mostly due to higher oil prices Won re-election in 2004 –Still controls the media; many doubt it was a free & fair election

– The Economists’ view on Putin’s crackdown of the oligarchs

Problems today Fear is a major force in Russian politics –Falling standard of living –fear of poverty –Fear of crime & terrorism (blame Chechens) Lack of a democratic political culture –Putin has made his reputation as someone who will crack down on corruption Is popular despite not-so democratic credentials Environment – much of former Soviet bloc countries has this same problem Alcoholism