IS RUSSIA A SPECIAL CASE, OR JUST A HARD CASE?

At a weekend conference of Slavists in Cambridge, England, economists discussed the status and prospects of the Russian economy. Debating the causes of Russia’s seven years of falling output, Vladimir Mau and Mario Nuti both addressed the perennial question: is Russia different? Both contended that it is not, but otherwise their accounts of Russia’s current problems differed sharply. Mau, deputy director of a Moscow think-tank headed by Yegor Gaidar, argued that political opposition had simply delayed Russia’s economic liberalization and financial stabilization. At every stage, he said, the advancement of reform had been forced to await shifts in political interests. In other words, the reformers had been trying all along to do the right thing, but were impeded.

Mario Nuti of the London Business School countered that Russian reforms were badly flawed from the start. Nuti described Russia’s success in lowering inflation as fraudulent, not because the statistics were cooked, but because the reduction of inflation to its current annual rate of about 18 percent was achieved by the government "not paying for what it bought:" that is, not paying government sector salaries and not paying factories for goods delivered. It was grotesque, Nuti declared, that the IMF stood by and applauded a "stabilization" achieved by such means. In forcing the population to "lend" to the state, the Russian government was behaving no better than the Soviet government used to when it forced the population to save by allowing chronic shortages to prevail.

Like other Russian reformers, Mau sees a recovery of the Russian economy as something that has been too long delayed but which is definitely on its way. Nuti, in contrast, continues to view Russia’s economic prospects as very uncertain. Growth might start soon, but so might disintegration. He warned against concluding that something between these two extremes is likely simply because it is in the middle. One extreme scenario or the other seemed to him to be more likely.

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