stat counnnter

Wednesday, January 04, 2006

Putin's Russia

On December 27th Andrei Illarionov, Russian president Vladimir Putin's chief economic advisor, quit his post saying he could no longer support a government that was moving away from freedom. This was a sad event because there was hope among many that Russia might genuinely move to a capitalist economy. Unfortunately, it is not to be. Putin has been extending government control over more and more of the Russian economy every month. It looks to me like he has visions of creating a Soviet Union lite with himself as a Stalin mini-me. He was after all, the head of the Soviet KGB for awhile so he has a pretty good picture of what he wants to achieve.

By placing the economy under more government control he will be making the same mistakes his former masters made, throttling the productive effort of Russian citizens thereby stagnating the economy. What seems to be puzzling is that Putin witnessed first hand the collapse of the Soviet Union. He cannot be ignorant of the fact that it was the totalitarian control of everything that caused the collapse. All he has to do is look around and he will see that every nation that is freer is also more prosperous than his own. So why is he seemingly returning Russia to the failed policies of the past?

I don't know for sure but I do have a theory or two. For one I think, fear. I believe that Putin's KGB background is acting like a security blanket. A society ruled by force is what he is familiar with. He is comfortable in that context because he understands its workings. So the question becomes: why didn't he trust Illarionov to help him with setting up a capitalist Russia? Again I think, fear. As a KGB head, I would think, you learn not to trust anyone completely. Trusting someone else could mean your downfall if they are wrong or make mistakes.

It could also be that Putin is looking south. He sees China pulling itself in opposite directions. The Chinese dictators want to retain their total control yet have granted unprecedented freedom which has resulted in unprecedented prosperity for Chinese people. Putin knows this situation is unsustainable, that eventually something has to give. Either the government will launch a massive crackdown and revoke the freedoms thereby destroying the prosperity and in turn possibly sparking a massive revolt. Or, the dictators will have to surrender some of their power and become a limited government like a western democracy. Which ever way this works out it has a good chance of being bloody. Putin has to be looking at this and feeling--fear. He doesn't want to walk the same path. So he reaches for his security blanket--power.

I briefly thought it may have been Illarionov's fault for not convincing Putin of the rightness of a capitalist Russia. But then I wondered, if he fears unfamilier ideas, would Ayn Rand have convinced him? I doubt it. I don't think she'd even try.

It looks like the world will have to bide its time until Putin is replaced by someone more open to ideas. In the meantime it wouldn't hurt for the rest of the world to keep putting pro-capitalist pressure on Mr. Putin.


E.T. said...

I think you are misinformed. Putin is pursuing liberal economic policy at non-energy sector. Since the West is hostile to Russia and quick to exploit its weakness, Russia has no choice but to use its energy resource bargaining chips.

Mike N said...

I would like nothing better than for you to be right about Putin's liberal economic leanings. But I think if it were true Andrei Illarionov would have stayed.

I also think the characterization of the West as hostile to Russia is off the mark. Suspicious yes but hostile, I just don't see it.

Mike N