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Keep Russian Capitalism Alive


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KEEP RUSSIAN CAPITALISM ALIVE

If elections were held now in Russia, a communist restoration would probably occur. The people swept back to power would not be the nouveau-communists now running Poland in a social democratic manner but the hard-line state planners of the cold-war era. Should Communist Party presidential candidate Gennady Zyuganov beat Boris Yeltsin in June, it would be the second time in a century that the transition to market capitalism was interrupted by communism before it could take root in Russian society.

It's easy to forget that Russia was moving toward a capitalist economy in the late 19th and early 20th centuries. The first interruption, the Russian Revolution of 1917, was marked by civil war and violence across Europe. A second interruption could do the same. The West must do all it can to prevent it.

There are eerie parallels. The Russian Revolution was backed by groups who lost out to new technologies, the opening of the economy to foreign trade and investment, and the rise of a private sector in a feudal society. A new class of rich entrepreneurs arose as traditional safety nets were torn apart. Set adrift, millions turned to political extremists for help. The historic resonance with 1996 is startling.

That is why, this time, it is critical for Russia to complete its transition to capitalism. Moscow is currently selling off state-owned assets. It is no surprise that the well-connected and powerful are reaping the benefits in an orgy of corruption. This happened in China, Mexico, and wherever state assets are privatized. When the U.S. federal government disposed of the frontier in the 19th century, a Wild West developed, with corrupt towns and cattle barons battling sheepherders and farmers for control. It took decades for the Texas Rangers and local sheriffs to build law and order.

Russia needs that kind of time. As bad as corruption is today, it is the path to a true market economy that can deliver what communism never could: living standards on a par with the West. Paradoxically, just as the communists appear ready to take over again, the economy is beginning to grow after years of decline. Yeltsin has succeeded in stopping Russia's hyperinflation. The ruble is finally stable. The country could see 3% growth in 1997 and 4% to 5% in 1998, providing jobs and income for those who lose out in the transition.


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