I think one has to be fair to Sachs. He helped give the Russians in power at the time, Yegor Gaidar and company, what they wanted. Russia was ready to fall apart. And the oligarchs, waiting in the wings, were ready to snap up the most valuable pieces.
The following is from notes I took while in Russia on a study tour in 1995: "With the freeing of prices and creation of a market system (which began during Perestroika but which as accelerated during the more recent reforms - the so-called "shock therapy"), the importation of western goods literally exploded. But western goods could only be had at world prices, and if Russian consumers were to pay for them in rubles (for a time they had the option of paying in dollars, but that has now been closed off) they had to pay the ruble equivalent of the dollar price of the goods. What occurred was a very rapid fall in the exchange value of the ruble, a very rapid rise in consumer prices, and a levering up of incomes by whatever formal or informal means were available. The exchange value of the ruble plummeted and finally crashed on "black Tuesday", October 11, 1994, when it fell from 3,000R to 3,926R to the dollar. It continued to fall further, and by the beginning of June, 1995, had reached almost 5,000R to the dollar. "Where incomes were upwardly flexible, wages increased. But in most cases they were not very flexible, so wage earners had to resort to a variety of other means, generally referred to as "working in the shadow economy", to obtain enough income to survive. Where incomes were fixed, such as the incomes of pensioners, people literally fell out of the economy. Savings, which were adequate as a retirement nest-egg under the Soviet system, were wiped out by inflation. Many people had to resort to depleting their capital by selling anything of value, even their apartments (to which they had been granted title when it became obvious to the state that it could not maintain them) just to survive. "The inflation was greatly abetted by the high degree of monopolization in the Russian economy. The Soviet state had held a monopoly on all foreign trade, and when the importation of goods fell into a relatively few strategically placed private hands, large profits were pocketed. "As well as putting many people into personal crisis, the "shock therapy" reforms had a disastrous impact on industry. Industrial firms, which in the planned economy had also been buying from and selling to each other at artificially low prices, took advantage of their monopoly positions following the freeing of prices and tried to charge "what the traffic would bear". Many could simply not pay, and the inter-linked industrial system began to fray and fall apart: "A competitive market was missing--monopoly dictated prices--and there was no control over enterprise budgets because the state had lost influence over directors. The directors gave credit to each other in order to maintain production. "Cost-based pricing continued, and attempts to limit growth in the money supply failed "under pressure from the pro-inflationary behavior of enterprises that are oriented toward a rapid increase in productions costs and that take advantage of their monopoly position to pass on those costs... The natural result is massive non-payments." Glazyev saw a chain of deepening structural crisis, "irreversible, spontaneous destruction of non-raw-material production facilities ... deindustrialization ... mass unemployment and impoverishment." Rapid privatization could only make things worse by breaking up rational concentrations of production and cooperative arrangements. "According to Russian official data, GDP declined by 12% in 1993 compared with 19% in 1992. Industrial output in 1993 fell 16% with all major sectors taking a hit. Agricultural production, meanwhile, was down 6%. The grain harvest totaled 99 million tons - some 8 million tons less than in 1992." Ed Weick ----- Original Message ----- From: "Lawrence DeBivort" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Tuesday, September 02, 2003 5:15 PM Subject: RE: [Futurework] Sachs writes in FT > Yeah, he did. He forgot the rubble overhang.... So while his advice, > accepted, led the Russians to hyperinflation and the bankruptcy of millions > of their citizens and the formation of the oligarchs, Jeffrey got to zip off > to Columbia to preen himself there. > > Nor should we forget what his advice did to Argentina.... > > Can't say that I disagree with his big-picture take on Iraq, though. > > Cheers, > Lawry > > > -----Original Message----- > > From: [EMAIL PROTECTED] > > [mailto:[EMAIL PROTECTED] Behalf Of William B Ward > > Sent: Tue, September 02, 2003 4:40 PM > > To: [EMAIL PROTECTED] > > Subject: Re: [Futurework] Sachs writes in FT > > > > > > Keith, > > > > Of course Jeffrey kind of messed things up in Russia > > > > http://newdemocracyworld.org/sachs.htm > > > > Bill > > > > > > On Tue, 02 Sep 2003 10:33:36 +0100 Keith Hudson <[EMAIL PROTECTED]> > > writes: > > > A succinct letter in today's Financial Times: > > > > > > <<<< > > > Sir, I am not sure which is more frightening: a sexed-up dossier or > > > an > > > honest one that so terribly misjudged the situation. > > > > > > The Iraq war is an utter disaster -- fought on premises that were > > > not > > > correct, leading to a predictable explosion of violence not only in > > > Iraq > > > but throughout the Muslim world, at a price tag of $100 billion or > > > more > > > that would have been sufficient to fight malaria. Aids, TB and other > > > ills > > > that claim millions of lives every year, and in the service of > > > horribly > > > naive US ideas about securing Middle East oil. > > > > > > These are the matters for which President George W. Bush and Prime > > > Minister > > > Tony Blair should be gheld to account. > > > > > > Jeffrey D. Sachs, > > > Director, > > > Earth Institute, > > > Columbia University, > > > New York NY 10027, US > > > >>>> > > > > > > Keith Hudson, 6 Upper Camden Place, Bath, England, > > > <www.evolutionary-economics.org> > > > > > > _______________________________________________ > > > Futurework mailing list > > > [EMAIL PROTECTED] > > > http://scribe.uwaterloo.ca/mailman/listinfo/futurework > > > > > > > > > > ________________________________________________________________ > > The best thing to hit the internet in years - Juno SpeedBand! > > Surf the web up to FIVE TIMES FASTER! > > Only $14.95/ month - visit www.juno.com to sign up today! > > _______________________________________________ > > Futurework mailing list > > [EMAIL PROTECTED] > > http://scribe.uwaterloo.ca/mailman/listinfo/futurework > > > > _______________________________________________ > Futurework mailing list > [EMAIL PROTECTED] > http://scribe.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list [EMAIL PROTECTED] http://scribe.uwaterloo.ca/mailman/listinfo/futurework
