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Thats an interesting perspective. Why don’t you agree that the privatization was a reaction to a failing system? Surely if command economics had been successful

Thats an interesting perspective. Why don’t you agree that the privatization was a reaction to a failing system? Surely if command economics had been successful they wouldn’t have felt the need to privatize?

rtsil 6y ago
I'm far from an expert on this, but the reason could be that back then, "democracy" and free market without State intervention were presented as inseparable parts of the same package.
- chordalkeyboard 6y ago
  That just moves the question to why people would want a democracy if they had a state controlled economy that provided for their needs and prevented them from capitalist exploitation? The point here is that soviet economic collapse as a historical event preceded the shock privatization* despite what command economy apologists might claim. *free market proponents shouldn’t defend the sale of state assets to oligarchs when those assets were formerly expropriated. The title is encumbered by the previous misdeeds.
  - rtsil 6y ago
    There is no dispute that the Soviet state-driven economy was totally inadequate in providing for the needs of its people and that led to its collapse. I think there is also no dispute that the wave of privatizations that followed the end of USSR led to an even economically worse situation for the Russian state. The fact that said privatizations were merely a transfer of State assets to a small group of private individuals for pennies on the dollar is a signifiant factor of that. What's less clear to me is why privatization was the chosen direction instead of a more dirigist approach, and I posit that the reason is the prevailing dogma back then (as promoted by such institutions as the IMF or the World Bank) was that democracy equals free market economy equals prosperity, so the Soviet people naturally believed democracy would be the solution to their economic problems. Had they been aware of an alternative way to prosperity (aka the Chinese way), I don't know if they would have adopted democracy (or what passed for democracy in Eltsine and Putin's Russia) or free market economy.
    - chordalkeyboard 6y ago
      > I think there is also no dispute that the wave of privatizations that followed the end of USSR led to an even economically worse situation for the Russian state. The fact that said privatizations were merely a transfer of State assets to a small group of private individuals for pennies on the dollar is a signifiant factor of that. I'm not sure how to parse this. Certainly I can agree that there is something morally wrong about the process of expropriating assets, mismanaging them, and then transferring them to politically connected people. However the economy now meets the needs of the people better than it did when it was state-owned, and the Russian state is made of people, it has no interests apart from the people who constitute it. If you're presenting a command economy that can't feed its people and a crony economy that does a better job feeding people, I think most people would choose the option where they get fed. > What's less clear to me is why privatization was the chosen direction instead of a more dirigist approach, and I posit that the reason is the prevailing dogma back then (as promoted by such institutions as the IMF or the World Bank) was that democracy equals free market economy equals prosperity, so the Soviet people naturally believed democracy would be the solution to their economic problems. I doubt the people had much say in the matter either way.
akiselev 6y ago
The people who pushed privatization were the ones who personally benefited the most from it. It went from semi-incompetent central command to completely incompetent private cronies with baked in government support in the form of contracts, outright thuggery, and geopolitical might. Sure they got cleaner pricing signals, but they lost everything that made them competitive. At this point, most of the privatized industry that remains is largely rent seeking (telecom et all), resource extraction, and the military industrial complex. The argument is that what the USSR experienced is an accelerated version of what we're seeing in the US, since it didn't have the other social institutions to make the transition. The free market didn't win, it just paused its ambitions to cannibalize the only competition before continuing on the same destructive path that the USSR economy speed ran in the 80s.
- chordalkeyboard 6y ago
  > semi-incompetent central command to completely incompetent private cronies with baked in government support in the form of contracts, outright thuggery, and geopolitical might. this doesn't exactly make sense when the people you call semi-incompetent were unable to meet basic standards of the modern world with their dictatorial powers and the crony economy that replaced them was able to rebuild the capital assets and replace them. > they lost everything that made them competitive. they were not competitive at the time according to practically everyone. > most of the privatized industry that remains is largely rent seeking (telecom et all), resource extraction, and the military industrial complex. why was a command economy unable to make extractive and rent-seeking enterprises work? why was a market economy able to sustain a military industrial complex (which is wholly parasitical) when a command economy was not? > The argument is that what the USSR experienced is an accelerated version of what we're seeing in the US, this is because the US is a mixed economy, not a market economy. the same process of parasitic institutions strangling the productive institutions is at play, it only takes longer because there are more productive institutions and fewer parasitic institutions in a mixed system than a command system. > The free market didn't win, it just paused its ambitions to cannibalize the only competition before continuing on the same destructive path that the USSR economy speed ran in the 80s. of course the free market didn't win because there was no free market competing. the mixed economy outcompeted the command economy because the market portion produced more value and the command economy choked on its own inability to effectively allocate capital. It is true that people who had the money came from market institutions and purchased formerly public assets in the former USSR. This suggests the question: Why were they able to purchase these assets and why didn't representatives of the command economy purchase the (private) capital assets in the west?

rtsil 6y ago

I'm far from an expert on this, but the reason could be that back then, "democracy" and free market without State intervention were presented as inseparable parts of the same package.

chordalkeyboard 6y ago
That just moves the question to why people would want a democracy if they had a state controlled economy that provided for their needs and prevented them from capitalist exploitation? The point here is that soviet economic collapse as a historical event preceded the shock privatization* despite what command economy apologists might claim. *free market proponents shouldn’t defend the sale of state assets to oligarchs when those assets were formerly expropriated. The title is encumbered by the previous misdeeds.
- rtsil 6y ago
  There is no dispute that the Soviet state-driven economy was totally inadequate in providing for the needs of its people and that led to its collapse. I think there is also no dispute that the wave of privatizations that followed the end of USSR led to an even economically worse situation for the Russian state. The fact that said privatizations were merely a transfer of State assets to a small group of private individuals for pennies on the dollar is a signifiant factor of that. What's less clear to me is why privatization was the chosen direction instead of a more dirigist approach, and I posit that the reason is the prevailing dogma back then (as promoted by such institutions as the IMF or the World Bank) was that democracy equals free market economy equals prosperity, so the Soviet people naturally believed democracy would be the solution to their economic problems. Had they been aware of an alternative way to prosperity (aka the Chinese way), I don't know if they would have adopted democracy (or what passed for democracy in Eltsine and Putin's Russia) or free market economy.
  - chordalkeyboard 6y ago
    > I think there is also no dispute that the wave of privatizations that followed the end of USSR led to an even economically worse situation for the Russian state. The fact that said privatizations were merely a transfer of State assets to a small group of private individuals for pennies on the dollar is a signifiant factor of that. I'm not sure how to parse this. Certainly I can agree that there is something morally wrong about the process of expropriating assets, mismanaging them, and then transferring them to politically connected people. However the economy now meets the needs of the people better than it did when it was state-owned, and the Russian state is made of people, it has no interests apart from the people who constitute it. If you're presenting a command economy that can't feed its people and a crony economy that does a better job feeding people, I think most people would choose the option where they get fed. > What's less clear to me is why privatization was the chosen direction instead of a more dirigist approach, and I posit that the reason is the prevailing dogma back then (as promoted by such institutions as the IMF or the World Bank) was that democracy equals free market economy equals prosperity, so the Soviet people naturally believed democracy would be the solution to their economic problems. I doubt the people had much say in the matter either way.

akiselev 6y ago

The people who pushed privatization were the ones who personally benefited the most from it. It went from semi-incompetent central command to completely incompetent private cronies with baked in government support in the form of contracts, outright thuggery, and geopolitical might. Sure they got cleaner pricing signals, but they lost everything that made them competitive. At this point, most of the privatized industry that remains is largely rent seeking (telecom et all), resource extraction, and the military industrial complex. The argument is that what the USSR experienced is an accelerated version of what we're seeing in the US, since it didn't have the other social institutions to make the transition. The free market didn't win, it just paused its ambitions to cannibalize the only competition before continuing on the same destructive path that the USSR economy speed ran in the 80s.

chordalkeyboard 6y ago
> semi-incompetent central command to completely incompetent private cronies with baked in government support in the form of contracts, outright thuggery, and geopolitical might. this doesn't exactly make sense when the people you call semi-incompetent were unable to meet basic standards of the modern world with their dictatorial powers and the crony economy that replaced them was able to rebuild the capital assets and replace them. > they lost everything that made them competitive. they were not competitive at the time according to practically everyone. > most of the privatized industry that remains is largely rent seeking (telecom et all), resource extraction, and the military industrial complex. why was a command economy unable to make extractive and rent-seeking enterprises work? why was a market economy able to sustain a military industrial complex (which is wholly parasitical) when a command economy was not? > The argument is that what the USSR experienced is an accelerated version of what we're seeing in the US, this is because the US is a mixed economy, not a market economy. the same process of parasitic institutions strangling the productive institutions is at play, it only takes longer because there are more productive institutions and fewer parasitic institutions in a mixed system than a command system. > The free market didn't win, it just paused its ambitions to cannibalize the only competition before continuing on the same destructive path that the USSR economy speed ran in the 80s. of course the free market didn't win because there was no free market competing. the mixed economy outcompeted the command economy because the market portion produced more value and the command economy choked on its own inability to effectively allocate capital. It is true that people who had the money came from market institutions and purchased formerly public assets in the former USSR. This suggests the question: Why were they able to purchase these assets and why didn't representatives of the command economy purchase the (private) capital assets in the west?