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Russian Economics. Mistakes in the Post-Soviet Transition to a Free-Market Economy and Suggested Reforms. Seulgi Kwon Wesley Oliver. Seulgi & Wesley. Presentation. Contents. Ⅰ. Neoliberalism by Oleg Bogomolov Ⅱ. A balanced approach by Leonid Abalkin

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Russian Economics

Mistakes in the Post-Soviet Transition

to a Free-Market Economy

and Suggested Reforms

Seulgi Kwon

Wesley Oliver


Seulgi & Wesley




Ⅰ. Neoliberalism by Oleg Bogomolov

Ⅱ. A balanced approach by Leonid Abalkin

Ⅲ. False Expectaions by James Tobin

Ⅳ. Conclusions

Ⅴ. Our opinion

Ⅵ. Reference

Ⅶ. Questions

Ⅰ. Neoliberalism

by Oleg Bogomolov


In Keynesian economics

the government has a

strong role - Keynesian

economics were used

post WWII in Europe after

successes in the US


The author says that

Neoliberalism - through

“deregulation” and

“denationalization” - was

the “order of the day”

(The New Russia, 54)

What is Neoliberalism?

Neoliberalism is a

backlash against the

interference of


Neoliberalism vs.



in the West

around 1990

Definition of Neoliberalism


“Economic liberalism... the belief that states ought to abstain from intervening in the economy, and instead leave as much as possible up to individuals

participating in free and self

regulating markets.”

(Thorsen and Lie, 2)


The Situation in Russia

  • Soviet / Russian actors’ enthusiasm
  • and “shock therapy”
  • 2. The influence of the G7,
  • World Bank, IMF, OECD, and others
  • 3. Western advisers inside influence
  • 4. Irreversibility and quick reforms
  • 5. “stabilization”, “liberalization”,
  • “privatization” - via Neoliberalism

The author's 1994 response

to the changes

“The slightest rejection of the ideals of U.S. liberalism is

deplored with undisguised bitterness...” (The New Russia, 55)

Past successes of economic recovery were due to

government intervention

Russia has gone much farther than other capitalist countries

by removing the state’s role

It is now difficult to recreate a new state administration

to build “a civilized and socially oriented market”- i.e. the

state is not a “counterweight” to the market. (The New Russia, 55)


Bogomolov’s ideas for reform

Bogomolov is for the reforms of

the ETG, a group that suggests

stronger macroeconomic policy

and the “formation” of a

“socially oriented economy”

(The New Russia, 56)

He says that “a functional system”

of banks and “market-compatible

accounting and law” are needed.

(The New Russia, 56)

Ⅱ. A Balanced Approach

by Leonid Abalkin


Abalkin is justifying the government's role

after the Russian state was “pushed... out of

the economy” by the events of the early 1990's

Starts off by saying that the government is

literally “more fundamental” than the market

through the maintenance of social order

but also acknowledges how impressive

the market is

Blames “neoliberal performers” such as the IMF

(The New Russia, 61)


Abalkin’s opinion of the government's role

  • Cannot be determined through economic statistics alone
  • The government:
  • “Regulates” the economy
  • “Promotes” the economy
  • Protects new industries and the environment
  • Must consider “traditions”, “culture”, and “geography”(The New Russia, 63)
  • Ensures redistribution of wealth
  • Helps to invest in human capital through

a. Health care

b. Education

c. Managing unions and the minimum wage


The search for a rational balance

between the market and government

Mentions “those who overstate the role of the market and underestimate

the role of government” (like Neoliberals)

and those who “exaggerate what the state can do” (who is he referring to?)

Seeks a “rational, appropriate balance”

Suggests that “Russia must set its priorities and clearly specify the goals

and instruments of government policy”

(The New Russia, 64)


Did Adam Smith really win against Karl Marx?

For example: How can the free market function without governmentintervention?

Just because the Cold War was over - did this mean that the West’snew deregulatory policies were justified?


You need an infrastructure in order

for the Invisible Hand to work

Can the Invisible Hand work without security and laws?The author thinks not.

Also, he emphasizes the importance of education.


Reallocation of resources can take time


The government may need to step in

Past successes in the West actually required government

intervention - James Tobin mentions Jean Monnet’s Coal and Steel community

But post-Soviet Russian reforms left the problem for the free market to fix


Western “euphoria”

Economic reforms and policies in the West,

coincidentally at the time of the

end of the Soviet Union and early post-Soviet period,

created a situation where goods and services that

are actually needed aren’t always important to economic

policy as invisible financial interests like derivatives

There was a euphoric atmosphere of anti-regulation

This didn’t help in Russia, a country that adopted similar reforms

and policies but wasn’t prepared for them and

didn’t possess the same infrastructure as Western countries

Therefore expectations weren’t met...

IV. Conclusions
  • The West's institutions and players as well as Soviet/Russian

compliance damaged Russia's economy

  • The government needs to have a role in the market
  • Reforms need to avoid either neoliberal radicalism or


  • Economic success requires security, laws, government

intervention in the reallocation of resources, and the creation

of goods and services that are of use, not just invisible

financial instruments


Our Opinions

Seul gi

The importance of a balance between government and market


How Neoliberalism led to the recent economic collapse in2008



Works Cited

Digital image. Rolling stone. MATT TAIBBI, 23 Apr. 2007.


Digital image. Tech Support Guy. Volan, 27 Feb. 2007. Web.

Kangas, Steve. "Causes of the Great Depression: A Review of Keynesian

Theory." Causes of the Great Depression. Web. 23 Nov. 2009.


The New Russia: Transition Gone Awry. New York: Stanford UP, 2001

Thorsen, Dag E., and Amund Lie. "What is Neoliberalism?”

University of Oslo. Department of Political Science, University of

Oslo. Web. 22 Nov. 2009.


2. 현상분석 및 시행과제 도출

문제점 파악

Thank you ♡