Yegor Gaider and the Concept of Transitional Economy

The  Architect of Russia’s  ‘Shock Reforms ” of  the Nineties Yegor Gaider is no more . He died on 16th Dec 09 at the age of 53 . How many of today’s students of market economy recognise the audacious and daring initiative and great change management effort in Transitional Economy of this economist in saving Russia from total system collapse post Gorbachev’s Glasnost and Peristoika which resulted in the break up of the erstwhile USSR? . This path breaking effort by Yegor as the Finance Minister of Boris Yeltsin is a classic case in understanding the role of Economy in the political history of a country and hold great lessons for the future state of many other nations in the World . While Gorbachev unleashed the political process in the eighties , it was Yeltsin with Yegor’s help and wise counsel who at the cost of even domestic  negative  popularity converted an ” On Order” central economy  to a truly ” market economy “,In this case, the end justified the means adopted . It was a disruptive change of a very high order  seldom seen in world affairs.

I cannot help remember my brief  stay at  Latvia  during 1977 when it was part of USSR . I was in the  three member Army Team from India visiting that country for a technology transfer work . The pains and fissures of a forced central economy was very visible even then to a discerning eye . Food shortages,spartan weddings, drunken brawls  etc were very much there. While the official exchange of  US Dollar to Rouble was one to eight ,one could get three to four times that amount in the unofficial channel.

Has the Russian economy turned around fully to be a free market economy?  In spite of the “OIL Advantage”, I feel they are still at sea and very fragile . So are the Chinese in spite of the US  support of  China by default due to adverse trade balance situation between these countries . In the case  of China ,the communist party still calls the shots  and I had a glimpse of this ,when I visited Chengdu , the new IT Super Park to attend the CHINASOFT seminar in 2007.

A truly free market economy still eludes most of the developed countries including the US. Vested interests and political  shortsightedness inhibits  this lofty goal . Only true globalisation based on mutual trust can bring about such a scenario which is still a dream .