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Putin’s History Implosion

By  and Victoria Gasteiz - With Russia’s economy crumbling under the weight of Western sanctions, some of the country’s leading economists are advocating a return to Soviet-style central planning. Will the violent wave of expropriation Russia has unleashed on Ukraine be unleashed at home as well?

Russian President Vladimir Putin has long regarded the collapse of the Soviet Union as a “geopolitical catastrophe.” The invasion of Ukraine, now approaching its one-year anniversary, could be seen as the culmination of his years-long quest to restore the Soviet empire. While this effort will almost certainly fail, Putin may succeed in reviving one of the USSR’s worst features: its centralized, sclerotic economic system.

With Russia’s economy straining under Western sanctions, some of the country’s leading economists and mathematicians are advocating a return to the days of five-year plans and quantitative production targets. In an interview marking the centenary of the Soviet Union’s founding, economist Ruslan Grinberg called for the reinstatement of the planned economy – an opinion that could be easily dismissed were Grinberg not the head of the influential Institute of Economics at the Russian Academy of Sciences.

Putin wit the Russian generals (Photo by kremlin.ru for education only)

Putin wit the Russian generals (Photo by kremlin.ru for education only)

What Grinberg proposed is not a war economy in which production is geared toward the needs of the military. A planned economy, in his view, should be “not directional, but indicative.” Government, he explained, must formulate economic priorities but not tell companies what to produce and when. Instead, the state should “stimulate production via subsidies, as well as fiscal and customs policies.” But while Grinberg attempts to strike a balance between plan and market, others have gone further. Albert Bakhtizin, the director of the Russian Academy of Sciences’ Central Mathematics Institute, supports not only “indicative planning” but also a return to the economic five-year plan (pyatiletka), which he defines as “strategic planning with a clear definition of goals and a system of socially significant indicators.” In his view, the state should “calculate what should be produced and when, and what is needed.”

These proposals could be seen as signs of desperation in the face of crippling international boycotts and economic sanctions. But Russia’s exclusion from the global economy (and other domains of international influence such as science, sports, and culture) is only part of the story. The rollback of the post-Soviet economic reforms initiated by Mikhail Gorbachev and Boris Yeltsin marks the latest stage in Russia’s ideological, social, and political regression. Russia’s newfound infatuation with Soviet-style economics is ironic, given that the USSR’s bureaucratic, inefficient, and ultimately unworkable economy was one of the main causes of its collapse. But there is another, deeper reason why Russians are increasingly turning away from the market economy.

Putin’s invasion of Ukraine represents what I call the implosion of history. For full article at Project Syndicate click here please. 

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