In Russia, soldiers are asked by the government to forage with their family for food. This shows the drastic loss of money that Russia has experienced in the past decade, for the government cannot even pay wages. It was a very bad idea for Russia to denounce Communism.
Before it can be understood why capitalism in Russia was a bad idea, it is necessary to look at how Russia became capitalist in the first place. Mikhail Gorbachev, who was the last leader of Russia under Communist rule, thought that the Soviet Union would either reform or become a third world nation. His most famous policy was perestroika, which means restructuring in Russian. The main idea of perestroika was glasnost, which means openness. It was created to give people a voice in their government and to allow constructive criticism of the government.
Gorbachev wanted the leadership to be an elected body of rule, not Communist. He promoted a “new thinking” idea which focused on cooperation, not confrontation, but people were skeptical of it. When the Chernobyl nuclear power plant melted down, Russia tried to cover its existence. On the other hand, Gorbachev said that the cover up was a symbol of the old order, so he created a policy of almost total disclosure.
Various factors contributed to the downfall of Communism. In 1990, one year before the downfall, the IMF made a report of the current economic status of Russia. The report suggested that Russia lift the restrictions on price and foreign trade, and cut spending on less important costs (such as management). It also helped the government decide to make its goal deficit 2.5 percent of the GDP.
In 1990, the Russian republics of Georgia and Lithuania declared independence. In August 1991, all other republics declared independence. Russia fought to keep the republics, but lost, and acknowledged their independence during September 1991. Although they fought for independence, on December 21, 1991, Russia and ten of the former republics formed an economic and political alliance. The only four that did not join the alliance were Georgia, Estonia, and Latvia. The fact that all of Russia’s republics were able to secede shows that Russia’s power was indeed weakening.
December 21, 1991, one day after the resignation of Gorbachev, marked a very important day in the history of Russia. It was the day when the Soviet Union officially dissolved, and Boris Yeltsin assumed presidency. In 1989 the ruble (Russia’s currency) was worth one and one half United States dollars. In 1993, it had already plummeted to 1/1000 of a dollar, and in 1996, 1/5000 of a dollar. With an annual inflation rate of over 350 percent, most businesses do not even accept the ruble. This immense economic problem has been caused because of the collapse of the Russian government. The people of Russia had lived for three generations without making political decisions, and it is obvious that there were going to be some problems associated with the change.
Conditions in Russia became so bad, that by 1998, workers were averaging fifty to one-hundred dollars (all values in US amounts). Three-fourths of the population was below the official subsistence level, and many had to forage for food or grow it in small gardens. Most people were only able to purchase tea, bread, milk and salt.
In 1989, the per capita income was three-thousand dollars. In 1996, it was four-thousand eight-hundred dollars. While this is an improvement, it is like the average American earning the same paycheck, but only two months out of the year. To make matters worse, many pensions go unpaid, women are often fired, and daycare centers (the ones that are still open) charge too much for the average citizen. Teachers and doctors are on strike because they are not getting paid. Research workers have lost their jobs because there is no funding, and miners occupy railroads to “press for payment.” These conditions are obviously less than nominal.
One result of the poor economy is that many people are turning to crime. Sometimes crime can rise by as much as twenty percent in one week. Many people who would invest in companies, and thus help to revitalize the economy, are afraid that the company’s assets will be stolen, and that they will lose all the money they invested. It is just a downward spiral.
Life expectancy in Russia has gone from sixty-four years in 1991 to fifty-seven years in 1998. That is a drastic change. The Defense Ministry has actually advised soldiers (including officers) to forage in the forest for food that they might not have otherwise, with the given reason being to spend “quality time” with their families. This is because the Defense Ministry doesn’t have enough money to give out ample salaries to its employees. Very few societies have declined so quickly during peacetime.
Technological modernization is almost impossible for Russia. Nobody wants to risk their assets in technology research and development, partially because of the limited market for it. In industries as a whole, production in 1998 was half that of 1990, and 1990 was not a good year. Investment is one-fifth that of 1990, and investment in metal and engineering is a mere five perecent of the 1990 level. What does all this mean? Estimates of the standard of living are that there has been a drop of twenty to thirty percent.
When Boris Yeltsin first assumed presidency, he had support from the vast majority of the people. His campaign in 1996 was very anti-Communist, and it showed the horror of the Communist past. He was re-elected on July 10, 1996, by a 13% margin; he still had strong support. Now, though, the vast majority of Russians are against Yeltsin. He used to voice concepts appealing to the freedom loving citizens, but after making empty promises, opinions of him drastically changed. One reason that support for him started to change was that in 1992, he promised that the standard of living would rise in six months. He was not able to do it, so he asked for another six months, but he failed to do it again. That was the start of his waning support.
On December 17, 1995, the DUMA (lower house of parliament) was elected, and Communists still controlled the legislature. This meant that anti-Communist Yeltsin would continue to have a hard time passing laws that went against Communist ideas. He barely averted a crisis when he removed his nomination for Viktor Chernomyrdin as Prime Minister. This was because the DUMA did not want Viktor Chernomyrdin as the Prime Minister, and Yeltsin would have either had to dissolve the parliament or run the high risk of being impeached. DUMA used to have little power, but this incident proves that it is gaining more.
Ever since the collapse of Communism in Russia, the government has tried very hard to bring Russia back to its former glory, but is having a hard time doing that. It has already been a decade, so there has been a chance to recover from the turmoil and gain back enough funds to help some people, but so many have been affected that not all can be helped. In 1995, less money was printed to help control inflation, but inflation still went up drastically. One reason the government is having trouble raising funds is that commonly, taxes are either not paid or are being paid with goods and not money.
The state made a large error in lifting its vodka monopoly. Now it makes less money through vodka, and much of the vodka is diluted (in some cases poisoned). People want to drink more vodka now because of the lower proof on the market. This causes more drunkenness, and in a small part has contributed to the drop in life expectancy.
Now the future of the Russian Federation is unfolding. Some have predicted that there will be a civil war or social explosion. Some have pointed out that the citizens have been very patient with the adverse times, but that patience may end. Ever since the collapse of the USSR, the society in Russia keeps getting more and more unstable. The west seems to think that Russia should “stay the course”, or just continue doing what they are doing, but the “course” obviously is not working. Commanders in the military have been ordered to prepare for “extraordinary situations.” Some change, maybe one never previously thought of, has to happen or else Russia could just continue degrading.
The Soviet Union was a major influence in international economics, so people naturally want to see how the Russia Federation will do. Russia is so big, and thus has millions of citizens across thousands of square miles, that success will only depend on Russians, not on outside help such as extra food, because the problem is much too vast. People nevertheless want to help, but giving money is an unpopular idea because that money may be misused. Food is a much more accepted donation idea, though, because it would be very hard to misuse it.
The Russian Federation will probably apply for entry to the European Economic Community, but will most likely be turned down. At least the action will show Russia’s willingness to become a functional capitalist society. The Parliament, however, is still mainly Communist, so it will be difficult for anti-Communist policies to be passed, but past success has shown that total reform is possible, albeit very difficult.
All the facts have shown that overthrowing Communist dictatorship has only caused turmoil in Russia. The ruble has plummeted, and people are struggling to get money. Companies cannot risk their assets for fear of burglary, and they have trouble growing. Even the government is having difficulties making money. Ever since Russia has become capitalist, almost everyone has had an extraordinarily hard time. Capitalism obviously was not the right choice.