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What happened to Russia in the 1990s that caused their economic collapse

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TNDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:11 PM
Original message
What happened to Russia in the 1990s that caused their economic collapse
and how is it difference from the current US problems?
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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:19 PM
Response to Original message
1. They didn't have an economy,
certainly not what should be considered a developed western economy; they needed time. Current u.s. problems are WAY different.

Check Wm Greider (The Nation) on Bill Moyers tonight.
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IrateCitizen Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 05:09 PM
Response to Reply #1
21. Are western economies so "developed"?
I'd wager that, given the impact of rising energy prices and the state of the earth's ecological systems, classical western economics has given us a huge shit-sandwich of its own.

And in many ways, it may turn out WORSE than that of the command economies.
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-23-08 07:05 PM
Response to Reply #1
25. Yeah, they didn't have an economy. That's why poverty skyrocketed after the transition, & life
expectancy declined by years. Cause they had no economy.

Of course the USSR had an economy - it's what made its privatization attractive.
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madeline_con Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:25 PM
Response to Original message
2. Some random links to get you started...

Closing the 'Collapse Gap': the USSR was better prepared for collapse than the US
by Dmitry Orlov

http://www.energybulletin.net/node/23259

...............

The Economic Collapse of the Soviet Union


http://www.sjsu.edu/faculty/watkins/sovietcollapse.htm

................

Why Did the Soviet Economic System Collapse: Two Schools of Thought

http://ideas.repec.org/p/duk/dukeec/95-54.html
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TNDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 08:59 AM
Response to Reply #2
9. Wow - that was very interesting.
You've obviously looked into this before.
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napoleon_in_rags Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 08:58 PM
Response to Reply #9
24. I've looked into this as well. Look at the second school from the Vladimir Treml paper.
Edited on Tue Jul-22-08 09:00 PM by napoleon_in_rags
Gorby did NOT cause the collapse through perestroika. It happened because a culture of deception was created in the Soviet Union through government oppression, where people were misreporting everything (Like in Mao's great leap forward) the lack of transparency created an incredibly inefficient culture of double talk cronyism and bureaucracy that impaired fundamental market forces from working. Gorby, and his protege Andropov before him, had good information through their KGB channels and knew this to be the case. The liberalizations and reforms of perestroika were an attempt to remedy an already deeply diseased economy. I think the relevant parallels with US come from examining the extent to which cronyism, deception and lack of transparency have become integrated into our own culture.
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SharonAnn Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:26 PM
Response to Original message
3. Crony capitalism. And there are some similarities to here.
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sam sarrha Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:40 PM
Response to Original message
4. horizontal filing ... burgeoning bureaucracy,, we led them into financial ruin with a fake cold war
Edited on Fri Jul-18-08 11:41 PM by sam sarrha
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A HERETIC I AM Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 10:27 AM
Response to Reply #4
12. "Fake cold war"?
I would suggest that the cold war was hardly fake. It was a war, to be sure, but it was essentially a financial one. We were able to outspend them on defense, forcing them to spend even more within a system that couldn't sustain such spending. I'll give you that we are having to now Pay the Piper for all of it (with the huge national debt) but it was absolutely a real war.

The US financially ruined the USSR without firing a shot.
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PDJane Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-18-08 11:54 PM
Response to Original message
5. And then,
Edited on Fri Jul-18-08 11:55 PM by PDJane
in order to fulfill their obligations, their economy was "privatized"...which did what it always does. It leads to a huge gap between rich and poor, massive crime, starvation and rotten living standards for most of the population.

Read Shock Doctrine.
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TNDemo Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 08:45 AM
Response to Reply #5
8. I read about half of Shock Doctrine
and then had to return it to the library because it had holds on it. I did jump ahead and read most of the Iraq stuff. What was the last part of the book about?
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Pale Blue Dot Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 09:29 AM
Response to Reply #8
11. The last part of the book is about Russia.
And a warning that we are headed in the same direction.
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Dan Donating Member (595 posts) Send PM | Profile | Ignore Sat Jul-19-08 12:40 AM
Response to Original message
6. Afghanistan
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lakeguy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 01:34 AM
Response to Reply #6
7. and the saudis flooding the market with oil
dropping the price so russia couldn't make any money selling their black gold.

so, now we are in afghanistan/iraq and the price of oil has gone sky high. since we import instead of export (mostly), it's the same basic situation. we are beng bled dry out of both ends.
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bluerum Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 08:47 PM
Response to Reply #6
22. I agree. What little economy they had was broken on occupying Afghanistan.
And the US spent a lot of money supporting and arming the Taliban resistance to fight the Russians.

The Russians left, and the Taliban filled the void.
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HamdenRice Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 09:25 AM
Response to Original message
10. The problems of the S.U. then and U.S. now were very, very similar
Obviously the economic systems were different. But the underlying problems were remarkably similar.

The S.U. simply spent too much on its military, especially after getting bogged down in Afghanistan. Same with the U.S. in both Afghanistan and Iraq.

A problem that was fairly unique to communist systems was that without market pricing, the distribution system tended to make problems worse. This generally did not happen in the U.S., but recently it has. The food/ethanol problem is remarkably similar to the food problems in the eastern block.

I remember reading that because bread was subsidized (ie its real cost and demand were not reflected in its price), pig farmers were coming into the cities, buying bread, and feeding it to their pigs. In other words, bread was cheaper than the grain that was used to make it, leading to shortages in food markets.

We never had such problems until now. Ethanol is made from highly subsidized corn, which in turn uses petroleum in its production. Part of the current food crisis is caused by the irrational fact that we are actually using more energy to make ethanol from "cheap" corn than we are getting out of it. As with the pig/bread problem, wacky prices actually make the shortages worse.

We are indeed heading down the Soviet path toward the "scrap heap of history."
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Art_from_Ark Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 12:38 AM
Response to Reply #10
18. They had people lining up at state stores
to buy bread and toilet paper. Their industrial system was built upon a system of factories essentially making parts for other factories, while the consumers were virtually ignored. Their military adventures and subsidies to client states didn't help much, either.
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bluerum Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 08:49 PM
Response to Reply #18
23. It didn't help that Stalin murdered all the farmers and agricultural workers either.
Edited on Tue Jul-22-08 08:49 PM by bluerum
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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Jul-19-08 10:29 AM
Response to Original message
13. I always think it was that platoon of Harvard MBAs we sent in
and who used it as an economic laboratory, but that's just me.
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Doctor Cynic Donating Member (965 posts) Send PM | Profile | Ignore Sat Jul-19-08 04:14 PM
Response to Original message
14. They should have allowed Russians to build up a new kind of capitalism
instead of allowing the IMF and World Bank to dictate what to do.

Example: The IMF kept writing loans to prop up the value of the Ruble. But this did nothing to solve the underlying problems.

Once Russia defaulted in 1998 the Ruble crashed in value which suddenly helped exports. Turns out they had huge amounts of industrial capacity left idle.
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Dover Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jul-20-08 08:39 PM
Response to Original message
15. Seems to be a popular question
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Dover Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jul-20-08 08:43 PM
Response to Original message
16. This collapse is unique in that central banks around the world hold
U.S. dollars as a reserve currency. So this collapse will be wide spread.
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leftofthedial Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Jul-21-08 03:02 AM
Response to Original message
17. they invaded and occupied Afghanistan
it isn't different, except that a slightly larger percentage of our population are capitalists.
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Jemmons Donating Member (407 posts) Send PM | Profile | Ignore Tue Jul-22-08 01:18 AM
Response to Original message
19. Dmitry Orlov has made some detailed analysis of the USSR vs USA economic collapse
The USA and the USSR were evenly matched in many categories, but let me just mention four.

The Soviet manned space program is alive and well under Russian management, and now offers first-ever space charters. The Americans have been hitching rides on the Soyuz while their remaining spaceships sit in the shop.

The arms race has not produced a clear winner, and that is excellent news, because Mutual Assured Destruction remains in effect. Russia still has more nuclear warheads than the US, and has supersonic cruise missile technology that can penetrate any missile shield, especially a nonexistent one.

The Jails Race once showed the Soviets with a decisive lead, thanks to their innovative GULAG program. But they gradually fell behind, and in the end the Jails Race has been won by the Americans, with the highest percentage of people in jail ever.

The Hated Evil Empire Race is also finally being won by the Americans. It's easy now that they don't have anyone to compete against.


http://www.energybulletin.net/node/23259
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IrateCitizen Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Jul-22-08 05:07 PM
Response to Original message
20. Jeffrey Sachs.
His "shock therapy" completely gutted the state-run economy without providing any stopgap measures to smooth the transition.

I also second the previous poster's mention of Dmitry Orlov -- VERY insightful person with a good understanding of both the USSR and US (having lived in both).
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jul-23-08 07:07 PM
Response to Original message
26. They were taken down by folks who wanted their assets.
Same as us.
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