What could the new Russian government do?
Forecasts and far-reaching conclusions in this country are most of the time made on the basis of simple outward appearances. Sergei Stepashin, appointed as acting prime minister, is a general and wears tinted glasses - therefore, he is a budding Pinochet and, therefore, he will use strong-arm methods to enforce order and push through reform. This ingenuous analogy rests on one widespread political/economic myth: There can be successful reform and development only under a dictatorship, a strong-arm regime, and the suppression of democracy. Chile, South Korea, Taiwan, and Singapore are cited as examples in point. It is maintained, in particular, that implementation of liberal reforms in a sluggish, inert environment is only possible through coercion - as was the case in Chile under Pinochet. Let us leave out the moral aspect of the issue and touch on its functional aspects. As a matter of fact, reform in Chile came off and produced results not only thanks to Pinochet but, rather, thanks to the "Chicago boys" who had developed a correct reform strategy and consistently carried it out, and especially thanks to the Chilean people who had enough common sense and courage to endure this rough stretch of the reform path. The military coup in Chile occurred in 1973 while reform (not counting some stabilization measures) began in 1975 - two years later. Of course, the strong-arm regime by itself did produce some positive results: It alone could stop the wave of strikes and rampant ultra-left terrorism. Yet there is no way a dictatorship can force an economy to work, which requires, on one hand, a weeding out of socialist holdovers in the tax, budget, property ownership, and social spheres, and on the other, the provision of business and investment incentives. This calls for concerted, target-specific efforts by national political, business, and scientific elites. Most important, Chilean society learned the futility of socialist experi ... Read more