Holmstrom & Smith article

Summary:

Russia and gangster capitalism. People's biggest complaint has been the corruption in China. People should have seen it coming, but relied on the neoliberalism concpet of capitalism. Marx's concept of capitalism is different, called "primitive accumulation." Capitalism first emerged in Britain with 2 groups of people: ones with monopolies and the landless proletariat. According to Marx, capitalism is not just money, it is the unique social relationship between those two groups. This is utterly tied to the separation from the produce from the producers, ultimately people sell their labor.

Post-socialist countries are trying to privatize state-collective property. This will bring increased economic depression, social polarization, corruption and class struggle. "Between 1992 and 1995, Russia's GDP fell 42 percent.. since 1989 Russia's economy halved in size and 80% of Russians have no savings... In the mid-nineties, suicides double and deaths from alcohol tripled."

The author says this was in part to Jeffrey Sach's "cure all" plan to privatize the market. This initial plan came from the Harvard Institute for International Development (HIID). Are they to blame? Were they pushing for an entirely Western agenda that went wrong? Basic rights such as education, childcare, housing and other subsidies are sacrificed for the transition to a "normal" economy. Sachs and company insist that the pain was unavoidable... is this justified? The author blames Western economy "architects" for the mess in Russia and China.

The rich Russians involved with "grabification" stealing everything they can get their hands on. hahahah this is an intriguing way of putting it, and the bourgeoise stashed their cash in Western bank accounts. And, people are trying to legalize it! Author claimed that Sachs fetishized capitalism, because prior to reform Russia did not have the 'capitalist' class. Capitalists had to be created, thus the birth of gangster capitalists... (mafia, nomenklatura, intelligentsia)

China's path to capitalism was different from Russia's because China effectively privatized their agricultural sector. Their economy consists of "special economic zones" and runs under state management. Mao thought (prior to 1978) provided equality and security in poverty, known as the "iron rice bowl." People can expect work, though they lacked freedom everyone was on the same page, and nobody owned anything.

Reactions: This article was very well written and easy to read. I had to look up some names like Anatoly Chubais and Gorbachev to give me a better understanding of Soviet and post-Soviet history. It was very informative, insightful and written in a way that non-Economy majors (such as myself) could read, understand and be engaged.