Putin’s Russia Reviving Economic Arrangements of Last Years of Soviet Power with Potentially Fatal Results, ‘The Insider’ Says

Paul Goble

            Staunton, June 19 – The Kremlin is “reviving Soviet ideology but emphasizing that it won’t “repeat past economic mistakes” and that Russia will remain a market economy. But “Soviet economic principles are resurfacing in Russia alongside the political ones,” the editors of The Insider say, with potentially disastrous results.

            In a 6,000-word article, they show that among these revivals are “the manipulation of statistics, impractical development plans, superficial income growth by means of sacrificing investment, elements of state planning, and obvious cases of extracting funds from business and the population” (theins.ru/ekonomika/261636).

            But by denying the obvious and concealing what is really going on by throwing the veil of secrecy over many issues, the Russian leadership is “increasingly using Soviet tactics to conceal these escalating issues.” And that in turn, the editors say, constitutes together “a ticking time bomb.”

            Even those who suggest that the Russian Federation is increasingly similar to the late Soviet Union in ideological terms insist as does the Kremlin that “economic policy is the final differentiating factor.” After all, many elements of a market economy continue. But, since the expanded invasion of Ukraine, these have “started to erode.”

            “Both market-based and planned economies can weather crises if they effectively manage panic and avoid planning errors,” the editors continue. “The decisive factors which render these difficulties fatal are often of a different nature.” In the case of the USSR, these were ideological as the Soviet regime was based on the belief that the Soviet economy was superior to the West.

            According to the editors, “in theory, a planned economy might have been able to function without the need for an ideology; but in the case of the Soviet Union, there was a need to justify the merits of socialism. But these merits were not particularly abundant.” As a result, officials managed by extensive falsification of data.

            The West recognized that published Soviet data were false “but assumed that accurate figures were circulating within the ministries and departments. But it was in fact the case that the Soviet government relied on the same officially published data in making crucial decisions.” And consequently, it made the wrong ones.

            The United States declared Russia was a market economy in 2002 but stripped it of that ranking in 2022 given the increasing gap between market principles and Russian practice and especially the suppression of data or its outright falsification to allow the Kremlin to make claims that are without foundation.

            Losing that status may cost Russia its reputation internationally, something that will have consequences on its own. But failing to maintain market principles and returning to Soviet ones as it is now doing could just as it did the Soviet Union cost it something rather more – its continued existence as a viable state.