Nothing is More Mistaken’ than to Suggest Russian Economy is Being Re-Sovietized, Inozemtsev Says

Paul Goble

            Staunton, Sept. 18 – Many in Russia and the West are now talking about the re-Sovietization of the Russian economy, “but nothing could be more mistaken,” Vladislav Inozemtsev says, except perhaps the notion that Moscow will be able to drive “the genie of a market economy” back into the bottle.

            Russia today is a market economy albeit with significant state interference, the Russian economist says, but it is not like the Soviet one in a variety of key ways. And there is no chance that it could be restored anytime soon without costs neither the population nor the regime is prepared to pay (istories.media/opinions/2024/09/18/pochemu-ekonomika-rossii-ne-pokhozha-na-sovetskuyu/).

            Indeed, in economic terms as well as political ones, “the restoration of the USSR is impossible,” Inozemtsev continues. “The system which exists today in Russia is a completely new reality, not less dangerous than the Soviet but incomprehensible for those who appeal only to analogies.”

            To make his point, the economist discusses eight ways in which the Russian economy now is fundamentally different than the Soviet economy was in the past, providing detailed statistics in each case:

 

·       First and most obvious, “the Russian economy of the model of the 2020s is private and market while the Soviet one was and remained throughout its history state-owned and planned.”

 

·       Second, in Soviet times, the economy served first and foremost the needs of the state; now, it serves the consumer. As a result, people have a significantly higher standard of living.

 

·       Third, because of the focus on the consumer, the service sector of the Russian economy now is vastly larger than it was in Soviet times.

 

·       Fourth, the Russian economy is far more integrated into the world economy. Foreign trade in Soviet times amounted to seven percent of GDP. Now, despite sanctions, it amounts for 34 percent.

 

·       Fifth, vastly larger numbers of Russians now travel or even live abroad than did in Soviet times.

 

·       Sixth, inequality has increased dramatically and become a driver of growth.

 

·       Seventh, the Soviet economy was slow to use Russian scientific advances for development. That is still true, but the Russian economy rapidly integrates advances in other countries.

 

·       And eighth, the Soviet government spent a far larger share of GDP on the military than does the Russian one even at the time of the invasion of Ukraine, and the former one spent far more on foreign aid from which it got no returns than does the Russian one today.