Lost on the Capitalist Road


Russia was ripe for Communist revolution. Poland more or less achieved one by free and fair vote. Ukraine never gave communism up.

The new Russian duma looks more fascist than communist but both groups oppose reforms. Russians may yet decide that the Brezhnev era was the good old days, and bring them back.

This doesn't mean that communism would be good for Russia, any better than it was last time round.

It doesn't mean that Vladimir Zhirinovsky -- or the other hyper-nationalists, fascists, Communists and kooks victorious in the Russian election -- deserved to win.

It does mean that President Boris Yeltsin went about introducing capitalism the wrong way. Russia has been in the grip of rigid ideologues impervious to human reality.

Not Russians. These ideologues were his Western and largely American advisers, the Group of Seven, the International Monetary Fund, Jeffrey Sachs and company.

They demanded that Russia (and Poland and others) endure "shock treatment." They wanted markets to work economically as markets should. It was the system that mattered to them, not the people.

But what was needed was reforms that would work politically until they work economically.

When Russians were instructed to take up capitalism, the only definitions they knew were those of Soviet propaganda. Naked greed. Licensed criminality.

The picture remained the same. Only the label was switched, from enemy to role model.

Multitudes of Russians have been impoverished rather than comforted by change. They believe they have substituted one Mafia for another, one set of parasites on their backs for another.

No wonder millions voted for some nut like Mr. Zhirinovsky, who has promised cheap vodka and the restoration of national pride.

The experts may have been knowledgeable as to how markets function in countries that tolerate them.

What they did not know was how to move a huge society successfully from socialism to capitalism. And in particular, the Russian Communist society, which has characteristics of its own.

That is a political, not economic, problem. And there are people who do know something about it.

Margaret Thatcher knows. In dismantling the more benign British socialism that had accrued since 1945, she did not make a few sharks super-rich. She made hundreds of thousands of minnows a little fatter.

The secret was sale of nationalized utilities, that were clearly worth something on the market, in small blocks of shares to many, many, first-time shareholders. And sale of much public housing to its employed residents.

This gave vast numbers of Britons a stake in the changes. So much so that the Labor Party could not fight the transformation and, should it come to power tomorrow, would not undo it.

The China of Deng Xiaoping knows how to move from economic communism to capitalism. China follows what the defeated Maoists, when they were in the ascendant, called the capitalist road. It has done so incrementally, and while remaining a Communist country politically.

The great majority of Chinese people affected by the change are materially better off. Pedestrians have bicycles. Entrepreneurs have cars. Peasants have television and washing machines.

As a result, capitalism is covering China like a tidal wave. No one can stop it. Mr. Deng's successors will not try.

China does not have democracy. But successful capitalism will create unstoppable pressures for more freedom of the spirit, freedom of speech, choice of one's rulers. It always has.

Mr. Yeltsin's mistake was in being persuaded to follow the logic of the market right away, no matter how much it hurt whom. To make reforms work, he needed to keep people grateful, not resentful for them.

He and his advisers should have been willing and knowledgeable to shape the reforms to what would keep the people hopeful about the direction being taken.

Mr. Yeltsin's challenge now is not to overpower his enemies but to out-think them. There are advisers who probably can tell him how.

Impossible as it would be for ideological, national and racist reasons, Mr. Yeltsin ought to sack his Western advisers -- and replace them with Chinese.

F: Daniel Berger writes editorials for The Baltimore Sun.

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