Shock therapy (shock therapy) is one of two theories of the economic transformation of post-Soviet societies into a market economy. Both theories act only as alternative, "ideal types" of market transformations. Implemented in practice, mixed options gravitate, as a rule, to one of the two theories.
Shock therapy is a set of radical measures aimed at improving the economy, disrupting the usual course of economic relations, phenomena and accompanied by a number of negative consequences: rising prices, etc.
The foundation of the proponents of the theory is rooted in the liberalization of the economy undertaken by post-war Germany in the late 1940s. During 1947 and 1948, price controls and state support for enterprises were abolished in a very short time. These reforms gave a kick-start effect, resulting in the German economic miracle (Wirtschaftswunder). Until then, Germany had had a deeply authoritarian and interventionist government, and by shedding these administrative barriers "overnight" it had become a state with an emerging market economy.
According to the states with transition economy shock therapy is a relatively quick and universal option for the transition to market relations, in contrast to the gradual and decades-long transition, such as in China.
The theory of shock therapy has a neoclassical (marginalist) origin. According to this doctrine economic activity is successfully carried out in the presence of a “perfect” environment in the country, associated with the conditions of a free market economy in its ideal textbook model. According to the theorists who adhere to this concept, the creation of a free market economy is the result of:
- financial stabilization and price liberalization;
- accelerated privatization;
- open domestic market.
At the same time, it is assumed that failure to fulfill at least one of the three conditions leads to a deformation of the economic behavior of economic entities. Hence the proof of the need to accelerate (“big blow”, “shock”) the transition to market economy.
The central idea of shock therapy is to create market conditions under which economic entities pursuing their own economic interests will ensure effective the economic growth and the realization of the national economic interest.
As reality has shown, domestic practice the methods of market transformations proposed by the theorists of shock therapy turned out, firstly, to be inadequate to the object of transformations, and secondly, the complexity of socio-economic transformations and the consequences they cause, as well as the incompatibility of shock therapy measures in terms of their significance, were not taken into account. Thus, macroeconomic stabilization and privatization were considered priority measures, the problems of savings and investment were in the background, they were supposed to be solved after the transition of the economy to the desired final state; it was not expected that the place of the missing market economic entities would be taken by criminal elements, etc.
Opponents of the theory of shock therapy note that shock therapy has a number of negative consequences, in particular:
- high level of inflation, ;
- landslide decline in production, mainly in high-tech areas;
- high ;
- property stratification and a sharp decline;
- growth of social tension;
- a crisis social sphere, a decline in the birth rate and a sharp increase in the death rate of the population;
- a sharp increase in crime and the criminalization of the economy;
- growth of government debt in the absence of financial resources for reforms of this magnitude;
- increased political instability;
- high dependence of the economy on;
- foreign trade imbalance.
Gaidar's shock therapy in Russia in the early 90s of the twentieth century.
Writers Arkady Gaidar and Pavel Bazhov left not only immortal works of Russian literature, but also the grandson of Yegor Gaidar, a politician, the author of economic reforms in the early 1990s.
These reforms, called "shock therapy" for their radical and ill-conceived nature, led to significant changes in economic life countries, but not at all to those that were expected of them.
Together with Anatoly Sobchak and some other political figures of the time, Yegor Gaidar earned a steady reputation as Russia's top swindler and founding father of domestic corruption.
Reasons for change
The main prerequisite for carrying out economic reforms is, of course, the fall of the USSR and, more broadly, the world "socialist" camp (in reality, the state-capitalist one). As a result, Russia found itself in a catastrophic situation.
- Prices for most goods produced in the USSR were set by the state, usually not in accordance with either demand or material and labor costs for the manufacture of goods. This led to a sharp drop in production and hyperinflation. To improve the country's economy, first of all, a transition to free pricing was required.
- State regulation economy in the USSR led to the lack of interest of workers in the results of their activities, which was one of the reasons for the decline in production. To activate labor activity the introduction of private property, including the means of production, was required.
- The withering away of the Soviet system of distribution of goods led to a sharp activation of "alternative" methods of commodity exchange, that is, shadow economy, unexpectedly "coming out of the shadows."
Such an unsystematic economy was in a chaotic state, led to the flourishing of crime and corruption. However, about the actual state Russian economy In those years, there are other opinions. Many experts do not understand why, with the total decline in production, which Gaidar's supporters are talking about, the country was able to quickly recover and at least stay afloat.
Manifestations of hunger took place, but were rather sporadic. Finally, in a critical state of the economy, it would be impossible for the emergence of "new Russians" - more than wealthy citizens who consume gourmet dishes, own mansions, expensive cars, household appliances and other attributes of luxury.
Keeping the country "afloat" became possible only thanks to the plundering and sale of the country's natural and other wealth, as well as large borrowings from Western countries. In this regard, it turns out that the significance of Gaidar's reforms is greatly overestimated. The new owners of the country, who possessed capital, activated the surviving production, construction, agriculture, and became the main customers and consumers of the restored economy.
Some of these people sat in the government, the other part had an unspoken, but absolutely real power (we are talking about the bosses of the criminal world). It turned out that Russia has its own high-class specialists - doctors, builders, etc., only now they served various thieves in law, mafia leaders and ministers and deputies associated with them.
The "superstructure" quickly appeared - developed journalism, mass culture and art, maintained by the same "customers". Hence, economic crisis in the country was not so total. However, a similar situation existed in the USSR: even in the dull period of "stagnation" of the 70s, the state elite received everything the best that the country's economy could produce.
Results of shock therapy
As a result of Gaidar's reforms, Russia has forcefully moved from a planned economy to a market economy - more precisely, to some kind of external likeness of it. By the end of 1992, certain achievements of the Gaidar government were declared:
- The trade deficit was overcome;
- reorganized tax system;
- The process of privatization of state property has begun;
- Liberalized trade, including foreign trade;
- Kolkhozes and state farms were reorganized and included in the market process;
- Freehold allowed foreign exchange;
- Oil companies formed.
However, more noticeable and significant was back side reforms:
- Significant property stratification Russian society, and perverted: between the small class of the rich and the huge class of the poor (all other citizens), there was practically no middle class, in the early 2000s, its kind of semblance, also small ("middle strata of the population");
- The destruction of entire industrial sectors, whose activities were not in demand among the newly-minted "elite"; ordinary citizens were interested in it, but did not have sufficient funds to purchase goods;
- An increase in trade in the absence of production: it was easier and cheaper for Russian "businessmen" to purchase products abroad and sell them in their stores than to pay for the work of domestic enterprises;
- Landing the country on the "oil needle".
Revenues from the restored oil industry did not go to the restoration of other sectors of the economy; as a result of this, educated specialists - "non-oil workers" - scientists, programmers, teachers, skilled workers, etc. - went abroad en masse or joined the ranks of the unemployed. Dependence on the "oil needle" was deliberately supported (and continues to be maintained until now) by the government for a number of reasons.
Since 1992, a sharp economic modernization began in Russia, which was called "shock therapy". The main postulate of radical economists included in Russian government in October-November 1991 and who drew up a plan of reforms (E.T. Gaidar, A.N. Shokhin, A.B. Chubais, etc.), there was an idea about the absolute advantage of the market system. The priority task, in their opinion, was the liberalization (liberation) of the economy, which in a short time (within a year) would lead the country's economy out of the crisis. monetarist economic theory, which was followed by E.T. Gaidar and his like-minded people insisted on the need to actively implement the process of deregulation and curtailment of the state presence in the economy. That is, the most important process for 1992-1993. should be the privatization of as much of the state property as possible. It should be noted that this entire program was built according to the classical monetarist canon and did not take into account the real economic, socio-political and cultural traditions and circumstances prevailing in Russia.
In October 1991, at the Congress of People's Deputies of Russia, President B.N. Yeltsin presented a plan for economic reforms for 1992.
The main measures were to be:
1) a one-time introduction of free prices from January 1992, which will determine the real market value goods, eliminates the shortage of goods and makes the mechanism of competition work;
2) liberalization of trade, which will accelerate the turnover and create an infrastructure for the sale of large volumes of products;
3) widespread privatization of housing and state enterprises which will turn large masses of the population into owners. In 1992 more than 50% of enterprises in the light and food industry, construction, trade, consumer services and public catering enterprises, etc., should be privatized.
Describing this program of reforms, B.N. Yeltsin said: “It will be worse for everyone for about six months<…>, by autumn the stabilization of the economy, the gradual improvement of people's lives. It soon became clear that the president was wrong.
Already the first measure (release of prices) led to extremely difficult results. Prices immediately increased by 10-15 times. Since the program of E.T. Gaidar planned to increase prices by about 2.5 times, then the 70% increase in wages and pensions, on average, turned out to be not only insufficient, but almost imperceptible and led to the fact that the majority of the country's population suddenly fell below the poverty line. At the same time, the government carried out a sharp reduction in funding for most social programs, which was necessary to create a deficit-free budget. A deficit-free budget, in turn, was a condition for the provision of financial assistance to Russia by foreign creditors, without which the country could no longer do without.
By the summer of 1992, the most acute problem was the unprofitability of all enterprises. Price liberalization and the absence of state subsidies led to the fact that enterprises inflated prices for their products, and this, in turn, led to an increase in prices for transport, energy, etc. Formed vicious circle. Having no funds, enterprises did not pay wages to employees, closed, sending them on indefinite leave. Unemployment rose. Since the Central Bank pursued its policy without taking the course of reforms, E.T. Gaidar, and significantly increased money issue hyperinflation began.
On October 1, 1992, the issuance of privatization checks (vouchers) to Russian citizens began. Each citizen of Russia received a voucher for 10 thousand rubles, symbolizing his share in the public fortune. When the reform was calculated, this amount was equal to the cost of two cars, but when the privatization checks were distributed, 10 thousand rubles already cost 2 kg of sausage. Since 1993, the investment of these valuable papers in company shares. Most people sold their vouchers for a small amount(sometimes - for several bottles of vodka) or invested them in investment funds, soon disappeared. Basically, these investment funds were associated with criminal structures that bought shares of enterprises for next to nothing. Thus, very few people benefited from privatization. The vast majority of citizens were left without vouchers, without income, without salaries and without work. By 1993, the decline in industrial production amounted to 35%, there was a sharp decline in the standard of living of the people. Prices rose by 100-150 times, while average salary increased only 10-15 times.
Shock therapy is an economic theory, as well as a set of radical economic reforms based on this theory. These reforms, as the postulates of "shock therapy" declare, "... are aimed at improving the state's economy and bringing it out of the crisis." Such reforms include immediate price liberalization, reduction money supply and privatization of unprofitable state-owned enterprises.
The reforms of the 90s in Russia were carried out by the team of E. Gaidar not according to the classical scenario of "shock therapy": one of its main conditions was failed - a sharp decrease in inflation, and in 1992 the government of the Russian Federation reduced the budget with a deficit of 40% of GDP, which also contradicts requirements for shock therapy.
Reasons for policy failure
1. Deep disequilibrium of the initial situation. The extreme severity of the inherited problems predetermined the extreme complexity of rapid stabilization.
2. Failure to balance the budget, despite the optimistic first quarter budget adopted in January 1992, made stabilization impossible. The reasons are more on the side of income than on the side of expenses. The main factors are the decline in production and the disorganization of the tax system.
3. The fall in production aggravated the situation: it directly worsened the fiscal situation; and indirectly gave rise to a powerful political lobby for helping businesses, sectors and regions, which turned out to be catastrophic, regardless
on the impact of such assistance on financial stabilization.
4. The inability of the government to control wage increases or monetary policy is a serious problem for stabilization policy.
5. The institutions Russia inherited from the USSR are extremely unsuitable for stabilization policy. In Russia there are no political parties who could secure parliamentary support for the government, strong social partners who could negotiate with the government and provide support for the agreement reached, significant private sector, which can respond in a "normal" way to market signals. And there is central bank, independent of the government and not bound to accept its policies.
It is generally accepted that the first economic successes in Russia appeared only after the 1998 default. Many see them as a consequence of subsequent conservatism in economic policy. However, market reforms began to bear fruit earlier. Thus, the shortage of goods was to some extent overcome in early 1992 with the help of imports, inflation fell to 83% in 1998, and GDP showed its first growth in 1997.
Under the conditions of the existing trade deficit liberalized prices began to rise sharply, causing acute social discontent. Therefore, the government simultaneously took a course towards saturating the market with consumer goods, which was facilitated by the policy of liberation foreign trade, which opened the borders for the wide penetration of foreign goods and free conversion (exchange of the ruble for the currency of other countries). The consequences of the measures taken were very controversial. The unbridled rise in prices and the ensuing impoverishment of a significant part of the population forced the authorities in the spring of 1992 to increase the wages of those employed in public sector economy. With a shortage of goods and a crisis in the economy as a whole, an unbridled growth of inflation (hyperinflation) began.
another direction economic reform was the implementation of a broad program of privatization (transfer of state property into private). The head of the privatization program was the chairman of the property management committee, AB Chubais. Privatization was carried out in two stages. On the first - 1992-1993. - was announced free transfer to all citizens of Russia of a part of state property by issuing a privatization check (voucher) for it. The second stage provided for the privatization of state-owned enterprises through their corporatization. However, in reality, in conditions of impoverishment and economic illiteracy of the population, voucherization led to the sale of enterprises and entire industries for next to nothing. Privatization essentially led to the de-industrialization of Russia. To the greatest extent, the decline in production affected the enterprises of the science-intensive civil and defense industries. The decline in production and technological backwardness have taken dangerous forms. There was also a deep social split in society. Only 5% of the population received property and economic power.
The merit of the new government headed by V. S. Chernomyrdin was the gradual suppression of hyperinflation. However, this was achieved to a large extent due to constant delays in payment wages workers and military personnel
54. Shock therapy in the early 1990s In Russia
The government of the Russian Federation, having chosen the option of “shock therapy” from all possible options, was confident of success, hoping to achieve equilibrium in the consumer market literally within a few weeks, to achieve financial stabilization in the country in a few weeks, to give scope for self-regulation of the market, or thus contain the recession. production and lay the impulses for its rise. However, attempts to artificially speed up the processes and jump over the inevitable transitional steps turned out to be unrealistic, bordering on adventurism and disastrous for society.
The elimination, effective December 1, 1991, of restrictions on wages and the increase in funds allocated for consumption led to a rapid increase in wages, both in the state and in alternative sectors of the economy, while the increase in funds for wages was largely attributed to the cost of production and was expressed in rising prices. This actually led to the launch of the wage-cost-price spiral in the Russian economy. In the subsequent period (1991-1993), the nature of inflation has changed significantly. If until 1991 the decisive factor in the development of the inflationary process was the accumulation of forced deferred demand, and the rise in prices played a much smaller role, then later the depreciation of the money supply took on expression through a rapid rise in prices.
The measures taken by the government turned out to be insufficient to overcome inflation, since they did not ensure the suspension of a further decline in production.
"Shock therapy" in 1992. pursued not so much the goal of overcoming the economic crisis as political tasks: the establishment of a new regime and the final dismantling of the administrative-command system of the national economy. From this point of view, such a policy has been largely justified for the time being. But shock monetarism has shown its limitations and inability to solve the long-term and global challenges facing Russia.
In general, "shock therapy" manifested itself in the form socio-economic effects: - curtailment of investment processes, suspension of the reproduction of fixed assets, destruction of the construction and scientific and technical complexes;
Falling production volumes and, consequently, the supply of consumer goods, which led to a violation of the market equilibrium: fewer goods are produced, prices are rising; - the mysterious disproportion that has arisen between the consumer price index and the index cash income population;
- "Russian competition", expressed in the curtailment of production by manufacturers and raising prices.
"Shock therapy" in Russia was not accompanied by any positive results, because the problem of market saturation in the context of a rapid and steady decline in production and mass export of goods was not resolved. Some mitigation of the deficit for certain groups of goods was associated only with the achievement of such a price level for them that makes these goods completely inaccessible to the bulk of the population (and thereby causes a sharp reduction in their consumption and production). On the other hand, liberalization caused a high rise in prices, reaching the level of hyperinflation.
When in the early 90s, acting. Prime Minister Gaidar proclaimed a course towards ultra-liberal reforms, many perceived this as “take it before others take it”, and the state was unable to control the process. Shock therapy - as this period was called by the people - ended in the actual plunder of a significant share of state property, the impoverishment of the population and other political and economic cataclysms.