Thursday, August 11, 2016
Will Russia Reject Neoliberalism? By PAUL CRAIG ROBERTS AND MICHAEL HUDSON
According to various reports, the Russian government is reconsidering the neoliberal policy that has served Russia so badly since the collapse of the Soviet Union. If Russia had adopted an intelligent economic policy, its economy would be far ahead of where it stands today. It would have avoided most of the capital flight to the West by relying on self-finance.
Washington took advantage of a demoralized Russian government, which looked to Washington for guidance in the post-Soviet era. Thinking that the rivalry between the two countries had ended with the Soviet collapse, Russians trusted American advice to modernize its economy with best-practice Western ideas. Instead, Washington abused this trust, and saddled Russia with an economic policy designed to carve up Russian Screen shot 2016-08-09 at 3.57.13 PM economic assets and transfer ownership into foreign hands. By tricking Russia into accepting foreign capital and exposing the ruble to currency speculation, Washington made sure that the US could destabilize Russia with capital outflows and assaults on the ruble’s exchange value. Only a government unfamiliar with the neoconservative aim of US world hegemony would have exposed its economic system to such foreign manipulation.
The sanctions that Washington imposed – and forced Europe to impose – on Russia show how neoliberal economics works against Russia. Its call for high interest rates and austerity sank the Russian economy – needlessly. The ruble was knocked down by capital outflows, resulting in the neoliberal central bank squandering Russia’s foreign reserves in an effort to support the ruble but actually supported capital flight.
Even Vladimir Putin finds attractive the romantic notion of a global economy to which every country has equal access. But the problems resulting from neoliberal policy forced him to turn to import substitution in order to make the Russian economy less dependent on imports. It also made Putin realize that if Russia were to have one foot in the Western economic order, it needed to have the other foot in the new economic order being constructed with China, India, and former central Asian Soviet republics.
Read More: http://www.unz.com/proberts/will-russia-reject-neoliberalism/