But what, exactly?
Your "market bolshevism" guys--Reddaway and Glinski--have a bill of indictment against IMF-Treasury. The mistakes they said that IMF-Treasury committed are:
1. Summers's 1997 call on the Russian government to revamp the tax system, combat crime, and combat corruption "reflect[ed] a lack of understanding of the direct links between corruption, crime, and mass tax evasion, on the one hand, and the path of economic transformation chosen in 1991 by the Yeltsin regime with Western approval on the other."
2. The G-7 leaders', notably President Bush and Chancellor Kohl, 1991 rejection of both Gorbachev's conservative reform package and the radical "Grand Bargain" of Allison and Yavlinsky.
3. A failure to take seriously the principles on which the postwar Japanese economic miracle was founded --a high degree of government protectionism, administrative coordination, social responsibility of the elite, and solidarity among different strata of society--as a model more suitable for Russia's economic recovery.
4. A fixation by the West on specific Russian politicians and elite group, rather than appealing to broad layers of the population and relying on social solidarity and democratic development.
5. Urging in early 1992 that privatization be speeded up.
6. Urging "austerity, budget cuts, and deflation"--and making "balancing of the consolidated state budget" a high priority.
7. Not being generous enough in providing aid to Russia
8. Supporting Yeltsin's autumn 1993 offensive against the Russian parliament "because it included a higher budget deficit than the IMF wanted."
9. Not providing Russia with aid.
10. Providing Russia with aid when the Yeltsin government was "fighting a savage and expensive war in its southern republic of Chechnya."
11. Requiring "deflation"--that is, that the Russian government promise to reduce inflation to 1 percent a month.
12. Demanding the liberalization of foreign trade and foreign investment in the petroleum industry.
13. Providing Russia with aid "with the transparent political goal of saving Yeltsin from looming defeat in the presidential elections."
14. Demanding more rigorous tax collection.
15. Demanding the abolition of Gazprom's tax-free stabilization fund.
16. Providing so much aid that the Russian government became "addicted to loans"
17. Failing to follow through on Lloyd Bentsen's warning that "it was not feasible to treat Russia like a banana republic."
Now imagine what an underbriefed, ignorant-of-Russia ivory-tower neoliberal intellectual and Democratic Party hack like me, convinced that his knowledge of neoclassical economic theory gives him the key to the riddle of history and superior knowledge to people on the ground who actually know something, would make of these 17 particulars in this bill of indictment:
(1) seems to be a complaint that Larry Summers believes that corruption was the setting and not the product of Russia's reforms in the 1990s. Since the one thing that my colleague the "gradualist" down the hall Gerard Roland and my ex-roommate the "big banger" Andrei Shleifer agree on is that in Russia corruption was the setting not the product of reform, I cannot accept this.
(2) and (17) I accept: big mistakes (and I said so at the time).
(3) seems just completely nutso. Japan's social capital assets after World War II--"a high degree of government protectionism, administrative coordination, social responsibility of the elite, and solidarity among different strata of society"--were exactly what Russia did *not* have in 1991. A development strategy that required these assets, as Japan's post-WWII development strategy did, was totally unsuited to post-communist Russia.
(4) again seems nutso. What a government can do is to influence and exhort (and perhaps provide the proper incentives for) other governments. What a government *cannot* do is to start, nurture, support,and grow a broad social movement in another country. One big reason for pessimism about Russia from 1991 on was our perception that Russia did not have a broad social movement pushing for market-oriented reforms--it had a lot of people who disliked the old system and few who liked the old system, but no near-consensus on how things should be changed. In this respect Russia was the opposite of its former satellites, where there was total social consensus that each country should become like western Europe as fast as possible.
(7), (9), (10), (13), and (16) simply cancel each other out: you can't complain that one year aid is too small, the next year aid is too large, the next year aid is too small again, and the next year aid is too large again. Incoherent.
(6), (8), and (11)--well of course the IMF wants a reduced budget deficits. High budget deficits and unsustainable fiscal policies generate hyperinflation. Avoiding hyperinflation is a very high priority, and Russia flirted with hyperinflation throughout the 1990s. Austerity budgets are bad. Hyperinflations are worse.
(5) I'm with the IMF on this one. Given that only 1/10 of what is proposed will be implemented, there is a powerful argument for trying to accelerate reform as much as possible--or else nothing will happen at all. Trying for "big bang" means that one will achieve gradual progress. Trying for "gradualism" means that one will get nothing done at all.
(14) Why are Reddaway and Galini opposed to tax collection? Why are they in favor of tax evasion?
(12) and (15) What purpose is served by Gazprom's special status as a separate Estate of the Realm, protected by trade barriers, and legally free from the obligation to pay taxes? A Gazprom that pays no taxes is certainly a very valuable thing for Viktor Chernomyrdin, but I do not understand how it can be a good thing for Russia.
In summary: (2) and (17) are criticisms that I accept as valid. (1) is not a criticism of policy, but of ideas. (7), (9), (10), (13), (16) are, collectively, incoherent and cancel each other out. (3) and (4) reveal a total disconnection from reality--of the preconditions for the Japanese miracle on the one hand, and of what governments can do on the other. (6), (8), and (11) reveal a complete failure to think through just what the consequences of large and persistent budget deficits in a country with limited debt capacity are. (5) is debatable, but I think wrong.
And (14), (12), and (15) are sinister: to be in favor of tax evasion, to be in favor of Gazprom's special tax-free protected status--these are arguments that I cannot see anyone making in good faith, or in any context other than that of being a willing tool of Viktor Chernomyrdin. You can argue that Chernomyrdin is no worse than Chubais and company. But I've found no one willing to argue that he is any better.
So as I read Reddaway and Glinski, I see it as having two parts: (a) an incoherent scream that somehow the IMF-Treasury should have made Russia in the 1990s turn out better (although they cannot say how this would be accomplished--more tax evasion and hyperinflation are hardly good starting points), and (b) a belief that making Viktor Chernomyrdin richer and more powerful is a good thing. If this is the best that critics of IMF-Treasury policy toward Russia can do, David Lipton, Stan Fischer, and company look very good indeed.
More interesting is the question: How is V.V. Putin doing so well? 28% jumps in real GDP in four years...
Brad DeLong