A reconsideration of the shock therapy in Russia, 1991-1996

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2014-6
Song, Keunwon
Following the collapse of the Soviet Union, Russia endured turbulent years of political and economic transformation. At the time, heated debates were focused on speed of reforms between the shock therapists and gradualists. Under President Yeltsin, Russia hastened its economic reforms through the Shock Therapy – radical structural adjustment policies that transformed Latin American countries few decades earlier and Poland just a couple years earlier. The general sentiment has been that the Shock Therapy in Russia between 1991 and 1996 failed. Based on the widely-propagated criteria of economic growth and democratic consolidation, I also conclude that the Shock Therapy in Russia failed within the given timeframe. I expand on Popov’s (2000) arguments that the debate was misfocused on speed of reforms instead of strength of institutions. I reconsider the debate extrapolating on the medical metaphor to argue that the Shock Therapy failed due to misdiagnosis of the patient’s illness, medicine overdose and the problems associated with the doctors. Simply put, firstly, I establish that the Soviet collapse was a deliberate political breakup - not an inevitable ideological or systemic implosion - that demanded immediate attention to politics, not economics; secondly, I criticize Russia’s implementation of the neoliberal model of Shock Therapy in place of the original model; thirdly, I discuss the insufficiency and incompetence of the external help as well as the lack of internal political consensus and control that undermined the Russian transformation.

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Citation Formats
K. Song, “A reconsideration of the shock therapy in Russia, 1991-1996,” M.S. - Master of Science, Middle East Technical University, 2014.