Michael McFaul and Kathryn Stoner-Weiss write about Russia:
…growth has averaged 6.7 percent — especially impressive against the backdrop of the depression in the early 1990s. The last eight years have also seen budget surpluses, the eradication of foreign debt and the accumulation of massive hard-currency reserves, and modest inflation. The stock market is booming, and foreign direct investment, although still low compared to in other emerging markets, is growing rapidly. And it is not just the oligarchs who are benefiting from Russia’s economic upturn. Since 2000, real disposable income has increased by more than 10 percent a year, consumer spending has skyrocketed, unemployment has fallen from 12 percent in 1999 to 6 percent in 2006, and poverty, according to one measure, has declined from 41 percent in 1999 to 14 percent in 2006. Russians are richer today than ever before.
These astouding figures raise an interesting question: how closely is Russia’s economic growth tied to its recent shift towards authoritarianism? The growing conventional wisdom – in Russia and beyond – is that Putin’s sacking of democratic practices, while regrettable, has been a necessary step to ease Russia’s economic woes and end the chaos of the Yeltsin period. It’s a theory that’s become an important explanation for Putin’s 80% domestic approval rating — but perhaps, as I’ll explain below, not one grounded in reality.
THE YELTSIN YEARS
During the 1990s, Russian democracy was a vibrant affair. The administration of Boris Yeltsin presided over a system that allowed for a multitude of political parties, a free press, and a developing civil society. There were darker moments, however – the siege of the Congress of People’s Deputies (when Russian tanks went as far as to shell the parliament building), Yeltsin’s passage of a super-presidential constitution in late 1993, and the banning of certain parties from regional elections. Although it was far from a strong liberal democracy, Yeltsin’s Russia was significantly more democratic than Russia today.
The economy was in chaos, however. The liberalization of prices in January of 1992 and subsequent economic restructuring led by Yeltsin’s chief economics advisor, Yegor Gaidar, resulted in the loss of families’ entire savings, major price jumps of basic commodities, widespread unemployment, corruption, and overall economic stagnation. Only by 1998-9, when center-left Prime Minister Yevgeny Primakov adopted a set of strict spending policies, did the economy finally start to pick up.
PUTIN’S DIFFERENT PATH
Vladimir Putin, a bland bureaucrat who unexpectedly rose to power and prominence as Yeltsin’s steady-handed prime minister in 1999, took a much more authoritarian turn. He promptly took control over three independent TV networks – RTR, ORT, and NTV – and has since solidified media control to the extent today where the Kremlin owns, or has major influence over, all of the primary outlets. Putin’s also gutted the independence of the Federation Council, the upper house of Russian parliament, and has established his control over regional legislatures — namely by ending elections and announcing his decision to appoint all governors.
During his tenure, liberal-to-moderate political parties such as SPS and Yabloko have suffered, while the pro-presidential party (United Russia) has established itself as the national hegemon. There are a number of reasons for this: manipulation of the media (election coverage has blatantly favored United Russia at the expense of other parties; opposition candidates receive almost no airtime), outright bans (the Republican Party and the Popular Democratic Union, for example) and even imprisonment of opposition leaders like Mikhail Khodorkovsky and Gary Kasparov. Civil society has also been attacked, as have basic freedoms like the right of assembly. The economy has boomed, however. As noted above, growth has averaged out at nearly 7%, unemployment is down, and income is up.
THE MILLION DOLLAR QUESTION
Is there a connection between Putin’s authoritarianism and the impressive economic growth that has occurred on his watch? Not at all, argue analysts Michael McFaul and Kathryn Stoner-Weiss in an article in Foreign Affairs. For starters, the authors suggest, the notion that democracy was responsible for Russia’s poor economy during the Yeltsin era is baseless:
Democracy…had only a marginal effect on these [poor] economic outcomes and may have helped turn the situation around in 1998. For one thing, the economic decline preceded Russian independence. Indeed, it was a key cause of the Soviet collapse. With the Soviet collapse, the drawing of new borders to create 15 new states in 1991 triggered massive trade disruptions. And for several months after independence, Russia did not even control the printing and distribution of its own currency. Neither a more democratic polity nor a robust dictatorship would have altered the negative economic consequences of these structural forces in any appreciable way.
Economic decline after the end of communism was hardly confined to Russia. It followed communism’s collapse in every country throughout the region, no matter what the regime type. In the case of Russia, Yeltsin inherited an economy that was already in the worst nonwartime economic depression ever. Given the dreadful economic conditions, every postcommunist government was compelled to pursue some degree of price and trade liberalization, macroeconomic stabilization, and, eventually, privatization. The speed and comprehensiveness of economic reform varied, but even those leaders most resistant to capitalism implemented some market reforms. During this transition, the entire region experienced economic recession and then began to recover several years after the adoption of reforms. Russia’s economy followed this same general trajectory — and would have done so under dictatorship or democracy.
Putin’s economic success, McFaul and Stoner-Weiss note, has largely been a result of high oil prices and Yeltsin-era economic changes coming to fruition — not authoritarian policies. In fact, the correlation may even go the other way:
If there is any causal relationship between authoritarianism and economic growth in Russia, it is negative. Russia’s more autocratic system in the last several years has produced more corruption and less secure property rights — which, as studies by the World Bank and the European Bank for Reconstruction and Development demonstrate, tend to hinder growth in the long run.
One can only wonder how fast Russia would have grown with a more democratic system. The strengthening of institutions of accountability — a real opposition party, genuinely independent media, a court system not beholden to Kremlin control — would have helped tame corruption and secure property rights and would thereby have encouraged more investment and growth. The Russian economy is doing well today, but it is doing well in spite of, not because of, autocracy.
Take that, Putin.