The Free Market 12, no. 7 (July 1994)
Alexandr I. Solzhenitsyn’s return to Russia has engendered more than the usual amount of scaremongering. The author, we are told, is a Pan-Slavic nationalistic and religious fanatic whose views are outdated and irrelevant. Yet Solzhenitsyn used his first speech and press conference in Russia to promote two economic ideas that can actually move Russia forward: private property and free enterprise.
His statement in Vladivostok denounced not only the Communists who created and ran the Gulag; he also attacked the phony reformers who have held Russia back since the mid-eighties. In particular, he assailed Mikhail Gorbachev’s “perestroika” and Boris Yeltsin’s “market reforms” for not being sufficiently decentralist and anti-socialist.
“There were many paths out” from socialism, said Solzhenitsyn, “but Gorbachev had no such goal. Gorbachev flung out slogans of perestroika, but he was really thinking of how to transfer the nomenklatura to comfortable commercial seats. His perestroika was hypocrisy. He lost seven years; he did nothing in seven years; he destroyed all the structures of industry without replacing them with anything.”
All this is heresy in the United States, where Gorbachev is still regarded as a great political and economic liberator. But for the average person in Russia, “perestroika” only made the economy less productive and deepened public cynicism. Socialism was already dead as an ideological force when Gorbachev came to power to save socialism from itself.
Indeed, in Gorbachev’s public speeches and policies, he proved his first loyalty was to the socialist system which was the source of his power. Rather than lead the nation out of socialism as he could have, he wrapped his false reforms in selective market rhetoric to give them credibility.
At the end of his regime, Gorbachev had increased the size of the government bureaucracy, imposed a vicious and costly alcohol prohibition, jailed people in the underground economy, entrenched nationalized industry, caused hyperinflation, and ruined the tiny consumer sector that had barely managed to keep people fed. In the end, peoples lives were more miserable than before.
The “expert” at the Soviet helm was Yegor T. Gaidar, acting on orders from the International Monetary Fund and under the guidance of Harvard University’s Jeffrey Sachs, who repealed price controls for large industries. He did not, however, privatize the state monopolies or make them compete. Tnis meant that these cartels could evade market discipline and charge whatever they wanted for a product or service.
Solzhenitsyn explained all of this, and rightly decried the Gaidar program as “brainless.” It was “deceptive privatization,” not the creation of real private property. It would be akin to “freeing prices at the U.S. Postal Service, which has no competitors in letter delivery. The result would be higher prices that still did not reflect supply and demand, consumer, preference, or resource scarcity. It would only reflect the greed of the Postal Service.
Even the property “vouchers” (”a ridiculous word,” Solzhenitsyn said) were a fraud, because they only amounted to 1/300th of one percent of the nation’s publicly owned capital stock. The much-heralded “market reform” of Yeltsin was a myth, and so Solzhenitsyn said “I refuse to recognize this as reform.”
Contrary to what the media have said, Solzhenityn is not opposed to market reforms. Rather, he has concluded that market reforms have never really gotten off the ground. Economists of the Austrian School have made this same observation for years, even while Sovietologists shrieked that “shock therapy” had gone too far.
The Austrian School, rooted in the work of Ludwig von Mises and F.A. Hayek understands how essential are floating prices for the calculation of profit and loss. Even more fundamental, it says, is the institution of private property. The two must go together for prosperity and to prevent one group from abusing its power and position to rob another group.
In all future efforts at authentic reform. Solzhenitsyn suggests throwing out socialism in “constructive, thought-through system of actions linked one to another.” He also cautioned against listening to the socialists in the West, who led Russia into its current statist miasma. “Our life, spiritual and otherwise, must be formed from our own tradition, our understanding, our atmosphere.”
But, he cautioned, these reforms would not come from the top of the Russian state. Russians must stop waiting for a “monarch, boyar, politburo, or general secretary” to save them with some grand decree. Russians must take fate into their own hands, especially in local elections.
As for his supposed rabid nationalism, he dismissed Vladimir Zhirinovksy as “a caricature of a Russian patriot so that he would be hateful to the whole world.”
How wonderful that Solzhenitsyn is able to see through the fog that has blinded American Sovietologists and economists for years. And he knows that the Russian people need to understand how they have been hoodwinked before they can go forward with an authentic reform.
By pushing for fundamental grass-roots change toward a truly free economy based on private property, Alexandr Solzhenitsyn will be a powerful force for liberty, in addition to being Russia’s greatest living writer. And after he finishes there maybe he can move back here and help us fight our centralized state.
