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Russia's Second Revolution (Russia now appears to be under Authoritarianism with an economy

controlled by billionaire oligarchs)

It has been known for centuries that people lobby their governments for privileges.
Expenditures on lobbying for privileges are costly and these expenditures, therefore, dissipate
some of the gains to the beneficiaries while causing cost and inefficiency to the overall
economy. If, for example, a steel firm spends one million dollars lobbying and advertising for
restrictions on steel imports, whatever money it gains by succeeding, presumably more than one
million, is not a net gain. From this gain(referred by some economists as "rent income" from the
State rather than a "production profit" by a private steel enterprise) must be subtracted the
one-million-dollar cost of seeking the restrictions... which increases the domestic cost of steel
anyway. Under the Stalinist 'socialist/communist' bureaucratic State, the State owned
enterprise managers were lobbyists for increased State capital for their particular State owned
Enterprise ( State owned communal farms, State owned tractor factories, State owned energy
enterprises, State healthcare, State owned retail stores,etc.,... all State owned enterprises.) This
was referred as "rent seeking" from the State as a benefit to the various State owned
'enterprises' and the managers being held accountable for the efficiency of the outcome. The
efficiency of the State bureaucratic economic system apparently began to break down( a much
deprived and underpaid population supporting a military empire). In reality, the Soviet Union
appears to have entered complete economic stagnation by 1979. The USSR was a military
superpower, but at the expense of everything else. ( a warning to the United States due to a
much bloated military budget and over-extended Global reach). It was in 1985 after Chernenko
died that Gorbachev was elected general secretary, and the entire aging leadership was soon
replaced by men mostly in their 50s that pursued a revitalization of the whole Soviet
administration. Five new leaders---Gorbachev, Ryzhkov, Ligachev, Shevardnadze and Yeltsin at a
time of cynicism, corruption, passivity and economic apathy intended to improve their country
(they agreed, "We can't go on living like this.")___Brown 1996, PG. 81

Perestroika
They began working on economically dominated policy of change, or 'perestroika' with a new
five-year plan for 1986-1990. Three plans were being debated: A first group led by Ligachev
advocated socialist morality, wanting little but the reinforcement of communist discipline. A
second group led by Ryzhkov opted for technocratic improvements within the Soviet system. The
most daring program advocated a socialist market economy, as was already in place in Hungary
and Poland, with elements of private enterprise (this approach had no full-fledged advocate in
the Politburo, but Gorbachev lent it partial support.) Yakovlev was the most radical member of
the Politburo, but as a political scientist and historian he did not focus on the economy, but
rather democracy. He stated, "There was an understanding of what had to be rejected---
authoritarianism and the command-administrative system. There was an urgent need for
democracy, but we had to find out by what means and in what form." ___Yakovlev 1991, pg. 33-
34

The Emergence of Private Enterprise

Communism abhores private enterprise. The nationalization of 'all' means of production is a


fundamental tenet of communism, yet many problems in the Soviet economy could not possibly
be solved within the public State sector. Numerous goods and services were scarce, of
substandard quality, or missing altogether. The black market filled the worst holes, but
organized crime was not an acceptable solution. After Stalin's death in 1953 it was later in 1977
a new constitution spelled out as permissible "individual labor activity in the sphere of
handicrafts, agriculture and consumer services for the population, as well as other types of
activity, based exclusively on the personal labor of citizens and members of their families.". The
most substantial private activity was 35 million private household plots, which accounted for 25
to 30 percent of all Soviet agricultural production.___Konstitutsiya 1977, pg. 9 On November
19, 1986, the Law on Individual Labor Activity was adopted and in force May 1987. Since it was
not yet economically attractive because of overall conditions, in 1989 only about 300,000 people
were registered in individual labor activity.( what might be considered economically self-
sufficient enterprises in Western terms)___Goskomstat SSSR 1990, pg. 47 Ideologically,
however, this law was important later since it contained several interesting innovations. One
was that "other kinds of handicrafts are allowed, if their occupation is not forbidden in
legislation." The Soviet standard until then had been that everything that was not explicitly
allowed was prohibited( think of the US Constitution when it comes to the 10th Amendment).
Surprisingly, planning and pricing were not even mentioned...leaving this law to initiate private
enterprise, which was soon to rise with the support of six subsequent decrees on various kinds
of independent cooperatives and individual farming adopted from October 1986 to October
1987. Each broke more ground for private enterprise, and the new cooperatives and individual
labor were backed up by an impressive media campaign from the end of 1986. (today in the
United States... individual, self-sufficient, small family farming enterprises have been replaced by
corporate Big-Agra/ and Factory farming... from about 40 million units in 1940 to around 1.5-2
million units today, which are mostly government subsidized. There are more lawyers in the
United States today than self-sufficient family farmers. The United States has been going in the
direction of the once Soviet economic model, while the cost of food since the 1950s has
increased by a factor of about 20x depending on the food item. Example: bread has increased an
average of .25/loaf to 3-4.00/loaf...and corn on the cob(sweet corn) has increased from
2.00/bushel to as much as 1.00/ear if you can find it in the Super Market. (most corn is now
wasted for Ethynol). It now would seem that the old Soviet State owned enterprises have been
transformed into privately owned economic entities by billionaire oligarchs, which use to be
high level communist State owned enterprise managers. Is Russia now an Autocratic State with
an authoritative private command-planned economy?

Most of the world seems to now be squeezed between what might be referred as a State
command-controlled and planned economy(State monopoly socialism...transforming into an
Autocratic State)...and, a present Corporate command-controlled and planned
economy(Corporate monopoly fascism transforming into an Autocratic State) The development
of a Middle Class cooperative system of free-enterprise and individual economic choice of how
people support themselves and their families now seems to have been for a number of reasons
pretty nearly eliminated. Society is always more prosperous and free when it is made up of
'three economic Classes' rather than just two, which has been the dominate situation of Human
history, but for a relative short period of time mostly following the Industrial Revolution.

...excerpts from Russia's Capitalist Revolution and Why Market Reform Succeeded and
Democracy Failed______Anders Aslund