he other republics of the former Soviet Union on a common ruble zone and no agreement between the Russian government and the central bank on the granting of credit. Production continues to fall, and is estimated to be about 20 percent down from 1991.[2]
However, it is also true that the march to the market has begun. Market behavior is being studied, adapted, and adopted.
Few appear to be talking about non-market reform; it is only a question of which strategy is best for reaching that ultimate goal.
Back in late 1989 and early 1990, a $100 billion plan was put together between Harvard and the Center for Economic and Political Research of the USSR. The plan was to start in June 1991 and complete its first phase in 1993. The project was called "Window of Opportunity." It was co-directed by Graham Allison of the Kennedy School at Harvard and Grigory Yavlinsky, a Yeltsin supporter who has been in and out of favor. There were 41 measures ranging from reduction of enterprise subsidies, to macrostabilization, to large scale privatization. The market system in the proposal is largely an abstraction, however, composed by western economists for recitation to elites in the former Soviet Union.[3]
This program and others like it are primarily designed to achieve financial and monetary stability. Such stability is usually achieved at the expense of employment growth and improvements in living standards. The key to the Harvard plan is to attract foreign capital and, in order for this to happen, the ruble must be made convertible as quickly as possible so foreign firms have the assurance that they can repatriate their profits.
To make the ruble convertible, financial and monetary stability must be achieved: inflation brought down to below 10 percent, the budget in near balance, and the rate of growth of the money supply contained. The "shock" involved in such a strategy is the cost imposed on the average Russian. Higher ...