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. Last Updated: 07/27/2016

Economic Tiff: Return of the Old Reformers

The most hard-hitting discussion to date of the main alternative economic program took place last Thursday. The program was developed by academicians Stanislav Shatalin, Leonid Abalkin and Nikolai Petrakov, as well as other representatives of the old academic establishment.

The discussion took place at a special session of the economic club "Vzaimodeistviye," or Interaction. The club was formed in 1992, and included well-known economists, entrepreneurs, parliamentarians, politicians, and journalists. Yegor Gaidar became president of the club right after his retirement in December 1992.

Last Thursday at the President Hotel, the club had one of its most impressive sessions. It was devoted to "the academicians' program," as it is now known. The participants included the academicians themselves on one side, and their rebellious students on the other.

The discussion was unique in that it was less a professional debate than a face-to-face meeting between two successive governments. It was the first public, extremely frank discussion by the representatives of two generations and two schools of economic theory and practice.

Among the academicians who had developed the program of correctives to the course of reform were two former deputy prime ministers from the government of Nikolai Ryzhkov, Leonid Abalkin and Stepan Sitaryan. Their chief opponents were Yegor Gaidar and two of his former ministers: Andrei Nechayev of the Economics Ministry and Pyotr Aven of the Foreign Trade Ministry.

The academicians accused their former students of failing to create a market in the country; their policies, said the academicians, had ruined the economy and bankrupted a large portion of the population. The practical proposals advanced by the academicians are fairly well-known: price-freezing, the introduction of a fixed exchange rate for the ruble, and a strengthening of the regulatory role of the government as a whole.

Pyotr Aven announced that it was the government in which Abalkin and Sitaryan had taken part that had left the country with hard currency reserves of $60 million. During the past two years those reserves had grown to $7 billion. During the academicians' reign the foreign debt had doubled, reaching nearly $80 billion.

The two sides also disagreed on what had happened to the standard of living over the past year. The academicians maintained that it had fallen. Gaidar's team pointed to the rise in income in dollar terms and to the growth of volume in retail sales, which, in their opinion, incontrovertibly demonstrates a relative rise in the standard of living.

Abalkin, who was Nikolai Ryzhkov's deputy for reform, tried to dispute this thesis, saying that during 1993 the mortality rate went up, as did the number of cases of venereal disease. This last assertion caused some loud merriment on both sides of the house.

But the most convincing argument was advanced by another participant in the discussion, Kakha Bendukidze, whose firm acquired 22 percent of the shares in the Uralmash plant, as well as large stakes in some other major Russian enterprises. "I used to think that Gaidar and his team were too far away from real economic practice. But now I see that their critics, the academicians, have absolutely no idea what is happening in the economy, and that the Gaidar people are much more informed."