Yegor Gaidar Interview: Conversations with History; Institute of International Studies, UC Berkeley
Page 4 of 9
What you were trying to do was move the Soviet economy, and then the Russian economy after the Soviet Union had broken apart, to a market economy. How could we explain to people what that means? Could you draw a picture for the average person of what that old way of life meant and what a change involves? For example, for people of your generation, what were their possibilities for the future that you envisioned which they didn't have in the old system?
Well first of all, you have to understand that the socialist system
was a very, very specific set of comprehensive institutions. So it's not as if
you are taking some details from this and combining them with a market -- it
was very, very comprehensive. And it is very difficult to put a person who had
no chance to live under the system in a position to understand how it works,
how it is structured, and also how dangerous it is when it's starting to fall
apart.
For instance, you come to the retail store and you're absolutely sure
that you will get bread in this retail store, that you will get milk in this
retail store, that you will get meat, if you need it, in this retail store. You
go to the gasoline station and you know that they have gasoline there. You know
that the light will turn on in your room.
And it is not, as Adam Smith
mentioned once, it's not because you depend on the charity or good view of the
baker, or anyone else. It's the normal work of the market mechanism.
So let us imagine, for a minute, that none of these things work, that if the state has not given precise orders to the grain producers telling them what to produce, where to send the grain, what to do with the grain, where to produce milk, where to send the milk, where to produce the components necessary for milk production, etc., nothing will be done because there is no interest in it. Money doesn't work, the market doesn't work. Only if this very comprehensive system -- which is based not on vested interest but on power; which goes through all the enormous country from Moscow to Kamchatka; which depends on the possibility of the highest level to influence directly, by order that will be implemented, on developments in Kaliningrad, Kamchatka, Sakhalin, etc. -- only then could the system work. So imagine for a minute that you withdrew power from this system -- power isn't efficient anymore. Well, the coup failed, the Communist Party doesn't exist, the KGB doesn't exist, there is no fear -- what will happen? You will not be confronted with some economic problems. You will be confronted with complete economic collapse because there will be no bread in the shops because there is no vested interest, and no bread in the shops because there are no efficient orders. There is no electricity because there is no vested interest, and no vested interest because no orders to produce coal to supply electricity. So you are having a full-scale catastrophe of that very, very delicate mechanism of the modern industrial society. That was really the starting point.
So it was not, for instance, as though we had a working socialist economy -- "it functions, it's nice, we are implementing a program of reform, we are thinking about how to make it better" -- no.
When communism collapsed, it was the start of the collapse of all the mechanisms
of microeconomic regulation. Soldiers were not getting bread because nobody
supplied them. Big cities were without food. The population was preparing to
save itself somehow. It was very well pictured in Russian novels, exactly at
moments, this expectation of catastrophe. So when we had to start, we had to
elaborate the plan first of all, not on how to build a splendid, nice, perfect,
stable market economy, but to urgently, somehow, without preparations, without
the necessary preconditions, make markets work. It was evident that it would
be impossible to make the state farms supply grain without food orders. So somehow,
in a very short period of time, we had to reintroduce efficient money in the
economy and to make a market mechanism work. That was the essence of the plan
we were elaborating. It was evident to us that there was no 100 percent efficient
solution, that no strategy guaranteed success. But at least it was evident what
you had to try to do. For instance, what I was thinking at the moment as a possible
model: You are flying in a plane. Then you see that the crew of the plane has
parachuted out. Then, either you crash or somebody will at least try to do something.
That was exactly my view of the situation in '91.
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