Egor Gaidar as a Marxist
By Vladimir Shlapentokh
Professor of Sociology, Michigan State University

Egor Gaidar was not the only professional economist who held a high position in the government of his country. Anne Robert-Jacques Turgot served as a high administrator under Louis XY and his grand son Louis XYI. David Ricardo was an influential member of the British House of Commons. Eugen von Boehm-Bawerk served as minister of finance during the Austrian-Hungarian Empire. Joseph Schumpeter was the Austrian Minister of finance. And finally, John Maynard Keynes was an influential economic adviser to the British prime minister. Nobody would compare Gaidar’s status as an economist to any of these giants of economic science. However, none of these prominent figures influenced the economic life in their country as much as Gaidar did in his capacity as the Russian prime minister. Whatever are the assessments of Gaidar’s reforms in post-Soviet Russia, they changed the country radically, for better or worse.

With such a record as one of the greatest revolutionaries of the twentieth century as well as one of the best Russian economists, each of Gaidar’s big publications deserves attention, particularly his extensive new book, Long Time. Russia in the World. Essays in Economic History (Dolgoie vremia. Rossia v mire. Ocherki ekonomichsekoi istorii, Moscow: Delo, 2005).

The first novelty of this book is the radical change in Gaidar’s attitude toward Marx, especially when compared to his book State and Revolution (Gosudarstvo i revolutsia, Moscow: Evrazia, 1995). Engaged then as he was in a struggle against Communist ideology and its defenders in post-Soviet Russia, Gaidar could not say much good about Marx. Only a few years earlier, in 1993, Gaidar and his family valiantly defied the Communists in the streets of Moscow in the dangerous days of September-October. In his 1995 book, Gaidar did not spare the founder of “scientific Communism” either. Rather, he applied all his sarcastic ammunition to denigrate Marx. With some caveats (“he is a great thinker and a brilliant publicist”), Gaidar associated Marx with “the leaders of great destructive revolutionary movements,” along with Bakunin, Lenin, Trotsky, Mussolini, Stalin and Hitler (31). Critical of Marx, he wrote that “Marx’s prognoses turned out to be exactly the reverse of reality” (30).

What a difference a new book makes in which Marx in fact dominates Gaidar’s theoretical reasoning. His return to Marx (see his last big publication during the Soviet times, The Economic Reforms and Hierarchical Structures, (Ekonomicheskie reforms i hierachicheskie struktury), Moscow: Nauka, 1990) is full of quotes from Marx. A change in Gaidar’s attitudes toward Marx started in his book Anomalies of Economic Growth (Anomalii ekonomicheskogo rosta, Moscow: Evrazia) published in 1997.

And now, Gaidar, as never before since 1991, demonstrated his full respect for Marx as a source of his theoretical inspiration, not refusing to make critical comments on some elements of Marx’s heritage (64). He cites a dozen famous scholars who praise Marx, including Joseph Schumpeter, Fernand Braudel, John Hicks and Douglass North. Gaidar says good things even about the theory of surplus value, one of Marx’s ideological constructions that substantiates his idea about the class exploitation as the major phenomenon in history: “Even if it looks today archaic and far from life,” it “describes not badly … the realities of agrarian and early industrial societies” (79).

Greeting the much more objective approach to Marx, indeed a great scholar, Gaidar’s new book may amaze the reader that he did not find a more contemporary theoretical framework for his analysis of Russia and the world. Gaidar’s book with Marx at the center of his analysis should indeed flabbergast Russian Communists, haters of Gaidar, as well as Russian liberals and Western admirers of the author.

Another novelty of Gaidar’s book is the use of Marx, the formidable critic of capitalism and the prophet of its demise, for its praise. Several prominent authors in the last decades came up as champions of capitalism – from Friedrich Hayek and Ludwig von Mises to Milton Friedman. But none of them based their praise of capitalism or even libertarianism on Marx’s economic theory.

To summarize in one sentence the essence of Gaidar’s book, it preaches economic determinism, in some ways even more strongly than Marx did himself. Gaidar himself preferred, as demonstrated by “The anomaly of Economic Growth,” to subscribe to “economic materialism” as “a powerful analytical and prognostic instrument” for the study of contemporary societies that are all in the “state of transition” (the author did not specify the direction of transition, see 19-21). There are two forms of economic determinism­“soft” and “harsh.” The first one explains social structure and culture as a product of the social and technical organization of economic life. The second one reduces all major developments in society directly to the progress of production and technology. Gaidar evidently gravitates to a “harsh” kind of “economic determinism.”

While Marx indeed believed that the development of the forces of production depends exclusively on the state of the relations of production, he did not suggest in his main works that the level of the forces of production directly shaped all major elements of society. He supposed that the impact of the forces of production on society could be put into action only with the interaction between “the base” (the relations of production) and superstructure (politics, culture, ideology and religion). Gaidar does not make a distinction between two of Marx’s paradigms and confounded them into one. As he mentioned in “the Anomalies of Economic Growth,” the “great change in the forces of production” directly determined “the changes … in culture” (19-20).

Indeed, Gaidar takes the income per capita (“the best indicator used to evaluate what Marx named the level of the developments of the forces of production,” 75) as the major independent variable that determines the dimensions of society and political structures in the first place. His latest book is full of tables in which income per capita is combined with various variables, particularly the level of democracy, education, the access to information, and the proportion of state expenditures in the national income (121, 123, 288, 289, 333, 350). Gaidar does not provide us with any evidence about the character of the cause-effect relations between the size of income per capita and such variables as political structure and culture. He is confident that the income per capita is an independent variable, while others are dependent. However, some recent studies, without denying the impact of economic growth on many elements of society, have shown that essentially, in the long run the opposite happens: the level of income is itself a product of various factors. Ronald Inglehart (see his Modernization and Post Modernization. Cultural, Economic and Political Change in 43 Societies, Princeton: Princeton University Press, 1997) suggests, along with several other authors, that the level of income seems more like a dependent variable, while specific aspects of culture and political structures come up as independent variables. While Gaidar makes income per capita dependent only on “the relations of production,” most Western authors try to find out the relative role of many factors that shape the rate of economic growth. Besides capital, both physical and human, and technological growth, the arguments of the so-called production function, they operate with the accumulation of knowledge, the scale effect, the openness of a country, international trade and protectionism, geography, demography, level of competition, the degree of inequality and various institutions. Using data of various countries, Gaidar, with his assertive style, does not profess any doubt about the complexities of cross-country analysis, such as the direction of cause-effect relations, the isolation of one variable from another and the statistical robustness of the results. What a contrast with the recent book by Elhanan Helpman (The Mystery of Economic Growth, Cambridge, MA: Harvard University Press, 2004), who, after the survey of the contemporary literature on economic growth, calls on his colleagues to look at their results “with a great deal of caution and humility.” Gaidar reveals the depth of his deep economic determinism when he moves to the study of the history of the 20th century. He talks a lot about various non-economic factors when he discusses the past, but as soon as he moves to our times he almost totally ignores them. Moving to the explanation of “successful” and “aborted” socialist revolutions, Gaidar uses, as key a indicator, only the national income per capita, suggesting to readers that it is the major factor that determines the success of a revolution. In countries such as Russia, China, Vietnam, Cuba, and Yugoslavia, the revolutions were successful and the income per capita was low. In France, Bavaria, Hungary, and Spain, where the income per capita was high, the revolutions failed (288-289). Gaidar does not even mention the specific political and cultural circumstances in these countries. It is indeed amusing that he links the failure of the Bavarian revolution (1918-1919) to the level of per head income in this German province. This revolution took place under extremely confusing political developments including a government of workers and soldiers’ councils which declared war on Switzerland because it refused to loan 60 steam trains to Bavaria (see Koppel S. Pinson, Modern Germany: Its History and Civilization, 2nd ed., Macmillan, 1966).

The deep economic determinism made it impossible for Gaidar to explain the origin of the Soviet totalitarian state and its economy. Gaidar reduces the choice of economic models in post-revolutionary Russia to “the alternative of state or private accumulation” (303), which is indeed a very superficial explanation that distorts the depth of the Soviet drama. Gaidar totally ignored the close link between Soviet industrialization and the geopolitical goals of the Soviet leadership, which, since the inception of the Soviet state, were concerned both with the defense of the regime against foreign threats and internal enemies, as well as with the determination to expand Moscow’s influence in the world­goals that Stalin never hid from the public.

Gaidar talks a lot in his book about the military issue in the Roman Empire, about the military reforms in Europe after the Middle Ages, not forgetting Napoleon, the evolution of the Prussian army after its defeat in Jena, and the state of the American army during the U.S. civil war. However, in describing economic developments in his own country, Gaidar almost completely ignores the fact that militarization was the essential feature of Soviet society and had indeed a crucial impact on the economy, political organization, culture, education and all other spheres of social life. Gaidar mentions the role of the army and the militarization of society in only a few sentences (319, 363, 375). Unbelievably, he does not discuss the military-industrial complex (the notorious VPK) as the major heritage of the Soviet economy and the conversion of the military sector as the top problem for Russian economic reforms, which were presided over by the author himself. However, he spends time to discuss such an economic burden from the Soviet times as “the development of the North” (373).

After disregarding the militarization of the Soviet economy, it is not amazing that Gaidar does not even mention the role of the geopolitical goals of the Soviet leadership and its permanent tendency for expansion until 1979 and the invasion of Afghanistan. In Gaidar’s 2005 book, there is no such term as “the Soviet empire.” The continuity of the Russian and Soviet empire, a fundamental factor in Soviet history, is definitely more important to this book than agrarian societies of the past (129-170), or “the phenomenon of ancient Greece and Rome” (189-219). To the Soviet empire, a powerful factor in economic processes, Gaidar does not devote (let us remember such an issue as the industrialization of the national provinces) even one line in his 650-page volume. Of course, it would be impossible to expect that Gaidar in 2005 would discuss the role of Russian nationalism, which was, since the early 1930s, a dominant force in the official ideology. It would also be hopeless to suppose that Gaidar would tell his reader that the socialist economic project, with public property, central planning and collectivism, has been a perfect instrument for nationalism in all independent socialist countries (not only Russia, but also in China, Vietnam, North Korea and Cuba, and to some degree also in Israel). Indeed, the socialist model was almost ideal for the mobilization of resources in order to implement fast modernization and expand the military (see the analysis of the close relations between nationalism and socialism in my book Normal Totalitarian Society, Armonk: Sharp, 2001). For this reason, Gaidar’s suggestion that socialism is “the biggest anomaly in the contemporary international economic processes,” or a “failed experiment” (325, 379) seems to follow the anti-historical approach that was so hated by Marx. It is not easy to argue against the view that in China and Vietnam the socialist revolution guaranteed the independence of their countries and created the industrial basis for the next stages in their history. Many historians in the West are confident that Stalin’s cruel industrialization helped Russians to defeat Nazi Germany.

It is possible only to speculate about the causes that pushed Gaidar, a committed enemy of the Soviet state, to ignore in the 2005 book such glaring facts of the Soviet past (particularly if we see in his 1995 book reflections on the “communist empire,” 57), including the militarization of the Soviet economy and the military industrial complex (88, 168), and even “national bolshevism” (118, 132, 186-187).

However, Gaidar not only treats the Soviet economy with a strong underestimation of political factors, the same method is used in his analysis of the demise of the Soviet system. To explain the collapse of the Soviet Union, Gaidar points to a popular Marxist paradigm: “the relations of production shaped in the process of industrialization became an obstacle for the development of the forces of production” (330).

Almost unbelievably, Gaidar confused the factors that initiated Perestroika and those which led directly to the collapse of the Soviet society. Gaidar does not make a distinction between the state of the Soviet economy in 1985 and 1990, which in fact were radically different periods. The section of his book called, “The collapse of the socialist economy,” is an erratic mixture of facts from two different universes – one a “normal” socialist economy and another an economy in the state of degradation, but not because of the bad “relations of production” but because the Kremlin headed the destruction of all the fundamental institutions of the system and its economy. In a typical data table about the national debt, Gaidar combined data from 1981 and 1984, when the debt was relatively small, with the data related to 1989, when the debt increased enormously. However, it is impossible to talk about a trend that covers both periods because of their radical differences (344).

There is no doubt that in the early 1980s a gradual decline in the rate of economic growth was quite serious. However, no economy in history died from a decline in the speed of growth. The post-Soviet economy suffered from a catastrophic fall in the absolute volume of production and did not have a lethal heart attack. Insisting that by 1985 the Soviet relations of production were not adequate for the needs of the forces of production, Gaidar practically operates with only one fact: “by the middle of 1980s the Soviet Union turned out to be a country which was strongly depending on the world price on energy” (344). How could he write this statement in 2005 when Russia, with its new, non socialist relations of production, depends on the price of oil and gas at least as much as the Soviet Union did?

There is no doubt that the Soviet centrally-planned economy by 1985 was much less efficient than the developed market economies. It was far behind the West in technological progress and in the quality of consumer goods, but it was better than in the previous periods. Is it not true that all Soviet leaders, from Stalin to Gorbachev, were deeply dissatisfied with the performance of their economy and tried to reform it, in one or another way. In 1985, the Soviet economy in many respects was even better than 20-30 years ago.

Still, the Soviet economy played its role in the initiation of Perestroika, not because it could not satisfy the needs of consumers, but because of its perennial technological retardation and its small size. It could not sustain the arms race that was accelerated by Reagan. Gorbachev came to power as a leader who wanted to improve the economy and protect the Soviet military parity with the United States. He failed in this endeavor and moved to radical reforms, which killed the Soviet system.

With his economic materialism, Gaidar is far from understanding the origin of Perestroika. Indeed, who were the actors who, on the eve of Perestroika and in its first two years, wanted to change “the relations of production”? Gaidar does not refer to the public, which tolerated the lines in the early 1980s, as well as the drastic decline in the standard of living and the confiscation of their savings in 1992-1995 and in 1998. Gaidar’s loyalty to Marx lured him in his “State and Revolution” to describe the emergence of the new relations of production in Russia exactly in the same way as Marx did for West Europe. According to Marx (and he was right), the emerging bourgeois class, the famous Third Estate which initiated the French Revolution, came up as the grave diggers of feudalism and the sponsors of the new relations of production. Gaidar declared that the Soviet nomenklatura played the same role in the formation of new economic relations in Russia, also inside the old system.

Again, he confounded the two periods (before 1985 and Perestroika). Indeed, when the Soviet society was in the state of collapse, the holders of power began grabbing state property. But nothing like this happen before 1989. Gaidar’s statements in “The State and Revolution” that “communist oligarchies were the grave diggers of the system” and that between 1953 and 1985 there was “invisible processes of preliminary privatization of property” (103, 107) are deprived of any empirical data and is indeed complete fiction. Gaidar could bring only one example that is supposedly in favor of his theory: the chairman of the Union of Soviet writers had in 1986 a fortune, about 14 million rubles (124), evidently made from the honorariums of his numerous novels. But how the savings of a Soviet bureaucrat could prompt him to nourish the dream of privatization of state property is unclear. Of course, there were many thousands of illegal entrepreneurs and private economic activities were quite developed before 1985. But these processes were irrelevant to the behavior of the nomenklatura. Numerous officials took bribes but it had nothing to do with their intentions to privatize state property, even if in “a preliminary form.” What is more, most of the nomenklatura was strongly hostile toward privatization until 1989-1990. Gorbachev himself did not dare to use the term “private property” until 1990, because of his fear of the nomenklatura. In fact, Perestroika was orchestrated by one group of people and benefited a different one. In any case, among the most notorious Russian oligarchs we do not know even one who was before 1989 a member of the high echelon of the Soviet bureaucracy. Olga Kryshtanovskaia, the best Russian expert on elites, in several of her publications, particularly her brilliant book “The Anatomy of the Russian elite” (Anatomia rossiiskoi elity, Moscow: Zakharov, 2004), convincingly showed that privatization with the participation of the nomenklatura started only in 1989.

It is only natural that Gaidar’s economic materialism accounts for his overestimation of universalism and underestimation of the specific character of each society. In “The Anomalies of Economic Growth” he even talked about “the world norms” of economic processes (40-41). Along with economic determinism, he shared this sin with a few American economists­first of all Andrei Shleifer, the former adviser to Gaidar’s government. In his article (co-authorship with Daniel Treisman), “A normal country” (Foreign Affairs, March-April, 2004), Shleifer offers the vision of a world based exclusively on the magnitude of the national income per capita as the factor that shapes all major elements of society (see my analysis of his views in “Shleifer and Treisman’s economic comparisons are wrong,” Johnson’s list, No. 8091, February 28, 2004). It looked as if such serene beliefs in universalism were a part of the mind of all these American advisers who worked for the Russian government in the early 1990s. Indeed, Jeffrey Sachs, a prominent American economist who was also involved in the Russian economic reforms acknowledged several years later in his critique of neoclassical economics, the disregard of geography and political specifics as an organic flaw of their activities after the collapse of the Soviet Union (see his chapter in Lawrence Harrison and Samuel Huntington, eds., Culture matters, Basic Books, 2000). However, Gaidar and Shleifer are today as enthusiastically simplistic in their versions of universalism as they were fifteen years ago. The question of how their views influenced the post-Soviet economic evolution in the 1990s goes beyond the scope of this piece.

In no way would I rebuke Gaidar for his respect for Marx. I despise those new born anti-Communists, such as Alexander Yakovlev, former head of the propaganda department at the Central Committee during the Soviet invasion of Czechoslovakia. Yakovlev was the author of numerous books that defended the official ideology and downgraded the West before 1985. After 1991, he started to denounce Marx in his books, speeches and interviews as the author of “meaningless and deceptive texts” (see, for instance, his recent interview on radio station “Freedom,” June 9, 2005). I personally see Marx as one the great thinkers in human history. There is no doubt that Marx’s focus on the role of the economy and technological progress in society and the role of material interests in human behavior is a big contribution (along with several of his other ideas, in particularly in sociology) to science. However, Gaidar’s infatuation with Marx served him poorly. It prevented him from developing a multifaceted analysis of economic and social processes in the twentieth century.

Using for the title of his book “Longue Duree,” the famous term of Fernand Braudel, who is known, along with his Ecole des Annales, for his broad vision of human history, Gaidar supposedly claims to be following his path. But he did not. However, when Gaidar, as a very educated person, well-versed in the Western literature (in his last book he cited roughly 700 non-Russian authors), frees himself somewhat from the grip of Marx’s monistic cognitive structure, he develops interesting ideas. One of them was about the impact of a weak state on society. And, of course, the author of this review highly appreciates the historical role of Gaidar as a destroyer of the Soviet planning system, which served as a basis of the totalitarian monster and a mortal threat to the world.

I will end with a mild rebuke to the author: Why didn’t he ask his publisher to provide his thick book with name and subject indexes, along with a bibliography at the end of the book? This practice has been followed by publishing firms not only in the West for more than a century, but also in Eastern Europe, Lithuania and Poland among others. Why is this practice still being ignored in Russia? Such information would have been very helpful to the readers of this controversial but very interesting book.

Acknowledgment: The author wishes to thank Joshua Woods for his editorial contribution to this article.