This article was published in 1993, almost two years after “shock therapy” was implemented in Russia and argues that Yeltsin’s reforms unleashed unbridled free-market chaos in the name of "economic reform”. It describes how the IMF agreed to give Russia 24 billion in credits in exchange for Russia to dramatically cut its state budget deficit, but Russia had little functioning economic infrastructure in place before this cut, so chaos ensued as living standards fell and inflation occurred.
This report gives valuable statistics about how shock therapy had a detrimental impact on the Russian economy. It describes how In the first seven years after 1991, Russia lost 30 percent of its GDP and suffered high rates of inflation, with an inflation rate of over 2000 percent in 1992. This resulted in the value of the ruble to collapse, causing the Russian government to devalue the ruble in 1998, with 1 new ruble equalling 1000 old rubles. Russian real income declined 25 percent between 1993 and 1999, and life expectancy fell from 64 for males and 74 for females to 59 years for males and 72 for females. These statistics provide evidence of the detrimental impact of Yeltsin’s economic reforms and how they impacted the Russian economy and population.
This book, written by Joseph R. Blasi, Maya Kroumova, and Douglas Kruse, entitled “Kremlin Capitalism: Privatizing the Russian Economy” gives a comprehensive, objective perspective on how Yeltsin’s economic reforms transformed Russia’s economy. It describes how, though Yeltsin’s intentions were good, by giving out shares to Russian citizens he essentially caused their ensuing poverty because these citizens sold their shares so they had more money in the rapidly inflating economy, and in the end were left with no money and no shares.
This investopedia article explores how Yeltsin’s implementation of radical economic reforms impacted Russia’s transition from a command economy to a capitalist economy. The president instituted privatization reforms which saw seventy percent of the economy privatized by the middle of 1995, an action which this article argues was trying to prevent the ensuing thirty percent drop in the country’s GDP from 1991 to 1998, as well as the rapid decline in Russian disposable incomes.
This video shows footage of the poverty many Russians experienced brought on by the extreme decline in standard of living from the economic reforms of 1991. It also describes the intricacies of what occurred in 1991 within the legislature of the Russian government, showcasing the many mistakes Yeltsin made in attempting to fix the failing Russian economy.
In this article, Swedish journalist Dan Josefsson looks at the concept of “shock therapy”, the technique Yeltsin used to suddenly transition from a command to capitalist economy. He describes how shock therapy is based on the view that society in its “natural” state functions as a market economy, and only by regulating the free market in an “unnatural” way can a non-market-oriented system be created. He explains how shock therapy advocates for Russia in the early 1990s believed that prices would go up when the price regulations were abolished, but only during the transition period and that soon afterwards the urge to earn a profit would make private companies produce more of the goods and services in demand and consequently prices would go down and stabilize, fixing the economy.
This article effectively summarizes what Yeltsin’s economic reforms were, which included eliminating government price controls and privatizing the major sectors of production. It also discusses the opposing views of the supporters of Yeltsin’s “shock therapy”, such as Harvard economist Jeffrey Sachs, and the critics, such as Joseph Stiglitz, a Nobel Prize winner and the chief economist of the World Bank. Sachs had used shock therapy as a strategy to successfully end Bolivia’s 24,000 percent inflation, and believed this would be a solution for the Russian economy as well. Critics like Stiglitz believed that Russia’s massive size and the difficulty of making a change so quickly would make shock therapy impossible.