The 1980s and early 1990s were characterized by sweeping, radical neoliberal, monetarist-inspired economic reforms designed to correct financial or structural crises. Latin American countries initiated the wave, followed by Eastern Europe and the former USSR, although the timing, scope, and policies varied. Often one reads accounts of friends and foes of reform lined up to do battle in domestic and international alliances. However, reform processes and outcomes do not always follow the formula of reformers versus conservatives; there is more to the balance of power than these all-too-common accounts would suggest. Industrial managers in the Soviet Union and post-Soviet Russia and business elites in Argentina initially accepted reforms that would soon harm them. Soviet industrial managers, with their hands on levers of Soviet and early post-Soviet production, did not wholeheartedly embrace increasingly radical economic reforms, but neither did they reject them, or prepare for the uncertainty and systemic shocks that marketization would bring. Unlike younger entrepreneurs, they did not play games of speculation to accumulate capital; rather, they played on the margins of the law to improve gains and positions somewhat. However the extent of these practices didn’t come close to guarding them against what would come. In Argentina, business elites themselves initiated economic reforms that they thought would bring them the opportunity to participate in privatization at low cost, with high gains and increased autonomy from state regulation. In the end, however, the state picked up the reforms and expanded them, with the result that business elites faced increased competition that went beyond short-term challenges to their security.
Why was this so? With the benefit of hindsight, one would advise the Soviet managers (“Red Directors”) either to fight reforms tooth and nail or prepare themselves for the onslaught, possibly by playing the speculation game as the younger generation was beginning to do. One might suggest something similar to the Argentine businessmen. Yet seldom does this particular type of question emerge; especially in the former case, Soviet-era managers are often seen as mere rent-seekers unable or unwilling to adapt and essentially asset-stripping their enterprises to get rich quickly (e.g. Åslund 2007). This was just as often myth as reality. Using a comparison of these two groups—Soviet “Red Directors” (industrial managers, especially in heavy industry, the mainstay of the Soviet economy)1 and Argentine business elites (business associations representing the interests of various sectors), we will try to shed light on the processes and dynamics of radical economic change, in order to draw much-needed attention to the actions of those beneath the state elite.
Copyright © 2010 Centre for Independent Social Research. This article first appeared in Laboratorium: Russian Review of Social Research 2:3 (2010), 123-154.
Please note that downloads of the article are for private/personal use only.
Beltrán, Gastón J., and Jeffrey K. Hass. "Illusions of Market Paradise: State, Business, and Economic Reform in Post-Socialist Russia and Post-1980s Crisis Argentina." Laboratorium: Russian Review of Social Research 2, no. 3 (2010): 123-54.