The End of the Yeltsin Era

The collapse of the Soviet Communist regime in 1991 is widely explained as the failure of a utopian experiment. In reality communism ceased to be much of an experiment within months after the October Revolution. The true failed utopian experiment was Russia’s adventure in free-market capitalism from 1991 until this year. The cumulative disaster of this course was evident early on to anyone not disabled by the ideological blinders of the Chicago School economists, but the crisis of August 1998 finally drove home (to everyone but President Clinton and his advisers, it seems) the futility of proceeding on the path of Yeltsin-style “reform.”

Russian economic policy under Boris Yeltsin, like the breakup of the Soviet Union, was driven neither by ideology nor by practicality, but rather by Yeltsin’s personal vendetta against Mikhail Gorbachev and a determination to undo everything the latter stood for. Having faced down the coup plotters of August 1991 and having presided over the collapse of Communist Party rule, Yeltsin embraced the free-market theory touted by Yegor Gaidar and the new school of Russian economists enthralled with the antigovernment doctrines of the Chicago School. Under Gaidar as the first postcommun...