Communism & the end of the Czar
Putin – The return of the Czar?
End of the Czar
• By the end the Czarist rule, Russia’s economy
was still pre-industrial
– Low standard of living
– 2/3 of labor force was agriculture-based
– Culturally fragmented
• 100 nationalities & languages
• Dispute over how to modernize
– Model economy on the West (capitalism)
– Build an alternative path (socialism/communism)
Bolsheviks won
• Marxism: capitalism will eventually fail b/c it
exploits the proletariat (workers)
– Profit is stealing from workers (surplus value--what
they SHOULD get paid)
– Leninism: Communist Party is the Vanguard of the
Proletariat & will be catalyst for the revolution
• Basic Tenets of Communism
– State ownership of the means of production
– Central Planning – develops plans for production
& economic growth
– Democratic Centralism: everyone gives their input,
but leaders make the decisions
Soviet Economy
• Soviet economy was in decline since
– Had to import grain & meat for the first time
• up to 1/3 of the USSR’s farm output spoiled
– Low standard of living
• Though some communist countries (like
Czechoslovakia) had a decent standard of living
Gorbachev’s Reforms
• Perestroika—restructuring
• Cut subsidies; allowed free-market pricing
• Glasnost – openness
• More personal freedom to promote more individual
• Had real debate & dissent
• Results
– Inflation
– Resurgent nationalism
– Rise of criticism against govt
• Led to Coup attempt, blocked by Yeltsin
• Yeltsin dismembered the USSR
Russia under Yeltsin
• New Constitution
– Strong President--can rule by decree
• appoints Prime Minister w/ Parliament’s approval
– Bicameral Federal Assembly
• Council of the Federation –represents regions
• Duma –combo of proportional representation &
Single-Member districts
– Federal System
• Sent the military to attack the Duma
Economic Reforms
• Shock Therapy
– Free market liberalization
– Privatization (Klepto-capitalism)
• Wealth confiscation, not wealth creation
• Anything of real value was sold off to Yeltsin’s allies for a fraction
of what it was worth
• Capital flight to the west --West was complicit in corruption
• Failure of Shock Therapy
– 1998 –Economic chaos (devalued ruble)
• 7 Oligarchs control ½ the economy
• Helped get Yeltsin elected
– De-industrialization of Russia
– Falling living standards
Putin -- Return of the Czar?
• Cracked down on corruption
• Arrested some of the oligarchs
– See photo on the next page
• Re-invaded Chechnya after series of 1999
apartment bombings in Moscow
• Economy has improved
– Mostly due to higher oil prices
Won re-election in 2004
– Still controls the media; many doubt it was a free &
fair election
The Economists’ view on Putin’s
crackdown of the oligarchs
Problems today
• Fear is a major force in Russian politics
– Falling standard of living –fear of poverty
– Fear of crime & terrorism (blame Chechens)
• Lack of a democratic political culture
– Putin has made his reputation as someone
who will crack down on corruption
• Is popular despite not-so democratic credentials
• Environment – much of former Soviet bloc
countries has this same problem
• Alcoholism

Russia - St. Charles Community College