Demagoguery And a Plan for The Economy

With the new Russian Parliament barely out of the starting gate, it is already clear that the government and the president are not the only ones claiming the right to create an economic strategy. Many factions began working out their own alternative programs almost as soon as they were officially registered.


The economic program of Russia's Choice is well known and parts of it have been put into practice. Ditto the program of the Communists and factions close to them. But the same cannot be said of Vladimir Zhirinovsky's faction. Given the LDPR leader's statements -- some of which he himself does not seem to take seriously -- it is hard to draw any conclusions as to the nature of the economic plans of our "liberal democrats." But to assume that Zhirinovsky's faction has no serious or specific program would be a mistake.


In the coming days, another leader of the LDPR, Academician Anatoly Sidorov, plans to present a report to the Duma. Sidorov is a senior member of the Academy of Sciences' Economic Institute and, more importantly, deputy chairman of the State Duma's Committee on Economic Policy.


What will Sidorov's report contain beyond a reiteration of the catastrophic situation (a requisite these days for most documents of this kind regardless of the authors' political allegiances)?


First, Sidorov maintains that the only way out is for the government to resign and for the Duma to form a new cabinet. He includes economic pointers for the new government. Point No. 1 is to draft and pass a law on state regulation of the economy.


Sidorov is fairly cautious. He tells us that this law should protect the private sector from interference and guarantee the security of private property. And Sidorov proposes conducting a credit policy that would stimulate the formation and growth of private capital. All these perfectly liberal theses sound almost like the real thing.


I suspect many liberals would support Sidorov's proposal to single out unprofitable enterprises and eliminate them one by one. Sidorov is also against transferring state property to other state institutions or enterprises rather than turning it over to private investors. Again, this conviction would find many proponents in the ranks of the reformers.


The report makes no allusion to the price and wage freezes favored by the scientific "economic nomenclature" -- Leonid Abalkin, Nikolai Petrakov, Stepan Sitaryan. But read the fine print and Sidorov's "liberalism" calls to mind the wolf in sheep's clothing. Sidorov, it turns out, is not against price and wage freezes. His idea is to set legal limits on the profitability of both state and private enterprises.What is more, his entire report hinges on the prevailing will of the state.


"Changing the structures of production under the influence of the market," it reads, "should be regulated by means of adopting an active state policy." In other words the LDPR's economic philosophy of reform is to let there be as much of a market as the state will bear. And that state should be run by Zhirinovsky's "liberal democrats."


Sidorov's report is an artful potpourri of reformers' phrases and orthodox central planning: the sort of pabulum that should go right down with moderate reformers and moderate conservatives alike, meaning an overwhelming majority in parliament. Worst, the democrats may again underestimate the effectiveness of the LDPR's demagoguery -- this time in the economic arena.