Is Russia a Normal Country - Book Report/Review Example

RUNNING HEAD: Is Russia a Normal Country Is Russia a Normal Country School Is Russia a Normal Country Since the fall of communism in what is now Russia, the world has looked on with rapt interest. A continuous debate has ensued focusing on the progress Russia has made in establishing a democratic society. Two such research pieces have offered divergent views on the current state of Russia's progress in moving towards democracy and an open economy. Both papers focus on answering the question 'Is Russia a Normal Country' In the following pages, this question will be examined and discussed. Before any discourse can be offered to determine if, in fact, Russia is a normal country, a definition of what constitutes normalcy within the context we are examining is necessary. Shleifer and Triesman (2005) as a disclaimer state that they are not the first to use the term 'normal' in reporting the current state of Russia's progress since the fall of communism. However, they fail to consistently define what normal is. Rosefielde (2005) in his rebuttal to the Shleifer and Triesman perspective point out that the definition put forth by the authors fluctuates between two definitions used interchangeably depending upon the point they are trying to make. According to Rosefielde, these two definitions are: 1) "a nation which has crossed the threshold from a cold war, centrally planned, authoritarian martial police state to virtuous democratic free enterprise, and 2) a middle income developing country with mixed characteristics that might mature into the western ideal" (2005, 3). As Rosefielde points out the second definition is uncontested. The mid level income status is statistically documented and the second portion implies that anything is possible. The controversy of opinions lies in the first definition and that will be the definition of normal which will be used in our examination. The first area to examine then becomes the status of Russia's free market economy. As Rosefielde succinctly points out this is done by evaluating several factors: "the characteristics of ownership, property rights, rule of contract law, price determination, market entry, profit maximising, utility maximising, efficient equilibration, and state regulation responsive to popular will" (2005, 4). The 2007 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal which was released January 17th addresses many of these main areas of concern. In this year's report Russia's economy was rated 'mostly unfree' with a ranking of 120th from the 157 countries analysed. Among it's geographically counterparts, Russia ranks 39th of 41. Figure 1 below displays the rankings based on various economic freedoms. Figure 1 Russian Economic Freedom Ranking Indicators ("2007 Index", 2007, 1) From the above chart, several of the categories indicate that Russia is near the world-wide average. However, in several categories there is a great deal of disparity, most notably investment freedom, financial freedom, property rights and freedom from corruption. The government restricts investment in many lucrative sectors including aerospace development, natural gas production, defence manufacturing and electrical power. In a free economy foreign invest must be scrutinised; however, restricting investment in entire sectors limits the growth potential of the country and the overall economic health of the country. In addition to these transparent barriers imposed by the Russian government, it was noted that within the culture of the country there are many instances of clandestine barriers which hamper Russia's move to a more free economy. Corruption, according to the report, is rampant which further hampers investments. Shleifer and Triesman (2005) who asserted that Russia was a normal country concede that there is widespread corruption and graft within the country as reported by annual reports presented by the World Bank and Transparency International. However, they countered this by suggesting internal measures would yield a more accurate assessment. According to Shleifer and Triesman (2005) when comparing the totals against only other countries emerging from communist rule, Russia scored in the median range for corruption and graft. They also provided survey results from individual citizens who responded to questions regarding the prevalence of corruption and graft. The results of this survey showed that individuals reported a decline within the past year in both categories. The fact that a country was once under communist rule is not a justification for continued corruption and graft nor should it be used as crutch to legitimise such action. Such a justification is flawed in that it excuses such behaviour because 'it's always been that way.' Further, consider the culture within which the Russian people lived for years and then consider how a normal person in similar circumstances would respond to questions asking them to report corruption and graft. Most people would, fearing reprisal, deny their knowledge of corruption and graft. Russia scored 40% free on the Financial Freedom listing. According to the 2007 Index, one of the main hindrances in this area is the banking system which lacks transparency and oversight. The index reveals that while there are over 1,000 registered banks in Russia, the two major banks which tend to monopolise the banking sector are both government owned. Independent foreign banks are not allowed to operate within Russia and lastly, the foreign investment level permissible is only 12% of the entire banking funds. These restrictions coupled with the heavy presence of the government owned banks which control much of the banking capital do not display a move towards a free market economy. Another area that has affected the Financial Freedom Index has been the economic swings experienced in Russia since the fall of communism. Shleifer and Triesman (2005) attribute this to faults within the decades of communist rule instead of analysing the current conditions. To say that the economic woes are solely results of the past forms of rule negate the precepts of a free enterprise system. Rosefielde (2005) counters this claim by pointing out that the former USSR on several occasions rebounded from economic depressions and: Consequently, it cannot be validly inferred that Russia has become a normal country just because it has partly, or wholly recovered from the trough of the post-communist hyperdepression. The USSR demonstrated a capacity to revive from disaster on two occasions, so that a post-communist bounce that is well shy of a full recovery fifteen years after the onset of "catastoika" cannot prove that Russia has transitioned to "normalcy." (Rosefielde, 2005, 5) The next area of the 2007 Economic Index of Freedom where Russia fared poorly was in the area of Property Rights. The index revealed that the protection of private property in Russia is very weak. To exacerbate the problem the judicial system in place is weak and ineffective leaving both citizens and business entities to instead rely on circumventing the system. This, of course, leads to further corruption and an underground form of justice which can often be violent in nature. As Rosefielde (2005) explains there is currently no independent court system in place to oversee not only civil and criminal infringements on an individual and business level, but also there is no system of checks and balances in place to ensure the democratic process is functioning smoothly. Shleifer and Triesman (2005) state that the reports of judicial misuse are unfair and state that 'these things happen' in countries implementing democratic principles. Again, after almost 20 years since the fall of communism is the lack of a strong, impartial judicial branch of government a believable excuse No democratic society devoid of such fundamental checks and balances can by any measure be construed as normal. Another common element of a democracy is the 'will of the people' and their perceived notions that they are, in fact, living within a democratic society. Nikonov (2003) stated "Democratic regimes are strengthened when their foundations are based on the people's faith in the sanctity and stability of basic democratic values. This is just what is lacking in Russia" (1). With the fall of communism in the latter part of the 20th Century the Russian people were eager to begin their journey on the road to democracy. The problem is that they have truly never experienced freedom. During the ensuing years those who championed the democracy cause have grown disillusioned. The turbulent economy, inflation, the privatization of property to a select few, rising cost of living expenses coupled with social woes such as increased violence and lack of adequate medicine have, unfortunately, been viewed as a failure of democracy. This is a sad consequence of the Russian government's attempt to appear to be moving towards democracy whilst still attempting to hold onto the control and power the few possessed in the past. Still, with all the turbulence of the last several decades, the Russian people are not ready to give up on a democratic government. Nikonov (2003) reported that a nationwide survey revealed that 15% of the population believed that had benefited from the free market reforms and implementation of the move towards a free market while 73% responding felt they had lost ground. However, 75% of all respondents felt that what was needed most was order within the country. When asked to define order responses included: "political and economic stability (46 percent), strict adherence to the laws (35 percent), a stop to the looting of the country (34 percent), and an opportunity for everyone to enjoy their rights (16 percent)" (Nikonov, 2003, 1). One of the main indicators of Russia's quest for normalcy will be how it responds to the 2008 departure of Putin at the end of his constitutionally mandated tenure. As Rosefielde (2005) points out the current election process is unfortunately manipulated by the government and its political machine. Only when there is transparency in the election process free from ballot stuffing and vote buying will democracy be a reality as opposed to a word on the tongues of those who wish to appear legitimate to the world. In examining the question of whether or not Russia is normal, the main indicators of free enterprise were examined to gauge the progress the country has made. The facts have supported the conclusion that Russia has not attained the status of normalcy. When examining the second definition of the term offered by Shleifer and Triesman (2005) can this middle income developing nation move towards the democratic ideal Of course they can, but this will only occur when instead of concentrating on appearances of normalcy the government makes a concerted effort to put first the will of the people in all. That is, by far, the most complete and lasting proof of democratic normalcy. References 2007 Index of economic freedom. The Heritage Foundation and The Wall Street Journal. 17 January 2007. 21 April 2007. http://www.heritage.org/research/features/index/country.cfmid=Russia Rosefielde, S. (2005). Russia: An abnormal country The European Journal of Comparative Economics, 2(1), 3-16. Shleifer, A. and Triesman, D. (Winter 2005). A normal country: Russia after communism. Journal of Economic Perspectives, 19(1), 151-174. Vyacheslav, N. (Spring 2003). The paradoxes of Russian democracy. Carnegie Reporter. 2(2), [online edition] http://www.carnegie.org/reporter/06/democracy/ Read More