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Privatisation in Russia Has Led to Criminalisation
Author(s) -
Intriligator Michael D.
Publication year - 1994
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.1994.tb00830.x
Subject(s) - shock therapy , currency , incentive , shock (circulatory) , business , property rights , digital economy , market economy , politics , economics , economy , economic policy , political science , monetary economics , law , medicine , microeconomics
Russia has recently embarked on a dramatic program of privatisation as part of the process of shock therapy which aims to convert the command economy to a market economy. This program has been undertaken in the absence of a well‐developed set of institutions needed for the proper functioning of a market economy. These institutions include a legal system, a related system of property rights, a credit system, a system of commercial banks, classified advertising, an accounting system and others including a sound currency and a social safety net. In the absence of these institutions the incentives facing agents in economic transactions have been perverted. This has led to criminalisation of the economy, dramatic falls in production, loss of confidence in all aspects of commerce, and political instability. The recent Russian experience of privatisation has important lessons for other economies in transition, for developing economies and for economic theory.