If it hadn’t been for Mikhail Gorbachev, emerging Europe would have been a very different, perhaps a much grimmer, place.
Gorbachev made clear in 1989 that he would not use force to keep the Berlin Wall standing, and paved the way for transition in central and eastern Europe. His policy of openness (glasnost) gave voice to Soviet economic reformers, some of whose proposals he implemented.
But Gorbachev was not an architect of economic reform. In contrast to Deng Xiaoping, who in the late 1970s set out a clear plan to move China towards a nationalistic, state-guided, bureaucratic market economy, Gorbachev set out with the most conservative, traditional solutions to the Soviet impasse.
When Gorbachev took over as Communist Party general secretary in 1985, his first response to stagnating output was to demand uskorenie (speed-up) and greater labour discipline, as his predecessor Yuri Andropov had. He tried unsuccessfully to criminalize alcoholism. Only in 1986 did he call for perestroika (restructuring).
Gorbachev listened to his advisers, though. “He had an amazing capacity to grasp new ideas,” Leonid Abalkin, deputy prime minister in charge of the economy under Gorbachev, tells Emerging Markets. “He would listen, discuss, not interrupt: this was unusual in a Soviet leader.”
Gorbachev had the “mentality of a [Communist Party] district secretary” – a pushy, businesslike but theoretically lightweight figure in late Soviet society – and so “overtook all the pensioners in the politburo”, Abalkin says.
Economic reform
“He achieved a great deal in the economy: the 1987 Law on State Enterprises, the Law on Cooperatives, and the Central Committee plenum of mid-1988 on the transition to the market.” He laid down the foundations of an independent central bank and a banking system; approved leased and then shareholding forms of ownership; and disbanded some – although not all – of the Soviet industrial ministries that so obstructed progress.
Abalkin believes that Gorbachev’s critical mistake in economic policy was to ignore the crisis of Soviet agriculture. “The whole thing should have started with agriculture. By stimulating production there, we would have had a basis to lift the domestic market, as the Chinese did. Everything else would have followed.”
For Abalkin, the moment at which Gorbachev’s attempt to reform the Soviet system hit the buffers was the autumn of 1990. Prime minister Nikolai Ryzhkov – who opposed the most extreme market reformers, such as Stanislav Shatalin and Grigorii Yavlinsky, and refused to endorse their plan to complete the transition in 500 days – quit. “When Gorbachev was left without Ryzhkov’s support against [the first post-Soviet Russian president Boris] Yeltsin, the fall of Gorbachev’s government, and of the Soviet Union, became inevitable.”
Anders Aslund, who was economic adviser to the Russian government in 1991-94, and criticized Gorbachev’s reluctance to embrace the most radical reform proposals, tells Emerging Markets: “Gorbachev’s fatal mistake was to refuse to implement the 500-day plan. He then lost Shatalin, Alexander Yakovlev and Nikolai Petrakov – and Ryzhkov and Abalkin too.” He was left only with the most conservative opponents of reform.
Aslund says: “Gorbachev had a clear sense that the system had to change. He knew the direction, he favoured decentralization, but he wanted the process to be gradual... and he had no clear idea of the goal.” Gorbachev’s economic advisers were “parochial and uninformed”, Aslund contends.
Neither in economics nor in politics did Gorbachev have the agency that admirers and detractors alike often attribute to him. Even more than other figureheads, he was often presented with unenviable choices by the force of events.
He was marked out from earlier party general secretaries by his sense of democracy. Although glasnost began as a utilitarian concept, underpinned by a belief that the USSR could never get out of its technological and ideological rut without greater freedom of thought, it widened under the pressure of events. He brought dissidents home from exile and allowed political discussion to flourish.
When the coherence of the USSR seemed to be at stake, though, Gorbachev often left the security services to deal with it – as, for example, when they massacred peaceful demonstrators in Tbilisi, Georgia, in 1989, and Vilnius, Lithuania, in 1991.
When Gorbachev’s conservative colleagues staged an unsuccessful coup in August 1991, he played the innocent victim, imprisoned at his holiday home. But whole books have been written picking to pieces his claims that he knew nothing of the coup threat and was powerless to stop it.
Gorbachev’s difference with such staunch opponents of reform was, perhaps, that he had a keener sense of the way history was moving. They wrongly believed the USSR could continue as it had done, while he knew it was collapsing round his ears, and took responsibility for burying it in December that year.
In post-Soviet Russia, Gorbachev forcefully opposed the brutal “market Bolshevism” that imposed capitalism like a punishment. Gorbachev, like other reform-communists-turned-social-democrats, blamed the IMF and World Bank for allowing the pace in early post-Soviet Russia to be set by dogmatic US “market reformers”.
He received the Nobel Peace Prize in 1990 and was held in reverence abroad – but in Russia his views counted for nothing. He stood in the 1996 presidential election and received 0.5% of the vote.
Gorbachev has enthusiastically supported Vladimir Putin’s presidency, couching his criticisms – of the replacement of elected governors by appointed ones, or the abandonment of attempts to find a political solution in Chechnya, for example – in mild and conciliatory terms.
The former Soviet president has frequently admonished western leaders for their failure to accept a return to world power status by Putin’s Russia. When Putin denounced American hegemony over the “unipolar world” at Munich in February, Gorbachev assented to “everything the Russian president said” and enthused about “Russia’s rebirth” under Putin.
This profile is one in a series of twenty, published in a special commemorative edition to mark the 20th birthday of Emerging Markets newspaper. The profiles canvass twenty of the figures who have had the most impact on the rise of the emerging markets over the past two decades.