Russian Economic Reform

Questioning the attempts to portray the reform of the Russian economy as a disaster, Jim Leitzel maintains that these portrayals are misleading because they fail to take account of the many complexities of the transition. Perceptions about the pre-reform Russian economy are often inaccurate, primarily because the logic of a centrally planned economy is so different from a capitalist one that familiar economic phenomena, such as inflation and unemployment, take unfamiliar forms. The resulting misconceptions about the starting point for Russian economic reform lead to an exaggeration of the costs of transition. Leitzel argues that many of the costs associated with the process are not new, though during the reform process they may be borne in different forms and by different people. Furthermore, the short-term benefits of reform also tend to be exaggerated due to an insufficient accounting of the pre-reform tax.