this episode and others like it are made possible by the generous support of my patrons on patreon [Music] here's a Parliament building being shelled by its president here's a starving Russian and here's Mikhail Gorbachev with a big old pizza pie this week we're talking about liberal shock therapy sometimes nothing brings people together like a nice hot pizza from Pizza [Applause] this is the USSR back in the 20th century the USSR was a country now not so much and the history of this transition has typically been told one specific way as you probably already know in the west the end of the USSR is a story of inevitable Triumph a sort of teleological proof of the superiority of capitalism and the definitive nail in the coffin for any kind of socialist project you'll certainly have experienced this yourself but all over America and in Western countries in general people are taught pretty early on about events like the fall of the Berlin wall or Reagan's speech by the Brandenburg gate from these moments The Story Goes came the inevitable end of the USSR of the Cold War and to some even of History itself the story is usually told as though it couldn't have gone any other way capitalism was always going to win in the end it's a very Marvel movie kind of way to tell history for most people then the period following the dissolution of the USSR has been been folded neatly into the US's overarching narrative for the 20th and 21st centuries it's a narrative of manifest destiny where the US is the Vanguard of democracy for the rest of the world and extends freedom and peace and justice benevolently to all who suffer under the Yoke of tyranny in this narrative there is democracy on one side and communism on the other and the U.S Prides itself on bringing democracy everywhere it goes including in Russia but as you can probably expect from all the other times the US has quote unquote brought freedom and democracy to other countries that whole narrative doesn't really line up with what actually happened the end of the Soviet Union was not the arrival of democracy to the former Soviet countries Russian capitalism was not the product of a democratic Reawakening and it was certainly not inevitable the whole transition period between the Soviet era of Russia to its modern capitalist iteration was in reality a time of brutally anti-democratic violence massive and immediate misery for millions and the beginning of a new period of insecurity and it all started with a process called shock therapy as you might already know in economics shock therapy is the process of suddenly transitioning from a planned economy to a capitalist economy said differently shock therapy is the abrupt simultaneous and top-down implementation of multiple capitalist economic principles where they once did not exist the kinds of policies implemented are usually centered around your typical capitalist stuff like privatizations as well as things like removing price controls opening the domestic economy to International capital and of course austerity Politics the goal of shock therapy is to bring in rugged quote-unquote free market neoliberal capitalism quickly and at pretty much any cost it's called shock therapy by its Advocates to try to evoke a positive almost medical notion of economic transition something like ripping off a Band-Aid a little shock at first but an overall therapeutic outcome in the end in reality though shock therapy is about as gentle and medical as a bath with a toaster and it can hardly be said to have cured any of the countries where it's been implemented but that's not model the term shock therapy has more recently come to have a sort of double meaning not only does the shock part of shock therapy evoke the sudden pace of change and the electric violence of the whole process as we've already covered it also captures the let's say convenient use of shocking events to push capitalism through at Breakneck speed in the words of Naomi Klein shock therapy is the brutal tactic of using the Public's disorientation following a collective shock Wars coups terrorist attacks Market crashes or natural disasters to push through radical pro-corporate measures so what did all this look like in Russia for starters in order to bring shock therapy to Russia the idea of democracy had to be severely let's say reinterpreted following a wave of liberalization under the last president of the USSR Mikhail Gorbachev and the continuing effects of the Cold War the USSR was suddenly illegally and undemocratically dissolved from within Boris Yeltsin then President of Russia a republic within the USSR signed an accord with the heads of two other Soviet republics to mutually recognize each other's Independence the leaders of Ukraine Belarus and Russia all sat at a table called themselves and each other independent countries and then they just were at the end of the day to be a country you really only need to say you are and find another country to agree with you just like that the Soviet Union was functionally over since without the u that was pretty much it for the SSR a couple weeks later then Gorbachev resigned as leader of the USSR and the Supreme Soviet the equivalent of a parliament or a congress announced the formal dissolution of the Union I summarized that pretty quickly and that's partly because things happened really fast in real life too the sudden dissolution of the USSR really caught Soviet citizens by surprise since just a couple months earlier the USSR had held a Countrywide referendum in which 80 percent of the population voted overwhelmingly in favor of preserving the union with some reforms to how it would function close to 80 percent of Soviet citizens wanted to keep the USSR around including large majorities in Ukraine Belarus and Russia the same countries that would announce their independence in other words the dissolution was not the fruit of some Democratic process it just kind of happened one day the USSR was unified then it was multiple countries and then it stopped existing what was left in its wake was a cluster of Nations and most importantly for this video the new Russian Federation led by liberal capitalist and nationalist president Boris Yeltsin to be clear this summary skips so many important events but this video is about liberal shock therapy not the dissolution of the USSR so we got to keep moving and speaking of keep moving is exactly what the Russian Federation did using the shock of the sudden collapse of the USSR Yeltsin began pushing through more capitalist reforms in the newly born Russian Federation he brought in capitalist institutions like the IMF as well as capitalist economists like Jeffrey sacks more on him later to help radically transform the Russian economy with the goal of bringing neoliberal capitalism in Fast and it started very early the final month of the ussr's existence was December 1991 and by January of 1992 shock therapy was Unleashed first price controls on consumer goods were dropped almost entirely leading to an immediate 250 percent increase in price of basic necessities then came the layoffs and the hyperinflation unemployment skyrocketed by 56 percent GDP fell 14.5 percent in a single year industrial production declined by almost 20 percent inflation ballooned to a ridiculous 1 354 percent and real incomes were cut in half the government cut spending on education and health and between 1989 and 2002 deaths increased by 12.8 percent and life expectancy for men declined by a full six years between 1991 and 1994. for reference the drop in life expectancy due to kovid is about one year in the U.S but that's not all according to Tony wood an author on the transition to Modern Russia the ILO classified 85 percent of Russia citizens as under the poverty line in 1992 which the Yeltsin government swiftly corrected quote unquote to a teeny tiny 35 or in other words one in three people and all of this mind you after the USSR stopped being at war with the world's largest economic and military power this humanitarian crisis happened not during a violent paralyzing War but during a Time time of relatively unprecedented piece for Russia these reforms and crises were accompanied with a decree from Yeltsin allowing anyone to sell anything at any time with no permit anywhere in Russia prompting recently impoverished Russians to fill the streets in makeshift bazaars selling family heirlooms personal belongings and really anything they could to make ends meet perversely this was commented on by Jeffrey Sachs The Economist leading the shock therapy project in Russia as evidence of spontaneous Market activity as though people were being good little capitalists and not desperately trying to salvage what they could to Stave off hunger unsurprisingly as a consequence of this whole mess organized crime found a welcoming home in the chaotic and deregulated environment of capitalist transition leading according to multiple accounts to the development of the Russian mafia but still that's not all we haven't even gotten to the privatizations in 1992 alone 47 000 state companies were privatized a number that nearly doubled to ninety thousand by the end of the following year companies formally integrated into the planned economy were cut up into shares and offered for sale to the Russian people well that is in theory unsurprisingly this process was done in a quick and dirty way that completely screwed over Russian people immediately to privatize the economy Soviet Industries within the planned economy were available for purchase in shares Russians would receive a voucher worth about twenty dollars with which they could technically buy shares in privatized companies or if they wanted they could just resell them as common sense would suggest when you're starving a share isn't worth as much as cash but regardless of what Russians did with these vouchers it was almost always a losing investment behind yeltsin's rhetoric of creating a society of quote millions of owners was the reality that Russian capitalism was being built to look like every other capitalism top-heavy like a shampoo bottle like when you flip it over to get that last little bit of shampoo From the Bottom by getting it to the top you already know what top heavy means I don't know why I felt like making an analogy in any case only 14 percent of companies privatized during the transitional period were ever available at public auction or for public stock purchase most privatizations went to insiders or company managers people who could take advantage of the new capitalist system effectively thus in a very short amount of time Russian capitalism caught up with its peers with wealth concentrating at the top of society and inequality following the same trajectory this by the way is what created the Russian oligarchy we know today and here I'll pause for a second because it might seem like this whole Spiel is evidence of some sort of bureaucratic inefficiency or simple corruption or that neo-liberal economists had good intentions but made a mistake in their execution that in theory this process could have happened in some fair and productive way but no it couldn't have one even if privatizations have been coordinated fairly it wouldn't have mattered capitalism naturally tends towards the concentration of money at the top regardless of if there's a fair starting point the oligarchy we all know and love would have shown up it might have just taken a bit longer two the reality is that privatization was sloppy and corrupt not by some accident but because neoliberal economists wanted it to be shock therapists wanted privatization to happen fast before anyone could stop it and sloppiness was just part of the deal Jeffrey Sachs put it extremely clearly when in 1993 he wrote quote as early advisors on the privatization process we argued strongly for Speed above perfection in the distribution of shares for the general success of the reforms which were extremely precarious from the start it was important to make facts by establishing widespread private property rights if that meant heavy Insider representation that was a cost that should be accepted fun fact here's a quote from 2012 where he denies ever saying this so why did neoliberals like sax care so little about quote-unquote perfection and care so much about speed because they all knew that if this process didn't happen immediately it would not pass Democratic muster here's another sax quote where he pretty much says that out loud but more convincing proof of this disregard for and even fear of democracy than what sack said is what the IMF and Boris Yeltsin actually did for starters the IMF did what the IMF has always done after giving its recommendations for how to restructure the economy meaning gutting it and letting capitalists strip it to Pieces the IMF withheld crucially necessary funds until those neoliberal reforms went through I don't think it's being a wacky political extremist to say that an international organization paying for a country to change their economy is maybe not the most democratic process but maybe that's just me IMF and American pressure notwithstanding in order to bring about the full and Rapid transition to a capitalist economy that shock therapy required Yeltsin also had to Brute Force his reforms which he did by rapidly consolidating power in the executive branch of the Russian government over the course of the early 90s Yeltsin would increasingly rule without Russian parliament in a series of constitutional changes and periods of exceptional power something that made the parliament a little upset and which Yeltsin acknowledged by let me check my notes thank you all right ordering the Army to Shell the [ __ ] out of him in 1993. again I'm no democracy expert here but maybe this is not really what democracy is about this also doesn't feel very invisible hand to me just a thought and all this is setting aside the massive advantages the ultin got in preserving his presidential Powers thanks to Russia's privatized press institutions which turned an eight percent approval rating into a successful presidential victory thanks to more time on television and more favorable coverage as well as all the Electoral rigging ultimately though some Devil's Advocate type could justify these brutal interpretations of bringing democracy to the east with some sort of post-shock therapy super democracy or something it wouldn't be convincing but I guess it's something you could do yet here again you'd have trouble finding anything of the sort there was no democracy Aftershock therapy just like there was no democracy during shock therapy democracy was of course never the intended outcome of any of these reforms the purpose was to kill labor power in all its forms and replace it with capitalist hegemony so democracy never came during the Yeltsin era nor has it during Putin's turn in the hot seat consolidating the power of the government into a single person highly beholden to the interest of the capitalist class was both the goal and the necessary means for the reforms to go through the parliament would have to be sidelined for capitalism to happen and disregarding governmental democracy in this way handled the political half of the shock therapy equation unsurprisingly then crushing democracy was also the goal in the economic half of the equation and here again we have proof in the form of a concise sex quote telling us exactly how shock therapy works quote privatization requires a disenfranchisement of the workers Council in other words workers the majority of the population having a say in the economy is bad but the minority of capitalists doing the same is good in short capitalism went through by destroying any governmental size of democracy and any democracy in the sphere of economic production all that is left after this thorough gutting of the democratic process is sham elections and the domination of the capitalist class Russia is characterized by today the picture you get from this series of events is one that's pretty contrary to how Russia's historical trajectory usually gets depicted that is to say with an undemocratic Communist Regime being saved by capitalism and democracy only to be perverted later by Vladimir Putin as the historical record shows that's just not what happened democracy was never the goal of the transition it was never even the means of this process either and therefore It ultimately only served as a rhetorical smoke screen for acts of heinous State and market-based violence setting up an undemocratic government and an undemocratic economy was the only way to bring capitalism to Russia for its liberal reformers so like for chile and other patients of the shock therapy treatment it was not democracy that came to Russia but political repression and economic domination now just a few decades later we see even more consequences of the system which has recently given us the Ukraine conflict the concentration of wealth into a few hands and a domestic Russian economy paired down to a complete dependency on oil and gas by the forces of international market competition has predictably resulted in the capitalist class of one country battling the capitalist class of another to see who will get to profit from fossil fuel exports this battle is not just numbers on a screen it is fueled by the loss of human lives in an actual war and will most likely result in a ruthless and certainly fatal winter for a whole continent it's high time for actual democracy and actual peace and capitalism will never provide that I mentioned at the beginning of this video that this kind of content is made possible by my patrons on patreon as you can probably imagine YouTube doesn't like to promote left-wing political content I've gotten a lot of reports recently of people not getting notified of my new videos even if they have the Bell 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clicking the links on your screen thanks for watching and I'll see you next week [Music]