With economic turmoil
engulfing Russia and several Asian countries, many reporters have
decided that capitalism — or at least too fast of a rush into free
markets — is the problem.
For example, in a
front-page Washington Post story on September 13 — under the
subhead "Russian City Discovers High Price of Free Market" —
correspondent Sharon LaFraniere reports that an average Russian
"cannot imagine a revival of the old Soviet system, but wonders if
the free market is better." She quotes a Russian woman: "There
should be something positive about capitalism. One would have hoped
it would be better than this."
According to The New
York Times’ David Sanger that same day, "Politicians around the
world reluctantly went along with the Washington orthodoxy that if
they stopped meddling in the markets and let international investors
move money freely in and out of their countries, it would help
restore confidence." He writes that it "was a compelling pitch — for
about a year or so. But now, after some of the West’s brightest
ideas for engineering economic recovery have gone up in flames, a
few countries are marching the other way."
Henry Chu, in the September
16 Los Angeles Times, writes that the problem in Russia is
the pace of reforms, and he doesn’t mean that they’re too slow. "In
attempting to remake itself from a Communist behemoth into a
capitalist beacon, China has studiously tried to avoid the path of
its onetime idol [Russia], preferring a more gradual approach to
change," he reports. According to Chu, "As world leaders and
economists reassess the wisdom of free markets amid today’s global
turmoil, the China model — from the perspective of Russia’s collapse
and the pain in lesser Asian countries that wholeheartedly embraced
capitalism — looks wise enough."
None of these reporters
cite the argument that the problem in Russia and other countries has
been a failure to move far enough toward truly free markets, not
that change has been too fast. According to the Cato Institute’s
James A. Dorn and Ian Vasquez, Western aid has actually made it
possible for Russia to put off free-market reforms.
They write: "In practice,
the [IMF]’s money has helped to delay, rather than accelerate,
reforms because it has eased Moscow's economic problems and allowed
it to forgo policy changes." They quote Russian reformer Grigory
Yavlinsky, who in 1993 said, "It has become clear that new Western
credits are no longer a remedy for Russia, but a drug helping to
maintain an unfit system." They note that "the conditions of the
IMF’s $11.2 billion loan, approved in July, were virtually identical
to the fund’s conditionality since 1992." In other words, sweeping
reforms still hadn’t occurred despite conditional aid over a period
of six years.
As worldwide economic
troubles continue, and begin to harm Latin American economies,
reporters should at least include in their stories the argument that
the problem is, in many cases, markets that aren’t free enough.