Boris A. Milner
First Deputy Director
Institute of Economics
Russian Academy of Sciences
Moscow, Russia
Wednesday, November 9, 1994, 3 p.m.
Government Hall, Room 206
Abstract
Russia is currently experiencing a change in the accepted theory of the economy. The Soviet economy was a military economy. Seventy percent of production was for the military. Five thousand of the biggest enterprises engaged in military production. Fifty to fifty-five million people were military workers and their families. The previously unified economy is now distributed among fifteen republics. The collapse of the USSR cut business ties. The vertical structure was abolished, but the horizontal structure is still forming. Forty percent of ports were lost to Russia. The cement industry stopped. Foreign trade stopped. Russia needs to introduce new management functions such as public relations, marketing, and capital management. The old system has been destroyed, but a new system has yet to be created. The change is from rigid structure to choice. Large enterprises still produce eighty percent of output. A piece of paper does not create the mentality of an "owner." In the past social services were delivered by firms, not government agencies or NGOs. The change has been all shock and no therapy.