Yegor T. Gaidar: R.I.P.


ne of my favorite economists is Yegor T. Gaidar, a former Communist who struggled hard in the 1980s and 1990s to turn Russia into a capitalist country. Gaidar, 53, died Dec. 16 of a blood clot.

So many people on this blog are free market advocates. At times, they get into the nit-picky about what they sometimes see as a creeping turn to socialism and big government.
Think of Gaidar and see the approach turned on its head. Consider that you are a member of the Communist Party of what was then a super power. You even edit an academic tome titled “Kommunist.” Yet during the excitement of Mikhail S. Gorbachev’s “perestroika,” you get free market religion and, in increments, you turn into a capitalist that Milton Friedman would envy.
At the same time, you are thrust into a decision making position of a country undergoing a huge, lightning-fast transition from police and military industrial state to what Russians call “dicki capitalism,”” or “wild” capitalism. You have to keep things in check, fight off mossbacks in the government, avoid civil war (with nuclear weapons no less) and somehow build an enduring structure of a free market economy.
The man who assumed the Herculean task was Gaidar. He sure didn’t seem the part. He looked literally, like an egghead. His round, oval face topped a small body that was equally round and soft. He was usually soft spoken and kind when we used to meet in the cluttered office at his institute in the late 1980s. The issue then was than Gorbachev’s efforts towards breaking from the command economy past weren’t going fast enough.
Gaidar had an interesting background. His great grandfather and grandfather were Russian culture icons since they wrote children’s fairy tales that are still in circulation today. Not many people know this but in 1962, young Yegor was a child in Cuba during the Missile Crisis. He was there because his father was an official with the Soviet team supporting Castro.
When the Soviet government fell apart in December 1991, Gaidar was one of the leaders who tried to plot a new course. Just a month before, he had become minister of finance and the economy. He lasted in that post only two months, but that was enough to launch”shock therapy” which is kind of like using a defibrillator to electrify the country into capitalism.
“Shock therapy” had been used with some success in basket case economies such as Bolivia’s. It had had some success in Poland. Gaidar’s plan was to overhaul state industries and end the gigantic government subsidies, ruble funny money, that for decades had kept the country from teetering to a crash.
The result were awful in the short term. Inflation jumped to something like 2,000 percent per annum. People saw their life savings vanish overnight and comparisons with Wiemar Germany were inevitable. Later, Gaidar helped with mass privatization in which ordinary citizens got vouchers for shares in formerly state-owned industries. It was a privatization of a scale never seen before. Even Margaret Thatcher, the Queen of Privatization during the Reagan era, only really privatized maybe a couple dozen British firms.
Gaidar had plenty of critics. He was blamed for crashing the economy. Rank and file Russians had no idea to do with their vouchers, so smart entrepreneurs picked them up for mere kopecks, giving rise to the oligarchs, which still rule today.
Gaidar’s political career remained spotty. He served briefly as Boris Yeltsin prime minister before being sacked. But as Anders Aslund, a Swedish economist and Russia expert notes, Gaidar helped create the capitalist foundations of the new Russia that people like Vladimir Putin get credit for.
My most vivid member of Gaidar was in the coup d-etat against Gorbachev on Oct. 3 and 4, 1993. I was Moscow bureau chief for BusinessWeek and the streets erupted into gunfire. We were conveniently located about a quarter of a mile from the White House, the locus of most of the fighting.
I was leading a team of three. We were crashing a cover story, intermittently running out on the streets, dodging for cover from the machine guns and then running back to the office to file a steady narrative to New York. We needed analysis as well.
That’s where Gaidar came in. The streets were extremely hazardous. The two-day combat resulted in more than 1,000 casualties, including 150 dead. Of them, seven were journalists.
Gaidar knew we needed an interview. He also knew that we would be placing ourselves in great danger if we tried to get to the Kremlin where he was holed up with Yeltsin’s staff.
You know what he did? He grabbed a tape recorder, interviewed himself and sent us the tape.
This post is in memory of the man.
Peter Galuszka

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9 responses to “Yegor T. Gaidar: R.I.P.”

  1. Do you have a link to the interview that was done in 1993?

    It would also be interesting to read about his opinions of "Shock Therapy".

  2. Gooze Views Avatar
    Gooze Views

    Sorry, I don't have a link. But go to and look under archives for the week of Oct. 3, 1993. Gidar's comments were included in the cover we did. I can't remember if we did a stand-alone Q&A. Those were truly wild days.

  3. Anonymous Avatar

    It's apt that a man who did so much to lower the life expectancy of the Russian male to the 50s once again worked to that end by dying at age 52…

  4. Wow. I never heard of Yegor T. Gaidar. It's always amazing to me what goes on in Europe without many in the US knowing about it. Here's another effort in Europe which few Americans know exists:

  5. Hey Larry …

    Give this a good listen. Then go to YouTube or RollingStone.Com and view or read everything Matt Taibi has said or written about the meltdown. He is right. And the Obama Administration has done nothing and is doing nothing about it.

  6. Anonymous Avatar

    We will soon see whether Senators Warner and Webb care about Virginia first. The media reports that, as the price for Senator Ben Nelson's (D-NE) vote for health care reform, federal taxpayers will fund Nebraska's costs for the expansion of Medicaid in perpetuity. Putting aside the fact that one congress cannot bind future ones, how is this fair to the rest of the country?

    Governor Kaine claims that Medicaid costs are a major source of the State's fiscal problems. No thinking Senator from any other state, most especially Virginia, should vote for this unfair money grab. What will Warner and Webb do?


  7. TMT:

    Webb and Warner will do no more than put even more of their lip prints on Harry Reid's butt. If you look up Useless in the dictionary you'll see Webb's picture, if you look up Wothless you'll see Warner.

    Webb is the born fighter that can't summon the political courage to take a single concrete step to help his constituents. Warner is the brilliant businessman and fiscal conservative who blindly follows Barack O Claus down the chimney with another "purchased on credit" present that we neither want nor can afford.

    We started sweeping out the Democraps last November. We need to coninue this next November (remember, you can't spell Connolly with a Con). Then, in 2012 we get the big chance to send the Ombomination back to Illinois (retirement home for corrupt politicians) and we get to send Webb back the bizzarre-o-land from whence he came.

  8. Gooze Views Avatar
    Gooze Views

    Anonymous 2:44

    It is ridiculous, not to mention arrogant as hell, to blame Gaidar for the low life expectancy of the Russians. Who the hell do you think you are? Doubt you know much outside of your neighborhood.

    Peter Galuszka

  9. Robert Bishop Avatar
    Robert Bishop

    My adventures in the Soviet Union created a unique opportunity to build a telephone company in Russia just before and during Gaidar’s time at the economic helm. My friend Paul Tatum and I would on occasion meet with Gaidar and after some time felt I could call Gaidar a friend. I can say it was my feeling that Gaidar was the mouse who roared logic and saved Russia – but in the end was completely misunderstood. Russia survived that time of insanity because of levelheaded – educated individuals like Yegor T. Gaidar.

    I feel America could use such logic just now at her similar place in history – this time of insanity. But the declining Soviet Union had one up on America during that similar period. The Soviet Union had left behind a region populated by perhaps the most educated peoples on the planet. But it would seem here in America few willing to see that the falling sky is our own making. I’m not very smart – but it seems to me that most of America’s problems stem from the fact that in general the tendency has been to shun education and intelligence and has for some time promoted just the opposite. We live in interesting times.

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