About Yegor Gaidar
Yegor Timurovich Gaidar, a prominent Russian economist, politician and statesman, was born on March 19, 1956.
Gaidars’ grandfathers were Arkady Gaidar and Pavel Bazhov, famous Soviet writers. Gaidar’s father, Timur Gaidar, was a famous journalist, writer, war correspondent and Rear-Admiral. Gaidar’s mother was historian Ariadna Bazhova. Yegor was raised in a family with deep-rooted values, such as courage, self-respect, independence and sense of duty.
Gaidar spent his first childhood years in Moscow and later, on the eve of the Caribbean crisis, his parents left with him for Cuba. Much later, he cast back his mind to this journey: "...Still functioning, unruined American touristic civilization was combined with the genuine festive revolutionary enthusiasm of the winners, crowded rallies, songs, carnivals… My room in the hotel "Riomar" overlooks the Gulf of Mexico, underneath there is a pool and side by side an artillery battery. The building, where diplomats and experts from the Eastern Europe live, is occasionally fired at. Our battery shoots in response. From the window I see the slogan "Motherland or Death" in yellow neon and "We shall win!" in blue neon. The cleaning woman puts off the gun and takes the mop…"
Behind the festive facade of the Cuban revolution, the traits of economic problems were evident even to the child. There were food irregularities, rationing system was adopted, indications of turmoil and slovenliness were all around. "There are piles of rotting fruits one hundred kilometers away from Havana. It is forbidden to bring and sell them here, it is called speculation. I don’t understand why it is like this. And no one can explain it".
In 1966, the correspondent for the Bolshevik newspaper Pravda (The Truth) Timur Gaidar and his family went to Yugoslavia. Sober-minded and erudite beyond his years, the teenager with adult worldview came to European Belgrade. Yugoslavia of that time made quite an impression: it was the only country with socialist market economy which was undergoing economic reforms and where people were discussing the most sensitive issues. Yegor took a great interest in philosophy and history, read a lot and studied fundamental works of the Marxism classics on his own at the age of 12. To his surprise, Yegor soon discovered that behind the emasculated formal ideological facade there were depth, talent and imagination of the prominent thinkers of that period. Yegor described his impressions in his letter to the grandmother: "It is so fascinating and brilliant but it can be so dulled and dogmatized".
In Yugoslavia, Yegor spent a lot of time studying numerous books on philosophy, economy and law, forbidden in the USSR. Almost as an equal, he communicated with his father’s friends and like-minded people discussing the problems of economy and soviet society with frankness, unheard of in the USSR. On his own, Gaidar came to "…understanding of the necessity to put an end to the bureaucracy’s monopoly on the property. And then, to move from the bureaucratic state socialism to the market socialism, based on the working self-government, broad rights of workers' associations, market mechanisms and competition".
In 1971, the Gaidar family returned to Moscow and Yegor went to school No. 152, one of the best schools in the city. An extraordinary pleasant artistic atmosphere reigned there. Studies were easy for Yegor – it was facilitated by his phenomenal memory for figures, facts and historic events. In 1973, he finished school with a gold medal and enrolled in the Economic Faculty of the Lomonosov Moscow State University, specializing in the production economy. In his book "Days of Defeat and Victory" Gaidar wrote: "...The essence of the education task is to train experts that are able to substantiate all changing decisions of the party with references to the authority of the founders of Marxism-Leninism. Studying is easy because I know the basic works well. Having the quotations at my fingertips is as easy as ABC".
Gaidar got married during his second year at the University. It was the beginning of an independent adult life. He considered it unbecoming to take money from his parents and started making money on the side, trying to find time after studies. In 1978, Gaidar graduated from the Moscow State University with honours and continued his studies in postgraduate courses. After defence of his PhD thesis "Estimated figures in the mechanism of cost accounting in production associations (enterprises)", Gaidar was placed on a job in the All-Union Research Institution of Systems Studies of the USSR Academy of Sciences.
It was the year 1980. There was a war in Afghanistan, academician Sakharov was sent in exile, 45 countries put the 22nd Olympic Games in Moscow under boycott. In Poland Lech Wa??sa founded the independent trade union "Solidarity", in the USA republican Ronald Reagan left his competitors in the presidential elections far behind. The world was rapidly changing, and only the USSR seemed to be the same.
In the beginning of the eighties, the group of young scientists headed by academician Stanislav Shatalin, that also included Yegor Gaidar, Petr Aven, Oleg Ananyin, Vyacheslav Shironin, concentrated on the comparative analysis of the results of economic reforms in the social camp countries. At the time the Institute turned into one of the centres, which were actively developing projects of economic reforms: there were various almost liberal ideas in the air, scientific discussion has by far gone beyond the scope of Marxist political economy. Quite soon Gaidar was absolutely convinced that the country should start market reforms, initiate self-regulation mechanisms and reduce the state presence in the economy as soon as possible.
In 1983, Gaidar got acquainted with Anatoly Chubais, informal leader of the group of economists of the Leningrad Economic Engineering Institute. A group of young and energetic like-minded people quickly formed around them – they were all united by the desire to study the processes underway in the society and economy and to find transformation ways consistent with the realistic situation in the country. Yegor Gaidar was unanimously acknowledged as the informal leader of this community.
From 1984 onwards, Gaidar and his colleagues were involved in the work with the documents of the Political Bureau Commission on Improvement of Administration of National Economy.
New generation of members of the Political Bureau, headed by Gorbachev, was interested in the work of the Commission, which was to prepare a moderate program of economic transformations modelled after Hungarian reforms of the end of the sixties. Young scientists were preparing their suggestions on the basis of the conviction that the authorities were willing to carry out the reforms before the threat of catastrophic self-destruction became a reality. But the Political Bureau was unwilling to listen to them. Later Gaidar recalled the response,"You seem to want to build market socialism. Is it so? Forget it! It is not within the powers of political realities."
The theme seemed to be closed. Nevertheless, in 1986, Shatalin’s group received a tempting proposition: it was transferred from the All-Union Research Institution of Systems Studies to the Institution of Economics and Prognosis of Scientific and Technological Progress of the USSR Academy of Sciences, in which Gaidar quickly became the head researcher. Soon in the tourist camp "Zmeinaya Gorka" of the Leningrad Financial Economic Institute, a half-underground seminar of economists – advocates of market economy took place. Its participants were well aware of the realities of Soviet economy and understood that the administrative market, drowned in bureaucracy, demanded urgent fundamental reformation. The participants of the seminar were Yegor Gaidar, Anatoly Chubais, Sergey Vasiliev, Petr Aven, Sergey Ignatiev, Vyacheslav Shironin, Oleg Ananyin, Konstantin Kagalovsky, Georgy Trofimov, Yury Yarmagaev and others, in total there were 30 persons. The most forbidden topics were discussed in a narrow circle. At the time, Gaidar recalled, that "We all acutely feel the revealed freedom, space for scientific research, for real studies of the processes that are underway in the economics… Everyone agrees with the necessity of well-organized reforms which could prepare Soviet economy for graduate restoration of market mechanisms and private property relations. But at the same time we realize that it will be incredibly difficult".
The start of the reforms was prevented by ideological taboos, censure and general inertia of state mechanisms dilapidated with time and unable to face the modern challenges. It was at that moment that the incredible happened: higher political authorities covertly allowed starting public discussion on the most important political issues. The results did not take long to appear – on the pages of the major state editions were printed the materials, which scared the censors, who had lost their guidelines…
In 1986, Gorbachev’s old acquaintance academician Ivan Frolov was appointed the head of the journal "Communist". He immediately renewed the Editorial Board and invited famous economist Otto Latsis to take a position of the first Deputy Chief Editor. In the course of a long time Otto Latsis had been disfavoured. Out of a sudden, Latsis offered Gaidar the position of the Head of Economic Department of the journal. Later Gaidar recollected, "… I realize that there is no way our note and pieces of writing can change the dangerous chain of mistakes destabilizing national economy… One gets the impression that the authorities simply does not understand what is going on, is not aware of the consequences of the ill-conceived decisions. In these conditions an opportunity to have a say on strategic questions on the pages of such influential edition as "Communist" is a great piece of luck".
As the Economics editor of the journal "Communist" and later of the newspaper "The Truth" ("Pravda"), the armchair scientist, widely known in a very narrow circle, suddenly turned out to be in the centre of attention and received a real opportunity to get his ideas across to the wide circle of readers, to bring out the most urgent problems which demanded immediate solutions.
In the sphere of economists-reformers, there was still hope that the necessary changes could be run smoothly without applying radical measures. According to the numerous accounts, Yegor Gaidar himself, whose name is now tightly connected with the concept of "shock therapy" in economy, has initially intended to use absolutely different scenarios of events. Till the very end of the eighties he was geared up for the consecutive transformations that could be implemented in the soviet conditions on the basis of Yugoslavia and Hungary’s experience. Bu the time passed and indecision and half-taken measures only worsened the situation.
At the several seminars of economists of 1987-89 a united team of future reformers, led by Yegor Gaidar, was finally formed. Soon an idea of the near unavoidable collapse of the Soviet Union was expressed. At first, Gaidar did not consider giving up socialistic model of economy, but later he realized that there was not a single chance to find peaceful solution for the piled up problems: failure of the state program "500 days" closed this issue. In July 1990, it was for the first time that he discussed the radical reforms program at the meeting with western economists in the Hungarian city of Sopron. "Shock therapy", liberalization of prices, privatization, financial stabilization, reduction of state costs, and struggle against hyperinflation seemed necessary and unavoidable measures because of systems crisis. Gaidar’s team received complete confirmation of their research from international experts, but these findings could hardly bring them satisfaction: there were hardships ahead of the country.
By the beginning of the nineties Gaidar was already a scientist with sustainable scientific reputation, PhD, experienced polemicist, public figure, founder and permanent director of the Institute for Economic policy of the Academy of National Economy and the Academy of National Economy of USSR, later called the Institute for the Economy in Transition. He has a beautiful family, he is absolutely happy in his new marriage with Maria Strugatskaya, his first childhood love. His carrier is arranged, his life was running its appointed course, and he expected no problems… In 1991, Gaidar spent his summer holidays in Krasnovidovo with his family, writing the long-planned book.
On early morning on August, 19, he was woken up by the news of a military coup – Gorbachev was arrested, the tanks entered Moscow. Television broadcasted declaration of the self-proclaimed State Committee of the State of Emergency. True scale of the events was unclear back then.
Gaidar immediately set off for Moscow – contemplating on the possible consequences of events: "enlightened dictatorship" or "Russian Pinochet" can hardly be expected. Blood will be shed like at the times of Pinochet, even more blood. But everything will be in vain. The conspirators don’t have a single rational idea how to deal with economy, which is falling apart. In a year, two or three – not more – the tormented country will turn to the uneasy way to market. But it will much more difficult for it to follow this way. A year, maybe two or even five. For the history, it is only a moment. And for those who live today? How many of them will step over these years?"
In the Institute, Gaidar cancelled his own order on suspension of party organization’s activity and convened the party meeting. There were two questions on the agenda: resignation of the Institute’s workers from the party because of the state coup attempt supported by the Central Committee of the Communist Party of the USSR and liquidation of party organization because of it. By the evening all men of the Institute gathered around the White House. Around there were a lot of people who came to protect their right to choose their own fate.
Yegor Gaidar recollected that "despite the flapping tricolour Russian flags and triumphant crowds, I am seriously concerned for the future of the country. What had happened is without doubt a liberal anti-communist revolution, provoked by inflexibility and adventurism of the ruling elite. Any revolution is always a terrible experience and a great risk for the country."
The same evening Yegor Gaidar got acquainted with the State Secretary of the RSFSR Gennady Burbulis, one of the most influential figures in the surroundings of the first Russian President. This acquaintance abruptly changed fates of them both: it was Burbulis who soon persuaded Yeltsin to entrust Gaidar’s team with the development of the reforms’ implementation program. If previously the idea of Gaidar undertaking practical administration of economy had been discussed in the academic circles only as a joke, now the situation was absolutely different. By the beginning of the nineties, Gaidar and his team turned out to be almost the only expert group, which has thoroughly studied the opportunities to carry out the economic reforms and estimated possible case scenarios. Despite lack of time and incredible stress, they were able to suggest a new clear reform concept and to start acting accurately, decisively and responsibly.
In October 1991, the Russian President Boris Yeltsin decided to appoint the government made of reformers from Gaidar team. At the fifth Congress of People's Deputies of the RSFSR, Yeltsin made a keynote address. The part of this speech on economic issues was prepared by Gaidar team. The Congress passed the resolution which approved the draft reforms and entrusted the duty of the Chairman of the RSFSR Government to Yeltsin. In the Presidential Decree dated November 6, 1991, Gaidar was appointed a Vice Prime Minister and the Minister of Economy and Finance, responsible for all economic and financial issues.
"This news was like a bolt from the blue for me, once and forever, it separated everything that happened in my life before from the unknown future. I used to be an advisor, and now I became a decision-maker. And all the burden of responsibility for the country, for rescuing its ruined economy, that is for lives and fortunes of millions of people was on my shoulders. ...Deliberating on "soft", "socially painless" reforms, which could solve the problems all of a sudden, so that everybody would be happy, no one would lose anything, newspapers blaming us from their pages and academics – from their tribunes, no longer offended. The picture that came to light proved the bitter truth: there were no resources which could mitigate the social expenses of launching the new economic management mechanism. You can’t postpone liberalization of the economy until you manage to promote slow structure reforms. Two or three more months of doing nothing, and we will face economic and political catastrophe, collapse of the country and a civil war. This is my strong belief", Gaidar wrote in his memoirs.
After a couple of days in the government, having familiarized himself with the real situation in the economy, Gaidar came to the unambiguous conclusion: liberalization of prices as a main instrument of eliminating the threat of hunger could not be postponed any longer. Never after he doubted this conclusion, till the very end remaining convinced that there was no other way out of the crisis. The time had come for decisive actions and radical changes.
On January 2, 1992, ignoring the protests of political opponents, the government liberalized prices for industrial and agricultural products. Then, the Decree on free trade and fostering privatization of state enterprises was passed after and the situation changed dramatically: free market economy emerged on the ruins of the Soviet command economy. The first results came very fast: commodity stock, which in January was less than a half of December 1990 level, by June 1992 grew to 75% of this level, at the same time, the prices skyrocketed by 3.5 times and a monthly inflation was still expressed a two-digit figure, though it slowed down a little. In its attempt to restrain hyperinflation, caused by the uncontrolled rubles emission over the recent years of the USSR existence, the government initiated unpopular measures, which consisted in serious cuts in public spending, termination of retail prices subsidizing and introduction of a value added tax. Although these measures allowed to run the budget of the first quarter of 1992 without deficit, they triggered off mass dissatisfaction among the population.
The sixth Congress of People's Deputies, "the first direct attack at the reforms", according toYegor Gaidar, opened on April 6, 1992, in Moscow. The opposition to the reforms, the so-called "red directors" who lost public financial support, lobbied for the adoption of the anti-market resolution "On the Course of the Economic Reform in the Russian Federation", which stipulated revision of the course chosen by the government. In his memoirs, Gaidar describes the decisions passed by the Congress in the following way: "The resolutions are being adopted almost by ear, without any discussion, any analysis of material resources. These resolutions direct the government to cut taxes, raise subsidies, increase salaries and cap prices. A senseless set of mutually exclusive measures".
In response to this resolution, the government resigned. The Congress back-pedalled and passed the Declaration "On Support to the Economic Reform in the Russian Federation", in which it supported the actions of the government and suggested that its resolution should be implemented "in view of the real economic and social conditions". Nevertheless, the President and the government also had to compromise. The governmental monetary policy eased: emission increased and public spending grew. Immediately, it caused inflation growth and reduced levels of trust to the government among the population. On December 1, 1992, the sixth Congress of People's Deputies opened.
The next day,Yegor Gaidar made a summary report on the course of the economic reform as the acting Chairman of the Council of Ministers. In his speech, he summed up the work of the government: the threat of hunger was eliminated, deep structural transformations didn’t cause any serious social cataclysms, commodity shortage was overcome and privatization and liberalization of foreign trade started. Talking about the future, he warned deputies against making a populist decision on increasing budget spending — this measure would lead to the next inflation surge and raise doubts about the results of the first stage of the reforms.
The Congress rejected Gaidar’s candidacy put forward by Yeltsin for the Chairman of the Council of Ministers. In his speech, the President severely attacked the work of the Congress, voiced the idea of a nation-wide referendum and called upon his supporters to leave the assembly hall. Following the long consultations with the Supreme Soviet leaders, an agreement was reached on carrying out an All-Russia referendum on the main provisions of the Constitution. On December 11, 1992, the Congress adopted a corresponding resolution and on December 14, after a multistage preferential voting on five candidates for the Chairman of the Council of Ministers nominated by the President BorisYeltsin, the deputies supported the candidacy of V. Chernomyrdin.Yegor Gaidar was dismissed from all his posts in the government.
"My feelings immediately after resignation were very complicated, contradictory. I felt both relief and bitterness. I felt relief because it was a load off my mind. I was no longer in charge of everything that was going on in the country. I wouldn’t hear any disturbing calls: somewhere the mine has exploded or the train has crushed. Neither did I have to make decisions on which people’s life depended, nor did I have to deny vital financial aid to regions, large enterprises and research institutions. I was no longer in charge of any shortcomings of the young Russian democracy. From this moment, it was somebody else’s headache. At the same time, I had a feeling that I could no longer do what my country needed, that the situation would develop far from me, and all I could do was just watching the mistakes I couldn’t correct. Anxiety: how many more mistakes are we going to have? What if they cancel out everything that Russia managed to do for the emerging market economy for such a high price?"
Rejection of the Supreme Soviet to appointYegor Gaidar as the Chairman of the Council of Ministers can be considered as the start of the outright conflict between the two branches. Antipodal views on Russia’s constitutional arrangement and the course of economic transformations, the actions of the Supreme Soviet aimed at procrastination of decision making and repudiation of the obligations undertaken earlier caused acute constitution crisis in the second half of 1993. The results of the referendum on trust to the President, which figures in history after the name of the President supporters’ campaign "Yes-Yes-No-No", were left without any notice, reforms were rolled back de facto, the work on the new Constitution was postponed...
In September 1993, almost a year after the high-profile resignation, Gaidar returned to the government as a Vice Minister on economic issues under Victor Chernomyrdin. It became clear to him that indulging the Supreme Soviet policy meant cancelling out all the outcomes of the reforms at once, returning back to where we started – to the ruined Soviet economy, and decided to support the President by all means.
The tragic events of October 1993, namely the clash of arms between the President and the Supreme Soviet supporters ended the protracted constitutional crisis. Very soon, rallies turned into organized anti-government protests. Confusion and law enforcement inaction led to radicalization of the conflict: there was a feeling in the air that the catastrophe is unavoidable.
In these circumstances, Gaidar acted resolutely – once in his life he made up his mind to call upon civilians to go to the streets and protect the power of the elected President. "I remember the crowd on Tverskaya square, probably, the most beautiful crowd in terms of people, their faces and so on, that I’ve ever seen in my life. I undertook a huge responsibility, I understood that these people could die, many of them could die, and I would be in charge of that forever. I realized that I could not let myself not do that...»
After the rally of the President’s supporters and the government on October 3rd in front of the Mossovet building on Tverskaya, the sentiment of Yeltsin’s supporters changed substantially: there was no confusion any more. The new Russian authorities undertook decisive actions which resulted in the storm of the House of Soviets with the use of elite tanks and special forces units, arrest of Mr Hasbulatov, Mr Rutskoy and other active supporters of the Supreme Soviet.
After October 1993, the liquidation of the Soviet system started, which lead to the adoption of the new Constitution of the Russian Federation at the referendum on December 12, 1993, consolidating the presidential form of government in Russia. To overcome the deadlock of the dual power, the country had to get through the bloody events and the level of responsibility for these clashes is still the subject of heated debates.
In early 1994,Yegor Gaidar became a deputy of the State Duma of the first convocation. As one of the key reformers in the country, he took an active part in construction of the party which ensured political support for the reforms. He was one of the founders of the "Choice of Russia" electoral block, the head of the largest parliamentary group in the State Duma of the first convocation, the chairman of the "Democratic Choice of Russia" party, the co-chair of the "Union of Right Forces" party and the deputy of the State Duma of the third convocation.
After Gaidar became a deputy, he quit the work in the government, but still influenced subsequent cabinets of ministers and contributed to all significant reformatory decisions in Russia’s recent history. Gaidar founded and headed the Institute of Transition Economy, retaining his authority in transitology – the science on social and economic transition of the society.
According to Anatoly Chubais, "you can take any subsystem of our country’s economy and each one would be either described by Gaidar or his institute, or developed with his active participation".
One of the key aspects of his life was writing books and articles in whichYegor Gaidar analyzed his own activities and studied regularities of transition in the society and emerging new social and economic institutes, forms and specifics of the young economies’ rapid growth...
Reflecting on his perception of time, Gaidar wrote: "Perhaps, the most important problem of adaptation to the government work, especially in the extreme crisis conditions, is a radical change of the time dimension. A scientist plans his work in terms of years, months and weeks. A councilor – in hours and days. The head of the government has to handle seconds and minutes, if he’s lucky. Reflecting for a couple of hours, consulting with somebody deliberately is almost luxury...".
Yegor Gaidar lived his life in the squeezed period of epoch-making changes, being their active participant and architect. He devoted himself to the work which was just and right as he believed till his very last day.