Letter: Russia's woes

Nick Martin-Clark
Friday 28 August 1998 23:02 BST
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Sir: The chaos in Russia is not the fault of free markets but of criminal ones. The fundamental problem is therefore political: the state has proved too weak to control its usurping robber-baron business oligarchies.

These ruthless plutocrats seek to blame the economic liberals for the harm caused in fact by their own widespread mafia practices, knowing all the while that discrediting the idea of free markets will consolidate their position as monopolists. Because of a misunderstanding of the nature of free markets, however, we in the West are in danger of being taken in.

A properly functioning system of free markets means that even market leaders are subject to the challenge of competition. But no "capitalist" country has attained such a system without effective legislation restricting monopolies.

In other words there is no such thing as an absolutely free market, and what is conventionally known as one can only exist when appropriate legislation seeks to provide a level playing field.

Similarly the IMF was not wrong in its prescriptions but in lending money with no guarantee that those prescriptions would be followed.

This was again, however, ultimately a political decision, taken to appease Russia as a nuclear power.

In truth Russia has had more leeway with the IMF than any other comparably bankrupt state could have expected.

NICK MARTIN-CLARK

London N17

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