Planet Money

The day Russia adopted the free market

15 snips
May 7, 2022
Dive into the tumultuous early 90s as an American economist attempts to reshape Russia's economy amid chaos. Discover the controversial shock therapy reforms, the struggles of transitioning from communism to a free market, and the rise of oligarchs during privatization. Hear about the volatile economic environment, soaring inflation, and the profound consequences of hasty changes, which led to increased inequality and lingering instability. This engaging discussion highlights the lessons learned from a pivotal moment in history.
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ANECDOTE

Poland's Success Story

  • Jeffrey Sachs helped Poland transition to a market economy in 1989.
  • Two years later, Poland's economy was booming, leading Russia to seek Sachs's expertise.
ADVICE

Key Market Reforms

  • Free prices and trade to stimulate supply and demand.
  • Reform currency to facilitate international exchange.
INSIGHT

Managing Reform Risks

  • Market reforms bring short-term pain like inflation and job losses.
  • Implement social safety nets and secure Western financial aid to mitigate this.
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