Russia – A Market-Oriented Economy

The assertion that Russia is a market-oriented economy has evoked doubt in the minds of many. The European Commission Economics Ministers in various countries, and indeed numerous Russian economists themselves, have resisted Russia being accorded that status. They have taken the view that Russia is possibly on the way to being a market-oriented economy – but that it is too early to talk of our country joining a system with that kind of “community-based” relationships. The fact is, however, that on April 1, 2002 Russia was formally accorded the status of “market-oriented economy”. The trend towards a market-oriented economy commenced with the disintegration of the Soviet Union. For 70 years, the country had been run according to the dictates of totalitarian economics. The Soviet Union’s economy was directed primarily towards strengthening the country’s military might. The whole of industry was controlled and financed by the State: privately run enterprises were out of the question. Private initiative was either eradicated or allowed to exist only in the tight grip of the State’s ideology. Any other form of economic activity, apart from that of a “state enterprise” or (to a certain extent) “cooperatives”, was prosecuted. Most industrial products did not meet the demands of the consumer either in quality or in quantity. The isolation of the Soviet economy from that of the rest of the world also harmed it greatly. This all resulted in the need to reform the economy by introducing the principles of “market economics” – on the basis of “khozraschot” (plant-based financing) and “samookupayemost’” (product-based financing) within industry itself. During the 1980s a number of political changes occurred, but these proved ineffective because of opposition from conservative elements. However, the 1991 “putsch” forced Russia to break with its past. With the collapse of the USSR a great number of problems emerged in the economy of Russia. The fact was that the economies of Russia and the constituent republics of the former USSR, together with those of the “socialist” countries of Eastern Europe, represented a unified system. Hence, its disintegration greatly multiplied those economic problems. Major changes have taken place over the past 20-25 years. Various economic projects have been put forward, and numerous economic reforms carried out. Some of these proved successful, others less so. The first symptoms of a market-oriented economy developing in Russia were the emergence of privately run enterprises and the gradual spread of individual businesses. People with initiative and energy now had a chance not just to work, but to make money. Whereas the large industrial plants that had been wholly State-maintained went into decline, small enterprises began to develop. Limited-liability companies, joint ventures and stock companies came into existence. “Shares” and “securities” were instituted – which in itself was a further step in the direction of a “market economy”. A securities market was created in Russia. Issuing of these securities was jointly facilitated by both State- and privately-owned industrial enterprises. “Securities” included bonds, bills of exchange, cheques, stocks and shares, “futures”, and a whole range of similar items. Organizations and concerns issuing securities are referred to as “emitters”. A person owning a “security” is entitled to receive part of the stock company’s profits in the form of dividends, and to have a say in the running of the company, as well as to have a right to part of any assets remaining after the company goes into liquidation. Trading in securities is conducted in stock exchanges and by broking organizations. One further principle forms the basis of a “market-oriented economy” – namely, competition. The market mechanisms of supply and demand communicate the wishes of the consumer to the industrial producer, and through him to the suppliers of production resources materials. Competition obligates companies to go over to the most efficient production methods available. In a competitive market any company unable to apply the most economical production methods are ousted by their competitors, using production methods of maximum efficiency. Competition promotes efficient distribution of resources. The competitive element in the market-oriented system channels resources into producing the commodities and services which society needs most. It dictates the use of the most effective methods of combining resources for production purposes; it also facilitates the development and implementation of novel, more efficient production methods. In the meantime, inadequate attention to the development of the market-oriented aspects of the economy and to the principle of free enterprise, as well as excessive preoccupation with financial “pyramids”, brought the country to an overwhelming financial crisis in August 1998. That crisis has set our country back several decades. Only now is Russia’s economy regaining the level it reached previously.

assertion –утверждение; mere assertion – голословное утверждение to evoke – вызывать be accorded – предоставлять, жаловать trend – общее направление, тенденция to commence = to begin, to start dictate ['dikteit], n – 1) предписание, веление; 2) диктат to eradicate – искоренять, уничтожить apart from – за исключением to prosecute – преследовать в судебном порядке to occur = to emerge a constituent republic – республика, входившая в состав a unified system – единая система gradual spread of – постепенное распространение to go into decline – приходить в упадок a stock company – акционерное общество a joint venture – совместное предприятие a share, a stock – акция a security – ценная бумага to issue – пускать в обращение; эмитировать be entitled to do – иметь право на an asset – недвижимость to compete –competition – competitive – competitors – конкурировать; конкуренция; конкурентоспособный, конкуренты go into liquidation – ликвидироваться; подлежать ликвидации to facilitate – облегчать, способствовать to obligate – обязывать to apply – применять, использовать to oust – занимать чье-либо место; вытеснять to promote – 1) способствовать, содействовать, стимулировать; 2) учреждать promotion – 1) содействие, поощрение, стимулирование; 2) основание, учреждение; 3) рекламно-пропагандистская деятельность to channel – направлять в определенное русло excessive – чрезмерный preoccupation – озабоченность overwhelming –зд. сокрушительный to regain – вновь обрести; снова достичь

I. Read and translate the text paying attention to commentaries.

II. Practice reading the following international words and expressions:

A concern, an initiative, reform, a cooperative, a principle, a company, a broker, organization, mechanism, resources, materials, financial, crisis, a decade, dividend.

III. Translate the following noun-groups. Note that nouns in English may function both as attributes and as premodifiers consisting of more than one noun.

Production resources materials; production methods; production methods of maximum efficiency; the USSR disintegration; the Soviet economy isolation; a state enterprise; a limited-liability company; a stock company; a securities market, production purposes, European Commission Economics Ministers.

IV. Find the synonyms in the right-hand column to match the words in the left-hand one.

To state	- major changes
To make smb do smth	- to occur
To arise	- a concern
A tendency	- to assert
Military power	- to carry out
To perform	- be entitled to
To start	- a trend
To have a right	- to force
The most important changes	- to commence
A large enterprise	- military might
To use	- to implement
To destroy	- to apply
To appear	- to eradicate

V. Give the English for:

Частный; частное предприятие; частная собственность; реформа; реформировать; реформатор; входящая в состав; акционерное общество; общество с ограниченной ответственностью; ценные бумаги (облигации, векселя, чеки, акции); рынок ценных бумаг; фондовая биржа; называться; иметь право (на); запустить механизм спроса и предложения; торговля ценными бумагами; наиболее эффективные способы производства; конкурентоспособный; распределять ресурсы; распределение ресурсов; размещение ресурсов; свободное предпринимательство; тоталитарная форма правления; вводить законы рыночной экономики; покончить с прошлым; управлять предприятием; прибыль предприятия; самые экономичные способы производства; отбросить назад.

VI. Answer the questions.

1. When did the trend towards a market-oriented economy commence in Russia?
2. Give the description of the Soviet Union’s economy.
3. Why did the need to reform the economy arise in the mid-1980s?
4. Identify the symptoms of a “market-oriented economy” starting in Russia.
5. Name two principles of the “market-oriented economy”.

6. What factors brought Russia to the crisis of 1998?

VII. Make up a list of features that might characterize Russia as a market-oriented economy (to be done in writing).