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Through the Russian Looking Glass

With Russia’s economy crumbling under the weight of Western sanctions, some of the country’s leading economists are advocating a return to Soviet-style central planning. Will the violent wave of expropriation Russia has unleashed on Ukraine be unleashed at home as well?

VITORIA-GASTEIZ – Russian President Vladimir Putin has long regarded the collapse of the Soviet Union as a “geopolitical catastrophe.” The invasion of Ukraine, now approaching its one-year anniversary, could be seen as the culmination of his years-long quest to restore the Soviet empire. While this effort will almost certainly fail, Putin may succeed in reviving one of the USSR’s worst features: its centralized, sclerotic economic system.

With Russia’s economy straining under Western sanctions, some of the country’s leading economists and mathematicians are advocating a return to the days of five-year plans and quantitative production targets. In an interview marking the centenary of the Soviet Union’s founding, economist Ruslan Grinberg called for the reinstatement of the planned economy – an opinion that could be easily dismissed were Grinberg not the head of the influential Institute of Economics at the Russian Academy of Sciences.

What Grinberg proposed is not a war economy in which production is geared toward the needs of the military. A planned economy, in his view, should be “not directional, but indicative.” Government, he explained, must formulate economic priorities but not tell companies what to produce and when. Instead, the state should “stimulate production via subsidies, as well as fiscal and customs policies.”