Russia Market Economy Short Lived?

Yevgeny Volk / June 29, 2009

The past week saw an extraordinary event in the Russian economy. Prime Minister Putin and other Cabinet Ministers made a surprise visit to one of Moscow’s supermarkets and personally regulated the price rates. Putin discovered that the trade margin on an array of foodstuffs in Perekryostok supermarket is significantly higher than the average. In fact, Putin ordered price cuts, while Yuri Kobaladze, managing director of X5 Retail mid-price chain and Putin’s former foreign intelligence colleague, promised to slash the prices.

The government’s intervention in pricing issues and attempts to institute administrative control over retail prices are the most glaring attributes of a totalitarian socialist economics. The economic history has repeatedly confirmed the policy’s total ineffectiveness and inaptitude, including during the recent Soviet age. (more…)