Turning Capitalist

by Jeffry R. Fisher

Prompted by a question about Russia, my reply is applicable to most command economies emerging from communism or fascism. Notice the similarity with my plan to rebuild Iraq's economy.

The Riddle

When you Yeltsinize, however, how is the process to be carried out?

Oy vey! I already solved this problem about six years ago; unfortunately, neither Russia nor Ukraine followed my advice. Nobody ever listens to me.

Forget all about any barter arrangements; they are inefficient. Money was invented for a reason; use it! Thus: auction off pieces of land and buildings and equipment for cash and then distribute the cash to the citizens.

Elements of Capitalism

Of course, to attract buyers (especially foreigners with big bucks) you must first change property, finance, and other laws. Real estate title law must be modernized. Property rights must be strengthened. Foreign currencies must be allowed to flow freely across the border. Dollars and pounds and euros et cetera must be legal for transactions if that's what two parties agree to use.

Foreigners must be allowed to buy property, and their property rights must be secure. Foreign banks must be allowed to hold liens on real property as collateral. Import restrictions and tariffs must be eliminated so that capital can flow into the country. Profit should not be mostly confiscated. Extortion, robbery, assault, graft and murder must be stamped out. Personal liberties need to be assured. Most of the bureaucracy must be dismantled so that locals with no special training are able to penetrate it. The "common man" (and woman) must be able to secure property title so they can participate in and learn to support capitalism. Capitalism must not become the province of a few elites and their foreign fellow travellers.

Auctions

A few rights of way need to be held together for transportation, but the rest of the land and its improvements throughout the country can be auctioned off to the highest bidder in any order that buyers want. Rather than the government deciding what order to place lots up for sale, have interested buyers place lots into play. Let each kind of lot be promoted and auctioned over some period of time and then closed. The government could hire multiple companies of each of several types to handle the advertising, sales, marketing, and title transfers. They could also hire land management companies to start charging market level rent on all of the property it still owns.

The cash coming in would give the Russian citizens more than something to buy food with; there should be enough to buy farm land or dilapidated condos or low-rent retail space to get started on the "Russian" dream.

Free Enterprise Unleashed

After that, the fun begins. American mega-farmers could swoop in with heavy farm machinery, high yield seed, and modern pesticides to turn the steppes into the breadbasket of Europe. German or Japanese railroad companies could rebuild and computerize the rail infrastructure to haul in the equipment and haul out the food and other products. Perhaps the Koreans, sensing heavy machinery going in and other products surging out, would build new container and ro-ro ports in both the Baltic and the Far East.

All manner of business would swarm in after that: heavy industry, communications, computer programming, hospitals, tourist resorts, 24-hour tech support for other nations' businesses etc. etc. Most of what's there now is obsolete, including all of the housing, so construction should be big for years to come in order to rebuild the whole country.

To Summarize:

The Russian people are well educated and very hungry, so they should be able to attract a wide variety of business with their cheap, plentiful land and their low wages. All they need to do is to protect life, liberty and property... and then open the gates.

Copyright 2003-2008 by Jeffry R. Fisher: Permission is granted to reproduce this article in whole, but only in combination with attribution, the original title, the original URL, and this copyright notice.
Jeffry R. Fisher is the founder and president of Propagate Ltd, which is liberating digital content as LiberateIP.com.