Was There Anything to Cure with? The Anti-Inflation Aspect of Shock Therapy through the Lens of the State Capacity Concept (1991–1992)

Abstract

The study is devoted to assessing the potential of government agencies in implementing the anti-inflation policy of the Yeltsin-Gaidar government. The need for a consistent analysis of the public administration system elements involved in the implementation of this policy determined the use of retrospective and structural-functional methods. The theoretical foundation of the research is the concept of state capacity, which focuses on establishing the relationship between the parameters of the state apparatus and its ability to achieve the set goals. An integral component of this concept, bureaucratic capacity, was employed to study the condition of government agencies from a personnel and organizational perspective. The subject of the study was a part of the public administration system, whose functionality determined the prospects for implementing the anti-inflation policy. The list of specific government bodies was identified based on four main directions: antitrust, foreign trade, tax, and fiscal-budgetary policy. The corresponding services, state committees, and organizations were examined in three aspects: personnel and organizational capacity, regulatory framework, and resource availability. The results of the study showed that government agencies were unprepared to operate under market reform conditions. They suffered from an acute lack of expertise, operated within an underdeveloped infrastructural and institutional environment, and faced significant funding shortages. The ideological principles and socio-economic realities of 1992 created long-term conditions for the degradation of bureaucratic capacity. The decline in the state’s ability to concentrate resources, enforce policies, and manage administrative processes rendered the anti-inflation objectives of shock therapy unattainable within the planned timeframe. Unrealistic goal-setting led to negative consequences such as additional socio-economic costs, destructive forms of social adaptation, and increased political tensions. The findings of the study revealed the need to align state capacity with the desired outcomes of government policies through a preliminary audit of relevant elements of the bureaucratic apparatus.