Niall Ferguson: Putin is heading for a worrying future

[Niall Ferguson is Laurence A Tisch Professor of History at Harvard University.]

There is no such thing as the future. There are only futures, plural.

Historians are supposed to confine themselves to the study of the past, but by drawing analogies between yesterday and today, they can sometimes suggest plausible tomorrows.

Seven years ago, the economist Brigitte Granville and I published an article in the Journal of Economic History entitled "Weimar on the Volga", in which we argued that the experience of Nineties Russia bore many resemblances to the experience of Twenties Germany. In particular, we focused on the impact of very high inflation, suggesting that it had similar causes and consequences in each case.

A post-war, post-imperial, post-revolutionary state sought to avoid high unemployment by spending generously. At the same time, powerful industrial lobbies exploited the government's weakness by evading taxation. To make matters worse, money had to be found to service a large external debt (post-war reparations in the German case, Soviet-era debts in the Russian). Soaring government deficits could be financed only by printing money. As people lost faith in the currency, prices soared. The resulting inflationary crisis had the effect of undermining the credibility not just of the currency but of the fledgling democracy that was to blame.

No historical analogy is exact, needless to say. Russia's currency did not collapse as completely as Germany's did in 1923, though the annual inflation rate did come close to 300 per cent in January 1992. Our hunch, nevertheless, was that the traumatic economic events of the Nineties would prove as harmful to Russian democracy as hyperinflation had been for German democracy 70 years before.

"By discrediting free markets, the rule of law, parliamentary institutions, and international economic openness," we concluded, "the Weimar inflation proved the perfect seedbed for national[ist] socialism. In Russia, too, the immediate social costs of high inflation may have grave political consequences in the medium term. As in Weimar Germany, the losers may yet become the natural constituency for a political backlash against both foreign creditors and domestic profiteers."

Seven years later, the man who succeeded Boris Yeltsin as our article was going to press is doing much to vindicate our analysis.... To repeat, there is no such thing as the future; only futures. One conceivable future is that after (if?) Mr Putin steps down next year, Russia will become more liberal in its politics. But that is not the future on which I would put my money. A more plausible future is that, having more or less stifled internal dissent, Russia is now ready to play a more aggressive role on the international stage. Remember: it was Mr Putin who restored the old Soviet national anthem within a year of becoming president of the Russian Federation. And it was he who described the collapse of the Soviet Union as a"national tragedy on an enormous scale". It would be a bigger tragedy if he or his successor tried somehow to restore that evil empire. Unfortunately, that is precisely what the Weimar analogy predicts will happen next.

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