Ever since the break-up of the Soviet empire, the West has beenr Kemp says we should not forget how shallow the market’s roots are in the former Soviet Union. trying to woo former Communist states away from command economies into market economies.
Huge sums of money have been spent, a lot of it through UK institutions, including accounting institutions. In a small way, the Foundation for Accountancy and Financial Management has been in this business. The present troubles in Moscow make one think about all this effort.
One of the biggest mistakes people make is to look on the countries of Central and Eastern Europe as being homogenous. They certainly are not.
Towards the West you get Poland, Hungary, the Czech Republic, Slovenia and Estonia – all of which are in the next wave of membership to the European Union, with others not so far behind.
These nations have a mercantile tradition, certainly somewhat underground for some 60 years – courtesy of Messrs Hitler and Stalin – but still there, ready to reappear. And the tradition is re-emerging; with Western aid contributing to its development.
But, this is not the case farther East. There is no mercantile tradition seeking to get out. And it is not that it didn’t exist under the Communists – it didn’t exist under the Tsars, either. Whole generations have had their upbringing and experience in a command economy framework of thinking.
This mindset is going to have to be overtaken before countries like Russia, Ukraine, Belarus, and others really understand, in a practical manner, what a market economy is and how to make it work – and with it the associated democratic machinery. This adjustment has taken the West over 150 years to achieve; but these countries are trying to do it in short order and too fast.
And in this they are abetted by many, hurried Western institutions, who see the position through rose-tinted spectacles and are politically and emotionally driven. They are, of course, commercially driven too, because there is (or was) money to be made. But, so far, it has been a dialogue of the deaf, with neither side really understanding the other or really trusting it either. Both have been too hasty and often too greedy.
But everybody has to keep trying. These are fundamentally extraordinarily wealthy countries with great human and natural resources. And they are also an important part of the global economy.
The job of the West is not to bully or harangue, but demonstrate, in the right time-scale, the benefits of a properly run market economy. And to help deliver it before these countries despair and return to command regimes as the only way to put food on the table.
It will be in large part our fault if they do, and our loss.
Sir Peter Kemp is chief executive of the Foundation for Accountancy and Financial Management.
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