Abstract
This chapter discusses a conflict theory of inflation—that one driver of inflation is distributional conflicts and it locates roots in conflict partly in the different rules and interests of fields. Not content to focus on Russian inflation as a phenomenon sui generis, this chapter uses the Russian case to dive into the thorny issue of what causes inflation to begin with. Inefficiencies and rent-seeking, among other practices, are built into existing Russian economic fields, such that competition for rents rather than returns on innovation contributes to inflationary pressures (although Protasov is careful not to exclude other usual macroeconomic variables). While the argument here has more than a passing resemblance to that of Mancur Olson, it does not postulate that distributional conflicts are a function of the quantity of economic associations alone, nor does he pin the blame on unions; rather, he points to fields that have crystallized into informal cartels.
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Notes
- 1.
Data from Rossat (http://www.gks.ru/).
- 2.
At the beginning of 1993, after a major defeat over policies aimed at financial stabilization, Yegor Gaidar (as if to justify himself) expressed more categorically: “Cost inflation is a powerful influence. All behavior of economic entities is fully cost-oriented.”
- 3.
It is characteristic that monetarists’ criticism of the institutional approach is completely inconclusive—it is based on the correlation of shares of state and private property in various economies. Obviously, it is wrong to reduce a whole variety of institutional characteristics to one.
- 4.
This could include economists who did not take a liberal approach to economic reforms.
- 5.
Andrei Illarionov, as a consistent supporter of monetarist views on Russian inflation, eventually acknowledged the lack of money in circulation in reference to payment arrears. This camp has offered a far from indisputable explanation for monetary deficit: the concentration of resources on the market for state debt. Other sources often mention the criminal nature of financial flows in the Russian economy. This probably has little significance in the end: in M. Deliagin’s apt remark, “an indication of the reason for the shortage of money does not eliminate that shortage.”
- 6.
At one time, non-payments appeared to be due to distrust of economic entities in stabilization efforts of the government, that is, their expectations of monetary emission or simple mutual offset of debt claims (one-time acceleration of the velocity of money). This might have been true only in relation to the initial stage of the payment crisis in Russia in 1992. Subsequently, the state officially refused to carry out a global clearing of accounts, and inflation gradually decreased—but non-payments persisted into the early 2000s.
- 7.
In this analysis, I examine correlations between inflation and institutional context in time. While this does not show causation, I argue that the correlation is strong enough to warrant some validity for the framework presented here. This is in a similar vein to Fligstein’s (1990) analysis of fields using timing of corporate mergers and acquisitions: usual market and other explanations cannot explain either the form or timing of mergers and acquisitions in a way that a field analysis can.
- 8.
Instituted in 1995, the currency corridor was a maximum exchange rate for the ruble. The goal was to stabilize the ruble, and two effects were reducing the capacity of banks and similar actors to profit from currency speculation and to reveal which banks were in worse health.
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Protasov, A. (2018). Economic Theory and a Constant Worry Across Time: Institutional Failures in the Development of Theories of Inflation. In: Hass, J. (eds) Re-Examining the History of the Russian Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-75414-7_11
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