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Kakha Bendukidze lecturing. Photo: Cato Institute

Suggested readings

Among the more recent sources, a transcript of an interesting conversation with Kakha Bendukidze is available from Russian blogger Vladimir Fedorin, known by his LiveJournal username empedocl. It is divided into three parts (part 1, part 2 and part 3). The blogger met with Bendukidze in March 2009 in Tbilisi and engaged in a lengthy conversation covering a wide range of topics including the global financial crisis, pension reform in Latin America, ideas for a safety net in Georgia, and differences between Russia and Georgia concerning democracy. Bendukidze explained his understanding of libertarianism in simple terms: "The point of libertarianism is to say: the government's attempt to do something good is very harmful."

Among the influences mentioned by Bendukidze in different interviews (including with ESI), the "Austrian school of economics" stands out. One of its leading representatives was Ludwig von Mises (who died in 1973), one of the founders of laissez-faire economics. His central argument was that

"the only viable economic policy for the human race was a policy of unrestricted laissez-faire, of free markets and the unhampered exercise of the right of private property, with government strictly limited to the defense of person and property."

Murray Rothbard had studied and worked with Mises. His ideal was also the "stateless economy". Any state was for him "a gang of thieves" and the very notion of a "public sector" an intellectual fallacy:

"it necessarily lives parasitically upon the private economy … the consumers are deliberately thwarted, and the resources of the economy diverted from them to those activities desired by parasitic bureaucracy and politicians."

When Rothbard died in 1995, The New York Times referred to him as a founder of "right-wing anarchism." An excellent source on the work and influence of Ludwig von Mises is the website of the Ludwig von Mises Institute in the US, www.mises.org. It includes classic libertarian texts, including Human Action by Mises and Murray Rothbard's Fallacy of the 'Public Sector' (1961). There are also the letters to Ayn Rand by Mises and Rothbard, congratulating Rand on the success of Atlas Shrugged.

Additionally, there are the two Russian thinkers whom Bendukize mentions in a Financial Times interview in 2007 as having influenced him: Vitaliy Naishul and Andrey Illarionov.

Vitaliy Naishul's book Another Life is available online in Russian: "Другая жизнь" (1985). In the preface to the book, Naishul addresses the reader, saying,

"In this book … you will take a look at the Soviet economy and understand why you earn so little money for your work and why it is so difficult to buy necessary goods in stores. You will also learn how the planning agencies work and will be surprised to find out that there is actually little they still plan."

Naishul uses real-life examples and comparisons to explain why the standard of living in the Soviet Union is inferior to that in Western countries. He advocates radical economic reform, including privatization, which he sees as necessary to allow the Soviet economy to catch up with the West. The author also introduces the reader to key concepts of mainstream economic theory, such as the "invisible hand" and "perfect competition". There is also an interesting public lecture by Naishul in Russian, in which he talks about the history of economic reforms and privatization: "Where Did the Reformers Come From?" (2004).

To find out more about the views of Andrei Illarionov please see the CATO Institute's website. There one also finds his praise of the US economist Milton Friedman, highlighting the tragedy of Russia in the 20th century:

"At the end of the 19th century when Milton Friedman's parents moved from the provincial Hungary to Brooklyn, Russia's population (based on the territory of the modern-day Russian Federation) was only 3 percent lower than that of the U.S. population – exact figures are 66 to 69 million people, respectively …. In 2006, when Friedman died, the population in Russia was half that of the United States – 142 million people in Russia versus 298 million people in the United States. The yawning gap is even more pronounced in economic indicators. In 1894, Russia's GDP was 39 percent of that of the United States … in 2006, Russia's GDP had dropped to only 13 percent of American gross domestic product.

"Freedom is a wonderful thing whether it is economic, political, or intellectual. When individuals are allowed to freely compete under limited government and the rule of law, they create great wealth and improve human welfare. This prosperity does not depend so much on natural resources or nuclear weapons; it depends on economic and personal freedom to develop one's skills and to engage in voluntary exchange …. The most fundamental problem of present-day Russia is not the lack of investment, the so-called natural resource (oil) curse, the existence of fools, the absence of roads, or even the "robbery" going on in Russia. The real problem is the lack of freedom."

April 2010

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