Question

Explain any four consequences of shocktherapy.

Answer 1

1. Economic Consequences:
   1. The industry under state control nearly fell apart. At market rates, about 90% of the state-owned properties were sold to private owners. This was known as the “Largest Garage Sale in History.”
   2. The ruble, Russia’s currency, saw a sharp drop in value.
   3. People lost everything they had saved due to extreme inflation.
   4. It was forbidden to engage in collective farming.
   5. Compared to 1989, the total GDP was lower in 1999.
2. Social Consequences:
   1. The Soviet Union’s social assistance system was entirely broken.
   2. The end of social welfare services left many people in poverty.
   3. People in the middle class were pushed to the outskirts of society.
   4. Academic and intellectual labor either left or fell apart, becoming disconnected from society.
   5. A mafia took over all the businesses and made them work.
   6. Privatization widened the gap between the rich and the poor.
3. Political Consequences:
   1. The current system, which was Socialism with Communism, abruptly changed to Liberal Democracy with Capitalism.
   2. Leaders of some countries were very strict and ruled by law.
   3. The formation of the political system received less attention than that of the economic system.
   4. There was no room for disagreement or protest, and the idea of the Judiciary’s independence hardly existed.