Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

In its way, it was effective. It demonstrated leadership. It humbled the oligarchs. It rallied Russian social interests around the state that provided for them. It kept Prime Minister Putin in the limelight. But was it a long-term strategy for growth? Liberal economists were skeptical. So too was Medvedev, who had succeeded Putin as president in 2008. Even before the crisis, the expert advisers that Medvedev cultivated in his personal entourage had been calling for a new course.22 In the wake of the crisis their message was even louder. What had made Russia so vulnerable in 2008 was its lopsided integration into the world economy: on the one hand, its excessive reliance on oil and gas; on the other hand, the corrupt culture of capital flight, in which Russian oligarchs sluiced money in and out of the country through the off-shore banking system. How else could one account for the bizarre anomaly that made tiny Cyprus into one of Russia’s main sources of foreign investment? What Russia needed was modernization. As Medvedev remarked on September 10, 2009: “Can a primitive economy based on raw materials and economic corruption lead us into the future?”23 Two-fisted crisis fighting was not enough. A mere recovery from the shock of 2008 would lead “nowhere. We need to get out of the crisis by reforming our own economy.”24 What Russia needed was economic transformation, and for that it needed not less but more interaction with the world economy, and above all with its technologi...