Systemic Pressures and the Intersubjective Bases of State Autonomy in Russia: A Constructivist-Institutionalist Theory of Economic Crisis and Change

AuthorWesley W. Widmaier,Lisa A. Baglione
Publication Date01 June 2006
International Relations Copyright © 2006 SAGE Publications
(London, Thousand Oaks, CA and New Delhi), Vol 20(2): 193–209
[DOI: 10.1177/0047117806063848]
Systemic Pressures and the Intersubjective Bases of
State Autonomy in Russia: A Constructivist-
Institutionalist Theory of Economic Crisis and Change*
Lisa A. Baglione and Wesley W. Widmaier, St Joseph’s University, USA
Over the economic crises of the 1990s, global economic understandings shifted from the
early classical orthodoxy of the ‘Washington Consensus’ to a later Keynesian support for
demand stimulus and capital controls. However, Russian policy – particularly after the
1998 ruble crisis – partly deviated from these broader trends, combining Keynesian
capital controls with classical budgetary restraint. In offering a ‘constructivist-
institutionalist’ explanation for this policy mix, we assume that agents can always
interpret or construct events as varying types of crises, reshaping state–society relations
in the process. We then argue that classical interpretations of the early 1990s’ crises
legitimated orthodox policies and – more importantly – alienated the Russian state from
society. Given this backdrop, while later interpretations of the 1998 ruble crisis
legitimated capital controls, the prior alienation of state from society precluded any
domestic Keynesian coalition. Global pressures must, from this vantage point, be situated
in specific social and institutional contexts.
Keywords: constructivism, crisis, ruble, Russia, Washington Consensus
Introduction: the problem and overview
Over the past several decades, scholars have widely argued that capital mobility and
currency crises have constrained the scope for the exercise of state autonomy or the
use of capital controls.1Yet, despite this skepticism, currency crises have often
enabled increased policy experimentation. Consider the case of post-Soviet Russia:
while the early 1990s’ crisis of post-Soviet adjustment spurred adoption of such
classically oriented policies of the ‘Washington Consensus’ as capital account
liberalization, price liberalization and privatization, the 1998 ruble crisis prompted
a more Keynesian response, most importantly the use of capital controls. However,
in a significant deviation, Russian policymakers also resisted global trends toward
Keynesian fiscal policies, favoring instead budgetary orthodoxy.2Where most
states undergoing crises in the late 1990s – such as Mexico, Thailand, Korea and
Brazil – recognized the need to apply a fiscal stimulus, Russian budgetary policy
remained contractionary.3This variation raises questions regarding the nature and
consistency of prevailing constraints on state autonomy.
From materialist perspectives, international influences appear as unmediated
constraints on policy choice. For example, Peter Gourevitch emphasizes the impact
of international crises – defined as encompassing ‘a major downturn in a regular
investment/business cycle, a major change in the geographical distribution of
production, and a significant growth of new products and new productive
processes’ – upon coalitional resources.4In this view, where crises alter the
‘balance of power’ among societal groups, they enable newly emergent coalitions
to wield greater influence over policy choices. However, such analyses obscure the
need for agents to interpret events as crises.5In this article, we therefore build on
recent ‘constructivist IPE’ (international political economy) studies to offer a
‘constructivist-institutionalist’ framework, highlighting the role of state agents in
constructing crises and shaping coalitional interests and – more broadly – state–
society relations in Russia.6In the first section, we outline this approach,
contrasting classical ‘state failure’ and Keynesian ‘market failure’ interpretations of
crises and their effects on economic interests.7In the second section, we show how
international and Russian agents interpreted the crisis of the early 1990s in classical
terms as driven by state failures. This legitimated not simply acceptance of
orthodox policies, but also – more importantly – prompted an enduring alienation
of state from societal agents. In the third section, we address the late 1990s’ crises,
contrasting Keynesian policies applied in the international realm with more
classical policies in the domestic realm: while Keynesian constructions of the 1998
ruble crisis as a market failure legitimated a more assertive use of capital controls,
the prior alienation of state from society undermined domestic supports for
Keynesian policies.8This analysis demonstrates that systemic pressures can be
interpreted in ways that legitimate varying policies, exceeding the possibilities
recognized by advocates of the capital mobility hypothesis. In the conclusion, we
highlight these themes and the implications for state–society relations in Russia.
Constructivism, crises and institutions
In recent IPE debates, materialist approaches have treated the international
economy – and particularly capital markets – as unambiguous constraints on state
autonomy. In this view, states competing for capital must accord primacy to mone-
tary stability, lest any attempts at macroeconomic stimulus prompt a speculative
attack.9From this perspective, the early 1990s’ Russian embrace of liberalization
and privatization stemmed from the competitive pressures to attract foreign
capital.10 More specifically, Soviet policymakers proved incapable of correcting the
inefficiencies inherent in their system, and capital markets were unwilling to
finance further efforts. For example, William Wohlforth suggests that Gorbachev
adapted rationally to economic challenges facing the Soviet Union, but was
ultimately unable to manage the pace of change. Wohlforth argues that Gorbachev
did not wish to ‘give up socialism and join the west’, but was eventually over-
whelmed by events.11 Likewise, US Treasury Secretary Paul O’Neill cast the 1998
crisis as ‘foretold’ and ‘not a surprise’ given the poor macroeconomic and business
environments in Russia.12 However, such analyses are insufficient to the extent that
incentives must be interpreted: certainly no unambiguous forces compelled the

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