Economic Shock Therapy

The New Year has brought little economic cheer to Russia. The estimated number of unemployed has hit 6 million. Industrial output has fallen by 10.3 percent. Car imports in the Far East have dropped by 95 percent in response to new tariffs. The ruble has slid to a new low costing Russia $200 billion or one third of its reserves (though the Russian government has announced that it will stop its further depreciation).

No doubt, Russia is feeling the economic pain but it isn’t alone. The US lost 71,000 jobs yesterday. Unemployment here in Golden State has hit 9.3 percent. Iceland’s government has become the first casualty of the economic crisis to riotous, window smashing, rock throwing protesters.  Mass protests have occurred in Greece, the Czech Republic, Hungary, Bulgaria, Latvia and Lithuania. This is just the beginning warns Dominique Strauss-Kahn, the head of the IMF. Political tensions in Europe “may worsen in the coming months,” he said adding “The situation is really, really serious.” This is especially the case in ex-communist countries where “there’s a long history of unfulfilled promises and frustration with the political elites going back to the communist era.”

The world’s economic elite are assembling in Davos in record numbers to coordinate a way to sway the market’s raucous invisible hand. But their mood is dim. “This may be the first Davos where capitalism is widely viewed as a failure, rather than something to be admired,” says one World Economic Forum veteran.  You know things are bad when the economic elite begins doubting their faith.

Yet while Russia’s statistical economic performance goes with the rest of the world, prompting some to speculate that it’s about to tear itself apart at the seams, pollsters, sociologists, and psychologists don’t see much evidence for a social explosion despite Russians’ increasingly concerns about inflation, rising prices, and unemployment. People seem to be weathering the storm and hoping for the best, or increasingly finding solace to their economic woes in psychotherapy and, of course, vodka. According to Tatiana Dmitrieva, the director of the Serbiskii State Scientific Center for Social and Forensic Psychiatry, since the financial crisis requests for psychologists have grown by 10 percent and psychotherapy by 20 percent. So much so that the Center has opened a hotline for people in psychological distress. Those who are of lesser means and can’t afford or aren’t inclined toward a human therapist tend to turn to its less expensive bottled form.  Nevertheless, Dmitrieva sees something positive in people’s turn to psychotherapy. It is a sign that “rational responses prevail.”

Indeed as the rise in those seeking therapy suggests, discontent exists, but says Valerii Fedorov from the Russian polling agency VTsIOM, “it has yet to find itself a target.”  As Kommersant explains,

The ratings for the President and government have not fallen.  Therefore protest carries a local character, and conflicts arise not out of discontent with those in power as a whole, but with whatever concrete matter that has taken place, in particular the car owners in the Far East.  In fact, about the government’s anti-crisis measures, asserts the VTsIOM’s direction, “people have poor information, and don’t know if there is a general plan to combat the crisis.” Sociologists cannot forecast whether parties, first and foremost the opposition, can strengthen their influence in society in the atmosphere of the crisis.

Perhaps the lack of political outcry has a psychological component.  One reason why the economic crisis has yet to produce political instability, say psychologists, is because “the beginning of the crisis was preceded by economic and social stability that has had a beneficial affect on the psychological condition of the population.”  In this sense, according to Aleksandr Asmolov from the Department of Psychology at MGU, the “Default of 1998 cannot be compared to the present crisis.  Now many breathe freely, believe in stability, and have began a long term planning.” People sense they have more of a social and economic cushion than they did ten years ago. Moreover, the psychological state of the citizenry also depends on the actions of those in power. If people perceive that the state has a clear strategy for improving the economy, “people will cheer up” and “if people feel that they’ve been disregarded then further neurosis is inevitable.”   Now whether increased neuroses will lead to political discontent or a further delving into the psychological musings of the self remains to be seen.