Incomplete transition or interrupted revolution?

The Russian economy and the crisis in Ukraine

Alan Freeman

Presentation to colloquium on ‘Perspectives on the Crisis in Ukraine’ at the Ukrainian Labour Temple, Winnipeg

18 June 2014

Sources United Nations Statistical Database Oxford Handbook of the Russian Economy Post-Globalization Initiative Alternativy Links Rosstat

londonmet.academia.edu/AlanFreeman slideshare.net/alanfreeman777 vimeo.com/alanfreeman ideas.repec.org/e/pfr102.html

Afreeman@iwgvt.org

Human losses in World War II (smallest estimates in all cases)

Country Population Military

Civilian deaths due to military

activity and crimes against

humanity

Civilian deaths due

to war related

famine and disease

Total deathsDeaths as % of 1939 population

Soviet Union (within 1946-1991 borders)

168,524,000

8,700,000 7,000,000 6,000,000 21,800,000 12.9%

(Russia)110,100,00

06,750,000 4,100,000 3,100,000 13,950,000 12.7%

(Ukraine) 41,340,000 1,650,000 3,700,000 1,500,000 6,850,000 16.3%

China517,568,00

03,000,000 7,000,000 5,000,000 10,000,000 1.9%

Germany 69,850,000 4,300,000 1,100,000 400,000 7,000,000 10.0%Poland (within 1939 borders)

34,849,000 240,000 4,880,000 500,000 5,620,000 16.1%

Dutch East Indies 69,435,000 3,000,000 3,000,000 4.3%Japan 71,380,000 2,120,000 500,000 500,000 2,620,000 3.7%

India (British)378,000,00

087,000 1,500,000 1,587,000 0.4%

Yugoslavia 15,400,000 300,000 581,000 1,027,000 6.7%French Indochina 24,600,000 1,000,000 1,000,000 4.1%France 41,700,000 200,000 350,000 550,000 1.3%Italy 44,394,000 301,400 153,200 454,600 1.0%United Kingdom 47,760,000 383,800 67,100 450,900 0.9%

United States131,028,00

0407,000 12,000 420,000 0.3%

Whose war was it? harsh facts underlie historical memories

Source: wikipedia

Worlds apart: international inequality in the modern world

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GDP per capita of industrialised coun-tries, divided by GDP per capita of the

rest of the world

The ‘economic nationalist’ programme

‘Why I am challenging Putin’Sergei Glazyev’s 2004 election

statement

Russia is living through the deepest, most prolonged crisis in modern history. It is a man-made crisis that has struck every sphere of society and the state. This crisis is not a natural disaster but one engineered by the choice of a false doctrine of reform, one that is leading the country to degradation. … I am running for president in order to cleanse the state apparatus of corruption and bureaucratic arbitrariness and to summon competent and responsible people into state service. Russia cannot withstand another four years of plunder and destruction. I am running so as to implement a real program to rebuild the economy. The current regime will not implement such a program and will continue to serve the oligarchic clans that have grown fat by plundering state property. Putin's corrupt and irresponsible regime has become part of the system of oligarchic parasitism, with its pathologically unjust distribution of incomes and property. … The impoverishment of great masses of the population has destroyed the structures of civil society, giving rise to a "civilization of slums." Roughly half of Russia's population, primarily children, is not getting enough to eat. Child neglect and homelessness are growing. Towns and villages are swamped by violence and banditry.  Poverty, psychological stress, and the collapse of health care have led to an anomalously high death rate, a mass decrease in health, and the wasting of colossal labor resources. Many people cannot buy the most basic medicines and have no access to modern medical services. The prospects for modernizing or even preserving the national health care system are shrinking with every year.

In order to do this, we must take back as state revenue the profits from the exploitation of our natural wealth, double the budget, and guarantee everyone's real right to free education and healthcare.

Implementing our program of social justice and economic growth will allow wages to be doubled in the course of a year by bringing them into line with labor's contribution to the national income, expanding workers' rights to stand up for their interests, and increasing the minimum wage by three times. Real wages should grow fourfold by 2010; pensions must also grow accordingly. Economic growth must encompass all regions of the country, and people must have equal social guarantees, rights, and opportunities regardless of their place of residence. At the moment, revenues are diverted away from the regions to the center and then dispatched abroad - the oligarchs' wealth of billions comes from fleecing the Russian provinces. I will put an end to this. To improve the economy we will direct lending to manufacturing and entrepreneurial activity, protect the right to honestly earned and legally acquired property, rebuild savings, and stimulate scientific-technical innovation and investment. Markets will be purged of criminals and monopolies; honest competition will begin to operate. Those who work well and benefit society will get high incomes, not those who take what belongs to other people. The prices of basic commodities and charges for electricity, heating, and other vital services will be reduced to their actual production costs.

The geopolitical legacy of the USSR as a great power has been squandered over the years of "reform." Reform of the armed services has boiled down to disarmament alone. Combat capability has fallen to an unprecedented low level. Russia is being threatened with losing its status as a power. Russia will not be reborn without the rebirth of a powerful, modern army. …Under the slogan of the market, the current regime has allowed depravity to flourish on television and in mass culture. The profound values of Russian culture are being systematically destroyed, stripping life of its meaning and joy, and sowing an enmity of each against all. To give Russians back a feeling of pride in their homeland, and to create the conditions for a revival of our historical spiritual and cultural traditions, we must revive our schools, eradicate the spirit of depravity and violence in the media, provide everyone with access to masterpieces of Russian culture, and create the conditions for a social partnership between the state and the church. Now is the moment for Russians to take Russia back!

How did transition affect ordinary Russian people?

Who got poor?

Poverty and Inequality in Russia; Michael Lokshin and Ruslan Yemtsov

Monthly salary

2007 2008 2009 2010 2011 2012

160$ 22% 16% 12% 9% 7% 6%224$ 36% 29% 23% 19% 15% 13%320$ 54% 46% 39% 33% 29% 25%448$ 70% 62% 56% 50% 45% 40%608$ 82% 76% 71% 65% 61% 56%864$ 91% 88% 84% 80% 77% 73%

1,440$ 100% 97% 95% 93% 92% 90%

Percent getting less than this

Rosstat, Author calculations

Putin enters Yeltsin government

Who got rich?

Poverty and Inequality in Russia; Michael Lokshin and Ruslan Yemtsov

Shock Therapy

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$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Per capita income, current US dollars

North AmericaOther IndustrialisedAccession and Transi-tionRest

Average income is $1,459, nearly a

quarter of its 1973 level and 3% of average US

income

UN statistical database, author calculations

Death rides out

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

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60

70

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Males Females

Percent expected to survive to age 65

UN Development Indicators

Shock and aftermath1

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19

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-15%

-10%

-5%

0%

5%

10%

15%

GDP Growth (constant US dollars)

Accession or Transition ChinaIndustrialised

UN statistics database, author calculations

How sustainable is the recovery?

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Russia China

Annual growth of GDP per capita at constant prices, local currency

Source: UN Statistics, author calculationsData are in constant local currency units, and show larger fall in 2009 than constant dollars (previous slide)

Not enough markets, or not enough state?

Western ‘experts’ say market reforms not deep enough

Not believed (and conflicts with much evidence) because:• Things got a lot worse with shock therapy

• Things got better when it was dropped BUT the system ‘is not working’ What is true: the capitalist class is ‘underdeveloped’.

• Not capable of bold moves,

• Mainly occupied with parasitic activity

• Not able to develop the economy

The unsolved problems of the people and the economy

‘West-facing’ trade strategy, in a bi-oceanic continental economy

Multi-ethnic state facing huge and growing regional disparities

Social Justice and the ‘oligarchic model’• Poor social provision, generalised poverty,

• Ostentatious and largely parasitic ‘nouveau riche’ class

• Monopolistic, resource-dominated industrial sectors incapable of modernising

‘Strong’ state, neoliberal economic model• Capital sought from outside

• Unprotected capital markets

• Little or no state involvement in development

• Resource dependency

Roots of social conservatism

Widespread passivity of the population Collapse of all forms of social support ‘Ostalgia’ for everything that once provided it,

or might do so in future Mixed up together

• Soviet Union• State authority in all forms• Russian historical tradition and cultural values• Church• Family

Understanding the Eurasian ideal

Roots of the national question A genuinely territorial Russian national question – the

integrity of a multinational state governing a continental economy

Genuine language question for Russian speakers outside RSFSR. Harsh discrimination of many kinds (eg Latvia)

When the left does not defend either, the right takes it up

• Usually as ethnic nationalism

• No economic way out (Zhirinovsky is an ardent neoliberal)

• The ‘fourth way’ of Dugin, Zavtra is not a coherent political force

• The right is essentially a ‘Putin lobby’

• In the absence of a mass left with an active base, appears more powerful than it is

Contradictions of the Russian right Economic unity contradicts ethnic nationalism and

conservatism• Requires full equality and wide social freedoms

• Social conservatism rests on passivity: relies on state support for its mass base

Putin and the state bureaucracy ‘use’ the right against the left, because they are threatened by mass action and discontent• Ethnic nationalist and socially conservative forces constantly appear

more powerful than they really are

• Presented by Western (and Russian!) Media as if the ‘real’ basis of the Russian state and society

Does not correspond to the real relation of class forces When the working class acts, the right are not seen

An orientationWhich forces can solve these problems?

• A siege economy under threat of dismemberment• A fundamentally ‘poor’ economy (NOT an imperial

one)• A ‘continental’ and multinational society• An overwhelmingly working population

DON’T LOOK AT THE PEOPLE, LOOK AT THE POLICIES

A COHERENT FOREIGN POLICY

NO INTERVENTION

SYSTEMATIC NEUTRALITY

DEMILITARISED ARCTIC BASED ON RESOURCE-SHARING AND ENVIRONMENTAL PROTECTION

BILATERAL COMPLEMENTARY TRADE

RESPECT THE NATIONAL INTEGRITY OF THE RUSSIAN STATE

RESPECT AND SUPPORT THE RIGHTS OF RUSSIAN SPEAKERS

RECOGNISE THE ECONOMIC INTEGRITY OF EURASIA

OPEN A DIALOGUE WITH NATIONALIST AND EMANCIPATORY MOVEMENTS