February 18, 2015

Russia's Improbable Futures and the Lure of the Past

Writing about web page http://rbctv.rbc.ru/polls/list

On 27 January I was asked to join a panel on Russia's Future within the University of Warwick One World Week. (The other panel members were Richard Connolly, co-director of the University of Birmingham Centre for Russian, European, and Eurasian Studies, and the journalist Oliver Bullough.) I decided to talk about how Russians are looking to the past in order to understand their uncertain future. Here, roughly, is what I said:

Russia has many possible futures; all of them are improbable. The economy must do better, stay the same, or do worse. Relations with the West must improve, remain as they are, or deteriorate further. Adding them up, there are nine possible combinations. The probability of any particular combination is small, so each is improbable. But one of them must happen because, taken together, the sum of the probabilities is one. One of them must happen, but we have no idea which one.

Faced with an uncertain future, we often look to the past for guidance and reassurance. What was the outcome when we were previously in a situation that felt the same? At New Year, many Russians were looking to the past. I found this out when I stumbled on the website of RBC-TV, a Russian business television channel. Every day the RBC website polls its fans on a different multiple-choice question. On 30 December, the question of the day, with answers (and votes in parentheses), was:

What should Father Frost bring for Russia?

  • End of sanctions (6%)
  • End of the war in Ukraine (27%)
  • A stable ruble (7%)
  • Return of the Soviet Union (59%)

It's disconcerting to be reminded of the strength of nostalgia among Russians for the time when their country was a global superpower. The Soviet Union united all the Russias -- if anyone's not sure what that means, that's Great Russia, Little Russia and New Russia (Ukraine), and White Russia (Belarus) -- with the countries of the Baltic, Transcaucasia, and Central Asia. The Soviet Union stood for strong centralized rule, with a powerful secret police and thermonuclear weapons. The nostalgia is shared by President Putin, who said (on 25 April 2005): “The collapse of the USSR was the greatest geopolitical disaster of the [twentieth] century.”

Here's a question that RBC asked its supporters on 25 December:

Can direct controls and a price freeze save Russia’s economy?

  • Yes, the free market is not up to the job (55%)
  • No, that would cause insecurity and panic (40%)
  • No need – no crisis (5%)

Again, the strength of support for the backward-looking answer is disconcerting. I tried to think of the last time the Russian economy was in a squeeze like today's. The last time the oil price price came down like this was the mid-1980s when North Sea and Alaskan oil broke the power of the OPEC cartel for a few years (that's the analysis of Anatole Kaletsky). The disappearance of oil rents probably contributed to the collapse of the Soviet economy.

But a closer parallel to today is 1930, when two things happened at once. The global market for Soviet exports shrank in the Great Depression. And international lending dried up, meaning that the Soviet economy could not roll over its debts. The Soviet import capacity collapsed almost overnight. Stalin responded by forcing the pace of import substitution through rapid industrialization. He demanded "The five plan in four years!" The result was a crisis of excessive mobilization that claimed millions of lives in the famine of 1932 and 1933.

Prominent in calling for an economic breakthrough today is President Putin, who responded to Western sanctions on 18 September 2014: “In the next 18 to 24 months we need to make a real breakthrough in making the Russian real sector more competitive, something that in the past would have taken us years.” Government-friendly Russian economists are talking about the need to go from a market economy back to a mobilization economy. In case the foreigners aren't getting the message, first deputy prime minister Shuvalov told those assembled in Davos on 23 January: “We will survive any hardship in the country – eat less food, use less electricity.”

A third question that RBC asked its viewers was on 19 December:

What matters most for the country right now?

  • The foreign exchange rate (33%)
  • Who is a true patriot and who is fifth column (56%)
  • “Vyatskii kvas” (11%)

(The English equivalent of "Vyatskii kvas" would probably be Devon cider. For the reasons why it was being talked up as a solution to Russia's problems last December, click here.)

Here the strength of support for the backward looking answer is shocking. What is the "fifth column" and how does it resonate in Russian history? In 1937, Stalin saw Moscow surrounded and penetrated by enemies. This coincided with the siege of Madrid in Spain’s Civil War. In 1936 the nationalist General Mola was asked which of his four columns would take Madrid. He replied, famously: “My fifth column” (of undercover nationalist agents already in the city). In Madrid the Republicans responded by executing 4,000 nationalist sympathisers. In the Soviet Union Stalin, who was also watching, ordered the execution of 700,000 “enemies of the people.”

In recent times, the spectre of a "fifth column" was first reawakened by President Putin on 18 March 2014, when he remarked: "Western politicians are already threatening us with not just sanctions but also the prospect of increasingly serious problems on the domestic front. I would like to know what it is they have in mind exactly: action by a fifth column, this disparate bunch of ‘national traitors’, or are they hoping to put us in a worsening social and economic situation so as to provoke public discontent?"

Putin took up this theme again on 18 December 2014: "The line that separates opposition activists from the fifth column is hard to see from the outside. What’s the difference? Opposition activists may be very harsh in their criticism, but at the end of the day they are defending the interests of the motherland. And the fifth column is those who serve the interests of other countries, and who are only tools for others’ political goals."

Here you can see that Putin did affirm the possibility that opposition can be loyal. But is it possible for Russia to have a loyal opposition today? The only example of loyal opposition that Putin could bring himself to mention was the poet Lermontov -- who died in 1841.

These echoes of the Soviet past in Russian opinion today are disconcerting and even frightening. At the same time it is important to remember that, even while Russians look to the past, Russia today is absolutely not the Soviet Union. From today's vantage point it is nearly impossible to imagine how closed, stifling, claustrophobic, and isolated was everyday life even in late Soviet times. Russians in 2015 lead very different lives from Soviet citizens in 1985. They are richer, live longer, are able to visit, study, phone, and write abroad. Even today they are relatively free to search for and find information and discuss it among themselves. In all these ways, the transition from communism has not been a failure.

As Andrei Shleifer and Daniel Treisman (2014) wrote recently: "Putin’s authoritarian turn clearly makes Russia more dangerous. But it does not, thus far, make the country politically abnormal. In fact, on a plot of different states’ Polity [i.e. democracy] scores against their incomes, Russia still deviates only slightly from the overall pattern. For a country with Russia’s national income, the predicted Polity score [a measure of democracy] in 2013 was 76 on the 100-point scale. Russia’s actual score was 70, on a par with Sri Lanka and Venezuela."

To see Russia as just another middle income country helps us to identify Russia's underlying problem. In Russia, just like in Sri Lanka, Venezuela, and most countries outside “the West,” wealth and power are fused in a small, closed elite, and that is how it has always been. The fusion of wealth and power was and remains normal. Before the revolution Russia was governed by a landowning Tsar, aristocracy, and church. After the revolution Russia was governed by a communist elite that monopolized all productive property plus media, science, and education. Today Russia is governed by an ex-communist, ex-KGB elite that has once again gathered control of energy resources and the media. This fusion of wealth and power is neither new nor is it unusual among middle and low income countries.

In societies where wealth and power are fused, particular people are powerful because they control wealth and the same people are wealthy if and only if they are powerful. This is what gives politics in such societies its life-and-death immediacy. To lose power means to lose everything; when power change hands there is often violence. “All politics is real politics," write Douglas North, John Wallis, and Barry Weingast (2009); "people risk death when they make political mistakes.”

Several times in history, liberal reformers have tried to separate wealth and power in Russia and make space for public opinion. Here are some examples from the last 150 years:

  • In 1864 a reform brought elected local governments – but within an absolute monarchy.
  • Shaken by military defeats and popular insurrections, in 1906 the Russian monarchy introduced an elected parliament, although with few powers, and ndividual peasant landownership, although (as it turned out) with little time for implementation.
  • In 1992 and 1995 Russia saw voucher privatization and "loans-for-shares," creating a class of corporate shareholders – but the outcome was crony capitalism, not free enterprise.
  • In 2003, Mikhail Khodorkovskii tried to separate the governance of Yukos from the "power vertical," but he went to prison for it.

All these efforts have so far achieved only partial or temporary success. Russia has not yet found a solution to the problem of the fusion of wealth and power. Here, at last, is an aspect of Russia's future that is certain: If Russia is ever to find a solution to this problem, it will be there.

Note: I updated this column after publication to correct a date -- 2014, which appeared as 1914.

References

  • North, Douglas, John Wallis, and Barry Weingast. 2009. Violence and Social Orders A Conceptual Framework for Interpreting Recorded Human History. Cambridge: Cambridge University Press.
  • Shleifer, Andrei, and Daniel Triesman. 2014. "Normal Countries: The East 25 Years after Communism." Foreign Affairs, November-December.

- One comment Not publicly viewable

  1. mf

    One cannot fully understand Russia without acknowledging that Russian political tradition is a tradition of despotism. This is sometimes difficult to understand for the western man, particularly Anglo Saxon people, who are born into a tradition of Magna Carta. This tradition may not be always observed in practice, but it serves as a beacon that periodically re-orients society towards greater individual freedom. Despotism holds exactly opposite to be true. It considers individual to be irrelevant, and attributes transcendental qualities to the state. This is the underlying cause of apparent inability of the Russian state to become more democratic or market oriented. Russia periodically undertakes some efforts to reform, always in the aftermath of major military defeat which is accompanied by large scale hardship. She always reverts to horrors, because horrors of despotism is her orienting beacon. This also explains why Russia is a menace, even in her economically enfeebled state. Russia can mobilize resources of the state towards war to a degree that would be politically impossible elsewhere. She will break eventually, but the breaking point is much lower (or higher depending on your point of view) than it would be in most other societies. The problem for Russia is that modern state power requires mastery of technology, which is best fostered by free markets. Thus Russia is progressively falling further and further behind. Her cycles are a downward spiral which, in my personal view, will ultimately lead to further breakup of that country, which is really the only cure for the despotic nature of the state by reducing it to irrelevance. The road to breakup can be very bloody and very dangerous though, not just for Russia.

    19 Feb 2015, 19:27


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I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).



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