The road from oligarchic to state-directed ramped up in Russia

KREMLIN RULES: "In Hard Times, Russia Moves In to Reclaim Private Industries," by Clifford J. Levy, New York Times, 8 December 2008.

Recalling the William Baumol et al. book, Good Capitalism, Bad Capitalism, you've got--in terms of evolution--oligarchic (elite family-dominated) capitalism, then state-directed capitalism, then big-firm capitalism, and then truly entrepreneurial capitalism. The sweet spot is a combo of the latter two: big firms surrounded by a sea of small start-ups.

The counter-intuitive analysis of Russia right now--meaning mine--says the 1990s Yeltsin firesale that generated an oligarchic-style capitalism is now being subverted/improved by a state-directed form, meaning, oddly enough, that Russia took a step backwards in the 1990s from what it had.

China has purposely sought to cannibalize its state-run enterprises into big firms, encouraging start-ups as new technology/product providers. That was the next best step forward from socialist ownership.

Russia's collapse under Yeltsin was to let the robber barons basically buy up government-owned companies for a song and then get fabulously rich. In a culture not ready for that disjuncture, a huge populist backlash was created (not well reported here) that welcomed the return of the "siloviki" ("power/security agency guys") and the reassertion of state control over the commanding heights of industry.

In short, Putinism was preordained by the way socialism collapsed in the USSR. Gorby chose poorly; Deng chose wisely. Gorby did politics first and Deng focused on economics first. The former yielded Putinism, the latter yielded the far more successful single-party state (please, don't pretend its "communist") called the CCP.

Do I regret the way the Soviet centrally-planned economy collapsed under Yeltsin? No. I was all for Gaidar's strategy of snipping all the vertical lines of authority. Better to have the collapse be severe so as to disallow any rapid recovery.

Do I thus accept the inevitability of a Putinesque phase as a cost? Absolutely. Pennies on the dollar, in grand strategic terms.

Do we now face the requirement of house-breaking Putinism? Yes, but that's the best possible problem we can have right now, given the trajectory. Plus, it's easily accomplished--to wit, the economic penance self-inflicted by Putin's smackdown of Georgia. My God, thanks to Russia's economic connectivity, the behavior mod program operates like a self-licking ice cream cone.

Is today's Russia the preferred Russia? Of course not. But I don't live in an ideal world, just an improving one.

Comments

[Stuart]

Putin is also dialing to Soviet era social policies too. He just pushed a bill through Russian parliament to so away with juries in certain legal tries, namely those that involve violence against the State. Definitely a country in regression. http://tinyurl.com/5wuejb

[farhad]

the main upsticle for capitalism,is itself.main topic of Marx's research.that is surplus is the primarary goal,& that,the needs of the consumers are secondary.the tendency for more production & less pay(cheaper labor),creates gap between supply & demand,hence this dynamic creates deepening crisis in every cycle,and ereversablein it's nature.Sweezy explains this in his book;the theory of capitalist development.eventually,domestic market will not satisfy the greed, hence it goes global,but globalization of this trend don't change itsinternal contritiction.Richard j Barnet has a book called "global dream",explains the bleeding of these underdeveloped countries to the core,& why it has to keep red bleeding in order for the big-firm capitalism (entrepreneurial) satisfy the greed(surplus).even at that we can see the clapse of the global capitalism.if WWII and later the automobile revolution saved the 1929-33(& not new deal really),andif the jigantic militerey budget(militerized economy) saved the cold war era,and continued at the same level by Cheny,Wolfowitz,PowellDefense planing,and later terrorism instead of USSR,and if new loan& credit system saved the 2000 .com crissis,we can clearly see the ereversable trend and the deeping of the economy not only in U.S, but globally now.(imagine & compare with what you sought just a year ago and now).so yeah,the the physical signs are here & visible,it just need to click mentally & politically.

[Tom Barnett]

Farhad,

That is just a lot of Marxist crap that denies the global economy's huge successes in lifting hundreds of millions of people out of poverty in the last quarter century. The neo-Marxists clearly have their moment now, as they always do in declaring capitalism's demise, but the sad--for them and you--truth remains: incomes rise where markets rule and where socialism was implemented by the government and markets killed, there history has routinely registered three great "accomplisments": mass murder by the ruling left, mass despoilment of the environment and "egalitarian" impoverishment of the masses.

You need to peddle that junk elsewhere farhad, because you wear out your welcome here with it. I taught Marxism and have a low tolerance for its unblinking adherents.

[Tom Barnett]

The "over-production/surplus" theory alone earns you the boot farhad; it's that cartoonishly bad. Nobody who's actually run a company would sign up to anything that stupid, and if none of them would, then pretending the "system" forces them to do so is patently goofy.

I say it again: there is doofus on your own site and then there's doofus on mine. What you do elsewhere is your free right of speech, but what you do here is mine to eliminate when it reduces property values and thus diminishes the product I offer freely here.

[stuart abrams]

Maybe TPMB's blog is not the place for it, but I'd love to see serious reconsideration of Marx in a 21st Century context. Yes, we can all agree that 20th Century experiments in socialism, of both the Leninist and the Fabian varieties, were failures, or at least we should be able to agree on that if we can put away the ideological blinders. However, if we can now all get past the massive cloud of ideology and propaganda surrounding Marxism, consideration should be paid to much of the heart of Marx's economic analysis, which I believe actually holds up pretty well. I favor a sort of "bourgeois Marxism", exemplified by my favorite 20th Century economist, Joseph Schumpeter, who had great respect for the power of Marx's analysis, but who then carried it through to arrive at radically different conclusions.