Paul
Goble
Staunton, October 25 – Since coming
to power, Vladimir Putin has sought to restore the dominant role of the state
in society and the economy but in the process has created a system which
represents “the complete denial of all those principles and goals which a contemporary
market economy has” and thus of its chance to grow, according to Vladislav
Inozemtsev.
In an article in “Vedomosti,” the
Moscow economist argues that the Putin system, something he describes as “the
new abnormality,” does not allow for “competitive, effectiveness, openness,
development [or] technological renewal;” but at the same time it is likely to
survive for some time (vedomosti.ru/opinion/articles/2016/10/23/662063-novaya-nenormalnost).
As a result of Putin’s action,
Inozemtsev says, “the state really restored its positions both both in politics
and in economics … Even those companies which were formally private are
considered by the authorities as instruments subordinate to their will” and the
siloviki are now “the main economic newsmakers.”
In seeking to overcome the diktat of
the oligarchs, Putin swung too far in the opposite direction and established a
system in which the bureaucracy controls the economy so thoroughly that people
in business are almost completely dependent on the authorities and can pursue a
policy “not so much of development as of survival.”
Competition has disappeared not only
because the largest companies in Russia occupy a far greater share of the
economy than such firms do in other countries but because the state guarantees
that they won’t be challenged by new entrants in their areas, something that
guarantees their loyalty but blocks innovation, Inozemtsev continues.
It is likely, he says, that in a
short time, “attempts at competition will be considered an attack on the holy
of holies.” Consequently, the best private businessmen can do is to seek a
niche, develop good relations with the relevant bureaucrats, and seek to
promote the Kremlin’s agenda.
That strategy entails a change in
the meaning of profits. They are a source of personal enrichment rather than a
means for investment. It also means that Russian firms should stop thinking
about the international market and limit themselves to the Russian one alone,
however limiting and destructive that is.
“For survival,” Inozemtsev says, “independent
entrepreneurs must limit to the maximum their sphere of activity to Russia (or
in particular extreme cases to the countries of the Eurasian Economic community)
and not try to imagine that they [still] live in the globalized world of the
1990s.”
That prescription, he suggests,
doesn’t point to anything good in the Russian economy; but it may be the best that
private businessmen can do for the time being. That is because “history shows
that when the compass swings too far in one direction between liberalization
and stratification,” it moves constantly and even more strongly in the opposite
direction with time.
And business people must remember
that “although the order which has been established in Russia has every chance
to hold on for long years, it nevertheless will not be eternal, and therefore
the main task of present-day domestic private business is to survive this era
of ‘new abnormality.’”
That is “very important” for Russia’s
future, Inozemtsev says, “because the main cause of the insanities of young
Russian capitalism of the 1990s was the complete absence of any experience in
entrepreneurship. To preserve those who were able to swim out of its whirlpools
is the most important task of the next decades.”
If they can survive, he says, that
will provide the basis for “moderate optimism” in the long term about Russia’s
prospects.
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