Monday, January 27, 2014

Window on Eurasia: A Market Economy Won’t Prevent Russia’s Disintegration and May Even Accelerate It, Chernyakhovsky Says

Paul Goble

            Staunton, January 27 – A market economy won’t save Russia from falling apart; indeed, it may even accelerate that process, according to a Moscow commentator, not only by concentrating development in some regions at the expense of others but also by leading to expanded ties between the periphery of the country and foreign states.

            Where national identity is strong and where people value the existing borders of the state, those consequences of a market economy may not matter; but where they are not, this particular impact of markets may be fatal for national development or even the maintenance of the territorial integrity of the country.

            And such risks or even the fears that they will prove true help to explain why many in Moscow are afraid of a genuine, that is, free market economy and prefer instead one in which the state plays a far larger role in directing capital and labor flows and thus in maintaining national integration.

            In an essay on, Sergey Chernyakhovsky argues bluntly that “a market economy will not save Russia from disintegration” and that “’thanks’ to the reforms” Russia has undergone, the country has shifted “from socialism to feudalism and continues to degrade” (

                What Chernyakhovsky calls “industrial socialism” did relatively well in the competition with industrial capitalism, but it “lost the competition with post-industrial capitalism” and thus the Soviet Union collapsed. But instead of pursuing the development of post-industrial capitalism after 1991, Moscow has tried to establish industrial capitalism even though most of the rest of the world has moved on.

            That mistaken attempt to set up a form of social-economic relations which had already been superceded elsewhere led to the destruction of  post-industrial spheres like science and education in Russia and reduced it to being a country that had to pay for goods by exporting raw materials and thus one that cannot compete.

            Russia’s failure to make the transition to post-industrial capitalism or even to fully realize industrial capitalism, Chernyakhovsky argues, “led to a situation in which capitalist relations were not supported”and in which “political instability, the ineffectiveness of state administration, and the degradation of production” fed on one another.

            Investing capital was “risky and ineffective” and so it was exported, and with its continuing export, Russia lost the capacity to move toward a post-industrial capitalism that would allow it to compete with the major countries of the world. Worse, becaue there was little private industrial production, there was no real private property in the classical sense.

            Instead, what was created as a system of early feudalism, one in which “the powers transferred certain economic objects to their supporters” and allowed them to enrich themselves as long as they did not pose a political challenge.  That meant the latter had little incentive to develop their sectors and great incentive to export their earliers.

            It also meant,Chernyakhovsky continues, that these feudal owners hadlittle incentive to pay their workers an adequate wage and that in turn meant that capitalism could not be developed because it “cannot exist [at least for very long] without a more or less adequate payment of the work force.”

            And those factors together led to “a regression of the forms of social life, de-industrialization and de-urbanization of the country,” to a system “lower than capitalism” and incapable of competition.

            But more disturbing for many, the new arrangements threaten the territorial integrity of the country because those who “own” the resources have an incentive to sell them to foreigners and to export capital rather than develop them and integrate the nation and the state. And that puts the country’s current borders at risk.

            The only way out, according to Chernyakhovsky, is to cut Russia off, at least for a time, from the world economy and expand the role of the state in order to engage in nation building.  But” the contemporary Russian state does not have the means to limit these processes” because of  its own shortcomings and lack of legitimacy among the population.

            Instead, the state consists of groups “who are interested in the export of capital and resosurces” and thus “cannot end this export because that would lead to a conflict with those who guarantee its power.”

            “The preservation of the state integrity of Russia,” he continues, will require “a limitation of the rights of economic groups to the maximum export of regional resources.” But that will create new tensions between the center and the forces on the periphery on which it currently relies.

            “Without the support of these groups,” Moscow “cannot maintain its power in the regions, that is, guarantee the territorial integrity o the country, but it can pay these groups only by a genuine reection of this integrity,” something it is unwilling to acknowledge even as it is doing it.

            Chernyakhovsky argues that “Russia cannot get out of its crisis” by market mechanisms alone because”market logic presupposes the continuing export of resources in exchange for product of current consumption,” something that will lead to the further degradation and falling behind of the country.

            If it is to move forward, it needs a domestic “Marshal Plan,” something that is “theoretically possible” but would cost “several trillion dollars.”  That would allow Russia to become a post-industrial capitalist country with growing rather than declining intellectual and scientific capacities. 

            But at present, Chernyakhovsky concludes, Moscow does not have either the resources or the understanding for such a project, although fears of disintegration may lead it to choose “a course of [state-organized] mobilization in which all internal resources are subordinated to the resolution of this task.”

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