Sunday, July 18, 2021

Unlike in West, Poverty Won’t Push Russians into Protesting, Inozemtsev Says

Paul Goble

            Staunton, July 12 – In many Western countries, a dramatic increase in poverty like the one Russia has experienced would cause their peoples to go into the streets in protest; but in Russia, for cultural, historical and economic reasons, that is unlikely to happen, economist Vladislav Inozemtsev says.

            In this as in many other ways, “Russia is ‘not Europe,’” the Russian economist and commentator says, and he points to three aspects of that difference, some with deep roots in the Russian past and others the product of the changes Russia has gone through over the last 30 years (

            First of all, he says, it is property rather than incomes alone that plays the stabilizing role in the political system. In Soviet times, people owned nothing and so could demonstrate without fear of losing what they owned. But now the situation is different. Ownership even of apartments has created “a completely new reality.”

            Russians have something to lose, and the state has shown itself quite prepared to take it away from them be they individuals or owners of enormous enterprises. In the West, property is protected and people with property feel they can defend it. In Russia, property has no such defense; and so Russians are compelled to consider what opposing the state could cost them.

            Second, the deficits in the stores Russians now face are fundamentally different than the deficits that their Soviet predecessors faced. Then, there weren’t any goods to be had; now, there are goods but the issue is whether people have the money to pay for them. As a result, then it was a systemic issue; now, it is more an individual one.

            Soviet people knew that no matter how much money they might have, the system wasn’t productive and so needed to be changed. Now Russians recognize that if they have enough money, they will be able to purchase whatever they want. And they see having enough money as something that depends on them rather than on the system.

            People who have confidence in their own strength and see a weak system as unjust “can rise in protest, but people who ascribe their problems to their own actions” aren’t inclined to blame the system or organize their anger. “Therefore,” Inozemtsev says, “the most important trigger of economic protest – poverty – practically isn’t effective in Russia.”

            And third, “the Soviet and Russian economies are very distinctive at the macro level. “On the one hand, the USSR economy was never as ‘rent-seeking’ as the Russian. Exports didn’t exceed seven percent of GDP and oil formed only about a quarter of these and not 70 percent as is the case now.”

            “On the other, the Soviet economy demanded a much larger share for investment” than does the Russian. It invested 30 to 35 percent of GDP; the Russian one invests a little over 20 percent. The difference has gone into consumption with the state playing a key role as everyone can see in redistributing this money among the people.

            As a result, property in the Russian case “anchors” people into the system and keeps them from protesting lest they lose what they have, the economist continues. And there is yet another aspect of the situation that works in the same direction. People typically protest when they think change is possible. Russians don’t have such expectations.

            “In Russia today, there is no expectation of economic growth and as a result the people cannot be disappointed by further stagnation.” That means in turn that they won’t protest what they see as inevitable. Given that at least over the next decade no significant growth is possible, poverty is unlikely to play a role in powering protest in Russia.

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