Thursday, February 02, 2006

Dead End

Andrei Illarionov, who last month resigned as an economic advisor to Vladimir Putin in protest at government policies, had an interesting article in the International Herald Tribune on January 25.

From just one section of Illarionov's commentary and analysis:
It is not only economic freedom that has left Russia. Political freedom is also gone. Political prisoners are back. The international organization "Freedom House," which monitors political and civil freedoms in 150 countries, reported a qualitative change in 2005: Russia moved from the group of "partly free" countries to the "not free" group. Others in the group are Rwanda, Sudan, Afghanistan.

"Corporatism" plays a central role in civil society as well. Freezing normal political life has eliminated the social structures that identify, formulate and protect the political interests of the public. Instead, society is structured along different interests - professional, religious, regional.

The corporate ideology may seem unclear at first glance. It does not look communist, or liberal, or socialist, or nationalistic, or imperial. But it does exist: It is an ideology of "nash-ism" - "ours-ism." It is an ideology of offering privileges, subsidies, credits, powers and authority to those who are "nashy," "ours."

It is handing out all sorts of state-owned and national resources to members of the corporation, both current and prospective. "Ours-ism" is an ideology of protecting "our own" not because they're right, but because they're "ours." It is an ideology of aggression to "others." It is a return to barbarism.

"Ours-ism" does not know national or ethnic boundaries. The former chancellor of a foreign country is made a member of the corporation and becomes "our man in Europe." Meanwhile, a Russian businessman who created a company that brought billions into the national treasury turns out to be an "other" and is exiled to the depths of Siberia.

The entire might of the Russian State is thrown behind "our" members of the corporation, whether this means refusing to transit Kazakhstan oil to Lithuania, switching off electricity to Moldova or waging a "gas war" against Ukraine. Russian imperialism has taken a distinctly corporate image.

The point of the new model is to redistribute resources to "our own." The rule of law is only for civilized countries. Fair business practices are only for countries that want to catch up with the developed world. Good relations with foreign neighbors are necessary only if Russia is interested in long-term development. The corporation has other goals.

What's wrong with that? What is so awful if state corporations become the driving force of the economy? If private companies carry out the wishes of the government? If the authorities inflate the non-market sector, strengthen state controls, set restrictions for "strategic" reasons? If state capitalism displaces a market economy? If the primacy of law and equality before law are absent, and inequality and discrimination triumph?

Is it only in Russia that this model exists?

Is it really not viable?

Yes, there are other countries like this. Libya and Venezuela, Angola and Chad, Iran and Saudi Arabia, Syria and Iraq. Russia is one of them now.

And yes, this politico-economic model can last for quite some time. In some OPEC countries it has survived for a third of a century; in Venezuela, for half a century. It can survive even without high prices for energy. Cuba and South Korea have even more impressive models, and that without any energy resources. There was also the Soviet political, economic and social model.

So from a historical point of view, there's nothing particularly novel about the new Russian model. This country and this nation can take a lot. The current model can last a long time.

There's just one thing. Choosing this model today, at the outset of the 21st century, is nothing other than deliberately choosing the third-world model. More precisely, the model of a very specific group in the third world, whose long-term prospects are well known, no matter how much money they get from oil, no matter how many pipelines they control at home and abroad, and no matter what saccharine stories they tell on TV.

The current politico-economic model of Russian development is a historical dead end. No country that has set off on this road has become richer or stronger or more developed. Nor will Russia. It will fall farther behind. And the price will be paid, as usual, by Russian citizens.
Hat tip: BH
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