Skip to Content

World View

Russian capitalism in crisis

Russia is in trouble; and its economy is in dead crisis. According to many commentators, the country is facing its biggest test since the collapse of communism. By the end of June, the Russian stock-market had dramatically fallen; and, at one point, the MT5O index of the top 50 companies was down 37 percent over the previous month. Yeltsin was forced to raise interest rates to I50 percent, in an attempt to stop speculators from transferring their roubles into American dollars.

Russia's crisis is not unexpected; nor is it surprising considering the slump affecting Japan. Indonesia, Malaysia, Korea and other economies of the so-called Pacific Rim. That a weak economy such as that of Russia should be affected by the downturn to the east was inevitable. To state, as have socialists for decades, that capitalism is global, is no more than the bare truth.

The former Soviet Union, of which the Russian Federation was the central core, has indeed collapsed. The former border republics, such as the Baltic States, Belarus, Ukraine and Kazakhstan have all become independent or at least quasi-independent of Moscow; and, in the main, no longer supply Russia with many of its raw materials at less-than-cost. The so-called Commonwealth of the former Soviet Union is a farce. Russia is largely dependent on loans from the International Monetary Fund.

However, what collapsed was not communism (or socialism), but a Russian-dominated empire, misnamed the Union of Soviet Socialist Republics, ruled by a one-party dictatorship and an economy which was over 90 percent state-controlled and owned: a bureaucratic state capitalism in which a relatively small elite (the apparatchiks) creamed off the surplus wealth produced by the workers and peasants of the country. The Soviet empire, and economy, collapsed due to a number of factors: state-run capitalism in the Soviet Union was grossly inefficient and had outlived its usefulness; the Soviet state could no longer carry the weight of the cost of enormous military expenditure, and large sections of the population were no longer prepared to support, or even tacitly accept, a one party form of government. Moreover, nationalist movements in such areas a the Baltic states and Western Ukraine, had become increasingly bold an active.

The change has not, however, benefited the Russian working class or peasantry. Far from it. Throughout the existence of the Soviet Union, they had existed in poverty and degradation particularly during the first 50 years ~ the "primitive accumulation" of state capital; and, throughout the period a the collectivisation and "liquidation of the kulaks', and the purges of the 1930s, together with the forced labour of the Gulag, life for the majority had been insecure and brutal.

But at least, throughout much of the Soviet era, Russian wage-slaves regularly received their monthly wages and although unemployment always existed to some extent throughout the Soviet period (but denied by so-called Communists), today many Russian workers, still creating surplus value for their new masters, have not been paid for months - "either because the company has no funds available or the have been allocated elsewhere. Last month coal-miners who had not been paid for up to 10 months blockaded the Trans-Siberian Railway" (Guardian, 16 June).

Other workers, including coal-miners in Southern Russia, have gone on strike, although this has been of little use to them: they still were not paid. The only way in which many unpaid workers have been able to exist is by growing food on small plots of land and gardens. Unemployment is rife, and the actual number unknown.

Not surprisingly, Russian society is dominated by corruption.At the top are the rich haute bourgeoisie, capitalists, of whom many were previously Soviet apparatchiks. Again, the Guardian:

"Many analysts believe they have played a significant part in Russia's crisis. Far from stepping in to bale out the economy, they have been actively enjoying the collapse by trying to weaken the rouble. They then hoped to make huge financial rewards by selling oil and other goods for US dollars."

Organised crime, run by local mafias, is also rife; and there is now an enormous black market, in which millions of Russians take part; but which, naturally, largely benefits the rich.

Taxes are the life-blood of the state; they provide the finance for both the administrative and repressive agencies (including the police and armed forces) with cash. However, the Russian government has, over the years since the collapse of the Soviet Union, failed to collect billions and billions of roubles in unpaid taxes, mainly due to corruption and inefficiency. In 1997, the Russian government collected just 50 percent of the taxes it was owed. Many—probably most—of the largest debtors are prominent capitalists who have done well out of Russia's semi-privatisation (many large industrial complexes and companies are, in fact, still state-owned). Lukoil, possibly the largest of Russia's oil companies, owes the state millions of dollars. Yeltsin has promised to reform the tax system. Not that that will make any difference to the poverty of the average Russian worker.

What of the future? The Russian economy may ultimately pick up; corruption may be tackled; most workers may even get paid their salaries on time, but whatever happens. whilst capitalism remains in any form, state or private, or some of each, the workers will still be exploited and repressed, and live in comparative poverty compared to their masters. Looking back to a nonexistent "communist" paradise in the former Soviet Union, as have a few mainly older workers, is as much a waste of time as looking forward to prosperity and security in a capitalist, "free-market" Russia.
PETER E. NEWELL
 
Some facts and figures

"According to the calculations of renowned economists, the world economy grew six-fold and the production of wealth and services grew from less than five trillion to more than twenty-nine trillion dollars between 1950 and 1997. Why then is it still the case that each year, 12 million children under five years of age die—that is to say 33,000 per day—of whom the overwhelming majority could be saved?

Nowhere in the world, in no act of genocide, in no war, are so many people killed per minute, per hour and per day as those who are killed by hunger and poverty on our planet - 53 years after the creation of the United Nations.

The children who die and could be saved are almost 100 percent poor and of those who survive, we must ask why 500,000 are left blind every year for lack of a simple vitamin which costs less than a pack of cigarettes per year? Why are 200 million children under five years of age undernourished? Why are there 250 million children and adolescents working? Why do 110 million not attend primary school and 275 million fail to attend secondary school? Why do two million girls become prostitutes each year? Why in this world—which already produces almost 30 trillion dollars worth of goods and services per year— do one billion 300 million human beings live in absolute poverty, receiving less than a dollar a day - when there are those who receive more than a million dollars a day? Why do 800 million lack the most basic health services? Why is it that of the 50 million people who die each year in the world, whether adults or children 17 million -- that is approximately 50,000 per day—die of infectious diseases which could almost all be cured—or, even better, be prevented—at a cost which is sometimes no more than one dollar per person?

How much is a human life worth? What is the cost to humanity of the uniust and intolerable order which prevails in the world? 585,000 women died during pregnancy or in childbirth in 1996, 99 percent of them in the Third World, 70,000 due to abortions carried out in poor conditions, 69,000 of them in Latin America, Africa and Asia? Apart from the huge differences in the quality of life between rich and poor countries, people in rich countries live an average of 12 years longer than people in poor countries. And even within some nations, the difference in life expectancy between the richest and poorest is between 20 and 35 years. It is really sad to think that just in the area of maternal and post-natal services, in spite of the efforts of the WHO and UNICEF over the last 50 years, the number of deaths from lack of medical services has been 600 million children and 25 million mothers who could have survived. That would have required a more rational and more just world.

In that same post-war period, in the area of military expenditure, 30 trillion dollars were spent. According to UN estimates, the cost of providing universal access to basic health care services would be 25 billion dollars per year—just three percent of the 800 billion dollars which are currently devoted to military expenditure—and this after the end of the Cold War.

There is no let up in arms sales, which have the sole purpose of killing, while the medicines which should be provided to save lives become increasingly expensive. The market in medicines in 1995 reached 280 billion dollars. The developed countries, with 14.6 percent of the world's population—824 million inhabitants— consume 82 percent of the medicines. The rest of the world—4 billion 815 million people—consume only 18 percent.

Prices of medicines are prohibitive for the Third World, where only the privileged sectors can afford them, the control of patents and markets by the large transnational companies enables them to raise those prices as much as ten times above their production costs. Some of the latest antibiotics are priced at 50 times their production cost"— from a speech by President Castro of Cuba, to the World Health Organisation in Geneva on 14 May.