Leviathan and the Small Whale

 “Russia Without Putin - Money, Power and the Myths of the New Cold War” by Tony Wood, 2018, Epilogue 2020

This is an excellent book on the development of capitalism in Russia after the USSR’s collapse in 1991. It shows that Putin is an extension and maturation of the privatized Russian economy and politics which started under Yeltsin. Wood is a writer for New Left Review and is interested in countering some of the simplistic or anti-communist ideas propagated by the bourgeois press about Russia and Putin which hide this capitalist development. As if everything can be explained by one person instead of a whole system. He addresses the ‘renationalization’ myth; the continuance of the “Soviet man” myth; the myth that a small clique runs Russia and the myth that the present authoritarian regime is an extension of the Russian past. This is an examination of concrete conditions, not clichés. It only hints at the coming Russian invasion of Ukraine in 2021, which dents one of Wood's myths, that Russia isn't an aggressor.

Putin was born in 1952 to working-class parents in a communal apartment in Leningrad. After studying law he became a KGB officer, spending most of his time in the GDR. Upon the collapse of the USSR he returned to Leningrad/St. Petersburg where he was appointed by Anatoly Sobchak as head of the economic unit responsible for privatization. He issued licenses to thousands of new businesses – casinos, joint-ventures, timber, oil, metals etc. One of his major deals failed to provide food for the city, though there were enormous kickbacks involved. He was investigated and protected by Sobchak. He was later appointed deputy head of Yeltsin's national property management unit. So Putin's mature origin story is a purely capitalist one, showing the intimate connection between private enterprise and state in the new Russia.

In St. Petersburg he met many of his future collaborators including Dimitri Medvedev, as personal contacts and loyalty are key in the Russian concept of 'blat.' According to Wood, post-Soviet businesses also use versions of KGB 'kompromat' – compromising info and blackmail that might lead to legal cases – to get what they want.

So what are the broad outlines of the present Russian capitalist system? Wood's main point is that Putin continues Yeltsin's trajectory, but developed it further to 'maturity.' Yeltsin initiated the first Chechen war, leveling Grozny and killing thousands of civilians as some in Chenya attempted to declare independence. Putin followed in 1999 with another more brutal Chechen war that butchered thousands more. This raised his public approval ratings to 80%. These wars rest upon the ostensible 'federalism' of the Russian state, which pretends to be a geographically broad 'democracy' but is really run from Moscow due to the fear of separatism. It is a structural bind the Russian state finds itself in, not a personal issue.

Yeltsin shells Parliament

Wood describes the nature of Russian democracy as a 'managed' democracy, an imitation democracy. This is the bind every free-market country has to some extent, as in this case Russia's rapacious capitalism has to be veiled by democratic phraseology. The Russian economy is heavily based on oil, gas, timber, mining and other extractive industries. This means the economy floats when these prices are up, crashes when they are down. It is part of the 'resource trap' of economies not adept at high-end manufacturing. In 2022 most Russian exports were in resources - oil, gas, gold, coal, copper, iron, aluminum, platinum.  

The ownership of the Soviet economy changed under Yeltsin and Putin, with the former 'red' nomenklatura, apparatchiks and enterprise managers taking over many firms, while others were put up for sale to entrepreneurs or foreign enterprises. Wood goes into detail on this. This process actually had it roots under Gorbachev which legalized 'cooperative' businesses and allowed the CPSU and KGB to own enterprises too. Yeltsin's 1992 'democratic' voucher system that gave shares to Russian civilians was a sham. Wood shows the Russian ruling class having two main factions – 'outsiders' and 'insiders.' The insiders held sway in the 1990s under Yeltsin, owning banks, media and consumer mercantile outfits; the outsides hold sway under Putin, owning heavy industry and extractive enterprises.  In 2004 9 companies worth 40% of the Russian GDP were held by Putin appointees.  Insiders are those who got their wealth through connections to government; outsiders are buccaneers who bought at the right time for cheap. This was accompanied by a 'revolving' door of personnel between the two, like the siloviki, from KGB to capitalist. In 2003 one-fifth of government ministers were businessmen.

Due to the parasitic relationship between business, law and government – not that unusual across the world but especially strong in Russia – corruption is endemic. Fraudulent contracts, kickbacks and flat-fee extortion are common. This is something pro-capitalist neo-liberals like Navalnyi latched onto and which came to a head in the 2011-2012 protests. Meanwhile Putin instituted a flat tax; limited labor rights, cut business taxes for several years and converted welfare benefits to cash payments – all moves praised by the U.S. Heritage Foundation. As is obvious, inequality in Russia is huge, at a .64 GINI coefficient in 1996 – in 1988 it was .24. (The closer to 0, the more equality.)

The illusion that 'state' ownership dominates the economy is just that. Many countries like Saudi Arabia have 'state' ownership or involvement in some of their extractive industries. What this means in Russia is not that state assets are principally used for the benefit of the population but that they function like any profit-making business. The wealth is appropriated for the most part. This is why cash havens like Cyprus hold the majority of Russian “FDI.” In 2014 Russian billionaires held as much wealth overseas as the whole Russian population. This has nothing to do with Soviet state planning or ownership nor Chinese CCP methods.

Wood maintains that the inheritance of Soviet welfare programs and methods made it easier for the proletariat to survive the violent capitalist 'shock doctrine' applied by Yeltsin in the 1990s. The crash hit workers, peasants and former 'intellectuals' (professionals) the hardest. Factories that were not closed still supplied food and medical care, or just reduced hours to prevent layoffs. Production workers, due to their status in Soviet times, had higher pay at the time. Large state or collective farms continued, as few were broken up immediately. Trade unions worked with firms to try to keep them functioning, though Yeltsin stripped the unions of providing social benefits in 1993. Municipalities controlled housing and did not put it all on the market. Skills of gardening vegetables, barter and blat helped others survive. But criminals, street peddlers and small businessmen flowered, along with homeless migrants, femicide and women returning to the home. Research funding went to one-thirtieth of 1990 spending and this affected professionals the most. But through this “the past gave a hidden subsidy to the present.”

Under Putin in the 2000s both oil revenues and state employment rose, which helped his approval ratings. Professionals were initially some of his biggest supporters. Wood alleges Russia dissolved the 'intellectuals' as a specific strata, which is also true throughout capitalism. Being a lawyer, doctor, engineer and architect does not dictate a further level of 'intellectualism' as we know from much personal experience.

Wood explains that the opposition to the United Russia party and Putin is divided between social opponents – the actual Left – and a polyglot political opposition that was gradually led by Navalnyi. Navalnyi, as is well known, was a neo-liberal ethno-nationalist for a time, then limited that view but remained heavily pro-capitalist. Navalnyi's forces promoted honest elections and anti-corruption narratives against bans on opponents in Moscow and continued government corruption like Sochi and Putin's new palace. After the 2012 protests repression and nationalism increased on the part of the Russian government. Wood almost never mentions the Communist Party of the Russian Federation, which gets a small, second-place tally in elections and is mostly a loyal opposition.

Wood speculates on what is to come after the Maidan coup deposed the Russian government's chosen - and elected - Ukrainian ruler. He identifies the problem for Russia as its' status as an intermediate power, with a weak economy, a large land mass, natural riches, a dilapidated but large military and a nuclear power. This contradiction between a former world political power and its fall to an economy in 2000 on the level of Brazil and India, unable to stop the eastward movement of NATO, the EU and the U.S., creates incredible tensions. Wood contends that Putin's geo-political ideology is not clear cut, first resting for long years on an alliance with 'the West,' then a form of ad hoc moves in Syria, negotiations, the Donbass and Crimea. The Crimean annexation actually pushed Ukraine towards NATO even more according to Wood.  The U.S.'s abusive 'great-power' treatment of Russia did not help this situation across a broad range of issues either. The U.S. felt Russia could not be integrated into the EU even after their heavy backing of Yeltsin and his protege Putin.

Euroasianism is not socialism or anti-imperialist

Regarding ideas, Wood rejects the government actually embracing 'Euroasianism' as an ideology - though it does have a Russia-First core and relates to Putin's mentions of 'Novorossiia.' Given China would be the leader in any actual version of this, Russian nationalists would be opposed. Wood considers it a symptom of the larger problem for intermediate Russia. EuroAsian ideology first arose in the 1920s among Russian intellectuals but was rejected by the CPSU for good reason. In the 1990s it was promoted by prolific intellectual Lev Gumilev. It's present promoter is Aleksander Dugin, a war-monger and ethno-nationalist promoter of “National Bolshevism' – a Russian version of national-socialism, as bolshevik means majority. This is an appearance of national weakness and Wood thinks it can promote 'adventurism,' turbulence and unpredictable relations.  Which is a bit prescient, though he rejects what is to come as most did. 

This is a useful book that explains the modern Russian economy and state in clearer terms than just imperial insults. It's also a corrective to naive Leftists who see Russia as some kind of 'anti-imperialist' colossus. It shows the essential capitalist nature of politics, the economy and the wars of Russia as a competitor, not a proletarian liberator. 

Prior blog reviews on this subject, use blog search box, upper left, to investigate our 17 year archive, using these terms: “War With Russia?” (Cohen); “Russia, Stoli, Snowden and the Gay Movement,” “Russia and the (Very) Long Transition from Capitalism to Socialism” (Amin); “Cowleen Rowley on Russiagate,” “The Russian Are Coming – Again,” “Thoughts on Ukraine,” “Dressed Up for a Riot,” “The Black Hundred,” “Soviet Fates and Lost Alternatives” (Cohen); “Look at the War-Monger Facts,” “Abusurdistan” (Shteyngart).

And I bought it at May Day Books!

Red Frog / August 28, 2024