A Book that is as Much a Discrete Critique of Western Capitalism as it is of the Russian version.
Reviewed in the United Kingdom on 25 October 2020
I remember reading John Gray’s ‘False Dawn: The Delusions of Global Capitalism’ (Granta, London, 1998) and what he described as Russian ‘anarcho-capitalism’ in Chapter 6 as a result of the chaos caused by the hard economic medicine the West (particularly the U.S.) inflicted on Russia with the fall of communism.
Gray was appalled then by the rise of the oligarchs and social disorder endured by ordinary Russians – enough to seriously question Western free market ideology.
I wonder what he would make of Ms Belton’s description, now.
Would Gray have foreseen how nationalist KGB stalwarts have morphed into the new but also enduring rulers of the modern Russian capitalist state?
Because it seems to me reading this book, that all Gray’s worries have come true and more so.
Having just finished this important book, I have been dazzled by the sheer resourcefulness of the writer as a researcher, the simply huge amounts of money being bandied about as well as the characters with their unfamiliar Eurasian names.
If Belton’s book gets close to how things are really working in Russia then it is fair to say that it’s a shame – a disappointment. I have no grounds to disbelieve her (nor underestimate the risks she is running by writing this book).
However, for all the research there are a number of minor issues with the book.
Firstly, Belton takes too light a touch on the problems with Western capitalism – problems that I think helped to influence the new Russian style of capitalism which can be seen as rejection of Western ways and means. This factor is mentioned but not explored deeply enough for me, so at times the book leans heavily on what she has discovered about Putin, his connections and what has taken place. I suppose if Belton was to take a more causal approach – asking ‘Why?’ a bit more often – she ran the risk of being seen an apologist for the way in which Russia is governed today (and the way this huge country is governed is far from satisfactory).
Secondly, the text could have done with some information on what it is like for ordinary Russians to live in a country governed in the way she describes. What is the quality of life or standard of living like now as opposed to the Yeltsin or even the Communist years? I remember pictures of Muscovites in the 1990’s selling personal items just to live; soldiers going without pay; the poor and unwell freezing to death in winter. What is the Russian health service like these days? Belton tell us that Putin’s regime talked about raising the retirement age for example. Just a bit more background about what was happening to your everyday average Russian whilst all these shenanigans took place would have been useful.
Two things come to mind from reading this book.
(1) That the West has failed to understand Russia and (2) fails to recognise the rampant and manifest imperfections of its own Western style of ‘democracy’ and capitalism and its effects on Russia’s style of capitalism ( resulting in what I would describe as a rejection of the West and a ‘Russian anti-West reactionary capitalism’).
In failing to understand Russia, what was there to understand? Well first, the vastness of the country which is bound to have geo-political challenges whatever ideological style of Government. I do not think that the small state thinking prevalent in the West has one iota of imagination in even considering that challenge.
Next up is the richness of Russia’s natural resources – oil and gas, sea ports, water etc., all waiting to be utilised and exploited (managed). Russia needs to have a strong central Government and the means by which to do this – look at history and how even the Tsars for all their cruelty knew this.
Yet, when communism goes on the back foot, in comes the Neo-liberal ideology from the West with its anti-Statism and insistence on a ‘small state with a light touch’ concerning the regulation of business, finance, markets and the environment and hey presto, Russia gets the Yeltsin era and the oligarchs and people selling their personal stuff at the market in order to live. In other words, this was Western created disaster for Russia which was driven at speed into an ideological brick wall.
So, Russia listened to the West and in doing so – almost overnight, its prestige and its social fabric began to crumble for all the world to see. The insistence by the West on some sort ‘shock doctrine’ instead of Gorbachev’s slower transition was a missed opportunity for the West to promote a different way to Moscow and the Russian people.
And to heap even more ordure on the situation, the winning ideology offers this proud nation - whose contribution to dealing with the Nazis was salient to say the least - loans at interest, ‘to turn things’ around and speed things up. What was the final indignity for Russia? Perhaps being offered IMF loans by someone who has just beaten them after a long ideological conflict, in their currency of course - dollars.
The real truth is that the West’s ‘shrink the state light touch’ mantra is known to cause problems even in the West – think about the U.S.’s inability to help New Orleans after hurricane Katrina (and its contribution to the failure of the levies beforehand); think about Boris Johnson’s inability to deal with Covid 19 in the UK because of austerity ravaged public services and a predilection for private provision over public. Think about the 2008 crash caused by the private banking sector’s lack of regulation and all the crashes before that. Think about the environmental degradation and rising levels of income inequality.
The West has to face up to the fact that it has no idea what good governance is any more - its own domestic mode of Governance is weak and unprincipled and dominated by a love of money, as Belton quotes a Russian interviewee (p. 488):
‘We believed in Western values..................... But it turned out everything depended on money, and all those values were pure hypocrisy’.
Western capitalism is beset by faults that must seem very strange to the Kremlin:
The ability of so called businessmen to buy power in companies through the stock market and then get a majority of shareholders behind them, sell the company off, liquidate its assets and take the proceeds but destroy jobs and communities and leave national governments to clear up the mess.
The ability for companies to avoid tax through offshore tax havens and hinder sovereign governments’ ability to collect taxes to curb inflation as the money makes its way back into the economy as loans.
The ability to arbitrage sovereign nations when deciding where to locate business and get the lowest tax rates, environmental and finance regulations that work against state national policy and sovereignty.
The ability of large shareholders to force companies to purchase their own shares in share buy-backs so that the share price is raised so that those who press for them can sell off their shares at huge personal profit but leave the companies more indebted than before and then likely to make cut backs to jobs and even cease trading – the state left dealing with the consequences again.
The ability of investors to buy credit default swaps – a derivative created by under-regulated private finance markets that is like taking out insurance on something that you don’t own and profiting from it if there is a drop in financial performance (along with the ability to influence market decisions so that something does indeed go wrong resulting in a big pay out).
The ability for a nation to lose key national assets and even security sensitive sectors to foreign powers that compromises sovereignty and national security though the markets.
The list could go on. But how desirable are these behaviours? In whose interest are they? Who in their right mind would call these tendencies ‘good’ when one considers the impact on nationhood?
Reading Belton’s book amplifies the fact for me at least that capitalism in today’s world is most definitely in crisis.
We can have capitalism that is good – one that uses money to solve problems for the wider society and allocates resources fairly.
But instead we have a capitalism in the West that worships the resource (money) and pays less heed to the objectives/problems more fairer distribution of money could address.
So what we get is mass hoarding of the money resource for self enrichment and power by a few powerful institutions and people instead that can challenge even State sovereignty.
And I don’t see a willingness to tackle any of this anywhere at the moment in the West. And I’m sure that through Russian eyes, this situation would be intolerable.
The West has made a huge error of judgement in dealing with post communist Russia. Things could have been so much better. We didn’t have to rub the demise of communism into their faces. It was not enough to win it seems. We had to have them on their knees. And when Russia needed help, instead all we offered half baked ideas that even the West refuses to accept cause harm.
My conclusion is this: if the West wants to change Russia for the best, give it a reason. Set an example for once. The Western (U.S.) style of capitalism has to change first – it really does. Our own house needs to be put in order before we can really criticise and insist on better from Russia.
Otherwise......well, we can forget it and reap the consequences.
The links with Trump; the painful demise of Litvenenko and others; the Novichok poisonings in Salisbury, possible Russian interference in U.S, and UK democracy - none of these are justifiable to me and I’m not making excuses .........but the consequences have begun already in my view.
What to do? Well, I think the West needs to apologise for a start. If we were really thinking about the Russian people and genuinely concerned about their welfare and freedoms, we must apologise to them and their leaders and see if – having comprehensively reformed ourselves – we can start again.
But the rapprochement with Russia must also realise that Russia is different and not insist on it being exactly the same as us and not impose our faulty economic and political models on them. Then we might get a genuinely different Russian capitalist democracy. Russia has the potential to show the world of the benefits of a strong state. It does not at this moment – far, far from it. But it could.
I highly recommend this book.
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