Russian State Capitalism Part II – Matveev on dirigiste and neoliberal synergies

So, as I said in my last post, I’m writing a long piece for Sotsvlasti – a social science journal in Russia on state capitalism and neoliberalism. In this second post I’ll mainly focus on Ilya Matveev’s work on Russia as a state-capital-neoliberal hybrid, because Matveev’s position is my main departure point. Matveev uses the term ‘state capitalism’ to propose a kind of elective affinity between neoliberal economics and elements of dirigiste industrial policy that maintain the position of economic elites and provide political stability, but which are uncoordinated with the private sector. Notably while the primitive accumulation associated with the 1990s privatisation processes and subsequent political conflict gets a lot of attention in scholarship, the relative security of property rights for ‘winning’ elites, and the longer term development of ‘normal’ forms of market accumulation, are overlooked according to Matveev.  Matveev here cites Daniel Triesman’s work on the misperception about the ‘legitimacy’, durability, and sources of wealth for many current financial elites. Triesman elsewhere has useful paper on the 1990s privatisation ‘loans for shares’ affair and how this  reflected a delayed transformation of Soviet elites into one flavour of postcommunist asset oligarchs. I obviously don’t share Triesman’s implicit Pollyanna approach to Russian economic transformation (creating new owners at any cost is justifiable).  

Matveev focusses on the period 2004-8 as a turn to ‘dirigisme’. Yukos is merely the most visible example of the expansion of de facto state ownership in the economy, with swathes of banking, oil and gas, and some industrial monopolies directly or indirectly state owned. Despite, experiments in pronatal social benefits and elements of autarkic developmentalist policy since 2014 that run against market philosophy, Matveev argues that Russia maintains orthodox neoliberal policies such as a strong monetarist bias, fiscal consolidation, and marketized mechanisms of discipline and competition in the public sector. Matveev provides clues to my main argument: the need to make a distinction between clientelist and patrimonial negotiations of relative power and access to capital resources within the elite, and a broad and deep set of policies that affect the lives of the majority of Russians in the private and public sectors. Objections to Matveev’s argument are striking for their misrecognition of fundamental changes that align with core deregulatory and ‘responsibilizing’ principles in biopolitics.

Translating the substance of this transformation into the language of popular politics, localized versions of terms like ‘austerity’, ‘the 1%’, ‘one rule for the rich’, ‘work no longer has dignity’, ‘the callous state’, ‘we are a country of paupers’,  resonate for Russians, W. Europeans, and N. Americans alike. Indeed, for workers in state-influenced or owned firms in strategic industries, exploitative and intensified labour conditions are similar to experiences of corporate change elsewhere,. My long-term underemployed research participant, Igor, reflects on his experience as a seasonal [na vakhtu] construction contractor with Yamal LNG in the far North, where 80% of Russia’s gas reserves are found. Yamal LNG is joint owned by Novatek, a private inheritor-firm of a Soviet pipe constructor, in which the Russian state has a 9% interest, China’s main energy SOE and others.

Like everywhere now a cleverly [khitro] designed small base ‘white’ [taxed] salary with bonuses that are impossible to earn. Again, like everywhere, there is a ‘black’ [unregistered, illegal] component of pay that is also withheld at will, as a kind of weapon over you.  Terrible conditions, worse than a prison camp. I quit ahead of my term because I got neither the days off, nor the travelling expenses in the contract. As a result, they wrote a terrible recommendation letter – without which I will not get another contract. We are just another item of brittle or pliable ‘inventar’ [equipment] to be used until it breaks (instead of a 12-hour shift we regularly worked 16). To me it’s like Russia is a slave colony, we just don’t use that term anymore. We ‘manage’ our slavery ourselves, with some help from machines and technology. [interview in Kaluga Region, summer 2019]

For me what’s important here is the presence of lay political-economic analysis that experience generates. In terms of everyday political economy, does it really matter whether one works for an SOE or not? This ‘everyday political economy’ is a framing device that hopefully will work in a book-length treatment.

Matveev’s analysis, while underlining that a serious study of state capitalism has its place in any analysis of Russia, should remind us that salient features are present in large measure in ‘core’ democratic states. By the same token, strategic ownership by the state and elite corruption does not alter the fundamental division between capital concentration, cartels, financialization and the rise of a rentier-class on the one hand, and the erosion of labour’s position, the retreat of the social state, and economic neoliberalism for the majority on the other.

 ‘State capitalism’ may exacerbate distortions in capital allocation towards favoured producers in weapons, metals or energy, and lead to spill-over into high levels of elite corruption. However, in the ‘core’ states, capital interests also make ‘good’ use of the state to entrench and ‘enmoat’ themselves into cartels in what look like ‘new’ industries, but whose final services are eternal necessities – consumer durables, transport, and information/entertainment (Amazon, Uber, Google). Where ‘disruptors’ arise, they rely, not only on financialization, but crucially, on tax subsidies and legislative capture or lag – Tesla being a prime example.

Covid-19 made these processes impossible to ignore, as one of the most deregulated of ‘free market’ states – the United Kingdom – engaged in some of the most corrupt practices of state-capital connivance – handing out production and service healthcare contracts without tender to crony insiders who gouged both citizens and state organisations. At the micro scale, in supposedly solid democratic states, severe impositions on freedom of movement and assembly are imposed that focus on the individual and her economic positioning. The reader will already see where I am going with this argument: that the varieties of capitalism approach is less useful than the evaluation of the objective and subjective economic relations as dictated by a logic of ‘neoliberal’ subjectivation. Explaining how that logic operates in Russia is a large part of the rest of my article and I’ll return to it in the future.

2 thoughts on “Russian State Capitalism Part II – Matveev on dirigiste and neoliberal synergies

  1. Pingback: Postsocialism

  2. Pingback: Russian State Capitalism Part III: How can Russia be neoliberal and dirigiste at the same time? | Postsocialism

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