Russian State Capitalism Part III: How can Russia be neoliberal and dirigiste at the same time?

coexistence of the old, not so old, and the new in downtown Moscow

This is the third in a series of posts on ‘everyday’ political economy. The long read is now published here.

In a post back in May, I outlined the usefulness of Ilya Matveev’s work on state capitalism. To recap: Matveev sees 2004-8 as the pendulum in Russia swinging back to incomplete state domination of the Russian economy. Despite this, Russia maintains strong orthodox neoliberal policies. In the previous post my departure from Matveev was to start thinking about how neoliberalism as a form of governmentalizing ideology, is imposed on ordinary Russians, even in ‘state’ companies. I ended that post by pointing out that neoliberal subjectiviation is not lessened as a result of the Covid pandemic….

Neoliberalism refers to a way of thinking about organising social relations. It emphasizes ‘market competition [as] the basis of economic coordination, social distribution, and personal motivation’ (Sparke 2013: 454-5). Economic neoliberalism is a form of market rationality. Colin Hay (2004) provides a seven-point definition:

  1. the desirability of free capital mobility
  2. the ‘market’ as an efficient mechanism for allocation
  3. limited role for the state
  4. supply-side economics
  5. labour-market flexibility
  6. conditionality of welfare based on incentivizing market participation
  7. private finance seen as more allocatively efficient in provision of public goods

Governmentality is key to the maintenance of these relations as it links social life to the logic of what Foucault called the ‘enterprise society’. Governmentality is a process whereby subjectivity becomes increasingly dominated by discourses of self-regulation – inducing people to ‘work upon themselves’ to become ever more flexible to the demands of post-Fordism. This is not a simple top-down process of domination, however. Social control is produced though the active participation of individuals and groups in the regimentation of their own discipline. We have already seen how Matveev argues that the neoliberalism in Russia entails state involvement in supporting highly exploitative relations between individuals, firms and sectors. Stephen Collier (2011) adds to the perspective by returning to Foucault’s lectures on biopolitics to argue that rather than a focus on freeing markets per se, neoliberalism is about rethinking government according to an over-determined form of economistic reasoning.

The social state remains, but its governance ‘styles’ are influenced by ‘khoziaistvo’ – the legacy of Soviet integration of politics and economy based on a narrow, managerial conception of need fulfilment. For Collier, the present moment sees governmentality as a ‘formal rationality’ that privileges market thinking. He adopts the term ‘assemblage’ to trace the genealogy of Russian reform in the 1990s back to core neoliberal thinkers from the US. Moreover, the idea of biopolitics from which governmentality emerges has deep roots in Soviet planning – in ‘incentivisation’ at different scales of labour and production (Bockman and Eyal 2002).[1] Collier elsewhere (2012: 190) proposes synergy between activist states and marketized relations, underlining how neoliberalism as distinct from classical liberalism imagines a key role for governments ‘in creating the conditions for diffusion of markets and market-like mechanisms’ and may contain highly illiberal measures.

Peck and Theodore (2007) trace the debates on ‘global neoliberalism’ via diffusion through institutions, financial markets and foreign competition in the early twenty-first century. This approach anticipated a profound erosion of the nation state as adequate coordinator of the economic sphere. It focussed on the strategic interaction of mechanisms of routinized regulation at trans- and sub-national levels of analysis: ‘corporate governance, education and training, labor-market regulation’ (Peck and Theodore 2007: 744). Firm level and sector scales replace an overly broad-brush macroeconomic institutional framing but are themselves prone to functionalism. In the final analysis, the ‘varieties of capitalism’ approach, in seeking to acknowledge real geographical differences, supposes an unrealistic coherence that closer analysis does not justify. For example it is problematic to clump together as ‘coordinated’, models those market economies often synonymous with northern-European ordo-liberal types. Indeed, since the turn of the century, this criticism has been justified, as ‘coordinated’ models moved sharply towards their Anglo-Saxon ‘liberal’ brethren – especially in the spheres of labour market liberalization, and its corollary – welfare state residualization and retrenchment, two areas of interest in the Russian case (Oorschot and Gugushvili 2019). Variegated neoliberal convergence has in part replaced the ‘varieties’ approach. 

Peck and Theodore (2007: 755) anticipate a tide rising over all developed economies as relative institutional weaknesses fail to moderate or mitigate waves of neoliberal reforms when coordinated states face the entry of multilateral institutions who brought with them modes of rationalization and audit, self-monitoring and surveillance. These techniques are as important as any legislative or coherent ideological diktat. They then diffuse into new territories (such as state bureaucracies) via true ideologies such as New Public Management (NPM) (see Romanov 2008 for a summary of its implementation in Russia [pdf opens automatically]).

Today, international institutions themselves, ironically, cannot find a reverse gear when they need to because of their immanent neoliberal logic. For example the IMF stresses the need for slower adjustment and more progressive taxation in Russia because of Covid-19, but immediately reverts to ‘neoliberal type’ to suggest VAT rises and reduced payroll taxes as well as the need to ‘reduce the footprint of the state’ (IMF 2021). Peck and Theodore (2007) are a scholarly bellwether of the need for more thorough acknowledgement of the multi-scalar and multi-register insinuation of neoliberal governmentality and rationality into the political-economic fabric of societies.

I move on in the next post to Special Economic Zones in Russia as showing us evidence of just how pervasive neoliberal governmentality is in Russia, despite the relatively small penetration of transnational companies there.

[1] While Rupprecht (2020) agrees that Russian neoliberal thought has indigenous roots, he disagrees that the 1990s saw its implementation in any meaningful degree there.

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