Tag Archives: neoliberalism

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.

State Capitalism Part I – Dorit Geva on Hungary’s Ordonationalism and the Parallels to Russia

Novatek Polska in Germany – a good example of a hybrid state corporation with transnational reach

A shortish first post on ‘state capitalism’ in Russia [actually there’s a previous post on this in relation to Covid and the state]. Defining state capitalism for me is important – as a precursor to more authoritatively talking about what I mean by the ‘incoherent state’ – an idea I’ve been playing with for a while now. Another reason for my interest in the term ‘state capitalism’ is that it is linked – for better or worse – with the meaning of neoliberalism in Russia.

I’m prompted to blog about it now because yesterday I read this great article by Dorit Geva on Orbán’s Hungary. I tweeted a few excerpts which provoke comparison to Russia. Here they are slightly edited: Geva argues that ‘ordonationalism’ entails: (1) a nationalist state invested in flexibilizing domestic labour; (2) state capture as means to control access to domestic accumulation; (3) a novel regime of social reproduction, linking financialization, flexibilization of labour, and a marked decline in social support. It’s interesting to reflect on the comparability with Russia where these destabilizing currents lead to the authoritarian state being forced to step in and find a (sticking-plaster) solution – this chimes with the various ‘manual control’ moments in Russian politics where elites are forced to ‘correct’ overzealous policy that threatens to completely impoverish citizens and provoke a coalescence of protestpension reform is one example of a “безальтернативно” policy that got watered down. Indeed the pension reform row-back was not some neat trick to show Putin masterfully ‘correct’ an unjust proposal, but an indication of the ‘living dead’ influence on economic policy in Russia. The so-called ‘Petersburg liberals’ still have political heft and they are still constructing policy from the same tired old flatpack Ikea version of the Washington Consensus, despite most of the rest of the developed world moving on more shabby-chic Keynesianism, post-Covid. Discussion here not specifically on pensions, but on the development of factionalism in the elite as reflected in such conflicts. Discussion here on the pension changes as neoliberal policy.

Bob Jessop’s strategic-relational approach gets a nod from Geva in her article, and this approach is quite important to me because I think it is underemphasised on work on Russia for various reasons. More on that another time.

[From a wiki:  “the state has differential effects on various political and economic strategies in a way that some are more privileged than others, but at the same time, it is the interaction among these strategies that result in such exercise of state power. This approach is called the “strategic-relational approach” and can be considered as a creative extension and development of Marx’s concept of capital not as a thing but as a social relation and Antonio Gramsci’s and Nicos Poulantzas’s concept of the state as a social relation, something more than narrow political society.”]

Funnily enough, an undergrad student (!) yesterday made a similar point to Geva’s but about Putinism. Geva writes that ‘Orban [is] contemporary manifestation of Bonapartism‘ emerging from a crisis of hegemony and class deadlock. Geva again: ‘Bonapartism for the neoliberal age; a political solution to the crisis of hegemony produced by neoliberalism, and whose strategy for accumulation of power is to take control of the state as primary arbiter over accumulation of capital’. According to this analysis, states struggle with hegemonic consent, thus turn to increasingly authoritarian policies to advance neoliberal projects that exacerbate their disruptive tendencies. Orban shows it’s possible to fortify hegemonic rule through advanced neoliberalisation. Geva cites Ian Bruff’s work on this point – a key reference for those interested in how authoritarianism is the present vector for sustaining neoliberal politics. I include a section on Bruff’s relevance to the Russian context in my article – I’ll expand on this in a future post.

Toplišek called the Hungarian path ‘counter-neoliberalisation’, incl. re-nationalization of key sectors, protectionism. However, ‘re-nationalization’ needs to be understood as form of financial nationalism which extends the logic of neoliberalism – not wholly a counterneoliberal’ move. Examples: Fidesz’s bank levy; national oligarchic dependents carving out sectors for exclusive rent collection; pension fund nationalisation – the volume of state-owned assets increased by two-and-a-half times between 2010 and 2015. Nonetheless, while there is no ‘political neoliberalism’, à la Stephanie Mudge, instead we get the central social policy plank of workfare, and individualised contractual relations, low corporate taxes and many other examples that reveal intensified neoliberal tendencies via ordonationalist policy. Geva concludes with a balancing statement: “Where Orban’s post-neoliberal prebendalism cannot fill a market niche, such as with the auto-manufacturing industry, he leaves those sectors to investment by global capital.” This is very close to my own work on transnational corporations’ place in the Russian economy. The case study of Special Economic Zones features in my work.

Some of this post relates to ideas from an article I’m writing for Sotsvlasti – a social science journal in Russia. I will expand on that in my next post, where I’ll also return to Ilya Matveev’s work on Russia as a state-capital-neoliberal hybrid. My ‘job’ right now it to try to put ethnographic skin on the political economy bones of that argument. I have some good interviews with people that went to work on contracts in the Far North for Novatek (which might serve as an example of a hybrid state-private corporation), but I need more time in the field to develop this material. I also have a lot of unused material on the SEZ in Kaluga – a ‘state within a state’ that echoes the political economic organisation of the former Soviet-era closed town I made a study of in my last book.

The neoliberal compact and the loss of autonomy for Russia’s middle class.

milton

Milton: “…I used to be over by the window, and I could see the squirrels, and they were married, but then, they switched from the Swingline to the Boston stapler, but I kept my Swingline stapler because it didn’t bind up as much, and I kept the staples for the Swingline stapler and it’s not okay because if they take my stapler then I’ll set the building on fire… “

This is my third and final post about the papers presented as part of a panel on Class formation in Russia at the BASEES Uppsala conference, Regimes and Societies in Conflict: Eastern Europe and Russia since 1956.

The third paper in this troika is by Mikhail Chernysh on ‘The structure of the Russian middle class’. Chernysh begins by examining the Russian government’s development programme “On the concept of the social and economic development 2008-2020” which aims to increase “the intensity of growth of the human capital and the middle class”. The policy paper is useful to get an idea of the government’s way of defining a middle class. These are individuals with incomes over six times the minimum. On this measure the ‘middle’ rises from 30% in 2010 to 52-55% by 2020. Chernysh remarks that it is symptomatic that the self-employed or small and medium entrepreneurs don’t really figure in this equation. The middle class is defined mainly by improved consumption linked to income.

It is striking here how modest this definition is in money terms. If ‘minimum income’ here refers to the МРОТ, then a ‘middle-class’ income equates to around 60,000 Rubles per month or 750 Euros a month. Here’s a discussion of the ‘minimum’: https://www.gazeta-unp.ru/articles/51943-mrot-v-rossii-s-1-yanvarya-2018-goda-qqq-17-m08. Going back to Markku Kivinen’s paper on linking middle-class to the classical idea of a propertied bourgeoisie, it is interesting that this amount is not enough to build assets over any meaningful period in most circumstances in Russia. People (including dual-income couples with no, or one, child) on this income typically resort to micro and meso short-term loans and mortgages. There are many stories of bad debt, ruined relationships and moonlighting among this segment of the so-called ‘middle-class’. In this income bracket I see people give up or downgrade their automobiles (to Russian or second-hand models bought for cash), whereas in the ‘noughties’ they bought new on credit. Similarly, while people nudging 1000 Euros, or so, could previously holiday now and then in Europe, now they are turning to domestic destinations, or those in the CIS (witness the boom in Armenia/Georgia tourism).

Chernysh then reports on an interesting discourse analysis by E. Balobanova which examines how Russian presidents have used the phrase ‘middle-class’. [E. Balobanova 2011.  Analiz ponyaita “srednii klass” v poslaniakh presidenta Federalnomu sobraniu RF. Political Linguistics. 2(36). For Yeltsin this phrase meant primarily ‘the bureaucracy’, echoing discussion in other papers about the ‘state’-focus of class and caste. Under Putin and Medvedev there was rather inconsistent rhetoric about raising what we might call the neglected technical intelligentsia up to the middle class. It’s interesting that again, entrepreneurs are nowhere in sight and neither are the ‘core’ intelligentsia of teachers and lecturers.

work

Chernysh then traces the controversial debates in sociology about the middle-class – from being seen as a myth, to the current (politicized?) promotion of Russia-specific ways of counting a middle-class that would produce figures higher than 10% or 20% (see my previous post). Chernysh remarks that this led to the rather unconvincing result of an income of 220 Euros-equivalent allowing entry to the middle class – 44% of the population!

Chernysh then goes on to discuss what he sees as the neoliberal compact in Russian society – particularly with regard to its effect on the state-sector middle class. In return for large increases in salaries, doctors, teachers and others had to sacrifice job security (austerity cut backs) and autonomy (increased monitoring, loss of control over job processes). This strongly parallels my findings among working-class cohorts in the same period. Also important for Chernysh is the actual intensification of work for these groups. The positive part of the deal – increased pay – is at least partly illusory. This is because of intensification but also because much of the pay increase is based on discretionary awards – premiia/nadbavka, etc. This also finds strong echoes in my work with caregivers like teachers and kindergarten employees. They complained after 2009 that they weren’t really better off as so much of their pay was subject to these ‘tricks’ (see p. 62, 64). Chernysh speculates that these factors may influence the current negative evaluation of the government by these groups.

Based on a number of datasets, particularly focusing on responses to questions about what people struggle to afford (durables, more expensive purchases like cars, etc), Chernysh finds that coupled with an occupation approach, the Russian middle-class is less than 20% of the population and more likely less than 15%.

Following Erik Olin Wright’s definition of the middle class as those working in jobs where autonomy is possible, Chernysh analyses autonomy as a variable in a group of respondents with middle class consumption patterns and a university degree.  He finds a significant fall since the 1990s in this category. This is important in the historical context of the necessity, even under totalitarianism, of a ‘moderate level of work autonomy’ in Soviet professions. (I argue, along with the sociologist A. Temnitskii, that this was true of blue-collar workers as well).

Chernysh concludes by drawing parallels with H. Balzer’s Russia’s missing middle class : ‘Middle class consciousness is contradictory, it is not only critical, but also individualistic, showing limited capability of concerted action in defense of group’s rights and class positions. It looks like a revival of historical pattern dating back to the pre-revolutionary times. Balzer’s analysis of the tsarist Russia middle class showed that it was too small and disorganized to effect tangible influence and possibly revert the negative tendencies that weaken existing economic and social institutions’.

Returning to the panel as a whole, the organizer, Jouko Nikula, recently published an interpretive summary based on a broad survey dataset ‘Social Distinctions in Modern Russia’ (SDMR), which some of the papers also made use of.

Nikula points out the ‘decreased opportunities employees have to influence their working pace or work tasks’, particularly among professionals and in the public sector, with a narrowing too of flexibility on working hours. Unemployment has been low despite the two recessions endured by the country – one in 2009, the second in 2014. This because of a persistence of the Soviet practice of labour hoardings and paternalism, at the cost of low wages and furlough, as well as the foregoing of bonuses, which as we discussed earlier, make up an increasing proportion of the real take-home wage.

All in all then, a provocative set of papers from the Uppsala conference. To conclude I would ground them in the reality of my ethnographic fieldwork (albeit partial and unrepresentative). I note the following from my own fieldwork: the least satisfied people from my research were always those that experienced the least autonomy (or a perceptible fall in it over time) – but this was true both of working-class (forklift drivers, packers and sorters in the carplant), and middle-class jobs (teachers and child-psychologists, whose work became increasingly monitored by metric evaluations over the 2010s). Who was most ‘satisfied’? Those with the most or least – well-paid entrepreneurs in high-barrier-to-entry areas like data-gathering and bespoke services, and at the other end, those informal taxi-drivers and grifters who answered to no one and could always ‘withdraw’ to the burrow of the garden plot (at least in the summer) and other strategies of informality.