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The Contradictions of Propaganda and the Economic Causes of the ‘Special Military Operation’* in Ukraine

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Guest post translation of Oleg Komolov’s ‘Prime Numbers’ YouTube video channel. With thanks to him for permission to reproduce here.

What prompted the Russian state to launch a military operation in Ukraine? And, of course, what interests us is the true motives, not those contradictory and vague explanations which gullible people are fed by state propaganda: fascist drug addicts among the Ukrainian authorities, oppression of the Russian language, trampling on traditional values of historical truth. These political arguments can be juggled as much as one likes, revealing them from up one’s sleeve and then hiding them again, over and over for eight years. However, a scientific understanding of social phenomena and processes entails the search for material causes underlying them. It is economic prerequisites which set the vector of state’s conduct and that of classes and individuals. People then can act in one way or another to change or preserve the prevailing objective conditions they find themselves in.

I love watching Russian “guardians”: those who, whether sincerely or for a small fee, justify any action of the ruling class. Even the most cannibalistic economic reforms, draconian laws or political adventures will be explained to you as cunning plans of 5-dimensional chess, or as in the national interests, or as intricate pseudoscientific constructions. The purpose is not to simplify, so as to make social processes understood, but on the contrary, to confuse people. The ‘Special Military Operation’* is no exception. Watch what people do and not what they say.

Before the outbreak of hostilities, anyone who respected himself or herself as a propagandist-“patriot” had for years admired the successes of the Russian economy. This went along the lines of, “look at what’s made in Russia”, etc., and, “everything is thanks to Putin’s wise leadership and his team”. As a result, Russia rose from the ashes, got up from its knees, became energized and some kind of superpower. Construction, industry, agriculture: in all these areas Russia has already surpassed or is about to surpass the indicators of the USSR. And the country’s economy whether today or tomorrow was about to enter the top five of the world’s largest. And how else are corporations to develop not only the Russian interior, but initiate large projects abroad? The state helps friendly regimes by supplying them with the most modern military equipment.

A lot has changed since 2022, of course. But even today there are those who with foam in the mouth who will prove the greatness of the Russian economy and the invincible power of the second army of the world. However, such ideas are already no longer fashionable. Since the outbreak of hostilities in Ukraine, state propaganda has found it necessary to retouch the aggressive nature of foreign policy and re-present it as if selfish, predatory interests were nothing to do with it. There is incredulity if anyone uses the term “imperialism”. Russia is, after all, a backwards and peripheral economy. The only thing its companies and oligarchs are capably of is to send abroad natural resources while doffing their hats obsequiously to the western buyers in return for the right to be admitted to respectable London society.

For such a ruling class there can supposedly be no imperialist ambitions. What’s the point in coming into conflict with the countries of the centre of the world economy? In short, the reason for the start of the special operation* was exclusively a humanitarian mission, initiated personally by the President. He is sincerely concerned about the fate of the inhabitants of Donbas and is doing his best to protect Russia from disintegration, which certainly would have happened otherwise. The oligarchs do not understand these threats or do not want to understand the power of their comprador nature, and that’s why they negatively reacted to the beginning of the SMO*. And then they lost money due to the arrest of Russian assets abroad. It’s a familiar point of view, isn’t it? I won’t even name those who actively promote it in the media field. I think most would recognize who it is disseminating these ideas. However, this is already part of the ideological mainstream, which of course has little to do with reality.

Who are the sub-imperialists?

However, there are still some points of intersection with reality. It’s possible to find simultaneously peripheral comprador features in countries at the same time as signs of aggressive imperialist behaviour. These components are mixed in different proportions and the formulation of this mixture is determined by the country’s place in the international division of labour. Here, Russia belongs to that group of countries where these contradictions manifest themselves in the most vivid way. South African Marxist Patrick Bond uses World-Systems Analysis to describe the contradictory nature of such countries. He applies the term sub-imperialists, revealed for example in the BRICS association, which includes Brazil, Russia, India, China and South Africa. In the world capitalist hierarchy, they are below the imperialists, inferior to them in economic power and political influence.

However, they adopt practices very similar to those used by the imperialists. By exporting capital to backward regions, they get the ability to extract imperialist rent. That is, to appropriate free of charge a part of the surplus value created by the labour of workers in less developed countries.

At the heart of such a relationship of non-equivalent exchange lies the theory described by Karl Marx: value is created by labour but is distributed according to the power of capital. Meanwhile, the possibilities for the exploitation of poor countries by sub-imperialists is generally limited in comparison with classical imperialist predators. Therefore, they compensate for lost earnings abroad by harsher oppression of workers in their own countries. This phenomenon is called internal devaluation. It manifests itself in the consistent state-sponsored austerity policies which include high taxes on households and low taxes on business, reductions in spending on education and science, oppression of trade unions, artificial undervaluation of the national currency. All these purely peripheral practices coexist with extensive appetites beyond the national borders, and form the phenomenon of sub-imperialism. It probably sounds complicated, not every journalist will figure it out.

The main question is about what criteria there are for classifying a country as belonging to one or another group of imperialists. The easiest way is to assess with how much intensity capital is exported. That is, direct foreign investments with which multinational corporations penetrate peripheral markets. A reminder: direct investments are those related to the creation of new industries, as well as gaining control over existing ones. We can collate a ranked list of countries by calculating their cumulative net FDI as a percentage of their GDP. It is possible, to a certain degree, to call this an index of imperialism.

UK: 93%

Germany: 70%

France: 66%

Norway: 60%

USA: 47%

Japan: 41%

Italy: 35%

Brazil: 29%

Russia: 27%

Saudi Arabia 18%

China: 14%

Indonesia: 9%

Turkey: 6%

India: 6%

Ukraine: 1%

Bangladesh 0.2%

Congo: 0.1%

[figures from 2020 based on the World Bank and UNCTAD]

The top lines are, as expected, the biggest capitalist predators: European countries, the United States and Japan, followed by a group of sub-imperialists: Brazil, Russia, China, Saudi Arabia, Turkey. At the end of the ranking are Ukraine, Bangladesh and dozens of other less developed economies which show almost no investment activity abroad. Thus, the larger the volumes of investment sent by a party to the outside world, the more effort in political, diplomatic and military relations will be exerted by their nation-states to protect their interests.

Foreign assets of Russian companies

The key regions for Russian capital are the post-Soviet countries. Companies from Russia sent several tens of billions of dollars in direct investments to the economies of nearest neighbours in various industries from mining to financial sectors. In the economy of Ukraine, before the Maidan period, about $17bn was invested. However, most of these assets were lost as a result of raider seizures, nationalization and forced sale. Western capital acting indirectly via Ukrainian officials, security forces and informal paramilitary associations ejected Russian business. Without having other ways to save a big chunk of its food supply, the Russian ruling class resorted to the argument of last resort: the application of armed force.

However, it would be a mistake to assert that the interests of domestic oligarchs are limited only to territories of the republics of the former USSR. Russian TNCs carry out direct investments far beyond the CIS, including in a number of developed capitalist countries. After the crisis of the 1990s, the rise in the oil price led to the saturation of the Russian market with foreign currency. Commodity companies were the main recipients and have become exporters of the oil and gas sector metallurgy and chemical industry The state abolished the requirements for them to sell foreign exchange earnings into the domestic market and did not interfere with capital’s withdrawal abroad. As a result, the net outflow of capital from the country has reached colossal scale: tens, and in some years, hundreds of billions of dollars. Approximately two-thirds of these funds went to offshores, and then turned into yachts, luxury real estate, football clubs, and deposits in Western banks. In short, it went into luxury consumption by the elite.

However, another third went to the economies of other countries in the form of direct investment, ensuring the promotion of Russian business abroad. Commercial expansion relied on the forces of private military companies, the most famous of which, PMC Wagner, has for several years expanded its presence in Africa, participating there in local conflicts and clearing the road for the investments of Russian oligarchs.

The geography of the business of the largest Russian TNC, Lukoil, does not end only within the post-Soviet space, but extends to Western and Northern Europe, Africa North America, Asia. Lukoil Group’s exploration, production, wholesale retail sales of gas, oil and petroleum products amount to about two percent of the world market. In the last years, the company owned large oil refineries in Bulgaria, Romania, Netherlands. And in Italy, the third biggest refinery in Europe was under the control of Russian oligarchs. Another international corporation based in Russia is Rosneft.

At its peak, the geography of its business included 25 countries: in Europe, America, Africa and Asia. In terms of hydrocarbon reserves, Rosneft has outstripped many large Western companies. In Germany, through subsidiary Rosneft Deutschland the Russian corporation owned significant shares, from 24 to 54 percent of three refineries. It controlled more than 12 percent of the country’s oil refining capacity and ranked third in terms of oil refining volume in Germany: 12.5 million tons of oil per year. In India, Rosneft owned half of the second largest refinery Vadinar, with a processing capacity of 20 million tons of oil per year. In Egypt, the company received ownership of 30 percent of gas development deposits in the Zohr field. In Venezuela, since 2008 Rosneft together with, BP, Lukoil, Surgutneftegaz and Gazprom oil, began to develop oil deposits, In Brazil, Vietnam, Mozambique, everywhere, Rosneft acquired large chunks of local extraction projects of natural resources. Until recently, the other energy Russian giant Gazprom controlled 40 percent of the gas market in Europe. Not only in the CIS, but also in Africa, in the Middle East, in Central and South America, Gazprom was engaged in the exploration of hydrocarbons, gas and oil production, and their transportation, refining process and sale, as well as the production of electricity and thermal energy. Gazprom oil is not far behind. The company is represented in 110 countries, including in Africa and Asia. Its extractive and productive assets are located in six countries. Russian transnational capital does not live by oil and gas alone.

RUSAL spread its networks across 13 countries across five continents. It owns aluminium smelters in Sweden and Nigeria. Bauxite is mined in Guinea and Guyana. Rusal owns aluminium production in Australia, Italy, Ireland, Jamaica. NLMK Group bought rolling assets in the United States itself, as well as in France, Italy, Denmark, and India. Finally, Norilsk Nickel opened a subsidiary division engaged in the sale of products in the United States Switzerland, China and in a number of other regions.

These examples, of course reveal only a small share of foreign assets of Russian transnational corporations. They grew at a particularly rapid pace before the crisis of 2008. Then the volume of accumulated direct investment abroad reached a maximum of $363 billion, which equated to 28 percent of the country’s GDP.

Losses of business of the Russian Federation abroad

But since then, world capitalism has transited from triumphant globalism to a state of deglobalization generated by uncertainty about the consequences of the global crisis. International economic relations stated to gradually reverse. States began to resort to protectionism more and more often in economic policy to administratively create favourable conditions for national capital. Sanctions became the most popular tools for the struggle for the redistribution of markets and property. Against Russia they were introduced for the first time after Crimea, and then tightened many times. As a result, the volume of Russian accumulated direct investment abroad in real expression, that is, adjusted for dollar inflation, fell by 2021 by a quarter. Many companies from Russia lost their foreign business.

For example, in 2020, Rosneft which had cornered the entire Russian share of the local oil production, left Venezuela. Though it sold its assets to another Russian company. But the production process was disrupted. A Rosneft geological exploration project has been frozen for several years in Solimões, Brazil. In 2018, Rosneft had to withdraw from work in Iran. Due to U.S. sanctions cooperation with local companies was also suspended by Lukoil, Gazproneft, and Tatneft. Lukoil withdrew from the development project of gas fields in Romania. The company had to leave the Black Sea. The same thing occurred in the Ghana Shelf Development Project and developments in Côte d’Ivoire, where the corporation had worked on deep-sea projects since 2006. Lukoil exited a project with Saudi Arabia. In addition, Lukoil completely lost its retail business in Eastern Europe, having sold 2,500 petrol stations in Lithuania, Latvia and Poland.

Gazprom under pressure from the authorities left the joint venture with Bulgaria’s largest company Overgas and lost its stake in the gas transmission network in Poland. And in 2018, Naftogaz of Ukraine in the course of a commercial dispute, achieved the freezing of Gazprom’s assets in England and Wales. And many such examples can be cited. The capital of the big imperialist countries in the struggle for the redivision of the world pushed out from the market weaker players: those whose economic development and political influence does not allow them to keep the prey between their teeth. The pressure from the outside has increased. Russian business lost spheres influences and as a result, profit. A successfully conducted SMO* in Ukraine was designed to show the world that no one messes with us. Russian oligarchs can take decisive action to protect their capital, not only toothless expressions of diplomatic concerns after the introduction of another portion of sanctions.

Under the pressure of military force, Ukraine was supposed to fall. As for the Western world, it was supposed to make any concessions just to calm down a raging bear. But these plans were not meant to be.  The gestures of ‘goodwill’ by the Russian army in Ukraine showed that Western capital had nothing really to worry about. The degradation of all and sundry after the fall of the USSR and the destruction of socialism affected not only industry. The armed forces, intelligence agencies, public administration, diplomacy, the military-industrial complex: all degenerated together with the embedding of the Russian economy into the world economy as a raw material-supplying appendage.

Having been gifted with trillions of oil dollars in the 2000s, the oligarchiate decided that it no longer wanted to be a bunch of entitled nobles anymore. The nobles wanted to be the masters of the sea. Parasitizing on the Soviet legacy, they dared to bite the hand that had fed them, but clearly did not calculate their real strength. Imperialist ambitions turned out to be based on nothing, and now Western states have had a demonstration that in practice they may act more decisively. In this way, without hesitation, 300 billion dollars of government reserves were frozen in Western banks. Accounts and yachts of the Russian rich were seized. And their displacement from the world market significantly accelerated. Thus, in 2022, Germany nationalized the subsidiary of Gazprom, Gazprom Germany. And also three Rosneft refineries including a giant refinery in Sweden. In Italy, Lukoil was obliged to sell the ESAB refinery to an American energy company. Russian metallurgists also lost their European market and many assets abroad. The owner of Severstal Alexey Mordashov got poorer by a whole 11 billion dollars.

The conclusion is this. In conflict with the West, Russian business which lost out cannot be called in any way innocent victims of the imperialist aggression. Russian business itself was an active player in expanding the sphere of economic influence. However, ambitions do not always reflect capabilities. The raw material nature of the Russian economy, which previously allowed those close to the authorities to enrich themselves and become billionaires, led to the degradation of all state institutions. They turned out to be incapable of performing their key functions to protect and promote business interests. means Now, this task will be entrusted to you and me. So stock up on dry rations, army boots, bulletproof vest, helmet and preferably a Chinese drone. After all, the lost billions of Mordashov won’t return themselves.

*throughout, I reproduce the wording the author uses.

Russia as vanguard: authoritarian governance in symbiosis with rent-seeking (final part VI in the series)

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A lonesome food courier in demand during Moscow’s autumn 2021 lockdown

In the previous post I started to discuss the Russian experience of Covid and how it shows authoritarian governance as contributing to the accelerating implementation of surveillance practices.

What we often miss in this equation is a mutual benefit for states and corporations, including state-owned enterprises .  Using the control society, further pressures are brought to conform or internalize behaviours, practices and mindsets that entrench neoliberal thinking and allow the biopolitical to undermine any alternative ‘mechanisms of accounting’ (Hardt and Negri 2004: 148). Local researchers like David Hurma are right at the heart of Russian research that opens up this contradiction – we are supposed to internalize discipline, but this goes hand in hand with increased surveillance of work processes. This conjunction of state and capital power can be observed everywhere, but I want to end with two further brief examples of Russia as ‘vanguard’.

Russia offers a good example of the broad and deep roll-out of the surveillance state due to its particularly fruitful experience since the 2000s of aligned state and capital interests in extracting economic rents from populations. In just the most obvious example, the peppering of public (and increasingly private) highways with revenue-generating traffic enforcement cameras should be seen for what it is: an authoritarian technical solution to overcome limits on rent-seeking elsewhere. The plethora of these cameras puts every other developed country’s efforts to shame.[1] Truly, in linking the control society to rent-seeking it is as pure a public-private partnership you can wish for. A part of the proceeds goes to regional budgets, but the ‘take’ from private companies supporting the cameras’ operation is 15-times greater than their real cost.[2]

And of course, in case there’s any doubt, petty corruption by police does not end because of the camerification of roads, it just metastatizes into preying on goods vehicles and taxi-drivers instead of ‘ordinary’ motorists who are caught by the cameras alone (like me – I pay around 3-4 fines a year for road infractions that are almost impossible to avoid). I personally saw three bribes extorted from such drivers in just a dozen trips last month.

To move to a different scale – that of the individual, a similar process can be observed in the microproletarianization of workers such as food couriers and taxi-drivers. They, as elsewhere, are subject to algorithmic control for maximum extraction of surplus value within shadow corporations – see Andrey Shevchuk’s work on this concept [opens as pdf]. This happens of their own ‘volition’, via internalization of the demands of maximal self-exploitation and the delegation of all externalities to the individual and wider society (health costs, accidents, insurance, pollution) by the platforms themselves. However, here again we observe the imbrication of state (which owns bonds in such companies, allows them to operate as quasi-monopolies, and sustains anti-labour legal environments) and financial and political elites who own such companies. The scaling effect of microproletarianization of swathes of economic activity in Russia via concentration of market share is unprecedented outside of China.[3]

“I use Face Pay. Travel became more convenient and simpler”

In conclusion, we should view Russia as just another ’‘normal’ country, just not in the optimistic sense Daniel Treisman and Andrei Shleifer (2005) predicted: a middle-income country facing typical developmental challenges. Instead, I would contend that Russia is ‘normal’ in a ways that reflect its peripheral-as-vanguard authoritarian neoliberalism. Its characteristics are the dominant politics of “austerity” (the phobia of fiscal expansion, a continuously residualizing social state) accompanied by the other disciplining factor of real incomes falling over protracted time periods;  limited social mobility and the privatizing of educational opportunity leading to a small plutocratic class or caste; the expansion of indebtedness and precarity in the population; social reproduction as largely responsibilized and privatized; the expansion of the horizons of the rentier alliance between state and capital interests and a modest cementing of multinational corporations’ clout and the intensification of their role in the economy (a process actually accelerated by sanctions; see Gurkov and Saidov 2017). All watched over by the nascent digital control society.

Doug Rogers in his book The Depths of Oil (2016) cautions against ‘uniting things under the theoretical sign of the “neoliberal”’, but at the same time agrees with the need for a more serious ethnographic examination of how flexible labour regimes, SOEs and the neo-authoritarian state are linked. As I argue here these linkages intensify the politics of resignation on the part of ordinary people, at the same time as they are further incorporated into neoliberal (self)governmentality. The only limits on incorporation are certain incoherences of the state-capital accommodation-assemblage. As Rogers (2016) noted in his study of the oil and gas industry in the Urals, capitalist ‘incorporation’ via privatisation after communism does not necessarily mean coherence or coordination in governance and corporate identity. In addition, the term ‘incoherence’ is distinct from ‘hybrid assemblages’ (Ong 2006) or ‘parasitical co-presences’ (Peck 2004). ‘Deregulatory’ governance (in the sense that it lacks finality or fixity) inevitably and often unintentionally opens up holes in the fabric of economic and social relations.

Emergent practices both reinforce but also undermine economistic and bureaucratic rationality (Molyarenko 2016, Morris 2019) in what Ananya Roy (2009: 80) calls ‘law as social process’. Conjuncturally, Russia is notable for the continuing expansion of the informal economy in tension with state and capital surveillance – even though, as I have argued before, informality entails in part internalisation of neoliberal governmentality (Morris 2019). As a space for autonomism, non-market orientated exchange and labour its potential is limited. Nonetheless for imagining non-capitalist alternatives, its sheer size means informality is important. Informality in Russia should be seen as offering similar counter-hegemonic potential as that of models that derive from ‘deregulated’ and informal systems from below in other global contexts – such as horizontalism (Sitrin 2012), baroque economics (Gago 2017), and ‘insurgent’ citizenship practices. These are beyond the scope of my essay, but deserve equal attention in any approach that proposes an everyday political economy with a view to uncovering space for the emergence of ‘commons’ beyond state and market (Caffentzis and Federici 2014, Fournier 2013).

[1] The world speed camera database records 15,000 control devices in Russia – likely an undercount – the GIBDD counts nearly 19,000 devices in 2020. This is 9000 more than the next highest European state and four times the number in the USA and 20 times the number in Canada.   https://www.scdb.info/en/stats/

[2] http://lse-ikb.com/activities/blog/201-kuda-idut-shtrafy-gibdd. See  also https://www.rbc.ru/rbcfreenews/60334c9f9a79475eb6162883?from=from_main_9.

The road tax system known as Platon has some similar characteristics https://www.forbes.ru/kompanii/344145-platon-mne-drug-no-istina-dorozhe-kuda-uhodyat-vznosy

[3] For example, the most popular search engine in Russia also owns the main social network, the most popular email service, and controls both the main ride-hailing app and an increasing share of the food courier business.

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

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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.

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

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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

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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 protest – pension 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.

Covid field tales – Part Two: Unmasking State Capitalism or Capitalist Realism?

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A pharmacy in Omsk with the sign ‘We have no masks or antiseptic gel in stock’.

This is the second of a series of Covid tales, made possible by collaboration with Galina Orlova of HSE Moscow. There will be 3-4 texts  on different aspects of lockdown and postlockdown Moscow. These will be based on one long text that will appear shortly in the journal City and Society. That journal, thanks to my colleague Derek Pardue, who is editor, has published some amazing Covid despatches – they are open access –  so please check it out. Space in those dispatches is very limited, so here on the blog I will take a little bit more of a circuitous route.

The last post chronicled the rise of Moscow as the focal point of the disease and its spread in Russia, not we move on to how City Hall has dealt with lock down and in particular what this reveals about ‘State Capitalism’.

To avoid an official ‘state of emergency’ which would have meant taking on a massive financial burden, City Hall adopted various heuristics to manage quarantine. From March 5, the Moscow had a high-alert mode, from the 26th – self-isolation for those 65+, from the 30th – self-isolation for all. The delegation of responsibility for their own health and well-being to citizens, after recent restrictions on freedoms, looked neoliberal. At the same time, the scope of quarantine education addressed to ignorant citizens and belief in its effectiveness, suggested the return of Soviet sanitary propaganda (Shok, Beliakova, 2020). In conditions of lockdown uncertainty, the boundaries of self-isolation were delineated by rituals of taking out garbage, buying food and medicine, dog walking. From April 1, fines of 4,000-5,000 rubles were imposed for each violation. On April 15, quarantine met the control society with digital codes for trips around the city. Since May 12, wearing masks and gloves became mandatory in stores.

When the president empowered regions as responsible for fighting the disease, and the prime minister asked the Moscow mayor “organizationally and methodically” to help colleagues “on the ground”, Sobyanin became the face of the ”virus federalism” and the capital’s protocol “counteracting the spread of coronavirus infection” became a model to follow.

Unmasking state capitalism or capitalist realism?

While the self-isolation regime is gone, the ”glove-mask system” remains. Entering public transport or shops without PPE is prohibited – although it looks like the mask requirement will soon be dropped.  Disposable masks – medical blue, three-layered – are found far beyond pharmacies: at newspaper stands, at the ice cream kiosks, in cheap and expensive grocery chains. At the reopened farmfoods store, half-empty due to supply disruptions, masks are at a discount. In May, they cost from 29 to 70 rubles, in March-April – up to an exorbitant 150 and you could buy them only on the Internet from resellers, thirty-times more expensive than in 2019. Prices began to rise in February. At the peak, the government tried to mandate them, but immediately abandoned this measure. The rhythm of the pandemic in Moscow was not only the appearance or absence of masks, but their price in(de)flation.

In the Russia that imported the bulk of masks from China before Covid-19 there were three domestic manufacturers. City Hall not only took ownership of the largest factory but removed its facilities from the city of Vladimir to the capital, turning the pandemic into a “Moscow state business”. Two thirds of masks from the Moscow government (about 4 million items a week) were sold at cost to hospitals and communal services, 500,000 – for a “standardised price” of 30 rubles in the metro. The rest were put into a city administration reserve.

Compared to the free distribution of mask not only in the Paris metro, but on buses in Russia’s Far East, Moscow’s choices provoked discussion of the political economy of PPE. Vladimirites were disgusted by the capital’s betrayal leaving them not only without protection, but one profitable business less. Their objections to internal colonialism were tempered with racist suggestions that the masks from Moscow – now produced by “immigrants from disadvantaged countries of the near abroad” – were now “less hygienic”. Muscovites discussed the superprofit extracted by City Hall, and supposed that “since they bought the plant, the mask-regime will never end.” Stuck between epidemiological citizenship and city-state paternalism, they claimed that the government had no moral right to demand wearing masks without free distribution. Citizens made a hopeless diagnosis – “it’s all capitalism and they don’t give a shit” – and continued to buy masks.

The nature of state-capital conjunctions in the Russian capital has long been a bone of contention. The question of who can sell masks and gloves and who profits from their production is at the heart of thinking about the paradox of Russia’s political economy Ilya Matveev calls ‘dirigisme and neoliberalism at the same time’ to financially benefit insiders. Matveev has been criticised for this argument – with the riposte mainly about the piecemeal nature of actual liberalising reform since 2000. However in many ways that critique (from 2016) was misplaced, and I think the virus response illustrates Matveev’s view well – state capture by interests does not exclude the market ‘for thee, but not for me’. 

Appropriating profitable PPE businesses, strategically significant in an epidemic, City Hall enters the order of state capitalism. Obliging citizens to wear masks and offering them at commercial prices, they interpret civic responsibility in a neoliberal mode as a personal transaction according to the logic of capitalist realism that anathemizes any alternative to marketised relations (Fisher 2009).

Nonetheless the virus’ acceleration of neoliberalism does not completely destroy the legacy of the Soviet social state, instead weakening and transforming it beyond recognition. By sending masks to hospitals at cost price, Moscow combines the logic of minimal profitability and sluggish paternalism. Opting to create a reserve fund instead of free distribution of masks, it reproduces a pattern of deformed care without expenditure, developed by the federal government via the Russian Reserve Fund. State capital accumulation has a perverse obsession with curtailing the circulation – of money, of civic potential, – we call this the political economy of “the untouchable reserve”.

Emergency Reserve

‘Emergency reserve’. The untouchable reserve relates more to a strategic reserve of collected stock for emergency use.

In the next post we will discuss ‘disinfection’ and the ‘smart city’.

Putting in a good word for the Russian bourgeoisie

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small shop in Russia

A typical small independent shop in a provincial town now under a lot of pressure from cartel-like supermarket chains.

A shorter version of this post appeared on Ridl.io

As anthropologist James Scott once said, ‘it’s time someone put in a good word for the petite bourgeoisie’. Shopkeeper-owners, small independent professionals and traders fulfil essential social and economic functions in any society but are especially important in modernizing ones. Sooner or later they turn into a middle-class with property rights and economic interests to defend. They are seen, even by Marxists, as a motor of political change.

However, in Russia the growth of a real middle-class and a healthy private sector is hindered at every step, largely in favour of a state-big business nexus. Whole industries – particularly in strategic sectors, are managed by state-owned monopolies, and have preferential access to banking finance, as Ilya Matveev points out.

The idea that the Russian political economy is a hybrid form of ‘state capitalism’ is widely accepted. However, less attention is paid to how these processes affect entrepreneurship generally and the wider implications for society. Coercion to gain access to wealth and the violent form of corporate raiding are also widely studied. However, elite insiders’ appetites for unearned wealth and sources of economic rent mean that even small businesses are subject to ‘taking’, rather than ‘trading’, to use Gerald Easter’s terms. This reflects a ‘maturing’ stage of insider elites and the way natural resources have already been ‘gathered back in’ by the state.

In most societies, the diversity of small and medium sized businesses – made visible in town and city centres – is seen as a key indicator of the health of the economy, and society more generally. If ‘mom and pop’ businesses are driven out of business, goes the logic, it’s because bigger capitalists have preferential access to power or the state, and because taxation and regulations are too burdensome for smaller operators. Russia suffers from both these structural obstacles and things are getting worse rather than better. To explore this we can start from the big picture and progressively narrow our focus to show how entrepreneurs are increasingly squeezed out and how informal ‘micro businesses’ are now one of the only viable alternatives for those without patronage from system insiders.

One way of understanding this is by looking at the share of ‘entrepreneurial incomes’ versus employment wages.  In 2000, it was 15%, but in 2018 it had dropped to 7.5%. Incomes from property are microscopic – 5%. So much for a broad property-owning class. The number of small and medium-sized enterprises (SMEs) is falling by 6-7% a year. We can also look at the average size of firms as an indicator. Labour researcher Stephen Crowley argues in a forthcoming book that Russia is an extreme case of the privileging of large enterprises. 80% of employment in manufacturing firms is in large companies, only 10% of the country’s workforce is employed in SMEs, versus 70% in the EU. Moreover since the Russia-Ukraine conflict and its economic side effects, consolidation has intensified, with the vast majority of closures in small and medium firms. There is plenty of evidence that monopolies and cartels are growing and competition falling. David Szakony reports that 14% of firms in 2016 reported they had ‘no competition’, a rise from 1% in 2013. Yet the number of ‘unfair competition’ court cases heard has fallen over the same period, while the Federal Monopolies Commission is notorious for pursuing SMEs in bureaucratic actions. Szakony summarises: Since 2014, SMEs have been squeezed by ‘skyrocketing interest rates, unsustainable tax burdens, and uncertain protection for their property rights’.

That the conditions and prognosis for SMEs are so bad is very visible in the Sisyphean efforts of the Minister for Economic Development, Maksim Oreshkin. Today Oreshkin is quoted as saying that preventing the stagnation of small business requires ‘work to increase the confidence of the business community in the state (both in regulation and in the system of enforcement) and reduce administrative costs.’ The report carrying the quote adds, ‘According to him, all these areas are enshrined in the list of key structural reforms.’ The problem is that all the signs are that for good reasons smaller businesses don’t trust the state.

Schemes like low interest loans for restaurants and small shops are a drop in the ocean ($30m), and almost exclusively go to ‘connected’ insiders at regional level. Indeed, this scheme is in fact a policy reversal – a similar scheme was discontinued because it mainly benefited the banks and was abused by businesses with political connections. In Kaluga region in 2017 (where my fieldwork sites are), for example, all the subsidized loans went to four companies owned by a single individual.  But even if the scheme provided fair access, an individual entrepreneur in a low-margin business (which is most shops) would find this a risky proposition.

 

In addition, for retail businesses there will be a broadening of the ‘compulsory barcoding’ of products to allow the state a real-time assessment of turnover.   While the idea behind these changes is to simultaneously prevent tax fraud and help small businesses by taxing their actual turnover, it is expensive for small shops to install and service. An online ‘cash register’ requires much more work in marking stock and inventory control . Finally, proposals like ‘inspection holidays’ to protect ‘conscientious’ business from excessive regulatory attention, only underline how much predatory and corrupt power bureaucrats have over small businesses. While the rate of some inspections is falling, there has been a sharp rise in ‘unplanned’ visits by regulators – up 74%). Regulatory inspection in Russia remains  a key area where bribe-taking can occur.

These dynamics are most observable in the changing patterns of shops and SME employment in small and medium sized towns. In the town of 20,000 people where I conduct field research, only two independent grocers remains, down from more than a dozen in the early 2000s. Three chains of mini-markets have taken their place – very convenient, but a classic example of cartel-like behaviour. One is owned by a state bank, the other two by oligarchic interests. This pattern is mirrored more widely – around 40% of trade is controlled by large retailers and the trend is increasing. The poorest areas do without the chains completely but even here a genuine local entrepreneur will struggle.  A vocal observer in this has been the controversial business commentator Dmitrii Potapenko, who in 2017 offered a stark analysis – ‘a seven rouble difference in the price of a loaf of bread is a critically significant sum’ (then around 10 US cents) illustrating the extreme price sensitivity of consumers. Potapenko has been in the limelight again just recently, commenting on cryptocurrencies. This was against the backdrop of discussions about the self employed ‘going into the shadows of cash only’, [ушли в кэш], the merits of employees demanding the option of payroll in cash, and the use and abuse of the Federal Law 115-F3 on money laundering that allows banks to freeze business accounts. While there’s more heat than light in the discussion, it highlights how trust of the banking system is still highly relative, and, as we’ve seen with even high-ranking politicians, cash is king!

But back to the suffering of small business under insurmountable pressures…

A similar trend to that seen among small shops is observable in employment, whether in services or manufacturing. In my town, small producers of steel, building materials, and plastic manufactures have either gone to the wall or sold up in the last ten years. Some of this is a natural process as many of these businesses were left-overs of large and outdated Soviet-era enterprises. A few with very special niches will hang on, but most are dying out. The local owner of a steel fabricators employing around 100 people, recently sold out to a conglomerate, tired of bureaucratic sword of Damocles, fed up with competing with Chinese imports, but mostly exhausted by the experience of being an entrepreneur in Russia: ‘in business you need to know when it’s time to leave,’ he told me. Another more optimistic entrepreneur had just opened a high tech laser-cutting materials workshop with around 20 employees – just the kind of business Russia needs, making good use of its still impressive human and technical capital. However, it turns out this venture was more out of necessity than choice. His prefabricated building business had been ‘taken over’ by competitors, against his will, and another side-line in printing merchandising materials and school textbooks was frozen due to a seemingly endless tax inspection.

However, this doleful picture is not the whole story. There has been a statistically measurable rise in start ups – in micro-businesses – defined as having 15 employees or less. While starting small is typical the world over, in Russia it has specific connotations. The smaller the business, the more potential there is for it to disappear into the informal economy and escape taxation and regulation partly or entirely, especially as the law on self-employment is unclear, as discussed in a previous blog post. Indeed, one informal fix to burdensome and predatory state regulation is spinning off part of a business into the underground, a phenomenon I’ve witnessed first-hand. A large proportion of the informal economy is connected to micro-businesses – largely made up of sole-traders.

If the state wants to support legal micro business, one way would be to bring back their most visible incarnation – the street kiosk – typically selling newspapers and magazines, hot food and beverages, or even clothes, domestic goods and toys. While long bedevilled by issues like mafia extortion and high rents, these micro-retailers are making a comeback outside Moscow and St. Petersburg. While the demand is clearly, there is a long way to go, and many municipalities are not keen on these small businesses. There are some 16,000 kiosks nationally, down from 42,000 some years ago. Certainly though, the resurrection of the kiosk, along with the high number of informal sole traders shows that entrepreneurialism is alive and well in Russia. However, that this is limited to the niche of individual self-exploitation – whether in street kiosk or shadow economy self-employment – is far from the dream of popular ownership of the means of production that James Scott lauds for its emphasis on autonomy, civic society potential and self-reliance. We’re back to the argument about Russia’s ‘missing’ middle-class (Balzer’s phrase)- or at least the entrepreneurial conception of it.