Streetwise Professor

November 10, 2009

Brittleness

Filed under: Economics,Financial crisis,Politics,Russia — The Professor @ 9:26 pm

Pavel Baev makes a point I’ve emphasized repeatedly: change destabilizes the Russian natural state.  As a result, they system is brittle, and Medvedev’s questioning of the entire basis for the state and the country’s economy could have catastrophic consequences:

The conclusion that the Byzantine political system built (or rather re-built) by Putin is incompatible with modernization appears both impossible and irrefutable. Medvedev dares not to utter one word of criticism directed at his co-ruler and waffles over the need to build a team of modernizers who could make at least a few innovations indeed happen (Nezavisimaya Gazeta, October 30). However, he constantly spells out the proposition that the conveniently corrupt business-as-usual is over, and this message -hesitantly conveyed by the official media- gradually becomes a catalyst for the growing sense that a period of change has arrived yet again (Moskovsky Komsomolets, November 3).

This perception gained more ground after Medvedev’s strong condemnation of Stalin’s crimes that appeared first on his video-blog and was then broadcast by all television channels. Insisting on re-examining the repressions, he went against the widespread desire to close those dark pages in Russian history and also challenged the tendency towards “rehabilitating” Stalin, which was carefully cultivated by Putin (Nezavisimaya Gazeta, November 2). This step signifies a risky departure from the policy of saying only things that people want to hear, since for large groups of “patriots” Medvedev has instantly become a “traitor.”

The divide within society over Soviet history connects directly with the splits on the way out of the current crisis, which were illustrated by the ambivalent celebrations of the November holidays. There were perhaps as many ultra-nationalist rallies as officially sponsored festivities on the recently established Day of National Unity, while the communists brought thousands to the streets on the Great Revolution Day. Still, a healthy 63 percent of respondents affirmed that they would celebrate neither day (www.levada.ru, October 29).

The rising momentum of change makes the political elites edgy about setting and switching their loyalties. The more Medvedev is trying to argue (as in a recent interview with Der Spiegel) that “today, there is no doubt that our tandem, as we are commonly referred to, is working rather coherently,” the more doubts arise about its future. Commentators and economic experts pondering the pseudo-liberal discourse and budgetary populism increasingly describe the situation inside the Kremlin as panic (Vedomosti, November 2; www.gazeta.ru, October 21).

In this turbulent environment, Putin wants to position himself as a “rock” of confidence standing against the ill-conceived “innovations,” asserting at every meeting of the government that “our plans are still alive and well, and they will continue and be completed. There is no doubt about it.” He can hardly fail to see, however, that time is not on his side, and the central question of the leadership acquires critical urgency well before the presidential elections in 2012. Medvedev might think that time is working for him, but re-inventing himself as a champion of change is an order much taller than his limited intentions, which he will present this week in an address to the parliament. He fancies “modernization” as an evolutionary and certainly non-violent process over which he would preside benevolently disallowing any “excesses.” The problem is that the strength of the thoroughly corrupt system of power to which Medvedev belongs entirely is in its rigidity. Thus, opening it up for transformation – even if only by words – could trigger a spontaneous collapse. The Berlin Wall is an object lesson in such a breakdown, and Medvedev may find himself to be merely the weakest part of the wall of fear and lies that Putin has built. [Emphasis added.]

Twenty years ago, Gorbachev was the Sorcerer’s Apprentice who, convinced that the Soviet system needed to be changed in order to survive–and to realize Lenin’s vision(!)–unleashed forces that he could not control.  The Soviet system was grossly inefficient, but it had an internal coherence and a set of self-supporting norms and institutions.  Attempting to change some of these, while retaining the essence (a one party state), destroyed this coherence and caused its collapse in short order.

Medvedev’s vision is somewhat similar.  He wants to change some of the system–notably, its reliance on extractive industries and its innovative backwardness–but retain a dominant state led by a bureaucratic elite operating through an overawing party.  But these goals are largely incompatible.  Like Gorbachev, Medvedev–or anyone–could never control what a wave of creative destruction would destroy.  The state structure and the resource dependent economy are highly symbiotic.  The resource dependent economy creates the rents that feed the state and its rulers.  A truly entrepreneurial economy creates sources of power that challenge the incumbents.  (Heck, even a resource economy with truly independent firms does this; which is why Khodorkovsky had to be destroyed.)  The economic side of the arch supports the political, and vice versa.  Disrupt the economic side, and the political side is likely to fall.

Hence the panic at the thought that Medvedev might play Sorcerer’s Apprentice.  Putin is much more realistic on this score.  He clearly understands that this is not like ordering from a Chinese menu–one item from column A and another from column B.  It is a package deal.

The main difference is that Gorbachev was in a position to do something, whereas Medvedev’s position is much more ambiguous and tenuous.  Moreover, having seen this movie before, the apparatchiks will be loath to embark on another socio-politico-economic experiment.  As Twain said of the cat that sat on a hot stove: it will never sit on a hot stove again, but it won’t sit on a cold one either.  Hence, it is highly unlikely that Medvedev will be able to secure the internal support necessary to act on his vision–even if he has the intestinal fortitude to try.  The gulf between his words and deeds suggests, furthermore, that he truly lacks that too.

The most likely outcome is for Putin and Putinism to prevail.  As deadening as its effects are, it is still an internally coherent system (as are natural states generally).  It works to the benefit of those in power, and it has atomized the population to such an extent that the risk of popular revolt is remote (though not non-existent).

It is not, as I’ve written, immune to collapse especially under conditions of economic stress that undermine the rents that hold it together.  But better to run that risk, than to run the much greater risk of trying to implement changes that are inherently destabilizing. Therefore, I would expect that as long as Medvedev is just talk, Putin and the siloviki will tolerate him despite the angst that this causes.  If Medvedev actually tries to act on his words, however, his days would almost certainly be numbered.  Those with vivid memories of the “greatest geopolitical catastrophe of the century” will not countenance another Sorcerer’s Apprentice run amok.

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9 Comments »

  1. Medvedev appears more liberal than Putin.

    It’s nevertheless a crock to claim that Putin has favored a positive/distorted image of Stalin.

    Comment by Avenger — November 11, 2009 @ 2:30 am

  2. Those of us living in Russia sense the same — or similar — kind of official hysteria that we felt in the 80s. There is a kind of frantic and increasingly outrageous/ridiculous tightening of the screws. A scholar researching treatment of German prisoners in the late 40s and 50s is arrested for violating privacy laws. The anti-narcotics agency issues a list of classical literary works that must be banned from libraries because they “propagandize narcotics use.” Deputies want to strip the Russian citizenship from the Georgian foreign minister (he had dual citizenship), although the Russian constitution doesn’t permit this. Officials accuse a cop who went on line to condemn corruption of being in the pay of USAID. A news agency writes that Ukraine asked Russia for help in fighting the swine flu, citing a Ukraine presidential press release — only the press release doesn’t say a word about Russia. Foster families have to show receipts for all expenditures of state subsidies. Foreigners hired on work permits now have to provide diplomas with apostilles. A St. Petersburg university is making their professors vet their speeches and articles before publication abroad. Another university has a list of “extremist” students that includes Yabloko (liberal opposition) supporters.

    These actions are all over the place, and I don’t think there is a command from on high. This is highly unscholarly, but it feels like the folks in power (at every level) sense that the game is almost over, the grand social contract is breaking up, and they are lashing out with attempts to control the uncontrollable. The result is a kind of surrealistic set of co-existing realities. There is one reality of the great things Medvedev writes on his blog and says in his speeches. There is another reality of TV, which is kind of stuck in the Putin mode of blaming everything on the West (particularly the US) and painting a picture of a few local problems but a basically sound system, even as their accusations of malign Western intervention are becoming just plain comical. There is a third reality of actual life, where corruption is totally out of control and some cities and regions are in dire poverty.

    You are right that the powers-that-be don’t want to fiddle the system. They understand that the most dangerous situation for a corrupt regime is an attempt to fix it along the edges. But I’m no longer sure that the Putin model is going to work for much longer. Like all corrupt governments, this one didn’t know when to stop. They’ve pushed it too far for too long, and the population’s patience is coming to an end. Right now they’re cracking down in small ways. That won’t work for long, so they’ll either have to crack down in big ways or make major changes. Either option is the end for them. No wonder there’s panic at the top.

    Comment by mossy — November 11, 2009 @ 5:27 am

  3. Very excellent comment, mossy. Thanks.

    Yours is a perfect description of a pre-revolutionary situation. The local color and historical context are invaluable. Please feel free to update and/or elaborate as circumstances warrant.

    The ProfessorComment by The Professor — November 11, 2009 @ 7:10 am

  4. It’s always been the case that Russian rulers see any kind of change as being a threat and suppress it. That’s why Alexei Dymovsky was fired rather than being given a medal.

    http://larussophobe.wordpress.com/2009/11/11/editorial-another-russian-crucified-for-patriotism/

    It’s why Russia finds itself in a constant state of degeneration and deterioration, why the USSR collapsed, and why Russia will do the same. In a competitive world, you innovate and adapt or you perish. It’s just that simple.

    Comment by La Russophobe — November 11, 2009 @ 7:37 am

  5. […] Mossy–a resident of Russia–has provided an excellent comment on the Brittleness post.  The description of the current situation in Russia captures the […]

    Pingback by Streetwise Professor » Read Mossy’s Comment — November 11, 2009 @ 7:44 am

  6. Russia continues a bar graph up and down period of progress, with the commentariot spinning in a predictable manner.

    Comment by Avenger — November 11, 2009 @ 8:16 am

  7. I liked Mossy’s comment, too, although what he describes is probably not the product of a conscious process. If you start with the premise that the Tsarist regime failed because it was captive to self-serving bureaucracy, then the Revolution starts to look like a brief interlude in this rule, after which the bureaucracy was able to subvert and absorb the revolutionary changes to cement its rule. More particularly, the Church was disbanded, and replaced with a religion/ideologically, that was generated and controlled by the bureaucrats themselves. In the past the Church could act as something of a check on the bureaucracy, especially in the regions, because it had a separate power structure, although of course both were subordinate to the Tsar.

    If you look at it in this way, then the Yeltsin years can be seen as analogous to the NEP period, when there were elements of the free market and even democracy in Russia, but this was ended in 1927 when Stalin started collectivisation in response to high grain prices. In reality, this was just the bureaucracy, as a self-organising organism, essentially acting as a parasite towards a host, was able to reassert itself and start to regain its ascendancy over political and economic life in Russia. In the same way, the bureaucracy reasserted itself when Putin came to power – Putin was just as liberal as Medvedev is now, back in 1991. But the bureaucracy was able to impose its own model of ruling Russia on Putin, and will no doubt do the same with Medvedev.

    It’s very similar to the debates we had in the late 1980s and early 1990s – the argument in favour of shock therapy in post-Communist regimes was that you can’t cross a chasm step-by-step. Every single bureaucratic initiative, designed to reduce the burden of government on the population and the economy, has in general led to more regulation and red tape. For instance, there was a revolutionary rule introduced allowing foreigners to register by simply posting a notification to the Federal Migration Service. That was quickly and quietly abolished (although formally it’s still in place) and now you have to go to the FMS, produce all kinds of pieces of paper, and in general it is much harder now to be a foreigner in Russia than it was ten years ago. And the same is true of hiring foreign workers, and generally running a small business here. The bureaucracy has had hundreds of years of practice in resisting and subverting gradualist reform. This isn’t conscious policy imposed by any one person or cabal – it’s the natural adaptive self-preserving behaviour of a parasitic organism.

    Comment by Sleeper — November 11, 2009 @ 8:44 am

  8. Sleeper, if I’ve understood you correctly, you think that the leaders of Russia are held captive by a self-preserving bureaucracy that expands its power as it can. I think the opposite is true: the leaders created the present rapacious bureaucracy by offering them a deal: you give us X (votes, control over the local rowdy elements, growth statistics, etc., depending on the agency) and in return, we give you Y (position and perks, medals, freedom to take bribes, grab assets, and use your official position to cut your economic deals, etc., depending on the agency). Or maybe it doesn’t matter which came first – the chicken or the egg. The end result is a self-perpetuating system that has gotten worse over the years. And the losers in this are obviously the population, i.e., anyone who isn’t part of this system. The longer it goes on, the more blatant the violations, the more ludicrous the justifications, and the harder it gets to maintain the fiction that all these problems people see are just isolated incidents – hey, it can happen anywhere – and not signs of a major systemic problem.

    And the thing is, not everyone in the system is a creep. Not every cop is on the take or wants to be. Not every public health official wants to fiddle the stats to make it look like the birth rate is going up or that HIV is going down. Not every military officer thinks violent hazing is okay. Not every city official wants to look the other way when protected land or buildings magically get transferred to private hands. There are rumblings there, too.

    I think these rumblings are becoming more widespread and louder, hence the spattering of (relatively) minor and unrelated crack-downs. It’s a knee-jerk, slightly irrational and gratuitous assertion of power. But I think it’s a bad sign.

    Comment by mossy — November 11, 2009 @ 9:36 am

  9. Good post mossy. I lived in USSR in the 80’s and know exactly what you’re talking about. The funny thing is though, that same pre-1991 atmosphere, is coming back again, only in US this time.

    Comment by AKM — November 12, 2009 @ 11:29 pm

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