Streetwise Professor

April 20, 2009

Well Said

Filed under: Economics,Financial crisis,Politics,Russia — The Professor @ 7:11 pm

A succinct description of the fundamental flaw of autocratic regimes.

This is by George Handlery, and is about Russia specifically:

Could it be? The instinct-driven policy objective of Russia for more recognition as a major world power, is realizable only if pursued by system akin to that of the Tsars or the Commissars. In this case, the limited existing resources allotted by lacking development   (not the country’s unused potential) need to be enhanced by dictatorial methods. These can concentrate the available means to overcome qualitative handicaps. Essentially, like the sun’s ray’s are concentrated by a magnifying glass, “limited” resources become bundled by dictatorship to achieve maximal effect at a chosen point. The problem with using autocracy as a multiplier of laggard means pit against an advanced opponent, are twofold. (A) It diverts energies from stimulating general internal advancement for the pursuit of domination abroad. Thereby the developmental lag is perpetuated. (B) Playing a power-role not commensurate to the country’s comparative modernization, and not corresponding to her development, risks destroying the system. (World War One, Cold War.)

I’ve said very similar things before, just never so well, or so pithily.  

There are no better illustrations of Handerly’s point than Russia’s insistence on (a) re-asserting its dominance in the near abroad (see, for instance, this article about a foiled Nashi influence (provocation?) operation in Georgia), and (b) increasing defense spending dramatically at a time when the Finance Ministry sees the necessity of cutting the budget between 10 and 30(!) percent in 2010.  Talk about attempts to ” to play a power-role  not commensurate to the country’s comparative modernization, and not corresponding to her development” that  “risks  destroying the system.”

Like I say–like the Bourbons: learned nothing, forgot nothing.  Or, to use a military expression: reinforcing failure (a cardinal military sin).  And doing so at a time when every resource is desperately needed to fight a crisis at home.  

On the one hand, this is stunningly bizarre.  On the other, as Handerly suggests, it is hardwired into the authoritarian mindset.  And we’ve seen of course–multiple times, in fact–how this plays out.  It isn’t pretty.

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  1. 1. You can magnifying glance to turbo-charge development itself, as seen in the state capitalisms of East Asia, China and arguably Russia today. This is done by concentrating resources into things that have small short-term payoffs, like education or nano-technology, but are game changers in the longer term. Countries like India and in Latin America do not have the requisite social discipline for this, so their potential for rapid development remains far lower than in east Asia or eastern Europe.

    2. Whenever Russia tries to become less “authoritarian”, it devolves into illiberal anarchy and is taken advantage of by predatory foreign powers, an old lesson that was reinforced during the 1990’s. It should be noted that Russian and Japan, nations which realized the necessity of constant economic development and military modernization, were the only two civilizations never to be properly colonized by the West – although arguably Japan fell in 1945, and Russia fell in 1991, to the advance of Western “universal” civilization.

    3. As such the Russians developed social preservation mechanisms to narrow down the chances of breakdowns, which paradoxically become much more catastrophic whenever they do occur – in this I concur with you. It seems to me that the correct response is to try to find a golden mean between the state and society, between authoritarianism and democracy, so as to allow for an optimally quick but self-correcting development path (incidentally, this is also the gist of Surkov’s much misaligned political philosophy). In my opinion Putvedev is doing it quite well, but if anything is too politically liberal and too bound by old, Soviet-style paternalistic traditions.

    4. I actually wish they were more like Saakashvili, whom I’ll admit I admire, if he were in charge of Russia and not Georgia – a combination of economic reform; downsizing of government; militarist, nationalist authoritarianism; and lots of slick PR to mask it over for the West. Unfortunately Russia’s leaders are far too humanistic, non-hypocritical and enslaved to Russian traditions to go through with it – for the essence of the West is struggle against the West, using its own methods. As such, I am sad that Russia is not sufficiently enslaved to the West to do this – therefore, I am a foul traitor to Russia, who should be lined up against a wall and shot, I’m afraid to say. 🙁

    Comment by Sublime Oblivion — April 21, 2009 @ 2:02 am

  2. “Whenever Russia tries to become less “authoritarian”, it devolves into illiberal anarchy and is taken advantage of by predatory foreign powers, an old lesson that was reinforced during the 1990’s.”

    That’s a hot one. Such drivel is exactly why Russia constantly “devolves.”

    It never occurs to these neo-Soviet apes that whenever Russia continues its authoritarian ways it devolves into crazed fascistic homicidal rampages. Stalin wiped out far more Russians than Hitler. Tsar Nicolai led the nation to horrifying defeat in World War I.

    Nor does it occur to them that Russia has never been governed, not for one single second, by a true democrat or by a person who had run an honest business, so it has no idea whatsoever what would happen in that case.

    What it does know is that authoritarian systems have betrayed and destroyed Russia twice in the last century alone. And it’s “friends” are now arguing for a third go-round.

    No wonder Russia is the laughing stock of the world and can respond to that laughter only with nuclear weapons and blunt trauma, like the gangster state it is.

    Comment by La Russophobe — April 21, 2009 @ 10:51 am

  3. 1. The record on “turbo-charging” development via state initiatives, especially huge state initiatives, is very clear. It is almost always and everywhere a disaster. A huge wast that, surprise, surprise, tends to line the pockets of the politically connected. Doing such thing in a country with weak institutions like Russia is a recipe for failure–except in the corruption department, where it would be a rousing success. I know you’re big on nano, but nano+hyperstate is a contradiction in terms. The absence of an entrepreneurial culture, and the aboveforementioned weak institutions, doom in Russia the kind of innovative firms that have invented and developed new technologies in the US.

    2. Illiberal anarchy is one of the possibilities that I had in mind in my subsequent post about what would succeed Putinism. The stuff about being taken advantage of by predatory foreign powers is, however, almost wholly nationalist, victim-ist fantasy. The people who took advantage of the last collapse of authoritarianism in Russia were almost entirely home grown. The main thieves–the Red Directors, etc.–all had very good Russian pedigrees. There was very little foreign involvement, frankly, because there was very little on the Soviet carcass that foreigners–predator or parasite–could make a decent meal of. If you mean the oil companies (e.g., Shell, in Sakhalin) who entered into the PSAs that Putin retrospectively whinged about, they did so when oil prices were at $10-$12/bbl. Very risky on their part. Fat lot of good it did them. No, “blame the foreigners” isn’t going to cut any ice here. And that goes not just for the 90s, but earlier catastrophes, with the limited possible exception of the Time of Troubles. Russia’s agonies have been, time and again, self-inflicted.

    3. “Misaligned” or “maligned” political philosophy? Yes, good Aristotelean that I am, always looking for the Golden Mean. Very good advice. Very hard to follow. Problem is, Russia has been looking for it with both hands and a map for centuries and gets no closer. The whole problem with “Putadev” is that there is no self-correcting mechanism, and in fact, Putin in particular has compromised, undermined, and/or dismantled the nascent ones from the 1990s to establish his power vertical. That is the main problem that Russia is facing in dealing with an existential economic crisis. It does not possess the feedback mechanisms, the mechanisms of self-correction, that sharply reduce the possibility of the descent into illiberal anarchy on the one hand, or illiberal autocracy on the other. This is a chronic, recurring problem, and largely explains why Russia lives its own special version of Groundhog Day, just without the comic relief.

    4. I will pass over in silence your characterization of Russia’s leaders as “far too humanistic, non-hypocritical.” “Enslaved to Russian traditions”–that I’ll buy wholeheartedly, and indeed, that’s the gravamen of my perhaps tiresomely repetitive comparison to the Bourbons. I have to admit that I have not fully digested your last couple of sentences, esp. your guilty plea. The court will reconvene when I have reached a verdict.

    The ProfessorComment by The Professor — April 21, 2009 @ 1:14 pm

  4. 1. That sounds ideologized. The investments in science and sunrise industries in East Asia during the 1970’s and 1980’s are now paying off handsomely, even though they may have looked wasteful and encouraging of corruption when they were first made. As for Russia, it has always been its tradition to use the state to leverage the resources to catch up with more developed nations, to an extent not seen in the West, never mind the costs in inefficiency – otherwise, nothing would happen at all. As examples like Peter the Great’s modernization and Stalinist industrialization showed, it could be quite successful in that – but the problem is that it couldn’t maintain the momentum long enough to truly catch up, and the state didn’t set the new modern industries free as soon as it should have, thus inviting obsolescence. Hopefully this problem will be avoided this time.

    2. I’m not blaming foreigners – moving in to take advantage of a power vacuum is completely natural and understandable, and this indeed what they did by moving in with NATO and taking away Russia’s financial sovereignty. Paradoxically, foreigners were actually attempting to restore order, albeit one orientated to serving their interests. Re-Shell, they’d have profited handsomely if Russia had remained enslaved to the West – that’s really the whole reason why such a huge scandal was artificially kicked up about Khodorkovsky (who was, incidentally, a far bigger thief than any Red director, who retained traditional their Soviet-era values of paternalism and honor, and who ended up paying for it economically).

    3. Maligned, my bad – I rarely proofread. I think Russia has no choice but to nonetheless continue searching, because of the centrifugal tendencies derived from its unfavorable and open geography, and consequent cultural traditions. Strong self-correction mechanisms will indeed “correct” it – to illiberal anarchic stasis, as is its natural state. That is why you need strong personalities and a fluid, flexible system of understandings to keep it together.

    4. I’m not sure I fully understand it either, or that I’m even supposed to. I believe in it though.

    Comment by Sublime Oblivion — April 21, 2009 @ 6:05 pm

  5. DR–

    Not ideological. I don’t disagree that state investments in human capital formation, esp. in high tech education, can payoff. Even in Asia, however, many flagship initiatives were dismal failures. Studies of MITI provide myriad examples of the counterproductive impact of state attempts to direct resources. I think it’s very interesting that MITI tried to throttle Honda’s efforts to move into automobiles. States picking winners usually focus on whiners instead’-)

    I was the discussant on a very interesting paper on Japanese industrial development in the Meiji period at the recent AEA meetings in SF. It showed that the Japanese attempted a government-directed, “big push” development strategy in the 1880s-1890s that failed miserably, primarily because the government tended to protect and fund failing companies. The government eliminated such support, and voila, Japan grew dramatically.

    Re “Stalinism” and “success.” I am reminded of what was said of the Persians after Thermopylae: “Any more such victories and they will be ruined.” If Stalin’s industrialization is a success, God spare the Russians any future ones.

    You mention the necessity of state intervention in Russia to allow catch up, that momentum petered out (no pun intended) if the state was not involved. This begs the question: Why? My conjecture: institutional weakness precisely because of the state’s meddling in property rights and law. That is, the lack of the institutional framework that facilitated growth in the West, and latterly Japan, made private-led development lag in Russia. So the state got involved. But that just perpetuated the institutional weakness. In other words, there was a vicious cycle. This persists to this day. That’s the gravamen of my critique of the Russian model. The foundation for longer term growth depends on the state making credible commitments to avoid interventions. Can’t do it. Hasn’t done it for centuries.

    Your diagnosis in #3 is not that far from mine. Again, this is the root of my pessimism. Interesting you use the term “natural state.” Clearly unintentional, and slightly different from the way I’ve used that term of art. . . but it fits either way. My pessimism derives from my view–which is consistent with what you write here–that the prospects for a transition to a law/rule ordered system in Russia are bleak. Russia has yet to succeed to navigate between the Scylla of autocracy (that undermines law) and the Charybdis of anarchy (in which law is absent).

    And, in the end, that’s why I’m very skeptical that any human capital intensive endeavor (e.g., nanotech) is unlikely to thrive–or even survive–in Russia, because the types of firms/organizations/incentives needed to cultivate it are incompatible with Russian political and legal institutions.

    The ProfessorComment by The Professor — April 22, 2009 @ 2:24 pm

  6. Re-#3, it was actually kind of intentional…Russia’s natural state is the natural state. 😉 And a higher degree of centralization and autocracy is necessary to avert it reverting to that equilibrium condition. This unusually big “potential gap” is possibly a good explanation for the cyclical nature of Russian collapses.

    Or to take another analogy, Russia is somewhat like Sisyphus trying to get roll that rock up to the mountain peak. When it slips it results in an avalanche of chaos and destruction, and then the struggle begins anew. So it’s necessary to stay happy and continue believing that one day the rock will end up at the top of the mountain – otherwise, your life has no point and you might as well commit suicide.

    And when it does commit suicide, it will just be replaced by another Eurasian civilization which, younger and more naive, will continue doing the same until it too realizes the meaningless of its existence. Perhaps the only terminal solution is to just dynamite the whole mountain – unleash a full-scale nuclear exchange with the US? If so, that would be a rational response of a suicidal Russian civilization.

    Comment by Sublime Oblivion — April 23, 2009 @ 12:27 am

  7. Da Russophile, you don’t quite seem to understand that Sisyphus was being punished by the gods and the reason for his punishment was hubris. He thought himself equal to the gods. Then again, it is an apt analogy. The Russian State and its politicians, like Sisyphus, is continually being punished for its hubris. It believes too much in its greatness, and whatever it builds comes crashing down like Sisyphus’ rock. It, like Sisyphus, thinks that it is smarter than the gods and can defy their laws, and for this reason is being punished. Unintentionally, dear Russophile, you have chosen the best symbol to represent the Russian states, its leadership and their Sisyphean nature of trying to achieve greatness through trickery and deceit but sooner or later it always comes crashing down around them.

    Comment by Michel — April 23, 2009 @ 10:16 am

  8. This is a very elevated and erudite discussion, folks. Much appreciated.

    DR–perhaps we agree on more than one would think, although I always wonder about the seriousness of some of your remarks, especially your more morbid ones. Groundhog Day. Sisyphus. The Bourbons. All have a common theme. Ditto Einstein’s definition of insanity as doing the same thing over and over and expecting a different result.

    Yes, the natural state is Russia’s natural state. That’s been the essence of my arguments all along. Glad to see you’ve come around.

    The development conundrum, in which Russia has much company, is that it is very difficult to break loose from the natural state because, well, it’s so damn natural. The Western European development path, and especially the Anglo-Saxon development path, are the exceptions that prove the general rule. Relatively unique, historically continent, and arguably accidental, circumstances appear necessary for breakout. And in the end, the difficulty of achieving these conditions is why I am a Russo-pessimist, though not a Russophobe.

    Michel–your elucidation of the Sisyphus analogy is spot on. Hubris, exceptionalism, dreams of national greatness. These lead to crazed policies that shatter a fragile system. Over and over again.

    The ProfessorComment by The Professor — April 23, 2009 @ 12:16 pm

  9. @SWP,

    Could it be that we disagree so much that we agree? 😉

    Re-Einstein’s remark. Just because something failed many times in the past, doesn’t mean it won’t succeed this time. Of course it will, and you are a heretic to hint otherwise.


    Another interpretation is that Russia, much like Sisyphus tried to save mankind from Death, supported liberation and worker movements throughout the world; and was punished for it by the exploitative Gods of the West. Yet it is proud and stubborn, and continues defying those spiritual tyrants. Even though the struggle is futile, it is too Romantic to abandon – indeed, it does not want to abandon its endless, sordid and tiring, but ultimately uplifting and self-defining struggle.

    Pray that Russia continues its insane struggle. For only suicide – universal suicide, can break the loop of the struggle. Much like Samson bringing down the Temple, a glorious nuclear conflagration will sweep the Faustian West with its machines and intellect and hypocrisy into the vortex of sublime oblivion, freeing it from the overlong, tyrannous daylight of the unnatural state and once again ushering in the primeval mysticism of the dark forests, where blood and instinct can once again reign dominant over the biosphere. As they should, according to the true dissident.

    Comment by Sublime Oblivion — April 23, 2009 @ 10:08 pm

  10. I see dear Russophile that you apply your revisionism to both Greek myths and Russia LOL! I see a bit of Sisyphus in you too Da Russophile. He too would certainly have tried to convince onlooker that his task was “uplifting” if there was any way that he could deceive them and gain something from their naivete 😉

    Comment by Michel — April 24, 2009 @ 7:00 am

  11. In that case Camus was one of the greatest tricksters in history, so I’m in good company. 😉

    Comment by Sublime Oblivion — April 24, 2009 @ 3:29 pm

  12. Perhaps, but I would not have trusted Camus’ prognosis of economics and demographics either LOL!

    Comment by Michel — April 24, 2009 @ 3:51 pm

  13. This is a riot! From the Russian economy and politics to Sisyphus to Camus! Hey, can anybody spare a Galois and a beret?

    The ProfessorComment by The Professor — April 24, 2009 @ 4:24 pm

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