The application of ideological and economic labels in the context of Eastern Europe/Eurasia often runs into problems. One of the biggest examples of this is the assumption that russia is somehow a socialist or communist country. I have seen both right-wingers say this as an insult and foolish leftists who think it’s still the USSR. I will explain why, precisely, it is not an accurate assessment. Russia is, in many ways, the ultimate example of crony capitalism, or the worst aspects that a flawed capitalist system can embody.
What do I mean by flawed here? I don’t want to get into that discussion about capitalism’s flaws and nature. What I mean is, we can see differences between capitalist countries in how they operate, the degrees of freedom, equality, opportunity, state control and involvement in the economy, corruption, taxation etc., and assess whether they are more or less desirable. While some, social democrats mainly, advocate that a capitalist economy must have a reasonable welfare state, and others claim that less state=better, I aim to sidestep this discussion. What I focus on is its evident desirability and I can clearly say that russia is more flawed (at least) economically compared to say, Switzerland. Even if you are an ardent communist.
I can’t use this space to give an entire history of russia’s move from communism, or ideological discussion on what is and isn’t capitalism. What I aim to do is highlight the ways that it is not a communist or socialist country.
Socialism and Capitalism Defined
The major divide between socialism is generally understood as based on who owns ‘the means of production’. Socialism prefers collective ownership, whether this be centralised, state-based, or localised, community-based. Capitalism favours individual private ownership. Of course, in reality, some socialist regimes have permitted individual ownership (Even Lenin!), and capitalist regimes may have state owned industries or can permit worker co-owned cooperatives etc.
Often the things associated with capitalism or socialism are not inherent. Socialism doesn’t demand the USSR-style central planning and ownership of all property, neither does capitalism demand total abolishment of taxation or welfare. Unions as well can fit perfectly into a system that permits private ownership of property, as a way to ensure workers have a say, permitting capitalism to function.
As well, socialism aims at equality in some way. Whether this is via ensuring equal wealth, or more just equal opportunity to own property, or in power relations, can vary (though arguably the latter two create a more apt description of social liberalism or liberal socialism than socialism). Capitalism aims at ensuring a market of free exchanges without state interference. However, these are not inherent, I would personally claim. There is a difference between the descriptive, economic systems and the ideological driving force and their end goals. Part of this conflation is the problem. To the most hardliner libertarians, russia is not capitalist, because there is a bloated and corrupt state. To some communists, the USSR was merely state capitalism and not socialist at all. There was nonetheless, collective ownership of the latter, and private ownership in the former.
So often people say russia is socialist because of a heavy-handed state, when clearly non-socialist regimes (fascist regimes, Pinochet, etc.) have been controlling. Others think so because of some performative gestures in defence of the USSR. However, this isn’t quite right.
Capitalism in Russia: From The Wild 90s to Today
Russia’s embrace of capitalism was pretty dramatic, to say the least, as was a lot of the former USSR. I don’t like to use the term ‘shock therapy’ as its quite inaccurate and empty as a term. Russia DIDN’T do shock therapy, Poland had more of this. Russia did adopt capitalism, yet it was not a form of shock therapy. The details of its transition are not a topic for here, and while it was not shock therapy, it’s fair to say it was quite chaotic.
A major problem was that, without the processes that have been established, formally or informally in market-based economies, capitalism was not easily adapted. With no norms of market economies, no real rule of law, and many people lacking the skills to make smart economic decisions, capitalism in these countries benefited a tiny minority at the expense of many. The future oligarchs bought off shares from regular people to solidify their position, wheeling and dealing without regulation led to those who were in the know and had some capital behind them reaching the top and leaving others to suffer. The state provided little compared to what it did before, and people had lost their pensions and many other means to make a modest living.
Of these oligarchs who flourished under Yeltsin, well, some of them, found the wrath of Putin, but others were close enough with him to replace one elite with another. Then under Putin, =some stability was ushered across russia, and there was a sort of unwritten social contract to provide some basic amenities in return for being quiet, obedient, and tolerating corruption at the higher levels.
Nonetheless, Russia has been and remained a capitalist country. A corrupt one, where the government and business elites are very closely tied together, but it is far from socialist by any means. Workers have few meaningful rights, many unions are state-affiliated rather than independent, meaning they have considerably less power to act. Huge private businesses operate, and there are massive wealth inequalities and major divides between Moscow and the rest of the country. Part of this in fact has helped equip the russian armed forces with a supply of manpower. The fact they are now recruiting in Moscow demonstrates the dire situation they are in too.
Private business, oligarchs, mass inequality, rural poverty. Major features of Russia’s economy, and while you may wish to say “this is what socialism CREATES” (and in many historical cases, you would be right, at least in authoritarian socialist regimes) however, russia has never even paid much heed that it is a socialist country. Some lip service to the USSR has not focused on much on the economics as it has a sort of historical nostalgia. Putin isn’t claiming to create a russian paradise, he is firmly rooted in the nationalism and imperialism of russia when he discusses this. While the USSR was quite imperialistic and russian centric, obviously, it at least attempted to create a sort of worker-led ethos in society. Political discussions were oriented around communism and the greater good, and party meetings and day-to-day functions were rooted in a communist narrative. That doesn’t remotely exist anymore.
Last Words
There is a lot of space for serious academic research into this. However, I aimed to give a brief overview of the nature of capitalism within russia. If you are a believer in a market economy, which I am (with some major caveats, admittedly), you should recognise that there are real dangers to wild rampant adoption of marketisation in the context of russia, as we partly end up where we are. Markets and private ownership must accompany some rule of law and processes to ensure the worst off don’t suffer at the expense of the elite. Conversely, if you consider yourself a socialist, you must emphasise to your ideological fellow travellers that russia is not your friend, at all.
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