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Taking Glazyev’s Plan Seriously

Despite its anti-neoliberal character, Sergei Glazyev’s proposed economic reforms are in the interests of elites and not the population.

MINSK, BELARUS. OCTOBER 10, 2014. Russian president Vladimir Putin, presidential aide Sergei Glazyev (R-L front) and foreign minister Sergei Lavrov (background) at a session of the Supreme Eurasian Economic Council at the level of heads of states at Minsk's Palace of Independence. Mikhail Metzel /TASS Белоруссия. Минск. 10 октября. Советник президента РФ Сергей Глазьев, президент России Владимир Путин (слева направо на первом плане) и министр иностранных дел РФ Сергей Лавров (на втором плане) в перерыве заседания Высшего Евразийского экономического совета на уровне глав государств во Дворце Независимости. Михаил Метцель/ТАСС
MINSK, BELARUS. OCTOBER 10, 2014. Russian president Vladimir Putin, presidential aide Sergei Glazyev (R-L front) and foreign minister Sergei Lavrov (background) at a session of the Supreme Eurasian Economic Council at the level of heads of states at Minsk’s Palace of Independence. Mikhail Metzel /TASS

Sergei Glazyev, the Russian economist and adviser to Putin, is increasingly in the news. He often speaks of “urgent measures” to help overcome the crisis, jump start economic growth and propel a technological leap forward. Liberals simply dismiss Glazyev’s proposals as half-baked ideas that will quickly ruin the country. Many shades of patriots, including “red conservatives,” give Glazyev more support, but do not particularly interrogate his ideas.

It’s difficult to assess Glazyev’s real stature and influence. On the one hand, being an adviser to the president clearly means something. On the other hand, Glazyev’s far-flung and ridiculous statements about “millions of mentally ill Ukrainians”, “Poroshenko the Nazi” and the need “to unite the church and state” seems to move him beyond meaningful debate and render him completely marginal.

Yet it is hard to ignore that Glazyev is getting a more serious audience of late, right up to the Security Council of the Russian Federation, which he addressed on the 15th of September. Even so, Glazyev’s proposals are worth a closer look. Will they help the economy? How will they impact society? And in whose interests will they serve?

Overall, Glazyev’s economic ideas are a mixture of neo-Soviet modernization and financial nationalism, with the latter gaining popularity in many countries since the crisis hit. Glazyev proposes to establish political control over the Central Bank, provide cheap domestic credit, cease investment in US government bonds, establish an independent payment system with the BRICS, control the flow of capital, severely restrict the use of foreign currency in the national economy, and fight against offshoreization. According to Glazyev, to make a technological breakthrough, you must “deploy strategic planning with the centralization of key functions at the presidential level” to move promptly to a “new technological mode.”

It should be said that some countries are implementing some elements of Glazyev’s plan. And they are producing results in the short and medium term. For example, Hungarian Prime Minister Viktor Orban, who came to power in 2010, has not only dealt a serious blow to democratic institutions; he has also gone economically “unorthodox”, that is, acting contrary to IMF policy. He instituted direct political control over the Central Bank, has indefinitely halted transition to the Euro, attacked foreign owned banks and levied special taxes on them, limited foreign currency lending, provided cheap loans for Hungarian small and medium businesses, dramatically reduced the budget deficit and public debt, and nationalized private pension savings, bringing $14 billion into the state’s coffers. All this has led to a resumption of economic growth and improved the main macroeconomic indicators: the ratio of government debt to GDP, budget deficits, inflation and the balance of trade. At the same time, Hungarian government bonds are successfully traded in the international markets. Orban’s “unorthodox” financial measures have performed for “orthodox” goals: the reduction of the budget deficit below 3 percent as recommended by the EU.

orbanAs Juliet Johnson and Andrew Barnes concluded in an article on Orban’s financial policy in the prestigious International Review of Political Economy.

“For scholars of international political economy, the Hungarian experience demonstrates that financial nationalism is not simply a pipe dream of ill-informed politicians in developing countries. Financial nationalist policies can be pursued in the heart of Europe, without automatically undermining economic development goals” (563).

That said, none of this means that Glazyev’s plan (1) will lead to positive economic results in Russia, or (2), will not have severe social consequences.

First of all, the basic contradiction of Russian capitalism (and Glazyev wants to save capitalism, not replace it) is not in the financial/monetary sector but in its “political” nature: the convergence between political power and property and the predominance of rent-seeking (or, in other words, employee theft) among bureaucratic elites. This is best illustrated by the so-called “de-offshoreization” that Putin proclaimed long before Glazyev: A scheme was recently discovered involving the Rotenberg brothers, that is, businessmen close to Putin, to secretly ferry $6 billion out of Russia. There is some speculation that Putin himself was the ultimate beneficiary of this racket. There is a paradox, so to speak. And Glazyev is not even close to resolving it.

Next, who will benefit from the cheap domestic credit and all the state benefits Glazyev offers? Those state corporations that now can’t even ensure economic growth. How do you confront this kind of corruption without political reform? You can’t. As a political plan Glazyev offers just another “centralization of key functions at the level of the President of Russia.” But everything is already personally tied to Putin. Glazyev’s proposed “centralization” is the creation of yet more unconstitutional “committees” which will only further disrupt a bureaucratic machine already incapable of working effectively. They will even increase opportunities for corruption because they do not solve the main problem: the government’s accountability to the citizenry.

Finally, financial nationalism does not necessarily translate into progressive social policy. Orban combines several “unorthodox” measures in the financial sector with quite “orthodox” ones in the social sphere. Simply put, since 2010, Hungary has carried out brutal neoliberal reforms: public sector layoffs, cuts in social benefits, the introduction of a flat income tax, which, combined with a sharp increase in the value-added tax leads to regressive taxation. Orban attends to the “national bourgeoisie” and not the poor, which, together with the Roma simply swell the ranks of “internal enemies.” There is no reason why the Russian government wouldn’t implement Glazyev’s plan in this form. Glazyev’s timid protests (“What about science! Research and development! Technological innovation!”) are unlikely to sway anyone. The Hungarian case shows that there are no miracles. Authoritarianism does not lead to the expansion of social rights. On the contrary, authoritarian regimes repress the resulting social protest.

It is not hard to see a direct link between Glazyev’s increased punditry, the rapid increase in the military budget, and the Kremlin’s repressive course. In all his reports over the last two years, he repeats that there is an American coordinated “hybrid war” against Russia and that his proposed economic measures are the only way to ensure national security. Glazyev almost exclusively discusses the need to support science and increase investment in high technology in relation to the military-industrial complex.

Financial nationalism and militarism are organically connected with suppressing freedom of speech (“cybersecurity”) and an intensified struggle against “fifth columns”. For, the West, which dreams of destroying Russian Orthodox civilization, tries to discredit the most sacred: “They will primarily strike the pillars of state power. They will accuse the state bureaucracy of corruption and discredit it in the eyes of the people … the security services will be beaten out from under the state fearing responsibility for excessive force. ”

glaziev2The Left must not have any illusions that Russia’s “statists” are struggling with “oligarch- compradors,” where Glazyev represents the interests of the “statists” who speak for a good, “nationally oriented” capitalism and where the liberals stand for the interests of the “compradors” who want to subordinate Russia to the West. The ruling class in Russia is nothing but a pyramid of patronage for Putin’s friends of varying degrees of proximity—both officials and businessmen. The rules of the game were established in 2004 and have remained virtually unchanged since. Glazyev’s rise in popularity among bureaucrats says more about the effort to discover some alternative strategy of self-preservation in the current crisis and economic impasse. But even if the authorities decide on a partial implementation of this “unorthodox” program at their own risk, we can state with confidence that it will be at the expense of the population, and not in its interest.

If someone has a great desire to fight for “national-oriented capitalism,” then he might stand with Kudrin and not with Glazyev. Russian small and medium businesses that are not included in the various levels of the patronage networks would benefit much more from the reduction of red-tape and bureaucratic predation, as well as from any arbitrary, minor expansion of political democracy and restoration of state institutions, especially the courts, than from Glazyev’s techno-modernizing fantasies. However, the left generally does not fight for capitalism, even the “national-oriented” variety. Their aim is to struggle for social and political rights of workers and against class, gender, ethnic, racial oppression. ‘Christian Orthodox economist’ Glazyev has nothing to do with this fight.

memay2015Ilya Matveev is a PhD student in political science at the European University at St Petersburg, Russia. He studies Russian political economy and neoliberalism in comparative perspective. He is an editor of an online platform Openleft.ru and a member of the Public Sociology Laboratory.”

With contributions from Ilya Budraitskis. Translated from the original Russian article in OpenLeft.ru by Sean Guillory, author of Sean’s Russia Blog.

 

 

By Ilya Matveev

Ilya Matveev is a PhD student in political science at the European University at St Petersburg, Russia. He studies Russian political economy and neoliberalism in comparative perspective. He is an editor of an online platform Openleft.ru and a member of the Public Sociology Laboratory."

3 replies on “Taking Glazyev’s Plan Seriously”

“First of all, the basic contradiction of Russian capitalism (and Glazyev wants to save capitalism, not replace it) is not in the financial/monetary sector but in its “political” nature: the convergence between political power and property and the predominance of rent-seeking (or, in other words, employee theft) among bureaucratic elites.”

“Convergence between political power and property” and “employee theft” are not contradictions of capitalism, Russian or otherwise, they define the capitalist system. Your article propagates Russian Exceptionalism, with its fetishism of Putin as some sort of Don Corleone and regurgitation of half baked Western jingoism as political science.

Then you mention Hungarys Orban as an example of “unorthodox” financial policy, only to bring him up again midway in the article to equate his policy’s with Glazev’s as if they are related. You provide no argument (even less evidence) for this , and even more oddly equate the social policies of the two. Orban is a product of NATO and the European Union, for his policies to be emulated successfully in Russia Glazev would have advocate they join the two bodies.

Lastly, the “aim of the left” is *not* “to struggle for social and political rights of workers and against class, gender, ethnic, racial oppression”. That is the platform of of centre-right forces, such as Christian Democrats and the like. The “aim” of the left is to abolish the wages system. Thats the *basic* position of the left. Niether Marx, nor Bakunin, or the Utopian socialists and (everyone after them) fought for “social and political rights.” (I mean Hilary Clinton could have verbatim described this as her platform- probably has). This and your praising of Kudrin (“reduction of red-tape” ” minor expansion of political democracy”), who is much more closer ideologically to the current Russian administration then Glazyev, tells me you are more then a ‘student of neoliberlism’ but a proponent of it. Which is fine, but shame on this website for spreading ideological confusion by posing as leftists.

PS You might find “Poroshenko the Nazi” to be a “ridiculous” statement but those whose family members were exterminated by the OUN that he praises as national heroes do not. Given your seeming intellectual deference to the political nostrums of “Europe” I doubt you would take Putin making the celebration of Vlasov a national holiday with the same tone; or maybe thats exactly the “political reform” that youre looking for the Post-Putin regime.

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