A Russian left take on the Russian economic crisis

Reblogged with permission from LeftEast.

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By the Coordinating Council of the Russian Socialist Movement


Today’s economic crisis has affected all spheres of life in Russian society. The processes we witness in economics, politics, and ideology look like constant escalation of unreason. The unending sequence of media scandals obscures the reality of mass poverty, growing unemployment and the unannounced but already palpable austerity policies of the state.

We see the sunset of the social populism of the Putin era, marked by the quiet forgetting of his “May orders,” a long list of economic promises to the population he made as part of his 2012 Presidential campaign. The more difficult life becomes, the more frequently we hear on the media calls for national unity.

The causes of the current crisis lie not only in Kremlin’s military adventures or in the sanctions from the West. Its fundamental origins lie in the exhaustion of the post-Soviet capitalist model based on extraction of natural resources and obedient labor.

The Russian elites are currently considering two ways out of the crisis. The first is the so-called path of “structural reforms,” that is, mass privatization, including of state corporations, pension reforms, commercialization of medicine, education, and so on, for the sake of attracting investment. As part of this package, relations with the West have to be normalized to end the economic sanctions over Russia, and maybe, a measure of political liberalization has to be introduced. The second scenario involves printing of money, further collapse of the ruble, a program of internal investment and massive cheapening of the labor force, superbly suited to Russian businesses who export goods to foreign markets for hard currency.

As part of this program, we could have an ideology of “Russia’s special way” and so on. As always in such circumstances, the government chooses a third option — remaining in place while selectively borrowing of elements from the above two. But all the different factions of the elite behind the different scenarios agree on the following: the price of the crisis must be borne by the population.

Silently observing the collapse of the national currency, refusing to index salaries and pensions, the Russian government conducts a policy of expropriation of the majority of the population. At the same time, government officials cynically boast of the gains in productivity purportedly achieved through wage decreases and the untimeliness of tax increases for the rich. Denying the growth in the number of jobless, the government refuses to take measures to create new workplaces, adopting the neoliberal position that unemployment is “natural.”

The policies of import substitution have increased food prices and led to the enrichment of local oligarchs. Neither protectionist measures nor the so-called free trade have much to do with the interests of most people. Our demands are the demands of those denied a voice in the existing system — waged laborers, debtors, and retirees:

• Obligatory indexation of salaries, both in state and the private spheres, and pensions.
• Defense of worker rights, including the rights for just compensation in case of dismissal, the right to form a union, to strike, etc.
• Abandonment of all plans to reduce the financing of the social sphere: education, healthcare, and culture. End to the pre-emptory financing of the military and the police.
• Effective defense of debtor rights. Regulating the bloated market of consumer credit banks developed in recent years.
• Restoring a progressive tax scale.
• Transparency in the financing of state corporations and genuine court cases against corrupt high-ranking officials.
• Introduction of a price ceiling for vital goods of and freezing the rents of state housing.
• Refusal to increase pension age.

Russia needs a political and social transformation, which cannot be achieved by the current elite. This is a task beyond the capacity of the liberal opposition, whose leadership’s understanding of the economy is hardly any different from that of the government’s economic bloc. We see the way out of the crisis in the formation of a wide protest movement whose agenda will not be limited to the democratization of the whole political system but will include the defense of the people’s social and worker rights.