A New Russian Emigration

The Return of Pushkin’s World

We posted recently on the endemic and systemic corruption in Russia. This is of some interest to New Zealand, since we are the first country in the world to begin negotiating a free trade agreement with that country.

Here is another take: Russia is a “neo-feudal” society. The thesis is that Russia is far away from totalitarianism; individual liberty remains firmly established. The power of central government is limited. Government is decentralised. Vladislav L. Inozemtsev, writing in American Interest Online, says this describes a society that is more feudal than modern–but, he argues, it is traditional and it works, up to a point.

Contemporary Russia is not a candidate to become a Soviet Union 2.0. It is a country in which citizens have unrestricted access to information, own property, leave and return to the country freely, and develop private businesses of all kinds. Of course, severe restrictions in the political sphere remain in place, and the country, as President Dmitry Medvedev himself recently said, “only to a certain extent, not fully”, meets the standards of democracy.

Clearly, this arrangement—economic freedom coupled with political constraint—does not please everyone. To the standard American mind it suggests that something has got to give. This, too, is wrong. Some Russians do give voice to dissatisfaction with the current regime and the widespread abuse of power by police authorities, local officials and oligarchs closely connected with the ruling bureaucracy. Yet the system seems fundamentally solid and durable. Its strength emanates from a basic principle: It is much easier for subjects to solve their problems individually than to challenge national institutions collectively. This is because what Westerners would call corruption is not a scourge of the system but the basic principle of its normal functioning. Corruption in Russia is a form of transactional grease in the absence of any generally accepted and legally codified alternative. Taken together, these transactions well describe a form of neo-feudalism. This should not be terribly surprising to the historically aware, for that was more or less the stage that Russian socio-economic development had reached when it was frozen by more than seventy years of Communist rule. It has now thawed.

In this system, bribery is more paying for protection and governance. This functions like paying tribute to one’s feudal lord, in return for protection and some assistance.

At every level of the hierarchy a certain degree of bribery and clientalist parochialism is not only tolerated but presupposed in exchange for unconditional loyalty and a part of the take for one’s superiors. The system is based on the economic freedom of its citizens, but cautious political restrictions on these freedoms generate the wealth of the biggest beneficiaries. There is a cascade of floors and ceilings to the restrictions on freedom, so it is a feudalism with more levels than the old kind. But it works fundamentally the same way: The weak pay tribute “up”, and the strong provide protection “down.”

Inozemtsev goes on to argue that the governing elites in Russia have become progressively more incompetent and less educated. They are more and more time-servers. He describes a world that roughly resembles that portrayed in Pushkin’s short stories. His description is eerily familiar to any who have read Pushkin. Russia appears to be operating in a manner not far removed from the old imperial tsarist system.

Clearly, Russia’s current political elite is dramatically less competent than the Soviet bureaucratic class used to be, but signs of its de-professionalization can be found throughout society. Today, only 14 percent of those graduating from Russian universities specialize in engineering. In Germany it is 29 percent, and in China it is close to 42 percent. Because of the lack of professional credentials, careers are made mostly due to personal relationships; experience and performance really don’t matter. The CEO of Gazprom, Alexei Miller, had no experience in energy businesses when he was appointed to the top position in the company. Even with gas prices soaring, Gazprom’s production fell from 523.2 billion cubic meters in 2000 to 461.5 billion in 2009. The CEO of Rosatom, former Prime Minister Sergei Kirienko, has no experience in the nuclear sector. Only one of the 11 new nuclear reactors he promised to install in Russia when he was appointed in 2005 has been put into operation.

What does the galloping de-professionalization of the Russian elite actually mean? Lately, it has meant that becoming a lifelong bureaucrat is extremely popular. That’s where the money is.

One outcome of this is an emerging feudal plutocracy. In old Russia, position and power was based on land, hereditary titles, and military commissions. In new Russia it is based on government service and oil-extracted wealth.

The second trend is even more obvious: Money today cannot only be “extracted” from the public service sector; it can also buy influential positions in the power elite. For example, there are more than 49 “official” U.S. dollar millionaires and six billionaires sitting in the state Duma, and 28 millionaires and five billionaires in the Council of the Federation. In contrast, Silvio Berlusconi is the only billionaire ever to win a seat in any parliament of any of the original 15 EU countries. Since the Duma and the Council of the Federation are composed of deputies handpicked by the Kremlin, one need not strain oneself to imagine how these super-rich people acquired their offices. They pay “up” with both lucre and loyalty, and they are protected “down”—a hallmark of feudal social exchange. At the same time, the majority of Russian ministers are trying to convince ordinary citizens that their average official income is less than $100,000 a year. Whether or not anyone believes them, there are no indebted Ministers or bankrupt Governors to be found in the country these days.

Another emerging trend is familial nepotism.

Sons and daughters of top officials actively insinuate themselves into government bodies, as well as into the staff of big state-owned and state-controlled corporations. For example, Dmitry Patrushev, the eldest son of Nikolay Patrushev, the Director of the FSB from 1999–2008, was in May 2010, at the age of 32, appointed as the CEO of state-controlled Rosselkhozbank, the fourth largest bank in Russia. Sergei Matvienko, son of Valentina Matvienko, the Governor of St. Petersburg, is now chairman of VTB-Development, the real estate branch of the state-owned VTB Bank and, at the age of 37, is one of the youngest Russian billionaires. Sergei Ivanov, son of the aforementioned Deputy Prime Minister, had just turned 25 when he was appointed vice president of Gazprombank, Gazprom’s financial arm, and so on. One can be sure that the children of the current top Russian bureaucrats will occupy at least a third of all significant positions in government and management in ten to 15 years. And it is clear that none of them will have the slightest incentive to change the system. They will strongly oppose any change so that they may favor their children. They are the barons in the new feudalism, and their children are to the manor born.

In insular tsarist Russia, emigres could be found throughout Europe. The same is happening today. The best and the brightest, unable to advance through the suffocating blankets of family controlled bureaucracies and government structures, leave.

What about Russia’s best and brightest? What future do they have in a neo-feudal Russia? During the Putin years, government officials made it ever more difficult for liberal young people to engage in any form of legal protest activity. No new political party has officially registered itself in the Russian Federation since the beginning of the 2000s (the two that have been registered, Just Russia and Right Cause, represent a mere allocation of smaller parties that existed previously). Organizing a referendum requires the collection of two million signatures, and even if this requirement were met, most would be declared invalid. All but one regional legislative assembly is controlled by the United Russia Party. At the same time, the government still allows people to leave the country freely. This is no accident. The scale of the outflow of the most talented young prospective professionals from Russia is almost beyond belief. The numbers are not known exactly, but estimates run as high as 40,000–45,000 per year, and about three million Russian citizens today are expatriates in the European Union.

The conclusion:

The Russian elite has essentially “piratized” and privatized one of the world’s richest countries. It is so grateful for this privilege that it may insist on Mr. Putin’s return to the Kremlin in 2012 for 12 more dismal years. By then the young liberal cohorts on whom so many Western analysts pinned their hopes for change will have grown up. The mediocre among them will be part of the system. Most of the best of them, no doubt, will no longer reside in Russia.

Behind all this, we suspect, lie the failings and weaknesses of the Russian Orthodox Church which seeks to lock the faith into timelessness, having little or no sense of historical development and the progressive Christianisation of the earth. This “other worldliness” enabled the Orthodox Church to survive Stalin, but it is unable to transform Russia into a thoroughly Christian country. Consequently, nepotists fill the vacuum.

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