Publication: Prism Volume: 2 Issue: 2

The Future of Russia’s Bureaucratic Ruling Class

by Mikhail Gershaft

The reaction of Western politicians, researchers, and journalists to the strengthening and the virtual return of the Communists to Russia’s political arena, and the chances of their victory in the June 1996 presidential elections, could be summed up in the terms: confusion, alarm, and a sense of danger. To a significant degree, this reaction was guaranteed by emotional assessments of the results in Russia’s democratic mass media. In part, it is linked to the difficulties of understanding the depth of the processes taking place in Russia, and the application of Western standards to phenomena of an entirely different sort. It is also–to the inertia of analysis and assessments formed over the long years of Cold War.

But to run ahead, the main conclusion one can make is that the Communists in Russia are no longer the same; they have different interests, different goals, different modes of action, both within the country and abroad.

"Different" Communists??

This does not mean that they have "gotten better," more tractable, more tolerant [terpimee]. It is quite probable that in the international arena, it will actually be more difficult to have political and economic relations with them than with the Soviet communists of the Brezhnev gerontocracy who were almost predictable.

But it does not follow from this that there is no point in having anything to do with them, that they must be fenced off with a new "Iron Curtain," because of their communist origin and the new communist threat.

It is generally recognized that the results of the December election to Russia’s State Duma will not change substantially either the disposition of the political forces or the content and course of economic reforms. Even the radical change in the legislative branch in December 1993 did not give a decisive impulse to economic development. Analogously, the crystallization of the present composition of the State Duma will not lead to an active change in Russia’s political and economic course.

Not yet, at least. Not until the June 1996 presidential elections.

Nevertheless, the elections have shed light on the disposition of the political forces, the population’s sympathies and antipathies, and its painful reaction to the course and the results of the economic transformations. They have shown that communism, for Russia, was not a chance turn of events, a whim of history, imposed from without.

Moreover, on the basis of the election results, it is possible to analyze and predict the interests and the future conduct of the various political groups, especially of the entrepreneurial class.

Someone who has been through the school of hard knocks is worth two who have not…

(a Russian proverb)

It is thought that approximately one-third of the Duma is made up, to one degree or another, of supporters of the present policy and the present government, headed by Prime Minister Viktor Chernomyrdin. After getting barely over 10 percent of the party list vote, this group recouped its losses where the voting was on the basis of personalities.

This group is, naturally, made up of those who have benefited from the economic transformations. Most of all, they do not want, and actively propose to freeze, all investigation of the origin of capital for five years, to prevent the possibility of "purges" and criminal prosecution.

This group is strong because of its connections with the state and the ruling bureaucratic apparatus, (which, not only will not give up its power, but does not even want to re-orient its activities in the interests of another capitalistic stratum.) This bureaucratic class does not want the Communists to come to power at all. It believes in the indestructibility of the bureaucracy, but it fears the traditional, albeit hypocritical, communist campaigns against "administrative excesses" and for "staff cuts."

If the ruling class succeeds in maintaining and strengthening its power as a result of the June 1996 presidential elections, the country’s politics will still be predictable. If not, sharp cataclysms are possible, not because the Communists or nationalists will come to power and will strive to implement their programs, (which are quite dubious in content and even more dubious in terms of the possibility of their being implemented), but because the process of redistribution of already-distributed property and power will have started.

At the moment, the ruling stratum is having trouble maintaining relations with the mass of the population. Delays in the payment of salaries, inflation (now slowed, but still making society nervous), press reports of corruption and misappropriation of state property and financial resources — all these factors will increase the number of those who disagree with, and are opponents of, the ruling stratum, but this does not mean that all of them will rush into the embraces of the Communists.

The ruling elite has attracted economists and financiers who have earned the confidence of Western and international politicians and bankers. The actions of these Russian ministers of economy and finance, Russia’s main bankers and privatizers no longer shock Western professionals; on the contrary, they inspire respect for their skillful combination of world experience with Russian peculiarities.

The economic relationship of the present regime with Western investors is complicated and will continue to be so. On one hand, the ruling stratum understands the necessity of Western investment to the restructuring of the economy, the conversion of defense industry, and in order to maintain Russia’s status as at least a "medium-developed" country. This class itself, naturally, has nothing against wallowing in the stream of foreign investment, export income, and foreign aid, not yet at full flood stage, but nevertheless quite attractive.

On the other hand, the government does not want to find itself accused of "selling Russia off" and "groveling before the West." Anyone familiar with Russia’s history knows that xenophobia has deep roots there. Prime Minister Viktor Chernomyrdin’s remark that the activity of foreign advisers in Russia has brought more harm than good was not so much a carefully-timed political statement as a deep-seated conviction.

In the beginning of January, Russian public television broadcast a typical news story: a Moscow sewing company with the symptomatic name of "Bolshevichka" received a significant amount–three million dollars–in credits to restore production and supply materials for export. But the investor wanted to replace the board of directors almost entirely. Speaking not from a management and marketing standpoint, but from a political one, such methods, which are being used on a mass scale, could reorient the interests of the entrepreneurial class towards the nationalists and Communists. The fear of losing power and property would quickly transform the present elite from reformers into xenophobes and restorers of state property.

A Repeat of the Past, or Will the Russian Nomenklatura Learn From its Mistakes?

As has already been noted more than once, the Communists have changed substantially. They are no longer terrifying to the entrepreneurial class, and are actually one of its varieties and groups. Analysis shows that the Communists are dissatisfied with the current distribution of capital, property, and, most of all, power. They would not mind redistributing property for their own benefit. But they are least of all interested in giving this property to the state, i.e., nationalization. They are interested first of all in seizing power in the state, and only after that, property, because as Marx said in a remark which Marxists do not like to recall, "the state is the private property of bureaucrats."

The Communists want not the nationalization of property but its redistribution. Their arguments are rather clumsy. State property was sold too cheaply, and if the Communists come to power, businessmen will have to "finish paying" significant payments to "the people" and the state. How this will take place, and what the consequences of these actions will be, are usually not spelled out, since, most likely, this is a propaganda trick.

One must confess that Russian voucher privatization "a la Chubais," in spite of all its shortcomings, falsity, and meager results had an unprecedentedly vast character. A social explosion was avoided. The Russian Communists and nationalists do not have any acceptable deprivatization program. And none would be acceptable under present conditions: any such actions would be rejected by a population sick of dashing from side to side in the course of one generation.

In theory and propaganda, the Communists, in Leninist fashion, divide capital into "comprador" and "domestic" varieties. Pro-Western "comprador" capital is the main enemy. References to it are implicit attacks on the leaders of the present regime, which rests on the oil-gas complex and is considered to be oriented towards the West. Domestic capital is supposedly oriented towards rebirth and new industrial development in Russia. So far, it is hard to say what is concealed behind the aspiration to "return power to the people," but the Communists are "reaching their hand out" "to the great-power nationalists," asserting that only the state can and must "force businessmen to share their wealth with the people, since they are incapable of restraining themselves."

The long years of Communist rule, especially the last ones, were years of social hypocrisy and camouflage surrounding economic policy. The Communists have had enough experience with that.

Most likely, first of all, they will try to win the sympathies of the population, and will introduce fixed prices on forms of energy and 10-15 products designated as being essential. Most probably, they will succeed in attracting competent economists, who are able to assess the consequences of these measures, but whose desire to "rule" outweighs their economic education and their common sense. Sergei Glazyev, for example, who served for a short time as minister of finance in Chernomyrdin’s government, is quite ready to play this role. But economic history has already pronounced its verdict: these measures, as they have been applied over the course of decades in the former socialist countries. To combine them with economic growth and prosperity is impossible.

Goods at low or fixed prices would be unprofitable to produce, and planned production norms for enterprises would have to be introduced. The truth would be confirmed that it takes long years to build a market economy, but a few months are enough to turn it back.

If the Communists come to power and carry out their populist-nationalist policy even in part, the most likely state infusions into the economy will be the defense enterprises, especially in the fuel industry, light industry, and other branches of industry whose lobbyists are influential. The growing state budget deficit and the probable new outbreak of inflation, not suppressed, which had been kept within bounds by the present government, would once again confirm the cost of sacrificing the economy to political ambitions.

One may recall that Prime Minister Viktor Chernomyrdin, in replacing Yegor Gaidar’s government, began by fixing prices and handing out state subsidies, and needed weeks and months of bitter instruction. But the new Russian bourgeoisie, burdened by populist promises and communist ideology, could, possibly, try again to combine state protectionism and fixed prices with market reforms.

The well-known American historian Richard Pipes, a wonderful specialist on Russian history, wrote a few decades ago: "Russian history is not a movement forward but a walking in circles…" If the predicted scenario develops in this way, no arguments about the changed essence of the Communist elite, about the origins of the market and the core of the national-patriots will save Russia’s economy from moving backwards, especially in the first stages of the change in government.

Mikhail Gershaft is a former professor at the University of Kazan.

Translated by Mark Eckert