Publication: Prism Volume: 6 Issue: 8

By Volodymyr Zviglyanich


The title of this article should more properly be formulated as “the economy of national identity”, because the disjunctive conjunction “and” implies the coexistence of economic processes and the lives of the people, who act as the agents of production, service and so on. In fact, they are fundamentally bound together by mutual ties, and economic relations inevitably carry the stamp of the national character and national culture (whatever the International Monetary Fund may think). The development of the macro-economy and the micro-economy should lead (according to the latest discoveries of specialists at the UN and the International Labor Organization) to an improvement in the human environment. In other words, there is no such thing as an economy which is detached from its subjects–a subject-free economy.

This apparently simple and obvious truth, however, has not yet been fully recognized in countries with a so-called transition economy (and, in keeping with our declared approach, a national identity also in transition). The reader is probably thinking that in contemporary articles on economic transformations, both those written by Western experts and those by economists of various shades–from liberal to Marxist–in the former Soviet Union, the concepts of the economy and national identity are similarly separated. In other words, the illusion of subject-free economic development is maintained even now, just like the illusion that Western and post-Soviet economists speak the same language rather than different ones.

However, the reasons for this similarity are various.

For Western economists and journalists writing about economics, the problem of national identity exists as a sort of absolute precondition for their ensuing discourse, as something self-evident and matter-of-course. This is a luxury affordable only to developed nations, where the formation and development of market relations took place in the 17th and 18th centuries, at the time of the national and industrial revolutions in Europe. The market system here was formed in a natural historical way, together with the formation of a national ethos, languages and consciousness. For economic theory, the quintessence of this development was the classical English political economy of Adam Smith and David Ricardo.

Meanwhile, for the national spirit of European nations the quintessence was continental philosophy, literature and poetry. “Logic is the money of the Spirit,” as Hegel, the patriarch of German classical philosophy, liked to say, implying that logical categories, which help man to cognize the world, are to his spiritual development what money is to the normal functioning of private enterprise. That is, without logical and philosophical categories, language, a national idea and so on, the formation of national identity is just as impossible as the development of an economy without money.

The result of secular historical development, polished into concepts which are self-evident to the average European from birth, is now that tacit horizon–to use the language of the philosophy of hermeneutics which is fashionable in Europe–of the understanding and examination of current economic problems. History is sort of placed outside the brackets of concrete analysis.

It is a quite different picture for nations for whom the development of national identity and economic relations was distorted by the theory and practice of Marxist totalitarianism, which negated the nation (“The proletariat has no fatherland”, said Karl Marx in the Manifesto of the Communist Party), and which organized the economy in accordance with the plan, ruling out people’s market-oriented behaviour, which, according to the principles of Marxism, is irrational and uncontrollable. In accordance with this, Marxism is first and foremost the theory and practice of “rational” social management, coercion and control, but not of the economic organization of the life of society, as liberally-minded Western economists tend to think. This coercive aspect of Marxism has been adopted by every fascist and totalitarian without exception, from Mussolini to Hitler and from Lenin to Andropov.

How did it happen that people–the subjects–were excluded from the very essence of economic theory? Soviet political economy found its own brilliant solution, dividing all economic production into two groups, A and B: Respectively, production of the means of production and production of commodities. In any five year plan production of group A was supposed to be greater. Correspondingly, this group received all centralized budget allocations. Meanwhile, group B, which included such “commodities” as national development, national culture and national identity, existed almost solely on paper, as the recipient of “secondary financing.” As a result, a totally anomalous economy emerged, where the end point and the goal of any normal economic system–the consumer, with his individual interests, requirements and psychology–was declared to be simply non-existent, and the goal of the economy was proclaimed to be the fulfillment of the five-year plan, which was elevated to the level of a mandatory law. The task was therefore–as the old Soviet joke had it–to receive an order from the party to manufacture excavators to be used for mining iron ore in order to produce even more powerful excavators. In practice the introduction of this distorted concept of the “ideological economy” resulted in Europe’s first holocaust in Ukraine–the artificial famine of 1932-33, initiated by Stalin, and linked to the forced collectivization of individual peasant holdings (see Robert Conquest, The Harvest of Sorrow, 1986). This deliberate extermination of the Ukrainian peasantry–whom Stalin, in line with the basic principles of Marxism, considered to harbor reactionary ideas of private ownership–resulted in the deaths of between six and twelve million people.

Apart from this, the peasantry harbored the basic values of Ukrainian national identity, language and culture. The war which followed and the post-war famines practically completed the annihilation of those who bore the cultural traditions of economic management in Ukraine, which would have allowed us to speak of an “economy of national identity,” and objectively divided these concepts. The dogma of subject-free economic development has since become the unconditional paradigm of economic theory and practice.

This paradigm, as demonstrated by post-Soviet economic development, is the main theoretical and practical obstacle to economic reform in Ukraine.

Why is this? Because the theory of market reform in totalitarian economies envisages not merely the adoption of recommendations and prescriptions worked out by such organizations as the IMF or the World Bank, which actively support the current White House administration in hastily forming a legion of “strategic partners” for the United States from among the post-Soviet states, which are becoming increasingly intolerant of the United States.

The premise to the IMF’s recommendations for the reform of transition economies, from Bolivia to Moldova, is based on a curious “economic objective idealism”–that national economic transformations are based on certain laws which have been established and enshrined once and for all in the language of mathematics and statistics. The faster a nation grasps this, and rejects theories of national models, “special paths” of development and so on, the faster it will overcome the shock of the initial transformations and reach the path of stable development. The story of post-totalitarian development in Eastern Europe shows that it is nations which have had experience of statehood and an established national identity which manage to achieve this quickest–Poland, Hungary, the Czech Republic.

For nations which have had no experience of statehood, and, more important, have no national identity, such as Ukraine, Belarus, Moldova, Romania, Bulgaria and so on, the IMF’s recommendations are inapplicable. Before they can adopt them, these nations need to change their paradigm for economic development, to make the transition from the concept of a subject-free economy to the concept of an economy of national identity (see Thomas Kuhn, The Structure of Scientific Revolutions, 1961).

In other words, Ukraine faces the task which the developed states of Europe resolved several hundred years ago: to form a state, a nation, and national identity as the prerequisites, not the result, of economic development. For countries with an unformed national identity, “economic determinism”–be it that of Marxism or that of IMF recommendations (that is, the idea that objective economic laws determine the behaviour of economic subjects) should be exchanged for an approach according to which economic progress reflects and conveys the progress of the development of the national identity.

The crux of the conceptual revolution which Ukraine is currently undergoing so painfully lies in overcoming the Marxist paradigm, which abolished the nation and the market, and restoring the European paradigm of the natural historical development of the economy of national identity. Ukraine’s “return” into Europe depends on this, and not on its artificial integration into European institutions like the Council of Europe, the European Union or NATO. What are Ukraine’s prospects in this respect?


Sadly, the prospects are far from rosy. In nine years of independence, Ukraine has not resolved the main issues and aspects of the development of its national identity. Paradoxically, for all the thousands of conferences, symposiums, round tables, and meetings large and small at every level, in all these years Ukraine has not seen one single even marginally significant event devoted to the national identity and its constituent concepts. There are no Ukrainian books devoted to this crucial issue. The only collective research into Ukrainian national identity–to which this author contributed–appeared just this year in the United States, and the prospects for its publication in Ukraine are very small (See Ukraine: The Search for a National Identity. Rowman and Littlefield, 2000).

One gains the impression that the Ukrainian authorities are either not interested in discussing this problem, or they are afraid of it, or–most probably and most worryingly–in accordance with the illusions of a subject-free economy they consider this issue to be a secondary one, something self-evident that will resolve itself, while what we need to do now is collectively get ready for the sowing campaign and then to gather in the harvest–which is getting smaller and smaller…

Yet this neglect of the crucial problem of national identification is destructive first and foremost for the economy. And this neglect makes itself felt in the most unexpected and paradoxical ways for people brought up in the spirit of undefeated Marxism.

Take, for example, the problem of Ukrainian history–the most important element of national identity. As in Soviet times, there is a list of subject areas which are considered politically unreliable, and research into them is not exactly banned, as it was in Soviet times, but is quietly disapproved of. This includes themes such as responsibility for the artificially engineered famine, the participation of soldiers from the OUN (Organization of Urkainian Nationalists) and the UPA (Ukrainian Insurgent Army) in fighting against KGB troops in Western Ukraine after the war, the colonization of Ukraine by Russia within the USSR, and a whole range of other issues. The authorities are keen to avoid making archive documents public which could shed some light on these questions, thus filling a lacuna in Ukrainians’ historical memory.

Instead, millions of Ukrainians of all ages and foreign visitors are invited to gaze at the monument in downtown Kyiv to the butcher of Ukrainian independence, Lenin, standing at the top of the avenue named for the Ukrainian national poet Taras Shevchenko. This is tantamount to erecting a monument to Hitler in central Jerusalem.

Yet the worst aspect of it is that this macabre, surrealist combination of the incompatible does not provoke any protest among Ukrainians, and that the supposedly “new” Supreme Rada, which has removed the hammer and sickle from the parliament building, has not touched the Lenin monument, thus contributing, whether explicitly or implicitly, to the preservation in Ukrainians’ consciousness of a syndrome of national doom.

What sort of economy can be built by a nation transfixed by this syndrome, which expresses in concentrated form the tragic and still secret history of Ukraine? The answer is an economy of national suffering, a mentality suspended in time and space and embodied in concrete economic approaches.

Suffering and complaints about life in its various manifestations, from the life of an individual pensioner to the life of the nation (endless crises involving a shortage of energy resources, equipment–the list is endless) are pretty much the favorite theme of Ukrainian national economic discourse. It is important to understand where it comes from.

As a consequence of its colonial history and of always being a part of larger formations–Poland, Russia, Austria-Hungary–Ukraine missed the moment of the formation of the active individual, whose economic activity would then form the nation, as happened in Europe during the Renaissance, the Reformation and the first industrial revolutions. There was none of this in Ukraine, just as there was no national philosophy, unless you count the semi-mystic writings of the wandering thinker Grigory Skovoroda, a contemporary of the founder of the concept of the active, cognizant, acting individual, Immanuel Kant in Germany. Action, activism, practice–these concepts determined Europe’s development after the middle ages. However, business ethics, self-affirmation, thrift and labor were replaced in Ukraine by a complex of passive-romantic contemplation and of distress when this was violated by usurpers. Unable to find its expression in philosophy, this complex of suffering was transferred to Ukrainian poetry and literature. The dominant themes of the work of Taras Shevchenko are suffering, hatred for those who cause it and calls for revenge, in the name of Ukrainian independence from Moscow. For this, Shevchenko is considered a national poet, but is it possible to build a national economy on suffering and the search for those responsible for it?

In a paradoxical way, what was impossible for European nations (it is difficult to imagine European economic and cultural life without the figure of Faust, who threw down a challenge to death) has turned out to be economically advantageous for Ukraine. It has managed to derive some benefit–minimal, but enough to survive–from the complex of national suffering. After all, it is easier to accept loans than to create the conditions for developing our own production. And the distribution of foreign loans and credits has successfully taken the place of the old Soviet Gosplan and its officials. What has changed conceptually?

Absolutely nothing–the old Soviet paradigm of the distributive economy is alive and well in Ukraine, and, what’s more, it has become the favorite child of the Ukrainian bureaucracy, which speculates on the complex of national suffering. The pyramid of Ukraine’s foreign economic debt is growing–from US$8 billion in 1995 to US$12 billion in 1999–almost twice Ukraine’s annual budget.

Alongside the increase in foreign debt, the poverty of the people is also increasing. President Kuchma recently signed a law on the minimum wage for 2001. It will be 118 hryvnya (US$1 = hyrvna 5.6); the average salary in the country for the first quarter of 2000 was 194 hryvnya; while the subsistence level is 270 hryvnya (less than US$50 per month). In European Union countries–whom Ukraine supposedly wishes to join–salaries account for, on average, 61.3 percent of gross national product (GNP), while in Ukraine this figure has fallen from 51.1 percent in 1990 to 45.2 percent in 1999. (Den’, 12 July 2000). At the same time, 5,000 Mercedes-600s were imported into Ukraine in 1999–costing between US$120,000 and US$300,000 each. These plain statistics demonstrate the reality–and the advantage to the authorities–of the complex of national suffering and poverty.

Conversely, creating the conditions for the formation of a “national Faustian” complex–the ethics of entrepreneurial activism–is unprofitable for the corrupt adherents to the economy of national suffering. The Ukrainian bureaucracy counters the development of the national book-publishing industry in every way. This is the problem which defined the spiritual and economic development of Europe from the time when the Bible was first translated into national languages. In Ukraine printed matter is still subject to VAT; this was abolished five years ago in Russia. This predetermined the domination of Russian-language books on the Ukrainian book market.

The development of a national language–an event which fundamentally determined the socioeconomic structure of Europe in the 17th and 18th centuries–is still an unresolved issue in Ukraine. During the years of independence, not only has the number of publications in Ukrainian fallen: The number of people using the national language as their means of communication has also fallen dramatically.

“Kiev” or “Kyiv”: The pronunciation of the Ukrainian capital has become a bone of contention among Ukrainians. Recently American television showed the furious reaction of a crowd in the western Ukrainian town of Lvov at the murder in May this year of the Ukrainian composer Igor Bilozir. People flung chairs at the windows of the cafe where he was sitting before he died, and Lvov town council has banned Russian-language songs from being played in local cafes and on local radio stations until October 1 this year. “The Ukrainian language is dying in my country,” lamented the poet Ivan Drach, Ukraine’s communications minister (The Christian Science Monitor, June 28). Drach has many detractors, which indicates that the people have effectively been split into two camps–and the majority is gradually shifting to the side of Russian-speaking Ukrainians. Linguistic alienation, and the division of Ukraine into two nations, west and east, place further obstacles in the path of forming an ethic of entrepreneurial activism and overcoming the concept of the economy of national suffering.


Most of the problems which characterize the post-Soviet economic history of Ukraine are based on the syndrome of undefeated Marxism, drawing attention to the technical problems of economic development when detached from the values of national identity. This approach has only been reinforced by the actions and policies of the White House administration, which encourages the idea of focusing on the personalities of the “reformers” and their programs, rather than the values and principles to which Western civilization basically owes its existence. This conceptual blunder on the part of the administration with regard to Ukraine–where national identity and its values are only in their formative stage–has only reinforced the blossoming in Ukraine of the concept of the economy of national suffering, which is based on the corruption of the bureaucracy and the poverty of the people. It is very difficult to overcome this concept, deeply rooted as it is in the national mentality, but this does not obviate the need to establish the main ways in which it can be overcome.

Volodymyr Zviglyanich is a senior research fellow of the Ukrainian Academy of Sciences’ Institute of Sociology, a research associate at George Washington University and a senior fellow of the Jamestown Foundation.