Book Review: The Russian Economy – Richard Connolly – a very short introduction

This is what it says it is; a very short introduction to the Russian economy. It is up to date as of 2020 and so covers the situation post-2014 sanctions.

The author is a Professor in the Centre for Russian and East European Studies at Birmingham University. The book offers a brief history of the Russian economy since the fall of the USSR and a model for understanding how the economy functions. It is a serious work largely free of anti-Russia sentiment. One strength of the book is that the author fully takes account of both Russian history and geography. This means that he understands Russia’s path to development in context. For example; he points out that the sheer size of Russia with its long borders has always meant that defence has placed strong demands on the budget. (The Russians don’t spend a lot on defence because they are ‘aggressive’ – which is the usual nonsense – but because of the size of the country and its long borders in different continents).

Of especial value is the analsyis of the Russian economy into 3 sectors. Sector A contains industries in the fields of armaments, natural resource extraction and nuclear power. This sector is owned or controlled by the state. It is competitive on the world stage. It generates revenue for the state. Sector B is focussed on production for the domestic market. Industries in this sector include ship-building, automotive and less efficient armaments companies. This sector is supported by the state either through placing orders with it or through direct subsidies. It includes State Owned Enterprises. These SEOs may be tasked by the state with undertaking tasks related to e.g. regional development – tasks which cannot be justified in profit-seeking terms. Sector B is not competitive on the world stage. Sector C accounts for perhaps just 20% of the economy. This sector comprises SMEs in private hands. Retail is strongly represented in this sector. Connolly points out that the overall level of involvement in the state is rather high in Russia at 60-70% of GDP. SMEs count for a smaller percentage of employment (20%) in Russia than is typical in Europe (40%).

After the chaos of the 1990s and “shock therapy” Russia has seen a steadying of the economy since 2000. The period since 2000 has seen something of a retrenchment by the state with the role of the state in the economy being reasserted. Growth was high between 2000 and 2008 – when Russia was caught up in the global financial crisis. Post reintegration of Crimea and the imposition of Western sanctions GDP growth was negative in 2015. However the underlying economic stability and the strong role of the state in the economy has meant that Russia has been able to reduce the impact of sanctions. GDP returned to growth in 2016. There have been significant efforts in the direction of import substitution. Connolly questions whether the approach of using the state as the lever to develop the economy and address sturctural problems (e.g. lack of investment and competitiveness), which is the current plan, can continue to deliver results. However Connolly does not automatically support the call of liberal critics of Russian economy policy who call for more market reforms and a reduced role of the state. Connolly appears to be willing to consider that it may be more realistic to see what can be done from the perspective of the existing state-centric model. Interestingly, Connolly points out that Russia is not alone in following a state centric path to economic development; the Gulf States and Turkey, for example, also follow this model.

Russia does have a manufacturing base outside of natural resource extraction though this sector produces primarily for domestic consumption. It is also open to trade; in 2018 trade accounted for 47% of GDP. (Naturally oil and gas resources figure strongly in this trade but Russia is also an exporter of food). These factors mean that Russia should not be understood simply as a petro-state. Nonethess it continues to be highly dependent on revenues from oil and gas and this means it is vulnerable to fluctuations in the world price for these commodities.

This is a very useful introduction to the Russian economy. Obviously written by someone with a clear and deep knowledge of the subject. Highly recommended.

The Russian Economy – Richard Connolly – a very short introduction. OUP. Kindle Edition

Book Review: A History of the Soviet Union from the Beginning to its Legacy

It is hard to find good histories of Russia. It may be relatively hard to find good history books in general. I’m open-minded about what kind of approach I’m looking for in a history; I’ve read good history which is simply based on a pragmatic analysis of events, good history which takes a sociological approach, good history which gives a considerable weight to economic factors; good history which takes the view that individuals and ‘chance’ play a significant role in shaping history. All I ask is it goes beyond a simple chronological narrative and undertakes some serious analysis. (It goes without saying that explicitly bourgeois histories which go on about Kings and Queens to produce a fake ‘national history’ as an excuse to justify the current position of the bourgeoise don’t count). On Russia it is doubly hard to find good history. There are any number of “history” books on Russia which spew vitriol and anti-Russia hate from every page. You can tell these books as soon as you pick them up; for example if the preface is a vulgar pastiche of stereotypes about the KGB and anti-Soviet jokes then you know it is worth putting down. Even if Russia is an irredeemably terrible place you are still unlikely to understand anything about the country from someone who hates it. Hate, in general, does not help us see clearly.

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Myths about child poverty

The child poverty industry is at it again. This is a preview of an exhibition of 30 “haunting” images of childrens’ bedrooms in 21st century Britain.

Sadly I won’t be able to attend the exhibition at the Foundling Museum and produced by a charity called Childhood Trust in London in February so all I can comment on is this article.

We are told, of course, how these images show the grim reality of life at the bottom. The head of the charity tells us that we can donate or get involved in a local grassroots action. (Charities these days are rarely so stupid that they fail to disguise their primary concern – getting donations – by not also encouraging people to “get involved”).

There isn’t that much to go on. But a few comments:

i. You can get cheap toys for a few pounds. Even people on a reduced level of benefit could afford one or two toys. Already they can probably afford more toys than many people had 150 years ago. Of course; poverty is relative. It hurts when you have blatantly much less than other people. But this level of poverty is not destitution. Charities present their demands for redistribution as demands to overcome destitution. But this is misleading.

ii. We are told that conditions in local authority hostels for the homeless are bare. Indeed they are. But – people are being housed. Many of these people are costing the taxpayer a great deal – free housing, money to live off, free schooling, free medical care. Conditions in hostels are bare because local authorities are trying to manage their costs somehow. Some of them at least are in these situations because of choices they have made. (This author had some friends who stayed in a hostel with their child for a while. They deliberately made themselves homeless and allowed themselves to be housed in a hostel so they could get into a Housing Association property and escape from private renting. This is probably not unusual). The charities who are up in arms about this rarely actually challenge the underlying social and political environment – capitalism, the free-market, the legality of private renting etc. They just complain about the consequences of all this and demand ever greater sums of public money be spent to ameliorate the worst aspects. This is though a bottomless drain. If you accept on the one hand a system which embeds inequality and then claim that those at the bottom end are impoverished and unfairly treated simply because they are at the bottom end your position is contradictory. – The explanation for the contradiction lies in the self-interest of all the self-appointed guardians of the poor – every pound spent on improving childrens’ bedrooms helps maintain a nice comfortable job for a charity executive. Ultimately these people support the system they claim to be concerned about.

iii. One of the sob-stories concerns someone who came to the UK as a “domestic slave”. She is here illegally and cannot work and therefore cannot afford clothes for her growing children. This is one of those Guardian stories about which we would love to know the actual details and facts. If she cannot work and cannot buy clothes how can she afford anything at all? E.g. food, rent? We are urged to feel sorry (and donate money) or outraged (and write to our MP asking that the government donate money) on the basis of what sounds like a very fishy story. The idea is to overwhelm our reason with the emotional impact of the story. – But, we can ask – if she is here illegally would it not be best for her to approach the authorities and try to legalise her position? (If she really does have children that might well help her case).

There is a lot wrong with the world today but small bedrooms is probably quite far down on the list of real concerns. And if the relative difference in incomes (which lies behind this) really troubles you – then do something about it. – Something other than blackmail and begging bowls.

Heart of a Dog – Bulgakov. [REVIEW]

I’ve just read the Random House (Vintage Classics) translation of this work.

Bulgakov wrote Heart of a Dog in 1925. It was seized by the secret police and not published until long after his death – in the period of Glasnost. This book, according to the introduction, marked the start of Bulgakov’s harsh treatment by the Bolsheviks. All his life Bulgakov struggled to get any works produced. Many of his plays were banned. His major work, The Master and Margarita, was also not published until after his death, (though in this case in 1966 – after the Khrushchev ‘thaw’). It is a miracle that he wasn’t sent to the Gulag. (This is said to have been down to Stalin’s personal support for him).

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