Re: Why did the USSR fall?

["Devine, James" <jdevine@xxxxxxx>]

I wrote:
> > Dependent countries can escape dependency (or at least its 
> effects) if they have a highly-priced export item. But if oil 
> goes away (i.e., if prices fall back to 1980s levels), the 
> Russian economy would be in Big Trouble, since there's not 
> much else to export. (Used nukes anyone?)

Chris D writes: 
> Now that you mention nukes, Russia is the world's No. 2 arms 
> exporter. (PS how can you have a "used nuke"? :) ) Sukhoi 
> makes probably the best fighter planes in the world, and MiG 
> is nothing to sneeze at either.

I'd forgotten that. Of course, it's got a down-side, in that such exports help destabilize the world and sap poor countries' civilian budgets. As my dad used to say, every silver lining has a mushroom cloud...

(Ha! But the old USSR's nukes are used, in the sense that they were used as deterrent -- and also in the sense that they have physically depreciated over time. The latter was what I was thinking of.) 

> There is no question that oil exports are important to the 
> Russian economy, but they are hardly the only factor. The 
> main contributor to the federal budget is actually Gazprom, 
> much exports (surprise) gas (something like half of the EU's 
> gas comes via Gazprom). Russia also exports large amounts of 
> timber, diamonds (ALROSA is the world's second-largest 
> diamond company after De Beer's, I believe), and other 
> natural resources (Norilsk Nickel being the world's largets 
> nickel company). Obviously, though, exclusive reliance on 
> natural resource exports is not the way to go in the 
> longterm. (Interestingly, high oil prices had no such effect 
> on the economy when they were high in 95-96. I personally 
> think much of the economic rebound is the result of the 
> devaluation of the ruble and political stablization of the 
> country, not external factors.)

It's interesting that all of these exports (plus the military ones) were based on the investment done during the Soviet period. Have the new capitalist rulers done nothing productive except political stabilization? 

Further, the near-total focus on natural resource exports is a sign of economic dependency. (The exception is the arms exports.)  It means that the vast majority of fixed investment goods and even consumer goods bought in Russia are imported, no? That means that the economy is "outer-directed," with accelerator and multiplier effects largely leaking out to the world economy. Economic growth is a process that's mostly going to be determined internationally (exchange rates, price of oil, etc.) That's economic dependency!

(The US is trending toward being dependent, too, in  process that's often called "globalization." But that's another question.) 

The devaluation _was_ very important. The overvalued exchange rate (thanks, IMF!) undermined all the positive effects. 
 
> IMHO, if Russia breaks out of the Dutch Elm disease trap, it 
> will be via high-tech, which is growing in Russia very 
> rapidly, not surprisngly considering the technical expertise 
> of the workforce. (Many Samsung products were actually 
> designed by Russian technicians -- they have a sizeable 
> Moscow office. A lot of Korean businesses do similar work in 
> Russia.). Kaspersky Labs is the main domestic software 
> company. If memory serves, which it may not be doing, Russia 
> is the No. 1 source for IT outsourcing after India, Israel, 
> and Ireland.

good luck to them on this, but this kind of thing seems to help a very small elite of workers.

...

me: > It's only when left-wing nationalists such as Peron or 
> Venezuela's Chavez decide to shake things up (under the 
> pressure from the workers and peasants) that we see any move 
> in that direction. And often opportunites are wasted.

Chris: > I think a notable difference between the examples you use and 
> Russia -- correct me if I am wrong, for I am no expert on 
> Latin America by any means -- is that, as far as I know, 
> Argentina and Venezuela have relatively large elites 
> committed to the status quo. The only people interested in 
> the status quo in Russia are a few billionaires, who have 
> either been exiled, jailed, or intimidated. The 
> powers-that-be in the Kremlin are KGB people with a KGB 
> mindset and KGB worldview (which is not neccessarily bad), 
> not a comprador class, if I am using that term correctly. (I 
> don't speak Marxism-Leninese.) They are etatist in ideology 
> and rent-seekers in terms of livelihood.

There are at least two "status quos" here. One is what's left of the old bureaucratic-socialist system. The other is the status quo of capitalism and the current distribution of power. The KGB types, I would guess, favor the latter but not the former. The fact that they live off of rents (and seek more) suggests that their statist ideology will reflect their means of support. They may aim to bump off (figuratively and maybe literally) a couple of billionaires, but that would be in order to elevate themselves to that status rather than to end the existence of billionaires as a social category.

"not necessarily bad"?!? I guess maybe, in the sense that the CIA is more enlightened than the FBI is. Lesser of two evils!

Jim Devine