Russia » Politics
Author`s name Michael Simpson

Topical Issue: Authority and Oligarchs

An experiment code-named "Market economy creation" has been carried out in Russia for over ten years. This is quite a period to sum up
Attitude to the results of the experiment has become aggravated because of the so-called "oligarchs' cases" as the society has split into supporters and opponents of Russian oligarchs. Supporters say that if some oligarchs were taken to prisons that was done illegal as it hadn't been proved that their financial speculations were illegal and caused damage to the country. Opponents of oligarchs made up the majority (many of them live below the poverty line) suppose that time has come for redistribution. They say it is time of requital for the riches oligarchs have stolen and for the natural resources oligarchs have illegally seized. This part of the population insists that oligarchs must be deprived of natural resources and their earnings must be distributed among the indigent. It's obvious that this primitive method suggested for setting of justice is vulnerable to criticism. Where is the truth then?

Famous contemporary economist Amartya Sen won the Nobel Prize for his really genial conjecture: this is important for any country irrespective of the size of its natural resources and the scale of the market economy whether the people in the country can create new riches and control distribution of the riches according to the human moral principles. In other words, he says only a country that places social and mainly moral principles above purely economic ones can actually succeed.

Russian architects of the market economy still cannot realize the key rule of the present day: all reforms are criminal if people suffer. The economic progress and methods to achieve success are measured with social objectives and tasks in countries with developed market economy.

In the USA, European countries and Japan the economic models are such that they provide effective systems of social support of the population. These are hundreds of programs meant to aid families, people with scanty means, unemployed, pensioners and other categories of social outsiders.

Against this favorable background Russia is moving in the opposite direction. Over the period of "market reforms", since the 1990s, the country has turned into the planet's most unstable society shaken with the social gap between the rich and the poor.

While an oligarch in other countries means a businessman respecting the human moral norms and favoring social progress, the situation is absolutely different in Russia. It would be not that bad if Russian oligarchs had no connection with the political power. It would be nice if they run their business and the government carried out its effective social policy saving the people from any social upheavals.

But here in Russia the model of market is particular: here the economic power of oligarchs has merged with the political power. The government mostly guarantees and supports the interests of oligarchs. This is the main reason of the anti-social trend of the Russian policy, even though social slogans are widely proclaimed. This is strange but the human factor and its peculiarity are ignored in today's Russia; the disregard to the development tendencies of social processes has driven the country to the verge of disaster. This is the price people have to pay for the fact that oligarchs were allowed to be part of the power, for the fact that their economic pragmatic moral is focused on primary accumulation of the capital.

There are two main components in the present-day anti-social policy of the Russian authorities. First of all, this is policy favoring unfair redistribution of the riches in favor of the oligarchs. Second, this is the policy aimed at genocide of human and intellectual resources, at that science and education are discredited as conditions of the modern progress.

The first component has entailed a mistake that turned out to be ruinous for the Russian economy - privatization of the natural riches. This mistake is a moral and legal crime. The problem is that when entrepreneurs get possession of land rich in natural resources he doesn't get the right for the resources themselves. At that, the entrepreneur must return a share of the earnings obtained through his business activity on this part of land to the actual holder of the natural resources. This is a reasonable payment for the usage of highly-yielding natural resources that is universally known as rent.

According to the RF Constitution adopted in 1993, "land and other natural resources are used and protected in the Russian Federation as the basis for life and activity of people living on its territory." Thus, according to the main law of the country, the people of the country are the legal proprietor of natural resources; this in its turn means that oligarchs must pay a rent. This is obligatory in addition to any possible taxes. However, the law "On natural resources" widely lobbied by oligarchs masks this very fact.

If oligarchs pay no rent to people for the usage of natural resources this is a constitutional crime. When oligarchs try to justify the present-day situation with imperfection of the laws and the inclination of the authorities to improve the situation, they commit a moral crime as well.

This is important that the annual size of the rent is a stable source of budget replenishment. This may give quite considerable sums of money that could be further used for health care, education and science where Russia has deficit of budgetary financing. In practice, this shortage of financing is being liquidated with a particular policy in usage of labor resources where the system of remuneration of labor and taxation are used as intricate mechanisms to deprive people of their earned incomes. This is the second component of the anti-social policy, the economic genocide policy.  

Russia is the world's second country where the share of natural riches per head is big enough; however the country got so much preoccupied with market reforms that it failed to create such an economic model that would give normal life adequate to people's creative efforts.

Russia still continues the policy of reduction of incomes for the sake of the market. As a result, GDP produced by an average worker in Russia for one dollar of payment is about three times bigger than that produced by an American worker of the same category. While the labor productivity in Russia is 5-6 times lower than that in the USA, but the salary level here is even ten times lower.

Salaries in Russia are not low in a general sense, but they are impossibly lower even with respect to the Russian labor productivity. The share of salaries in the Russian GDP is twice as less as it is in the American GDP. This is a defect in the politics, not economy. Policy encouraging increase of prices for end use commodities, transport tariffs, social and communal services against the background of wage restraint is not only damage for the market balance principle but even anti-social activity.

This means non-payment and backpay of wages, the so-called social tax, the value added tax and sales tax that are the burden of the end use in Russia. These taxes are a wonderfully disguised mechanism of labor exploitation.

It happens very often that market principles are used to justify the organization of the above-mentioned anti-social model of today's Russia where the policy of wage restraint is even stronger than over the period of the Soviet plan economy. This is the reason why the population is poor and the social atmosphere is so tense.

The policy of economic genocide is particularly obvious with respect to Russia's intellectual resources, the second rich sphere of the country. As is seen from the global experience, the role of an intellectual factor is increasing; it has become the key factor for progress and prosperity of countries. This is proved by the increasing share of science intensive production and end products which are produced by intellectual workers. In the USA, this group of workers has already exceeded the number of industrial workers.

Economies of developed countries carry out the policy of financial support to intellectual workers, at that investments into the education industry are considered to be the top priority. This kind of investment is an important component of the socially-oriented economic policy in addition to programs designed to support families, health care and science.

However in this respect the Russian leadership manages to astonish the whole of the world. Russia is still a country of oppressed, irrationally used and having no money intellectual resources. The authority must be first of all focused on losses the country bears as a result of brain drain, but not on collapses of ratings of Russian oligarchs. Western expert say that direct damages of the Russian intellectual reserve made up $50 billion within the past ten years. This is strange that the fact is not published in the Russian mass media.

On June 11, 2003 the collegium of the RF Science and Industry Ministry held a session to consider who results of research and experimental design work are taken into account in production of goods and services. In fact, the rights of scientific workers depending on the budget and the results of their intellectual activity are not protected in Russia.

People are paid meager wages at the time when other enterprises widely use technologies these people produce. These enterprises thus make money using the brains of such intellectual workers.

Unfortunately, the collegium didn't consider the problem required immediate and thorough discussion. This is quite a problem because intellectual labor is especially valuable and must be paid an intellectual rent. This labor has a price radically different from other things sold on the market.

Results of scientific activity in Russia would have been much higher if there were laws according to which scientific workers could get a share of money made through realization of the product produced according his scientific developments. Otherwise, this results in concealment of intellectual property and sale of this property abroad. This is the price of the anti-social technocratic policy based on the morals of oligarchs.

As a result, we cannot form a rich budget 70 per cent of which is formed at the expense of the most oppressed factor, people's labor. At the same time, earnings brought by the natural rent make up just 10-13 per cent in the budget. This is paradoxical: Russia has and must have money, big money formed thanks to the natural rent. But at the same time this money isn't included into the Russian economic turnover. That is why the country fails to guarantee social and economic requirements.

This proves that in order to start a new national economic model Russia needs to considerably review its policy of market reforms.

This is first of all important to revalue the importance of natural and intellectual resources of Russia and to liquidate the monopoly of oligarchs on earnings obtained through usage of the natural resources without payment of the rent. The nature and intellectual rent problem is said to be "the robbery of the century".

The government should put an end to usage of rent earnings that don't belong to oligarchs but are still used to pursue the personal interests of oligarchs. This is the sphere where immense social tense is rooted; this sphere is wonderfully used by supporters of revolutions and coups.

There are two parties that are guilty of the problem: oligarchs who are creating the social tension in the society and those people who want to do away with the oligarchs with the help of anti-constitutional measures. We need not great upheavals, but rich Russia where every citizen is rich.

Anatoly Sapor