An objective critical and constructive analysis of Russian reality is typically impeded by widespread myths. Most notably, there is the myth of the totalitarian sole dictator – the omnipotent Russian president. The demonic image of Vladimir Putin is also inextricably linked to the notion of the Russians’ eternal suffering and irrational devotion to a national leader due to their ‘totalitarian mentality’. These are two interrelated elements of a common myth about modern-day Russia, which is still intensively and persistently broadcast by official Western propaganda, and, for different reasons, by liberals and leftists, Western as well as Russian.

An understanding of the structure and evolution of Russian capitalism is necessary in order to understand what is really happening. The existing political order in Russia did not emerge from nowhere, nor is it a direct continuation of the Soviet past, as assumed by some critics of the current regime.

The Yeltsin epoch

Under the rule of Boris Yeltsin conflicts between various business groups were resolved by force, with the battle fought relatively independently of the state, which was only presented with faits accomplis. The winner became intimate with the authorities, could even dictate his conditions and exercise almost infinite influence over economic decision-making, while the losers were removed far from any political and economic levers of power. Such a system was unstable by definition, the outcome of battles between oligarchs were unpredictable, the consequences could not be assessed, and with every twist in the confrontation the political system experienced further perturbations. In this situation, the very existence of the regime was constantly called into question. This is why part of the big bourgeoisie endorsed, supported, and directed the administrative coup that brought Vladimir Putin to power.

At approximately the beginning of the 21st century the so-called dynamic compromise of the elites began to materialise with minimal pomp and publicity, and became the basis of the present political regime in Russia. The authorities carefully selected amenable parties from Russia’s big bourgeoisie and allowed them to become or to remain oligarchs, that is, persons given access to super-profits, which in turn would be protected and guaranteed through the proximity to the authorities.

The period of unpredictability and arbitrariness of big capital was over. Those representatives of the bourgeoisie who showed boundless ambition and wilfulness were removed from the seats of political management with varying degrees of harshness. The trial of Mikhail Khodorkovsky did not at all seek to strengthen the rule of law, but rather contained a very important message to all dissenters in the sphere of big capital. The message was very simple: violations of the rules of the game and attempts to unilaterally change them will be punished.

The anger of the authorities unleashed on the oligarchs was public, widely covered by the press, and passed off as a sign of a new era. But the agreement between the authorities and the amenable oligarchs remained in the shadows; it is still implemented day after day hidden from public scrutiny. It is essential to emphasise that this was in fact an agreement, not a surrender of big business to the state. Russia’s big bourgeoisie is not forced by the state to subordinate itself to national interests, to curb its appetites for the sake of national welfare. Rather, the current Russian state has become the main capitalist, the bureaucratic centre of the Russian bourgeois system. From now on, the oligarchy in Russia is anonymous; no amount of capital or economic power gives someone the right to public recognition, to open implementation of one’s own policy. But this in no way negates the very existence of the economic power of individual business circles capable of pursuing their interests through state economic and social policies.

A dynamic compromise

The main objective of the Russian state today is to ensure the balance of proprietary interests of the groups involved in the compromise. This is not an agreement made once and for all, but a dynamic compromise, the terms of which are constantly adapted to the specific socio-economic and political situation, with the authorities taking upon themselves the task of finding solutions acceptable to all participants in each conflict situation. In this dynamic compromise, Vladimir Putin plays a crucially important role as a mediator, and it is precisely this role that requires the image of the national leader standing ‘above the fray’.

By not being directly involved by the elites in the mechanism of creation of the ‘dynamic compromise’ Russian society has until recently profited from this system, since the interests of the majority were taken into account – for the sake of maintaining stability. As a result of the partial redistribution of petrodollars by 2012-2013, the country’s average consumption levels came to be the highest ever in Russian history. This is convincingly confirmed in the report ‘Living in Russia’ published in the journal Left Politics in 2013. No ‘economic miracle’, no strong social state, not even much state welfare was involved. The redistribution of oil revenues was largely spontaneous, but it was encouraged by the authorities. The population was involved in Putin’s ‘dynamic compromise’ not as a fully-fledged partner but as a consumer and tolerant observer. An observer prepared, in exchange for some privileges, to turn a blind eye to the elites taking certain liberties.

The improvements, however, were quite peculiar. No special benefits or social rights were granted to the population. True, wages increased, albeit slowly, and social spending steadily increased. These changes were not systemic and rational from the point of view of objective needs and progressive social development goals; but they gave the population a sense of growing stability, a kind of rest after the poor and bleak 1990s. However, what helps the population of Russia maintain a certain level of welfare is not so much the stochastic state handouts but those features of Russian society which result from a combination of the socio-economic and political system emerging at the beginning of the 21st century and the Soviet legacy in economic and social culture.

The influx of oil money into the Russian economy did not stimulate the development of the real economy since this objective was not a part of the Russian elites’ dynamic compromise, but it created an increased demand for consultancy and information services. The Russian economy developed as a dependent export-oriented one, and the state’s economic policy was not based on any coherent strategy. Everyone went with the flow. But there was money in the economy, and this money created jobs. The financial sector required managers on various levels; national projects, from large ones like the Skolkovo Innovation Center or the Sochi Olympics, to the smaller scale regional or local ones, required agents, needed managers, advertising and PR professionals, and experts in information technology and communications. The economy was stimulated by the demand for intellectual labour, for all kinds of services, which supported and reinforced the striving for higher education dating from the Soviet period. The projects themselves were direct consequences of the elites’ compromise, as they helped to redistribute public resources to business from state-owned corporations acting as contractors for these projects. Simultaneously, the ‘Russia-rising-from-its-knees’ stage set was created, an illusion playing a key role in the formation of President Putin’s image.

… and the interests of the citizens?

A characteristic feature of modern Russian stability is that the interests of capital are always and very consistently respected, while the nationwide interests of citizens are realised only accidentally, as an ‘extra’. Ambitious projects mostly become platforms for the realisation of private interests from their very inception.

However, in one way or another jobs were created and, therefore, solvent demand was increasing. From the export and financial sectors the growth momentum also spread to the services sector, to education, and to the commodity market. The housing market was developing as well, significantly aided by a demographic crisis that broke out in the 1990s and still has not completely subsided. The housing demands of a naturally shrinking younger generation were being satisfied by exchanging old Soviet housing for new housing. Thus the housing market was simultaneously influenced by three epochs:

• the Soviet epoch, when public housing was developed, but slowly, lagging behind the growth of the population’s needs;
• the Yeltsin epoch, which triggered a profound demographic crisis;
• the Putin epoch, during which petrodollars flowed to areas where speculative growth could best be ensured.

In general, an important factor in stability proved to be the Soviet legacy itself. In the late Soviet period, a powerful public sector was created, whose material base is still used in Russia. Most of the roads, airports, schools, hospitals, etc. used by Russians today were built in the Soviet Union. A significant proportion of doctors, teachers, scientists, and educators working in Russia today were trained in Soviet schools and universities. An important feature of the socio-economic culture of Russians, inherited from the Soviet period, is a tendency to overvalue individual consumption and undervalue public consumption. Among modern Russians, the striving for individual wellbeing is much stronger than the desire to protect social rights. Russian citizens have no experience of shared struggle to achieve a social state, but they do have a long-standing tradition of, and wealth of experience in, looking for loopholes for personal gain under conditions of state control. This tendency was all the stronger since this control was accompanied by certain guarantees – free education, free medical care, the right to a job, etc.; Soviet citizens took all this for granted, expressing dissatisfaction with the fact that the medical care was bad, higher education did not guarantee high wages, and housing was chronically in short supply. Not appreciating their social rights and living with shortages of goods, Soviet citizens dreamed of unhampered consumer freedom. The first decades of the 21st century gave Russians an opportunity to enjoy an abundance of goods while still benefiting from the remnants of social rights. Thus the population saw their situation as, in a certain sense, optimal.

Russian capitalism’s aggressive offensive

Today, however, Russian capitalism’s attack on social rights is becoming increasingly aggressive and obvious, already threatening individual wellbeing as well. Following other European countries, Russia has moved towards a policy of austerity. Furthermore, a new generation is growing up that did not experience the guaranteed social state and has not been worn out by a shortage of goods but knows exactly what a shortage of money feels like.

The petroleum-based prosperity gave the Russian state the resources it needed to secure a new relationship with the elites. The commercialisation of the public sector was carried out in a centralised way, as was the creeping privatisation, which has by no means stopped. The paradox of Russia’s modern social structure is that the decentralisation of administration and development is centrally administered; it is imposed on the resisting population and regions who know full well that it is not income and resources that are being redistributed by the authorities but costs.

The key process of ‘capitalist’ development in modern Russia turns out to be a reform of the social sphere, those sectors of social production which in the Soviet period were used by the state to centralise the society’s development.

The growth of discontent with this policy is, however, retarded by the president’s personal popularity. Vladimir Putin certainly draws on the image of the national saviour reviving Russia’s greatness; it would be wrong to claim that this image is purely media-generated and bears no relation to the real view Russians have of the president. But these views are not romantic, and they are certainly not irrational.

In the eyes of society, the government is evil incarnate, and Putin is the only protection against the malicious activity of the cabinet appointed by himself. Fascinatingly, from time to time Putin indeed puts brakes on the neoliberal reforms of the social sphere. This is due not to ideological differences but to the terms of that same dynamic compromise which, at times, is not respected by the ministers. The president and his administration (as opposed to the government) prefer to do everything more carefully, with an eye to the population.

This position of the president has in turn been criticised by the liberals who oppose his ‘inconsistent policies’. By and large theirs is not even a criticism of the pace of reforms, but a concern about risks. Regardless, however, of the president’s position these risks are increasing because of the worldwide crisis.

This instability is occurring against the background of the West’s resumed attempts at gaining direct control of Russia’s transformation. In the 1990s, it was evident that although Russia was participating in the neoliberal project of the global division of labour as a supplier of raw materials, the ongoing control over the process remained in the hands of local elites, as did corporate ownership and the resources supplied to the world market. In 2013-15, due to the worsening of the worldwide crisis, the West began to behave much more aggressively, trying to bring about a de facto change in the conditions of integration into the world system of countries of the periphery and semiperiphery. This process could be observed in Greece and Ukraine, and it also involves Russia. Partnerships with local elites must be replaced by the direct control of multinational companies over the key markets and resources. And ‘native’ capital, even represented by its openly comprador faction, is in danger of losing its position and is beginning to resist. This is the essence of today’s struggle in Ukraine. It is not only about who controls Kiev, which has obviously lost the ability to act as an independent and effective centre of decision-making; it is also about the Ukraine turning into a potential base for the takeover of Russia by European and partly by US capital. The failure of this reorganisation of economic space and power will in turn likely mean the collapse of neoliberalism on a European scale since the resources to maintain the system are clearly exhausted. It is because of this takeover agenda that despite all attempts to negotiate with the West Putin and his entourage cannot obtain compromise conditions acceptable to them and Western propaganda creates an image of ‘terrible Russian imperialism’, although just a few years ago Moscow seemed to be a perfectly legitimate partner of European democracies.

The process of ‘spontaneous destabilisation’

In this situation left organisations face a dilemma in opposing Putin. If they form a bloc with the liberals against the authorities they are not only objectively acting as supporters of the neocolonial project, but they will also repel the public. On the other hand, if they begin to support the authorities in the name of struggling against the liberals, they become objective allies of a government carrying out neoliberal reforms. The problem, therefore, is not so much the positions of particular groups around specific issues but the lack of an overall strategy to deal with the dilemma.

Paradoxically, the growing social protest in society is at the same time pro-Putin. The Communist Party of the Russian Federation (CPRF) plays a certain role in this political channelling of the protest. It often organises social protest, giving it an anti-government appearance, sometimes even promoting anti-Putin slogans, but it never achieves anything specific and does not propose policies for solving the problems. This is essentially a form of support for the regime, for its stabilisation (by co-opting any normal protest). But even real social protest is addressed to Putin as a referee, and this is disorienting the left.

Nevertheless, the process of spontaneous destabilisation is growing. And nothing will stop it. The times require the formation of ideologically heterogeneous coalitions that can, however, become a real opportunity for the self-organisation of society. It is essential to move away from formulating political issues as a choice ‘for’ or ‘against’ Putin, and foreground specific social objectives, above all the fight against austerity policies. At the same time, it is important not to confuse the breadth of a coalition with a lack of agreed principles.

The Russian left’s time as an organised political force will only come in the post-Putin era. But a conceptual alternative to neoliberalism needs to be formed today, without waiting for changes in power. Particularly since those changes can appear very suddenly, and once the momentum starts things could develop very quickly.