Impossibility of modernization

Excerpts from the book “Unmodern Country” by Vladislav Inozemtsev, Alpina Publisher

Russia, which for many centuries built its identity based on the imaginary West, throughout its history felt the need to confront the real West - and this required economic power or came down to “economic competition.” Therefore, for a long time, the domestic elite from time to time felt discomfort from the country’s predominantly raw material economy and tried time after time to turn it into one of the advanced economies. However, each time the approach to the desired goal was short-lived, and after the next breakthrough the country fell back. Why does Russia fail to modernize over and over again? To answer this question, we must first say a few words about the basic principles of modern modernization.

First, they all began when the country in question was on the verge of disaster or was recovering from a war in which it had been defeated. This was significant for two reasons. On the one hand, the people had no choice but to develop rapidly. On the other hand, the population was poor and willing to work. Both of these factors made it possible to implement the modernization agenda without the temptation to look back into the past, and also preserved the need to carry out modernization policies for several decades, during which its main imperatives became familiar to the majority of the population. Modernization was viewed not as a painful but short-term “work on mistakes”, but as a long and natural process.

Secondly, modernization presupposed well-thought-out actions of the state - a kind of development program: giving priority to certain industries, mobilizing the necessary funds and resources, stimulating innovation or purchasing promising technologies, helping national companies enter foreign markets, etc. The government was formed, first of all, from professional economists, technologists or engineers, “national headquarters” were created that led the reforms on a daily basis, an uncompromising fight against corruption was carried out, foreign experience was actively adopted, and foreign specialists were almost always invited. The model of such a state - not always democratic, but, as a rule, extremely effective - was later called the “developmental state.”

Thirdly, all modernizations were based on a sharp increase in the share of industry, both in GDP and in the employment structure, which in turn required an increase in investment. Indicators of industrial output - taking into account the fact that a significant part of the production went to foreign markets and constant growth in income of the population was not a prerequisite for economic development - grew significantly faster than the standard of living increased. Modernization thus implied the possibility of persuading the population to live relatively hard lives for a certain period of time, but to be rewarded with future successes.

Fourth, modernization was successful only when it focused on integrating developing countries into the global economy, rather than on autarchic development.

Modernization is a process, the goal and result of which is to transform a previously lagging and “self-confused” country into a society that can develop on a natural basis, freely competing with other members of the international community. In other words, it is a political and economic effort that eliminates the need for its repetition in the future and opens the way to harmonious development. Against this background, Russia looks unique. Over the past 500 years, no state has risen so high in the world economic and political “table of ranks” only to then fall so low, and certainly no country has done this as many times as Russia.

It is worth noting that the most important catalyst for Russian modernization was most often the threat emanating from the outside world - modernization was always purely catching up, even in those cases when it produced results that for a short period made the country one of the European or global leaders. For the stated reason, they were all limited and internally contradictory. The desire to overcome the gap did not necessarily imply becoming a leader - this is why most Russian modernizations faded when they somewhat approached the “modern” level. The fruits of achievements very rarely “failed” to the entire population: progress was limited to sectors in which successes made it possible to say that the backlog had been overcome. At the same time, in Russia the tasks of modernization were never clearly defined: the elites were quite well aware of what they wanted to get away from, but were never able to formulate an “image of the desired future.” Also, their illness lies in the constant inconsistency of economic and political reforms.

The idea of ​​“modernity” in today's Russia is based on the assumption of the possibility of its successful economic development. Meanwhile, the results of the 1990s and even the 2000s do not indicate such a possibility. The share of the raw materials sector in the economy has only grown over the past 30 years, fixed assets are renewed very slowly, and many integral economic indicators have not returned to the late Soviet level. The modernization attempt, announced in 2008 by then-President Medvedev, was quickly scrapped. All this, of course, does not mean that modernization will never happen in the country, but it is unlikely to be expected in the next few decades - and for a number of reasons.

The first comes down to ideological aspects that determine the unpreparedness of both the ruling group and the people for the modernization agenda. On the one hand, the political elite has officially proclaimed a course towards conservatism and the strengthening of traditional values ​​and norms, while any modernization is based on the postulate of the flexibility of social foundations and the possibility of their transformation. On the other hand, today all the efforts of the authorities are aimed at convincing citizens that Russia has “rose from its knees” and returned to the ranks of great powers, that it is ready to compete on equal terms with the West. Under these conditions, calls for modernization are dissonant with the main rhetoric of the authorities. The population, in turn, is also not ready to support modernization. In recent decades, the population has become accustomed to a relatively high standard of living and a more “quiet” life than before. It does not see the need to dramatically increase efforts in implementing any major project. In addition, the factor of “historical memory” should be noted - all attempts at modernization that have taken place in the country over the past 100 years have left an extremely ambiguous impression. After a set of unsuccessful attempts, any new one will be perceived as profanity. Thus, today in Russia there is no the most important prerequisite for modernization: broad public consensus on the unacceptability of the existing state of affairs.

The second reason is the significant changes that have occurred in the world economy due to the modern technological revolution. Traditionally, industrial modernization relied on mass production and was based on the rapid commercialization of new technologies, the availability of opportunities to artificially reduce costs, and wide markets for standardized goods. In the last two or three decades, industries have become advanced and most in demand, where market success is determined not by the mass production of identical products, but by the ability to fill relatively narrow market segments with various types of the same product. In Russia, even in a formally market economy, this trend is not applicable to almost any industry.

The third reason is the lack of economic and political interests in modernization. Given that Russia's human capital has deteriorated markedly due to emigration, the decline in the quality of education and the degradation of the economic structure, and that bureaucracy has paralyzed normal economic life, almost the only competitive advantage of Russia could be an abundance of resources, coupled with ease of access to them and low prices for all types of raw materials. However, both economically and politically, conditions of this kind contradict the interests of the elite: in the first case, there would be an attempt to limit the excess income of the oligarchs, in the second, an attack on budget revenues, mainly provided by revenues from mineral extraction taxes and export duties. In fact, the very idea of ​​an “energy superpower” suggests that modernization can only be fictitious - because it is impossible to industrialize the country without affecting the interests of representatives of the raw materials business.

The fourth reason has to do with Russian foreign policy and the character of our allies. Each attempt at successful modernization presupposed the presence of a partner - a country that would act as both the most important market for the sale of industrial products and a supplier of investments and technologies necessary for accelerated development. Russia could successfully modernize, focusing on the status of a partner of Europe. However, having turned away from Europe for political reasons, it turned to the most conservative post-Soviet countries in the hope of building an alternative model of political integration and to China in the hope of strengthening economic cooperation. Meanwhile, the latter, being the largest industrial economy, is least of all interested in Russia becoming its competitor. Since the first half of the 1990s, China has been consistently reducing the share of industrial goods in its exports from Russia and increasing the share of unprocessed raw materials. Now the first has fallen below 7%, and the second has reached 79%, exceeding the corresponding figure in Russia’s trade with the European Union. Even within the framework of the cross-border cooperation development program, the Russian side failed to convince its partner to build at least one full-cycle raw material processing enterprise on our territory. Likewise, we do not see a boom in Chinese investment in industrial facilities in other regions of our country. The maximum that China is capable of is to promote purely quantitative growth of the Russian economy without its structural changes.

On the one hand, modernization is an attempt to catch up with the leaders, so it inevitably involves “pulling up” first the sectors of mass industrial production, then the more advanced segments of the economy, and only subsequently – reaching the latest technological frontiers. In Russia, the entire logic of modernization comes down to the desire to “leap over” a certain stage of progress, “saddle” a new technological structure and break into an advanced economy with it. Unfortunately, post-industrial trends do not replace previous social forms - they coexist, deepening the complexity of society and the nature of the social structure. Only countries that have adopted the previous way of life can successfully develop the next one. On the other hand, modernization is not only an economic, but, above all, a social process. In all successful countries, it began with industries that were least likely to become the object of influence from external players and especially government agencies. Russia stated that the areas of its breakthrough would be complex and at the same time rather little dependent on the free market industries: nuclear energy, space technology and pharmaceuticals, which even if successful could not launch large-scale economic growth in the country.

Finally, another reason can be called the specific conjuncture, which manifests itself whenever it comes to an attempt at modernization. In Russia, the country's economic success is determined by the phases of cyclical changes in prices for resource goods. The need for modernization begins to be recognized by the ruling elite during periods when oil prices are at the lowest point of the cycle. However, it is precisely during such periods that the ruble exchange rate falls and prices for equipment and technologies soar, reducing demand for them. Foreign investment works in “counterphase” - they are ready to come into the economy when it is on the rise. However, during these periods, the Russian oligarchic system seeks to invest in the most attractive segments of the economy itself, and Western capital is allowed only into the most competitive sectors. In addition, as growth accelerates, wages and costs rise, making the traditional export-oriented production of most modernizations irrelevant. Focusing on the domestic market for foreign companies looks quite risky.

To summarize, we can confidently say: today the modernization of Russia does not seem possible or even desirable from the point of view of the majority of the population. The Putin regime has convinced the majority of Russians that following the mainstream of global progress is not only pointless, but also dangerous. As a result, a situation has developed in Russia in which regression and lag have begun to be perceived as an indicator of success.

Speaking about the impossibility of change in Russia, it is worth dwelling on one significant circumstance - the limited role of V. Putin in “ensuring” such a state. The current course is a natural continuation of what happened in the 1990s, even despite the fact that V. Putin himself constantly emphasizes the fundamental difference in policies and approaches.

Most authors believe that the crisis of the 1990s prepared the way for V. Putin’s rise to power by sharply lowering the standard of living of the population, disrupting the usual way of life - and therefore gave rise to a demand for a return to the past. However, another circumstance seems more important to me.

Privatization, launched in Russia in the early 1990s, resulted in most assets passing into private hands at very low prices. By acquiring the assets cheaply, the new owners were able to produce goods at extremely low costs - and thereby limited the entry of new players into the market, who needed to invest millions of dollars in building new production facilities. The privatization of the 1990s thus contributed to the emergence of Russian monopoly capitalism. All growth was concentrated in industries that did not exist at all until the mid-1990s - in banking and real estate, retail trade, communications and Internet communications. As these segments of the economy began to show signs of saturation, growth stalled as companies privatized in the 1990s never achieved higher production levels. Almost no company operating in the basic sectors of the national economy has demonstrated organic growth (a classic example is Rosneft, the share of organic growth in production of which in 2012-2017 was only 23%). As representatives of the security elite came to power, corporate raiding and “squeezing” of property from politically oppositional entrepreneurs spread - as a result, conditions developed in the country for the formation of a “redistributive” state, in which even the most influential businessmen are ready “even tomorrow” to cede their property to the authorities.

In the political sphere, the differences between the 1990s and 2000s are also not as great as they might seem. National elections led to a change of power only once – during the 1990-1991 electoral cycle. Since then, Russian voters have not been able to change power even once - even when the ruling party lost the elections and formally found itself in the minority in parliament, the president managed to maintain the composition of the government he needed through the votes of representatives of other factions or “independent” deputies. It was the Democrats who invited the country to vote with its heart (not with its mind) in the 1996 presidential election. It was then that the main argument was not the outstanding qualities of the preferred candidate, but the “lack of an alternative.” This principle has been actively used since then in any presidential campaign in Russia, and in the recently concluded one it was exploited, perhaps, most openly and persistently.

It should be noted that the personalist regime of the 2000s is based primarily on the 1993 Constitution, which was written by successive democrats. Meanwhile, it was the provisions of this Basic Law that allowed the president to have full power without being responsible for anything: the president appoints and dismisses not only ministers and heads of federal agencies, but also their deputies, although he is responsible for the activities of the government its chairman. It was this Constitution that made it possible to change the procedure for electing governors in 2004 and turn the Federation Council into a screen - that is, the two institutions that were obliged to restrain the omnipotence of the president were initially written in such a way that this allowed him to freely exercise his will in almost everything.

Even the notorious “national idea,” which V. Putin ultimately found in “patriotism,” began to be constructed in the 1990s, when in 1994 a special presidential commission was created to formulate and develop it. Since then, the authorities, realizing the need for additional legitimation, began to rely on the Russian Orthodox Church as a kind of “ideological department” of the Kremlin administration. It was the democrats of the first wave who laid down the idea of ​​historical continuity of the new Russian Federation with Tsarist Russia, which became the basis for exalting the past in conditions when the elite did not have a clear project for the future.

It should be noted that the desire for the revival of the Russian Empire or the restoration of the Soviet Union, the approach to the former republics of the USSR as provinces of Russia, which only gained independence through a historical misunderstanding, also did not appear yesterday. Russia, with the help of its troops, managed to actually split Moldova in 1992, separating from it the puppet Transnistrian Moldavian Republic, and in 1993-1994, formally being “above the fray,” it contributed a lot to the actual separation of Abkhazia and South Ossetia from Georgia. B. Yeltsin’s call to E. Shevardnadze after one of the attempts on his life with comments about the harmfulness of pipelines from Azerbaijan to Turkey perfectly showed how much Russia intends to control the energy policy of its neighbors.

Finally, it is worth remembering the ideas of post-Soviet reintegration, which also did not appear simultaneously with V. Putin’s famous article on the Eurasian Union. Moscow stopped treating the Commonwealth of Independent States as a form of “civilized divorce” back in 1994-1995, having realized the scale of the populist potential of “quasi-Soviet” ideas. In 1996-1997, the first attempt to restore the previous structures resulted in the formation first of the Community of Russia and Belarus, and then of the so-called Union State, which was perceived by some Russian citizens as the first step in the right direction.

To summarize, Russia, as soon as it emerged from the depths of the Soviet Union in the most spectacular peaceful democratic revolution, immediately began to try to move away from the agenda directly set by that revolution. Driven by the needs of its ruling elite, which has complete control over the country's national economy and its main assets, Russia has today achieved what its ruling class most aspired to during two decades of non-development. Russia positions itself as a bastion of conservatism and traditional values ​​not so much because its leaders really believe in them, but because they are all aware that modern development is incompatible with maintaining their control over the economy and society. Such stagnation leads not only to economic vegetation, but also to the rapid destruction of human capital and serious decline in all spheres of life - its consequence is the large-scale degradation of the nation, which is only accelerated by mass emigration from the country.

You can read this entire chapter from Vladislav Inozemtsev’s book “The Unmodern Country” by purchasing the book in the store or its electronic version from the Alpina Publisher - www . alpina . ru

Digest prepared by Victoria Rabotnova

Photo: 01/06/2019. Work to modernize the infrastructure of the Arbatsko-Pokrovskaya line section of the Moscow Metro. Vladimir Gerdo/TASS