HOW DO YOU SLAY A DRAGON?

If we roughly compare the recoverable profits that Putin’s regime receives today from resource rents with the amount that the government should be paying for pensions but cannot cover, then the sums are virtually the same. On the payments’ side we can also add in spending on medical insurance, that the government also isn’t able to meet, and which it therefore is constantly cutting back. So if this is the case, wouldn’t it be simpler to cut out all the intermediate stages and direct the windfall profits from resource rents – in the main, those from raw materials, notably oil and gas – straight to people’s pension and health savings’ accounts? When the need arose, either when they reached pensionable age or were ill, people would receive the necessary funds. What’s more, this would be proper sums of money, not simply the crumbs that prevent them from dying of starvation.

Technically, this wouldn’t be difficult to arrange. Already today, the windfall profits from the sale of raw materials are marked out, and come into the state coffers in a separate line from the companies that receive resource rent, so it wouldn’t be difficult to distinguish them (it would simply be a question of the inefficiency of Putin’s managers). Today they’re simply merged into the overall budget flow, and the government disposes of them as it wishes, spending them on crazy Kremlin projects or simply stealing them. But each month they should be divided equally into the savings’ accounts of every citizen of the country.

These savings’ accounts, pension and health, should be opened the moment a person is born, and last until they die. This would be a genuine privilege of Russian citizenship, and not an imaginary symbol of belonging to a great country. We have to create a situation where being a citizen of Russia would mean they you lived with dignity into your old age, and not just have the privilege of dying to protect “Rottenburg’s palaces” in a series of endless and pointless wars entered into by the regime. Today, resource rent drops into a black hole, where it’s redistributed in the most outrageous fashion to the beneficiaries of Putin’s regime. We must make this black hole transparent, so that every citizen can see and understand what’s happening with the national property that’s been handed down by our ancestors.

The sums of money that would be saved in these accounts would be very significant. All around the world pension funds are important investment vehicles, and I don’t see why Russia should be an exception. I suggest that surplus amounts could be held temporarily on the Russian Financial Index (a consolidated packet of Russian shares, traded on the stock market), which would in turn support Russian production. In this way a safety cushion would be created, that would genuinely help to turn Russia away from being a socialist state, where the country’s wealth of raw materials belong to the bureaucrats, into a proper welfare state, where resource rent belongs to the people, and comes under the direct control of society.

I’d like to repeat what exactly I see as the difference between the model of a socialist state – with no prospects for the future – and a welfare state. By this I mean not simply what is written in the Constitution, but what in actual fact is the only suitable way for the economic system in Russia today to develop. In a socialist state, production and distribution are in the hands of an inefficient monopoly, that does everything in the interests of a bureaucratic clan. In a welfare state, however, the state doesn’t take production nor distribution under its control, thus encouraging competition in all areas. The state’s responsibility lies simply in setting the rules in order to lessen social inequality.

On the surface, some of these suggestions reflect the slogans of the left opposition to Putin’s regime, and also to those spouted by the Russian Communists. These also call for the re-establishment of social control over resource rent; but, as I mentioned earlier, they propose doing this in the same way as the Bolsheviks carried out nationalisation, and putting control over resources into the hands of the state. Whilst I agree with the left insofar as it is essential to re-establish social control over natural resources, I cannot agree with the way in which they want to do it. As I see it, this wouldn’t even level out inequality, but simply turn it from an economic method into one dominated by the nomenklatura and their clans.