HOW DO YOU SLAY A DRAGON?

No private enterprise can possibly compete with the consolidated power of the state, when the state is both owner and controller. If anyone doesn’t know how this works, they should study carefully the garbage and construction businesses of the Russian Prosecutor General. There can be no question of one official being able to effectively control another official (and by default, all the leaders of state corporations are ipso facto  the most powerful officials). Everyone witnessed how even the slightest hint of such control can finish in Russia with the example of the “Ulyukaev affair”. Alexey Ulyukaev ended up in the meat-grinder, where they make “Sechin’s sausages”.

In Russia, the idea of monopoly has deep historic roots, which is why it has so many supporters. Nearly all industry was founded on the state’s initiative, with the participation of the state and under the state’s control (even if that initiative was corruptly motivated by the future owner). Monopoly was the main instrument for the industrialisation of the state. And after the Bolshevik revolution it became its sole instrument for industrialisation. The principle of the monopoly was taken to absurd lengths, far further than it had ever been taken before in any large global economy. In the end, this monopoly was what killed off the USSR, because it made its economy inefficient and uncompetitive.

After the collapse of the USSR, Russia significantly freed itself from the grip of the monopoly. But this was only for a very short period, and it wasn’t able to organise proper competition. The economic and political institutions couldn’t cope with the enormous challenges of the time. As a result, society went into a tailspin, that resulted in exactly the kind of war of all against all that monopoly and competition are supposed to defend against. At the start of this century, the strategic mistake was made to re-start the monopoly, instead of continuing to re-build the field of competition. But this turned out to be a very particular monopoly, the like of which Russia had never experienced.

In this authoritarian regime, that’s corrupt from top to bottom, and that’s bereft of any ideology (in place of which they use some sort of rusty paper-clips), monopoly has become the only way in which the clans can get rich, by sucking up to power. The regime uses monopolies to reward the clans for their political loyalty. So monopolies have become the most convertible currency of post-Communist Russia. Using power instead of money is a way of distributing the monopolies. It started with oil and gas extraction, then spread to road tolls, and then to anything and everything. Now, according to the latest pronouncements, it’s even spread to toilets. It’s not surprising that this vital sector of the economy went to the family of the former Prosecutor General, Yury Chaika; after all, it’s right up his street.

To be fair, it should be pointed out that even before this there were few preconditions in Russia for the successful development of competition. So creating the conditions now for competition would be a tricky task for any government, including the one to which it will fall to build the new Russia, once the present regime evaporates into nothing. Such preconditions usually include a readiness to cooperate, a broad base of trust, and other attributes of a bourgeois society; everything that’s included in Max Weber’s code of Protestant ethics. Unfortunately, no such ethical code has emerged in Russia.

Despite the common perception that Russians have a collectivist mind from birth, even researchers with diametrically opposed views on the fate of Russia have pointed out a pathological individualism (what the philosopher Ivan Ilin called “federalism”) is characteristic of Russian people.

The most severe measures have been employed in order to crush this eternally excessive Russian individualism, including the ubiquitous use of monopolies. To a great extent, over time monopolies in Russia have become a historically determined way of survival due to the notable suppression of initiative. The well-known, violent, Russian concept of sobornost’  [a term without parallel in other languages, but described as “a spiritual community of many people living together” – Tr.], was merely a reaction to the inability “gently” to wipe out individualism with the aid of general rules. But historically even this method has had its limits: after a while it simply stops working.

As a way of dealing with chaos, competition is now preferred to monopoly almost everywhere. But in Russia, with its difficult cultural heritage, competition simply failed to develop sufficiently to be able to carry out what it’s meant to do. At every turn it came up against an authoritarian leader who tried to solve problems that arose by using a monopoly. And the result? It was totally ineffective and cost huge sums of money.