The Myth of “Russian Imperialism”: in defence of Lenin’s analyses

 

By Renfrey Clarke and Roger Annis

 

February 29, 2016 -- Links International Journal of Socialist Renewal -- A sharp controversy within the international left in recent times has concerned the place occupied by Russia in today’s capitalist world-system. Is Russia an imperialist power, part of the “centre” of global capitalism? Or, do its economic, social and politico-military characteristics mark it as part of the global “periphery” or semi-periphery – that is, as one of the majority of countries that, to one degree or another, are the targets of imperialist bullying and plunder?[1]

 

Traditionally, the Marxist left has used the term “imperialism” with a high degree of discrimination. Imperialism for Marxists is not something called mysteriously into being when “greed” overcomes political leaders. Nor is it simply external military action, however aggressive. For Marxists, the imperialism of our time arises from specific features of the economies and social orders of the most advanced capitalist countries.

 

The classic Marxist definition of imperialism in the modern epoch was provided by V.I. Lenin in his 1916 pamphlet Imperialism, the Highest Stage of Capitalism. As viewed by the Bolshevik leader, the advanced capitalism that had emerged during the preceding decades had these salient characteristics:

 

“(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this ‘finance capital’, of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the world among the biggest capitalist powers is completed.”[2]

 

By the final decades of the nineteenth century, Lenin argued, the economies of the most industrially advanced countries had moved into a new phase of “monopoly capitalism”. Control over economic life by the biggest concentrations of capital had reached the point where in each of these countries, a tightly interlocked group of the most powerful financial and industrial capitalists held unchallenged sway.

 

Still unable, though, to find fields of investment at home for much of the capital they had accumulated (suffering, in other words, from a chronic surplus of capital), the financial-industrial magnates found themselves compelled to multiply and intensify their operations abroad. Increasingly, the trading operations of the past were augmented and overshadowed by direct investment, a great deal of it in regions where the development of capitalism was in general much weaker. In these regions – the “periphery” of the emerging imperialist system – the new global hegemons could find cheap raw materials, abundant low-wage labour power, and customers for the goods produced in the countries at the system’s “centre”. By the end of the nineteenth century, the need to secure the new investments and fend off competitors had led to the incorporation of most areas of the periphery into vast colonial empires.

 

Imperialism has evolved a great deal since Lenin’s time, but it is remarkable how apposite his analysis remains. While specific forms have changed, each of the key underlying features noted by the Bolshevik leader is still very much in place. The “international monopolist capitalist associations” of Lenin’s time – the cartels and trusts – have morphed into multinational mega-corporations and their policing agencies, the IMF, World Bank and WTO. The colonial empires have vanished in formal terms, but their essence persists in mechanisms aimed at reinforcing stark global inequalities of power and wealth that are immensely profitable for the global centre. These mechanisms of post-colonial robbery and oppression include the direct remittance of profits by imperialist-owned enterprises; debt dependency; constant political meddling by the centre; and when other methods fail, trade embargos and armed coercion.

 

A further mechanism of plunder, less recognised but among the most powerful, is implicit in the underlying structures of global trade. This is the set of phenomena known as “unequal exchange”. In exporting capital, the global capitalist centre has consistently maintained its monopoly over the most advanced and sophisticated (and hence profitable) technologies and economic functions. In the imperialism of colonial times, firms at the centre used their monopoly advantages to sell their manufactured goods at a stiff price premium. The producers of raw materials in the colonies and semi-colonies were forced to compete against one another, and thus to content themselves with much lower margins. The trade between centre and periphery was therefore profoundly unequal. Behind a façade of impartial markets, value was siphoned from the periphery to the centre.

 

A further “value siphon” was implicit in the difference between the massive capital investment in the factories of the centre and the much lower capitalisation usual for the farms, plantations and other enterprises of the periphery. Between centre and periphery, the gap in labour productivity was huge. In exchanging their raw materials for manufactured goods, the colonies and semi-colonies in effect exchanged large quantities of labour power, and hence value, for much smaller amounts. The industrialists of the centre, despite paying comparatively high wages at home, profited handsomely. Capital accumulation took place overwhelmingly in the countries of the centre, while the periphery remained poor.

 

Since decolonisation, the forms underlying unequal exchange have evolved extensively, though their purpose and general outcomes remain unchanged. Complexes of investment and production that once were unified are now broken up across national borders. The most specialised and profitable functions – research and development, financing, design, marketing, and the most demanding aspects of production - are still monopolised by the firms of the centre. Low-profit functions are outsourced to the periphery, where local enterprises are forced to compete with one another for contracts to produce components and carry out assembly.

 

For this system to work, an important degree of industrialisation has had to take place in the more advanced areas of the periphery. Major economic differences have thus opened up within the periphery itself, to the point where it has become necessary to speak of a broad “semi-periphery” of global capitalism.

 

The semi-periphery, however, is still unmistakeably peripheral in relation to the system as a whole. It remains substantially shut out of the most profitable economic functions, and its industrialisation is of a distorted, narrowly-based, dependent kind whose logic is that of maximising imperialist profits.

 

Between the centre and semi-periphery, there remains an economic and social chasm. Between the U.S. and Mexico, for example, the effective difference in average living standards is more than three to one, and between Germany and Turkey, well over two to one.[3] The capitalism of the semi-periphery remains underdeveloped, its relatively weak state machines possessing only a limited ability to resist imperialist financial blackmail and politico-military interference.

 

For Marxists, an ability to distinguish between the imperialist centre and the countries of the periphery and semi-periphery – that is, between advanced capitalism and its prey - is an indispensable tool. Lack of clarity on this division makes gross political errors virtually inevitable.

 

Lenin and tsarist imperialism

 

Before proceeding to examine the place held by Russia in today’s global capitalism, we need to clarify an issue that has been the source of a good deal of confusion. This relates to characterisations of the tsarist Russian Empire made by Lenin in the period surrounding the outbreak of the First World War.

 

In 1914, Lenin was among the few European socialist leaders to reject the ruling-class siren song that called on workers to set aside class struggle and join the national war effort. His position of “revolutionary defeatism” rested on the analysis that tsarist Russia was a great imperial power and that Russian workers and peasants had nothing to gain from its victory.

 

If the Russia of 1914 is measured against the imperialism of our own time, Lenin’s categorisation of his country as imperialist seems highly problematic. Only in a few enclaves was Russian capitalism in 1914 advanced by world standards; in most of the country, production and exchange were primitive. Much less was Russia marked by an over-accumulation of capital; to the contrary, it was a large-scale international borrower. Lenin, however, was not wrong in regarding tsarist Russia as an imperialist power. The country’s colonial possessions ranked with those of France, if not of Britain. With its large population and army, the tsarist empire was a major interventionist force in European politics despite its backwardness. Its relatively recent history included expansionist wars against Turkey.

 

Lenin was acutely aware of the contradiction implicit in categorising the primitive, backward Russian Empire as an imperialist force alongside the modern imperialisms of Western Europe. In writings in 1916, the Bolshevik leader made clear that he viewed the imperialism of Russia as being of a qualitatively different nature from that of the West, as resting on fundamentally distinct economic and social foundations. He drew a sharp distinction between “crude, medieval, economically backward”[4] tsarist imperialism, and the system in its “advanced capitalist, European” form.[5]

 

What were the economic and social roots of the “medieval” imperialism to which Lenin referred? In the Russian and Austro-Hungarian empires during the first decades of the twentieth century, the traditional feudal-dynastic and mercantile imperialism, based on the extraction of peasant rents and merchants’ profits, retained a certain vitality. It was clearly in respect of this “old” imperialism, a holdover from an earlier historical epoch, that Lenin regarded the Russia of pre-revolutionary times as imperialist.

 

For practical purposes, the changes that accompanied the end of the First World War marked the end of the “old” imperialism. Today, we seek in vain for some lingering, wraithlike emanation of that old system that might allow us to slip in a characterisation of Russia as “imperialist”. The material basis for such a characterisation has passed into history. Russia’s place in the capitalist world-system must now be plotted strictly on the basis of the modern financial-industrial imperialism whose opening phase Lenin analysed.

 

So what is it, within the paradigms of modern imperialism, that marks countries as members of today’s exclusive imperialist club? Apart from the chasm that separates the imperialist world from the developing countries in terms of general prosperity, a series of other criteria can be identified. Of course, individual imperialist countries will not necessarily display all these markers. But if today’s Russia is indeed imperialist, this will show up as a relatively dense “clustering” of the characteristics that will now be examined.

 

An advanced capitalism?

 

For the purposes of this study, the most general question needing to be posed is whether the system now prevailing in Russia is, in any real sense, “the highest stage of capitalism” – that is, advanced capitalism.[6] To anyone seriously familiar with Russia, the argument that the country’s production and exchange can be described in this way is quaint in the extreme.

 

Russia’s per capita Gross Domestic Product (measured at Purchasing Power Parity) in 2015 was a little under US$24,000 – rather less than half of the U.S. level, significantly behind Malaysia, and similar to the figures for Chile and Argentina.[7]

 

The gap separating Russia from the most prosperous countries of the developed world is still more striking if we examine wealth, as distinct from income. The Credit Suisse Global Wealth Databook for 2015 shows that in most of the countries that clearly qualify as imperialist, wealth per adult at current exchange rates in mid-2015 was in excess of $200,000. In Russia, the figure was just $11,726. This was a little above the figures for Jamaica and Paraguay, well below the one for Brazil, and barely half those for South Africa, China, and Mexico.[8]

 

In 2014 Russian labour productivity, a key indicator of overall economic development, was also low at just under half the European average and about 35 per cent of the level in the U.S.[9]

 

More will be said in other contexts about the poverty and backwardness of today’s Russian economy. For the present, some general points need to be made on the forms and structures of the country’s capitalism. Left-wing political economists in Russia stress the essential weirdness of a system that has no close analogues except in other countries of the post-Soviet expanse. There is a consensus that Russian capitalism is nothing like the “highest stage” of the system, but is instead a de-developed throwback that perpetuates the managerial culture, as well as key informal structures, of the late Soviet period - that is, of bureaucratised “state socialism” in its final phase.[10]

 

The classic study of the real functioning of today’s Russian economy is provided by Ruslan Dzarasov of the Plekhanov Russian University of Economics. Dzarasov describes a system in which the rule of law is haphazard, and entrepreneurs depend for their commercial survival on the favour of corrupt bureaucrats. Control of enterprises is concentrated in the hands of “big insiders”, who for purposes of tax evasion and financial fraud conceal their ownership behind an elaborate “offshore cloud” of fictitious foreign-registered companies. Hostile takeovers are a commonplace, routinely backed by physical violence. In these circumstances, senior managers make up for their insecure tenure by plundering company revenues, using the “offshore cloud” to hide the proceeds abroad.[11]

 

Phenomena such as these are not unknown in the capitalism of countries much richer than Russia. Capitalist doctrine, of course, condemns them as a danger to the system. In advanced capitalist countries they are not so prevalent as to stop investment and accumulation from going ahead. But in Russia these marks of weakly developed capitalism are not incidental but pervasive, and play a key role in keeping the country’s economy in semi-developed form. Within Russia’s “Jurassic capitalism”,[12] little of the profit pie is left for investors who are not themselves big insiders, or closely in league with them. Understandably, levels of productive investment are abysmal.[13] Dzarasov cites data showing that the present average age of Russian industrial equipment, at around 21 years, is roughly twice the figure at the end of the Soviet period.[14]

 

Russian monopolism

 

The forms of Russia’s present-day capitalism include a high degree of monopolism. In almost all sectors of the economy, a relative handful of corporations dominate. This might suggest a close match between the processes of Russia’s capitalism and those of the system as found in advanced, imperialist countries, but the analogy is deceptive. Today’s Russian monopolism, to paraphrase Lenin, did not arise out of a “high stage” of capitalist production and accumulation. Typically, Russia’s monopolies have their roots in the large, integrated production complexes that were favoured by Soviet planning. Reinforcing the trend to monopoly has been the fact that in capitalist Russia’s violent, chronically unstable business milieu, medium-sized firms rarely prosper.

 

Meanwhile, it should be noted that monopolies are no longer unusual in the countries of today’s capitalist semi-periphery. As well as reflecting the process of concentration that occurs in all capitalisms, this situation also stems directly from state initiatives. Developing-country governments have often set up wholly or majority state-owned monopoly corporations, like the Iranian, Saudi and Nigerian state oil corporations. The existence of these corporations does not mean that the countries concerned are imperialist.

 

Privately-owned monopolies in developing countries tend to differ from their imperialist-world counterparts by being far smaller. Russia has few companies, either private or state-owned, that approach in scale the “hyper-corporations” of the advanced West. In Forbes magazine’s 2015 list of the world’s 2000 largest publicly-traded companies, the highest-placed Russian firm is the gas corporation Gazprom in 27th place, while the oil corporation Rosneft is listed at number 59.[15] Both these companies are majority state-owned. The largest privately-controlled Russian corporation listed by Forbes is LUKOIL, in 109th place. In all, Russia rates 27 firms in the Forbes list – similar to Brazil with 25, and well behind India with 56.

 

The top tier of Russian corporations is heavily dominated by firms with their base in natural resources extraction or raw materials processing (including metallurgy), and whose output is largely exported. Apart from two state-controlled banks, the largest eight Russian companies listed by Forbes all have this character. For export-oriented extractive industries to have major weight in the economy is unusual for advanced capitalism. But it is encountered frequently among countries of the periphery – and especially among the least developed, most dependent states.

 

The most powerful privately-controlled Russian company that does not have an obvious link to the resource sector is the retail chain Magnit, at number 701 on the Forbes list. Russia’s non-extractive, non-processing private corporations are thus rather modest in size by world standards.

 

A Russian finance capital?

 

In his writings on imperialism, Lenin speaks of “the creation, on the basis of…‘finance capital’, of a financial oligarchy”.[16] But the key positions of today’s Russian business elite are not financial. The fusion of industrial and financial capital that Lenin identifies with modern imperialism is not the major face of Russian capitalism, and has occurred in the country only to a limited degree.

 

In the literature on Russia’s financial industry, numerous comments and statistics attest that this sector is small and relatively undeveloped. Russia is strikingly poor in financial assets. Credit Suisse in its Global Wealth Databook for 2015 cites the astonishingly low figure for financial assets per adult in Russia in mid-2015 of $2,490, compared to $8,204 in Brazil, $25,962 in Chile, and figures in Western Europe that mostly top $100,000.[17] The low figure for Russia reflects the weak development since Soviet times of the financial instruments, including stocks, bonds, money market funds and bank deposits, that in most parts of the capitalist world make up the bulk of wealth.

 

Within the finance capital of an imperialist country, a central element is a highly developed banking system. Lenin speaks of “the ever-growing merger, or…coalescence, of bank and industrial capital and…the growth of the banks into institutions of a truly ‘universal character’.”[18] But there is nothing universal about Russia’s banks. A commentary from 2012 has the following note: “Banking-sector assets represent only 75 per cent of gross domestic product, compared with developed economies, in which banking assets typically exceed 100 per cent of GDP.”[19]

 

Russia’s small banking industry is dominated by two majority state-owned banks descended from Soviet financial institutions. Neither of these two is especially big in world terms. In the SNL Financial list of the world’s largest 100 banks as of 31 March 2015, Sberbank ranks at number 59 while the VTB Group holds 100th place.[20] The remaining Russian banks are much smaller.

 

With a market capitalisation in May 2015 of $26.9 billion, Sberbank measured on this basis is less than one-tenth the size of the world’s largest bank, the U.S.-based Wells Fargo, and not much more than 40 per cent as big as Brazil’s largest bank, Itaú Unibanco.[21] Brazil, moreover, has four banks in SNL Financial’s top 100, compared to Russia’s two.

 

Since the dissolution of the Soviet Union, Russia’s banking system has had a chaotic history that reflects the criminality and general dysfunction of Russian business. During the 1990s, many hundreds of small banks were founded by rising business magnates, often as poorly-concealed tools for financial malfeasance. Press reports on the Russian banking industry complain of poor lending practices, lack of transparency, high rates of bad loans, money-laundering and at times, massive fraud. In December 2015 Bloomberg reported that in the course of that year around 100 Russian banks, representing 13 per cent of the industry, had been stripped of their licenses by the Central Bank authorities.[22]

 

The two top Russian banks are important corporate players, but to try to depict Russia’s small finance capital as a hegemonic sector making up the core of the economy is naïve. The real hegemonic force in the country is a close fusion of top state officials with industrial oligarchs, the latter mainly from the resource-extractive and metals-processing fields. For decisive power to be held by such a cabal of bureaucrats and resource-based, export-dependent business chiefs is a pattern that has many precedents in the history of peripheral countries.

 

Russia’s finance capital, meanwhile, has never made much impact in the archetypal role played by this sector in modern imperialism – as the cutting edge of economic expansion outside the country’s borders. Unlike major Western banks with their massive international operations, Russian banks focus overwhelmingly on domestic lending. A partial exception is the VTB Group, reconfigured by the Russian government in 1990 to service the country’s international trade. As of the end of 2013, VTB was operating in 23 countries, with notable stakes in Belarus, Kazakhstan and Ukraine. Sberbank entered the international field in 2006 and by 2012 had purchased banks in Kazakhstan, Ukraine, Belarus and Turkey, stating that it planned to generate about five per cent of its net income outside Russia by 2014.[23]

 

Russian banks were eventually to gain a foothold in Ukrainian financial markets. But their position in Ukraine has never been dominant, even in relation to other foreign banking interests. In 2014, three Russian banks – Sberbank, AlfaBank and the VTB group – held 3.2%, 2.8% and 2.8% of the Ukrainian banking market respectively, out of total market share of 31 per cent held by foreign banks.[24]

 

Russian industry and trade: imperialist or dependent?

 

As explained earlier, the top tier of Russian corporations is dominated heavily by firms with their base in raw materials extraction and processing. The industrial sectors in imperialist countries present a sharp contrast, with knowledge-intensive, high value-added functions normally prevailing. Even in imperialist countries where extractive industries are important, as in Canada and Australia, the economies are generally diverse, with a broad range of activities making substantial contributions to GDP.

 

The Soviet Union in its later decades had a diversified economy, with all important productive sectors at least moderately developed. The return to Russia of capitalism, however, has seen broad areas of production go into catastrophic decline. While the arms industry remains globally competitive, Russia’s civilian industries have been starved of investment. High-tech civilian firms have been among the hardest hit.[25] The relatively backward nature of most industrial production in today’s Russia aligns the country firmly with the developing, not the developed world.

 

In their export trade, imperialist countries typically show a marked bias toward sales of sophisticated, high-value merchandise; of knowledge-intensive technical services; and also of financial services. Here too, Russia bears the marks of the periphery. Services in 2013 provided a low 11.8 per cent of total Russian export sales, and in this area the country ran a massive deficit.[26] The structure of Russian merchandise exports further reflects the “de-development” of industry since Soviet times; in 2013 energy carriers and mineral products made up 71.5 per cent of the total, with refined metals, basic chemicals, forestry products and foodstuffs accounting for most of the remainder. The category of machines, equipment and vehicles comprised only 5.5 per cent,[27] consisting mostly of weapons and related military supplies.[28] On the other side of the ledger, machines, equipment and vehicles made up 48.5 per cent of merchandise imports.[29]

 

In absolute terms, World Bank data for 2013 put Russia’s exports of high-technology products at $8.656 billion - roughly half the figure for India, about the same as for Brazil, and less than 30 per cent of the sum for (imperialist) Italy.[30] Brazil and Italy have GDP at current prices close to that of Russia.

 

The picture of Russia that emerges here is not of an imperialist power but of a petro-state that must pay top prices to import most of its sophisticated equipment, while depending for its solvency on sales of a handful of low value-added generic commodities. In marketing most of its key exports (natural gas is an exception), Russia competes directly with other low-wage, low-productivity countries. When world markets for these commodities are saturated and prices are low - as they very frequently are – the wealthy countries that are often the main purchasers can secure their needs for almost derisory sums.

 

Significantly, Russia conducts little of its trade with the poorer countries of the periphery, whose trade offerings and purchases tend to replicate its own. Its main sources of imports are countries of the centre (especially the EU) and a range of semi-peripheral states (China, and various countries of the former USSR) that share its general level of economic development.[31] Russia thus gains almost nothing from the lopsided trading relations that siphon value to the imperialist centre at the expense of the world’s poorest inhabitants. Indeed, we have to surmise that the country loses heavily from unequal exchange.

 

Russia’s outward foreign investment: behind the ‘cloud’

 

All capital must seek to expand, and in their pursuit of profits, capitalists in semi-peripheral countries will frequently search out investment opportunities outside their national borders. This is despite typically acute shortages of capital for tasks of national development at home. Rates of genuine outward investment by non-imperialist countries, however, do not as a rule approach those for countries of the imperialist centre.

 

Russia’s raw figures for outward foreign investment present a tangle of paradoxes. Suggesting massive capital exports, the figures seem to place the country at the apex of imperialism. But what are we to make of the fact that the Russian Central Bank’s figures for foreign direct investment put the main destination (by far) of Russia’s capital exports as Cyprus, followed by the British Virgin Islands?[32] Both these territories are notorious as tax havens and money-laundering centres.

 

Russian entrepreneurs often acquire their enterprises for startlingly small sums through hostile raids, backed by corruption and violence. If the businesses are unprofitable, as is often the case, assets will routinely be stripped and sold. The uncertainties of Russian capitalism then make the attractions of capital flight extreme.[33]

 

Even where the goal of entrepreneurs is not to strip companies and shut them down, large sums that might be used to modernise the enterprises finish up abroad. Plundered by owners and senior managers who know they could at any time be thrown out of their offices by masked gunmen, these funds after laundering are mostly invested in the West - for the most part, reputedly, in low-risk securities or real estate.

 

Meanwhile, even the routine, day-to-day operations of Russian business require that manoeuvres around the law be made untraceable. For this purpose, large sums are continually “round-tripped” between Russia and the offshore zones, and these transfers register as “foreign investment”. Any attempt to determine how much of Russia’s capital exports can be described as “real” – and claimed, conceivably, as proof of imperialism - thus contains an element of guesswork. But from surveys of particular firms and their identifiable investments, some observations are possible.

 

A 2013 study of the top 20 non-financial Russian multinational enterprises gives a figure for their total foreign assets at the end of 2011 of $111 billion.[34] For comparison, this total was only about a third of the foreign holdings in 2013 of the world’s largest non-financial multinational, the U.S.-based General Electric Co., alone, and less than half of the foreign assets of Exxon Mobil Corporation.[35]

 

Globally, none of the Russian non-financial multinationals rates among the top 100 such firms when ranked by foreign assets.[36] The 2013 study cited above puts the share of foreign holdings in the assets of the top 20 non-financial Russian multinationals at a modest 14 per cent. World-wide, top-ranking multinationals commonly have well over half their holdings outside their “home” countries, and for resource-based firms (most of Russia’s leading capital exporters are in this category) this tendency is especially marked.[37]

 

The largest Russian foreign investor, LUKOIL, is recorded by the above-cited study as having oil and gas projects in 14 foreign countries, as well as refineries, petrochemical plants and chains of filling stations. But with foreign assets in 2011 of $29.16 billion,[38] LUKOIL in that year had only about one-tenth of the foreign holdings of the world’s largest oil multinational, Royal Dutch Shell.[39] LUKOIL’s foreign assets in 2011 amounted to barely a third of its holdings overall.[40]

 

Plainly, Russian multinationals are mostly small beer, and their foreign investment tends to be merely an adjunct to their activity within Russia’s borders.

 

A favourite argument of supporters of the “Russian imperialism” thesis nevertheless concerns plans, headed by the state-controlled conglomerate Rostec, for new Russian investments in Africa. United Nations figures show past Russian investment in Africa as relatively small-scale, with cumulative direct investment in 2011 of about $1 billion.[41] But over the coming decade, Rostec projects building a $4 billion oil refinery in Uganda and a $3 billion platinum complex in Zimbabwe.[42]

 

Impressive as these plans might seem, they do not compare remotely with the foreign investment activity of real imperialist powers. Canada, for example, has GDP at current prices about the same as Russia’s. But alongside Canada’s foreign investors, Russian firms are stay-at-home skinflints. Canadian mining companies in 2012 operated 80 mining projects in Latin America and had 48 more at the development or feasibility stage.[43] In 2013, Canadian foreign direct investment in Chile amounted to C$18.2 billion; in Mexico to C$12.3 billion; in Brazil to C$11.1 billion, and in Peru to C$8.1 billion.[44] In Africa, the projected Russian investments are almost trivial beside the existing activity of Australian resource firms.[45]

 

Russian investment in the CIS

 

After “Cyprus” and Western Europe, Russian foreign investment has been concentrated in other post-Soviet countries of the Commonwealth of Independent States (CIS).[46] Quantifying this investment precisely is impossible, since much of it is unquestionably routed through the “offshore cloud”. But with all due allowances, Russian corporate expansion into the CIS countries has to be seen as small by world standards, and minor in terms of overall Russian capital exports.[47]

 

Russian government figures, for what they are worth, suggest that in terms of accumulated funds, the only one of the CIS countries that in 2011 rated among the top ten global destinations of Russian foreign investment was Belarus, in fifth place.[48] Data for specific transactions reveal a pattern in which major Russian investment deals in the CIS have been few in number. A list of the largest global share purchases by Russian firms between 2005 and 2010 shows that of 24 deals, only four involved assets in CIS countries. The largest of these saw the acquisition by the Russian telecommunications firm Vimpel-Com in 2010 of the Ukrainian mobile phone company Kyivstar, for $5.589 billion. Other Russian share purchases in the CIS countries were much smaller, of $2.5 billion or less.[49] These sums are significant, but it is clear that in their aggregate they lag massively behind, for example, Canadian investment in Latin America.[50]

 

In Ukraine, government figures at the end of 2012 put Russia well behind Germany and the Netherlands as a source of cumulative foreign direct investment, with a slender seven per cent of the total.[51] The Russian economic presence in Ukraine is in fact more substantial that this would suggest, since investment has also been directed through offshore zones. Russian interests dominate Ukrainian telecommunications, oil refining and aluminium production, with further important stakes in ferrous metallurgy, mechanical engineering, and electricity generation and distribution.

 

Political developments in the past few years, however, show plainly that the impact of Russian investment in Ukraine has been far from hegemonic. Russia’s economic relations with Ukraine since Soviet times have not been those of an imperial overlord, but rather, have unfolded in the context of economic interpenetration between neighbouring countries on similar levels of technological and social development. The holdings of Ukrainian oligarchs in Russia, it should be noted, are by no means negligible.[52]

 

Military potential and arms exporting

 

Only somewhat less fundamental than the dominance by imperialist countries of global economic structures is the role they play in policing the world order. Countries of the centre are typically members of politico-military blocs directed against the periphery and semi-periphery. Leading imperialist powers have important weapons industries, and participate as sellers in the global arms trade.

 

Does Russia’s military potential, along with its arms production, suggest the country should be seen as part of the imperialist camp? Military potential can fulfil defensive purposes as well as aggressive ones. If we examine Russia’s armed forces not simply as a military aggregate, but as a factor in a broad standoff of international political forces, we find the evidence points in a distinctly un-imperialist direction.

 

By far the dominant military power in the European region – and indeed, the world – consists of the 28 member states of NATO. In their combined 2014 “defence” spending, NATO members outstripped China by a factor of about 4.4, and Russia by more than ten to one.[53] True, a dollar in low-wage Russia buys more military potential than in Western Europe or the U.S. But if an appropriate adjustment is made, the difference is still arguably at least five to one.[54]

 

In the decades since the Soviet Union expired, NATO has been expanded to the point where Russia now faces an arc of U.S.-aligned states, on or near its borders, from Turkey to the Gulf of Finland. Anyone who accepts the existence of imperialism ought to concede that as an economically vulnerable country - and as the object of unsubtle armed threats from the world’s most potent military bloc - Russia is entitled to assign relatively large resources to its self-defence.

 

Part of the cost of Russia’s military defence is defrayed through arms exports. In 2014, the Russian arms production complex sold a record $13.2 billion worth of weaponry on world markets.[55] In the years from 2010 to 2014, Russia commanded 27 per cent of global arms sales, second only to the U.S. with 31 per cent, though with a far more narrow spread of customers.[56]

 

These numbers, however, need to be kept in perspective. In 2013, Russian arms firms enjoyed total sales at home and abroad of $31 billion.[57] But this sum was less than sales that year by the world’s largest single arms corporation, Lockheed Martin, alone.[58] In 2014, seven Russian firms made the list of the world’s top 100 arms producers. But the figure for U.S. corporations was 42, with seven of the top 10 places.[59]

 

Meanwhile, the weakness of the claim that large-scale weapons exports are in themselves evidence of imperialism is shown by the fact that in 2012 the world’s fourth-largest armaments exporter was Ukraine, supplying weapons under contracts signed with no fewer than 78 countries.[60]

 

Social structure and welfare provisions

 

For many non-specialists, economic and even military factors are less important for distinguishing between imperialist and non-imperialist countries than the quality of the daily lives of the masses of ordinary citizens. In imperialist countries, the perception goes, such people live well, and when they do not, they at least benefit from functioning state health and welfare systems.

 

To be more scientific, imperialist countries possess sizeable middle classes, consisting of better-paid hired employees, independent professionals, and small and medium entrepreneurs.[61] The “good life” of these layers reflects to a significant extent the success of imperialism in extracting value from developing-world populations. Meanwhile, the relative prosperity of broad middle classes feeds into and sustains imperialism. Middle-class people exercise effective consumer demand that underpins a multitude of national businesses, and their savings make an important contribution to the financial system. Their contentment with their lives feeds conservative attitudes, securing social peace at home and consent to wars abroad.

 

How does Russia rate according to these criteria? The Russian middle class, as properly understood, is tiny. There is simply no way that the mass of Russian wage workers can be considered “middle-class”. A 2013 dataset, compiled before the steep devaluation of the ruble in the later months of 2014, shows a large majority of Russians with per capita monthly incomes in the range of $300-800.[62] In Russian cities, especially Moscow and St Petersburg, such sums even at their upper level cover little more than basic food and clothing, together with utility charges and transport fares. Such incomes are bearable for working people only because most do not pay rent, having been able to privatise their previously state-owned apartments.

 

What amount of income in Russia really confers middle-class status, in the meaningful sense of having appreciable discretionary spending power and an ability, if desired, to save money? As a rather generous rule of thumb, we shall define a middle-class income in Russia as the sum needed to secure a modest Western-style standard of living.

 

In 2013, U.S. Census data reveal, median per capita income (half below, half above) in the U.S. stood at $1,668 per month. This sum does not buy an opulent life-style in the U.S., and nor does it do so in Russia. Still, a Russian family with a per capita income of $1,668 per month in 2013 could buy a used car and household durables including a large, flat-screen television set, as well as tasteful clothes and furnishings. They could take out a mortgage on a modest apartment, dine occasionally in restaurants, and think about holidays in Turkey.

 

At what point, in Russia’s 2013 scale of income distribution by population, did the above level of well-being cut in? Data from that year show that only 10.9 per cent of Russians had per capita money incomes greater than 50,000 rubles per month - at that point about $1,520. [63] This indicates strongly that in that relatively prosperous year the proportion of Russians with lifestyles resembling those of median-income Americans, or better, was no more than about 10 per cent.

 

Clearly, there is nowhere in this picture for a broad, prosperous middle class, exercising substantial consumer demand. Most Russians get to consume little more than essentials, with the result that consumer manufacturing and services remain weak.

 

In imperialist economies, high labour productivity is underpinned by developed education, health and social security systems. Neo-liberalism in recent decades has seen these systems come under relentless attack, but they remain a distinctive feature of advanced capitalism.

 

In Russia, social provisions have deteriorated markedly since Soviet times. The country continues to turn out impressive numbers of highly-trained personnel, but spending on education is now well below average OECD levels, both in absolute terms per capita and as a proportion of GDP.[64] Gross spending on research and development fell from two per cent of GDP in 1990 to an essentially developing-world figure of one per cent in 2008,[65] before recovering to 1.5 per cent in 2013. The latter figure compares with 2.8 per cent in the U.S. and Germany, and 3.4 per cent in Japan.[66]

 

It is in the area of health care, however, that Russian capitalism has caused the country to regress most spectacularly to developing-world status. Acute funding shortages have forced large-scale spontaneous privatisation of health services. In a 2015 world survey of life expectancy, Russia with its average figure of 70.47 years was rated at number 153 of 224 listed countries, behind Honduras and Bangladesh.[67]

 

Conclusion: the necessity for Leninist analysis

 

Summing up, what causes might be found for admitting Russia to the “gated community” of highly developed capitalist states, the imperialist countries? In essence, none - or perhaps one, if we ignore the specificities of Russia’s arms production and accept this as an “imperialist” characteristic.

 

On the other hand, Russia exhibits a dense clustering of the characteristics needed to identify it as part of the capitalist semi-periphery.

 

Russia is not home to an advanced capitalism, or to a broad, prosperous middle class. Its monopolies tend to be puny alongside those of various countries that are clearly part of the semi-periphery, let alone the corporate monsters of the imperialist centre. Russian industrial production has lost much of its past diversity, and its overall technical level is decidedly backward, while in a pattern reminiscent of the least developed areas of the periphery, the extractive sector accounts for a notably large share of output. Russia’s foreign trade has a markedly dependent character, and the country exports mainly basic commodities for which prices are often depressed. Conducting little trade with poorer areas of the periphery, Russia does not benefit significantly from unequal trading exchange. There is no overall surplus of capital in Russia, and while the country nonetheless exports capital, this is for perverse reasons and despite a near-catastrophic lack of investment in infrastructure and productive plant.

 

With its real foreign investment concentrated in countries of the centre, Russia plays little direct part in the quintessential imperialist activity – the export of capital to the periphery and the extraction of profit from developing-country labour and resources. Russia’s finance capital is small and weak, and the largely criminalised, chaotic nature of the Russian financial sector rules out any possibility that this sector might play a hegemonic role within the economy.

 

No possible doubt can remain here: in the terms that Lenin defined, present-day Russia is not an imperialist power.

 

But who was Lenin anyway? And a century after he wrote, does today’s left still have to line up at his mausoleum? Aren’t there alternative analyses, more modern, incorporating the changes imperialism has undergone since 1916?

 

There are – but not Marxist ones. A materialist analysis of today’s capitalist world-system – and of its salient feature, the staggering global polarisation of wealth between its privileged core and impoverished outlier territories - has to base itself on Lenin’s definitions and methodology. Various modifications to Lenin’s analysis are indeed required, and the concept of the semi-periphery is just one of them. But are we to suppose that there can be an adequate take on modern imperialism that doesn’t rest on monopolism, on the power of finance capital, on the system’s over-accumulation of capital and on its resulting compulsion to expand its sphere of operations? And where all or most of these elements are missing, or are present only in part and ambiguously, doesn’t that mean we’re dealing with a fundamentally different, non-imperialist entity?

 

Perhaps, though, we’re too hung up on the material realm and the constraints it puts on our thinking. Perhaps the definitions we should be applying are “definitions of the deed”. Maybe the crucial consideration is not what Russia is, but what it does. If a country uses its armed strength to meddle in affairs outside its borders, doesn't that make it imperialist per se?

 

The trouble with that line of argument is that it quickly leads to truly bizarre conclusions. Many wars have been fought in the past half-century between countries of the periphery, and if we categorise Russia as imperialist simply on the basis that it has made armed incursions into nearby countries, then logically we should also speak of Pakistani imperialism, or Iraqi imperialism, or even, in recent times, of Sudanese imperialism.

 

If we categorise as imperialist countries that are clearly part of the developing world, how are we to explain the gulf between the global rich and poor? Used in this impressionistic, essentially liberal fashion, the term “imperialism” loses all potential as a tool for analysis. Understanding the nature and dynamics of present-day world capitalism then becomes impossible.

 

Specifically, if we reject a materialist analysis, we lose the ability to distinguish between the global hegemons and their victims. In crucial conflicts, we find ourselves displaying a myopic even-handedness that damns the mugged along with the muggers. In these circumstances, international resistance to imperialist violence is confused and blunted. The victims are denied our solidarity. From being opponents of imperialism, we are transformed into something close to its accomplices.

 

Renfrey Clarke is an Australian writer and political activist who throughout the 1990s was Moscow correspondent for Green Left Weekly. Roger Annis is a retired Canadian aerospace worker, solidarity activist and blogger who has made repeated research trips to Crimea and the Donbass. Both Annis and Clarke are among the editors of the New Cold War website.

 

Notes

 

[1] Fuelling this debate in particular have been developments in Ukraine since U.S. and Western European imperialism in February 2014 secured the overthrow of the elected administration of Viktor Yanukovych. This overturn had been plotted in some detail by U.S. diplomats, and U.S. agencies had spent billions of dollars on preparing it. When opposition to the new ultra-right Kyiv government surfaced as popular revolts in Crimea and the Donbass, and received support from Moscow, the Western media were quick to accuse Russia of “imperialism”. This meme was then taken up and repeated uncritically by important sections of the Western left.

 

[2] V.I. Lenin, Selected Works. Moscow, Progress Publishers, 1970, vol. 1, p. 737.

 

[3] GDP per capita at PPP, World Bank, 2014, https://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita.

 

[4] See Lenin’s 1916 essay, The Discussion on Self-Determination Summed Up. In National Liberation, Socialism and Imperialism: Selected Writings by V.I. Lenin. N.Y., International Publishers, 1968, 1970, p. 164.

 

[5] Ibid., p. 147.

 

[6] See Lenin, Selected Works, vol. 1, p. 736: “Capitalism only became capitalist imperialism at a definite and very high stage of its development, when … the features of the epoch of transition from capitalism to a higher social and economic system had taken shape and revealed themselves in all spheres.” [7] http://knoema.com/sijweyg/gdp-per-capita-ranking-2015-data-and-charts.

 

[8] Table 2-4, http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=C26E3824-E868-56E0-CCA04D4BB9B9ADD5.

 

[9] Calculated from stats.oecd.org/Index.aspx?DataSetCode=PDB_LV. OECD figures. See http://www.themoscowtimes.com/business/article/russians-named-europes-least-productive-workers/527669.html.

 

[10] Outstanding exponents of this thesis include Moscow State University political economists Aleksandr Buzgalin and Andrey Kolganov.

 

[11] See Ruslan Dzarasov, The Conundrum of Russian Capitalism (London, Pluto Press, 2014).

 

[12] This expressive phrase is that of Buzgalin and Kolganov.

 

[13] According to the World Bank, gross fixed capital formation in Russia in 2013 was 21.47 per cent of GDP, down from more than 30 per cent at the end of the Soviet period (www.tradingeconomics.com/russia/gross-fixed-capital-formation-percent-of-gdp-wb-data.html).

 

[14] Dzarasov, op. cit., pp. 203, 204).

 

[15] www.forbes.com/global2000/list#tab:overall.

 

[16] Lenin, Selected Works, vol.1, p. 737.

 

[17] Table 2-4, http://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=C26E3824-E868-56E0-CCA04D4BB9B9ADD5.

 

[18] Lenin, op. cit., p. 701.

 

[19] https://www.atkearney.com/documents/10192/572733/

 

A_Chessboard_Strategy_for_Russias_Banking_Market.pdf/390d7bc6-8cc3-4f9c-9fd3-d71f4226c026.

 

[20] https://www.snl.com/InteractiveX/Article.aspx?cdid=A-33361429-13866.

 

[21] See www.forbes.com/companies/sberbank; www.relbanks.com/worlds-top-banks/market-cap; www.forbes.com/companies/itau-unibanco-holding/.

 

[22] http://washpost.bloomberg.com/Story?docId=1376-NZCGV56S972G01-6K92CFG6J3D6CLN5DUCPTT15MB.

 

[23] https://www.denizbank.at/en/AboutUs/AboutSberBank/AboutSberbank.html.

 

[24] CEE Banking Sector Report June 2015, http://www.rbinternational.com/eBusiness/services/resources/media/829189266947841370-829189181316930732_829602947997338151-1078945710712239641-1-2-EN-9.pdf.

 

[25] In a 2014 article, Moscow economic researcher Olga Koshovets had this comment on the fate of Russia’s civilian high-tech industry: “The existing production and technology capacities is [sic] practically exhausted, since it was created in the USSR and after its fall almost no new factories have been built and the existing production facilities haven’t been developed” (http://www.scientific-publications.net/get/1000007/1409340758352379.pdf,

 

[26] Rosstat, 2013. See www.gks.ru/bgd/regl/b14_13/IssWWW.exe/Stg/d04/26-01.htm.

 

[27] www.gks.ru/bgd/regl/b14_13/IssWWW.exe/Stg/d04/26-10.htm.

 

[28] Russian arms exports, despite their success on world markets, have not altered the structure of Russia’s export trade substantially. In recent years weapons and military equipment, which make up about 60 per cent of Russia’s high-technology exports, have accounted for only about 3% of the country’s exports overall. See Olga B. Koshovets, http://www.scientific-publications.net/get/1000007/1409340758352379.pdf.

 

[29] www.gks.ru/bgd/regl/b14_13/IssWWW.exe/Stg/d04/26-13.htm.

 

[30] data.worldbank.org/indicator/TX.VAL.TECH.CD/countries.

 

[31] See atlas.media.mit.edu/en/profile/country/rus/#imports.

 

[32] www.cbr.ru/eng/statistics/print.aspx?file=credit_statistics/dir_inv_out_country_e.htm&pid=svs&sid=ITM_586.

 

[33] The Moscow Times in May 2015 cited Russian government data that put the country’s net capital outflow in 2014 at $154.1 billion, and the total since 1999 at about $550 million. The paper goes on to note that according to independent researchers, the actual total may be greater than $1 trillion (www.themoscowtimes.com/business/article/russia-massive-capital-flight-continues/520112.html).

 

[34] IMEiMO and Vale Columbia Center, “Global Expansion of Russian Multinational after the Crisis: Results of 2011”. ccsi.columbia.edu/files/2013/10/Russia_2013.pdf.

 

[35] http://topforeignstocks.com/2014/09/16/the-worlds-top-100-non-financial-tncs-ranked-by-foreign-assets/.

 

[36] Ibid.

 

[37] Ibid.

 

[38] IMEiMO and Vale Columbia Center, “Global Expansion of Russian Multinational after the Crisis: Results of 2011”. ccsi.columbia.edu/files/2013/10/Russia_2013.pdf.

 

[39] www.economist.com/blogs/graphicdetail/2012/07/focus-1.

 

[40] LUKOIL’s total assets in 2011 were $84 billion. See http://www.forbes.com/lists/2012/18/global2000_2011.html.

 

[41] unctad.org/en/PublicationsLibrary/webdiaeia2013d6_en.pdf.

 

[42] www.voanews.com/content/sanctions-hit-russia-looks-to-africa-to-boost-arms-tech-sales/2709611.html.

 

[43] cidpnsi.ca/Canadian-mining-investments-in-latin-america/.

 

[44] www.parl.gc.ca/Content/LOP/ResearchPublications/2014-49-3.html; cidpnsi.ca/Canadian-foreign-direct-investment-abroad/.

 

[45] Australian resource firms were recorded in 2014 as operating in more than 1000 projects across 30 African nations, and as having discovered almost $A700 billion (about $US650 billion) worth of minerals across the continent over the previous five years (www.abc.net.au/news/2014-09-03/miner-look-to-africa-for-new-opportunities/5716934).

 

[46] An American study notes that of the foreign assets held in 2011 by the 20 largest Russian multinationals, more than 66 per cent were in Europe and in Central Asia, with 28 per cent in former republics of the USSR. See ccsi.columbia.edu/files/2013/10/Russia_2013.pdf.

 

[47] A 2014 study, citing Russian Central Bank data, states that of total Russian foreign assets in 2012 of $1241.4 billion, only $50.4 billion (4.1%) was held in other CIS states. See www.kier.kyoto-u.ac.jp/DP/DP899.pdf. These figures do not, however, take account of the “Cyprus” factor.

 

[48] See Rosstat, www.gks.ru/bgd/regl/b12_13/Isswww.exe/Stg/d5/24-24.htm.

 

[49] A.V. Buzgalin, A.I. Kolganov and O.V. Barashkova, “Rossiya: novaya imperialisticheskaya derzhava?” Unpublished manuscript, 2015.

 

[50] The 2005-2010 Russian purchases of CIS assets recorded by Buzgalin, Kolganov and Barashkova (op. cit.) total less than $12 billion.

 

[51] State Statistics Committee of Ukraine, cited in www.e-finanse.com/artykuly_eng/276.pdf.

 

[52] See lenta.ru/articles/2014/09/04/property.

 

[53] Figures from the Stockholm International Peace Research Institute (books.sipri.org/files/FS/SIPRIFS1504.pdf).

 

[54] In the case of Russia, the multiplier applied to nominal GDP in US dollars to obtain GDP at PPP is about 2.0 (IMF, World Bank).

 

[55] www.themoscowtimes.com/article.php?id=526366.

 

[56] SIPRI International arms transfers 2014 (books.sipri.org/files/FSSIPRI1503.pdf). Almost 60 per cent of Russian arms sales during these years were to just three countries, India, China and Algeria.

 

[57] www.themoscowtimes.com/business/article/russian-arms-exports-hit-13-billion-in-2014/513553.html.

 

[58] www.sipri.org/reseaarch/armaments/production/recent-trends-in-arms-industry/The SIPRI Top 100 2013.pdf.

 

[59] people.defensenews.com/top-100/.

 

[60] www.kyivpost.com/content/ukraine/worlds-4th-largest-arms-exporter-in-2012-according-to-sipri-321878.html?flavour=full.

 

[61] North American bourgeois sociology, that denies or disputes the concept of a working class, obscures the class structure under advanced capitalism by categorising most employed workers as “middle class”. But when huge numbers of American workers live from pay to pay, or depend on welfare support to get by, this categorisation is plainly absurd.

 

[62] Figures prepared for this study by Anna Ochkina of Penza State Pedagogical University, on the basis of Rosstat data and surveys of household budgets. Personal e-mail 16 Aug 2015. [63] Figures prepared by Anna Ochkina from Russian statistical sources.

 

[64] See www.oecd.org/edu/Russian Federation_EAG2013 Country Note.pdf.

 

[65] www.oecd.org/sti/inno/46665671.pdf, accessed 7 Feb 2016.

 

[66] https://go8.edu.au/sites/default/files/docs/publications/policy_note_government_research_funding_in_2014_in_selected_countries_final.pdf, accessed 7 Feb 2016.

 

[67] http://www.infoplease.com/world/statistics/life-expectancy-country.html, accessed 7 Feb 2016.

 

Comments

Russian imperialism

I think a reasonable case can be made that Russia is not imperialist.

However, this is not the axis of the debate that really matters, namely how to assess the role of Russia in Ukraine and Syria. With respect to Ukraine, Annis staked out a position that looks absurd in retrospect, namely that the Russian-backed separatists were some kind of progressive force. Along with Kagarlitsky, who described Luhansk and Donetsk as "the perfect embodiment of the anarchist concept of the revolutionary order", he essentially served as an apologist for the Kremlin that was consistent with the Great Russian Chauvinsim that Lenin decried.

In terms of Syria, Annis has recently emerged as a partisan of the Russian blitzkrieg that is modeled on Putin's war on the Chechens. His analysis is in line with the reactionary axis that includes Patrick Cockburn on the "left" and Marine Le Pen on the right. Disgusting really.

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