YAKOV KROTOV

HOW TO UNDERSTAND RUSSIAN ECONOMY

The main reason why it is hard for Westerners to understand the Russian economy is that the basic differences in terminology describing it are masked. You read and hear about "debts," "government," "companies," "banks" and you presuppose that these terms have the same meaning as in the West.

It is quite different with the famous Russian Orthodox icon-painting. The specialists are very eager to explain the differences in the basic terms between icon-painting and the art of painting deriving from the Renaissance tradition. Everything is different: material, paints, the laws of perspective etc. etc.

However, as concerns the Russian economy, the specialists (Russian as well as Western) are not at all quick to explain that it resembles the Western economy no more that Rublev's icons resembles Da Vinci's Madonnas. This unwillingness is so strong that it can not be explained only by fiscal interests of economic experts. Certainly they are more interested in arguing that it is necessary to invest in the Russian economy than not (and therefore state that Westerners can understand it and get profit out of it), because the absence of investments from the West would mean the absence of the necessity of such experts. But the main reason why economists can not explain the Russian economy for Westerners is less selfish: the basic differences between the Western economy and the Russian are of a non-economic nature.

Before looking at these differences it is useful to remember that the border between two economic types is not political or cultural. Italy combines usual Western types (North) and the types which are closer to Russian (South). It is interesting to mark that Southern Italy until the 11th century was Eastern Orthodox, but post hoc... Moreover, the border can be chronological: Russia before 1917 was a country of the Western type (industrial) and Eastern at the same time.

The structural difference of the Russian and Western societies can be compared with the difference between water and ice. Russian people prefer to remain unstructured mass. The West prefers to be a crystal structure with the person as the basic unit towards which all connections are oriented. Each type has its pluses and minuses, but neither can be called more "right" or "good". They are simply different and, moreover, both have functioned for centuries. Each types has its own criteria of success and thinks it is better.

The Law in the West must articulate and regulate the relation between persons and society. Russia prefers not to articulate this relation with the help of the Law. Or, when it does, then it uses the Law as an instrument - which is deeply alien to the Western mind and frightens Westerners. Law in Russia is permanently semi-observed, semi-violated and is never clear to the end. The best economic example: the relation of property are not regulated by the Law even now: who is the owner of this or that piece of land; factory, house, flat is yet non-addressed by any act, and the rights of the propriator can not be defended in court, the government clerks remain the main judges. That puzzles foreigners most: different organs of power are struggling with each other on this or that property without going to court. There is the so called problem of debts - but no one goes to court to get his money back. The struggle takes place in different government offices.

Practically all the Russian economy even now remains the state economy. Privatization was a fictitious process, as well as organizations of private business. The only result of "reforms" is the complicating of the system of state-governing of industry.

"New Russians" are not real bankers or managers: they are the new version of state bureaucracy, they are the "old wine in new wineskins." One of the best economic examples: so called "strikes" on TV or in mines: these are the strikes inside the 100% monopoly of the government. One and the same clerk in the ministry is "striking" as the leader of the "independent" trade-union of the TV workers against himself as the head of the governmental department of TV. This case was reported in the press as most puzzling. But nothing changes when there are two persons operating within one system and trying to make impression that there are two systems.

The salary is not a salary in this system, employment is not employment in the Western sense. People are not paid their "lawful" salary for nominal work but they are permitted to get money by some "unlawful" ways (speculation). Nobody fires anybody, nobody pays anything for real work, but everybody manages to get money for some unproductive or even destructive movements. No market, no competition, no risk. Everybody, from President to tiny thieve, is guilty of something from the legal point of view. Who will be put into jail is determined not by the law but by some other unspoken criteria. The result is not the destruction of the economy in general. There is something like a tithe: everybody does some useful work, although in very little quantity and of a very low quality because it is practically unpaid. The result is a very low level of economy.

Then why doesn't anybody protest? In some countries such a system has already lead to the devastating results: check out Ukraine or Serbia. Yet everybody seems to agree to live a life which Westerners think to be not simply poor but paranoid. Such a system gives a definite profit for those who are engaged in it, although this profit is more often than not purely psychological. People are proud not by their personal wealth or by the wealth of their country. The wealth is not a criteria for them at all. They are proud of the fact that they live in peace with everybody, that they are "included in the system" - and they think that Westerners are all enemies of each other because of the market economy.

Certainly that's wrong: I can not speak for the West but the peacefulness of Russian society is certainly an illusion. There are a lot of evil feelings but the decisions about their aim are held not personally, but collectively, so the person feels not guilty in exercising this hatred. Mind you, collectivism was the fundamental principle not only of Bolshevism but of the dissident movement as well.

In the West money is not the aim in itself -- it is only a symbol of success. In Russia another symbolic system is at work, people get the same level of satisfaction and feeling of self-actualization not by personal or collective wealth, but by collectivism itself. The level of life can be lowered much more than now, and people still will not protest, because the level of mutual self-confidence will remain the same. Practically this means that Russia will try to create a kind of "state capitalism."

Boris Yeltsin in his speech to the Duma very often repeated the word "rynok" ("market") and only once mentioned private property." Roman Artemyev ("Kommersant-DAILY", 1.3.1994) pointed this out and commented: "the President sees the future of Russia in 'state capitalism'". Max Weber divided all nations in terms of "trade" (leaders) and "bureaucratic" (outsiders). Artemyev states that with the present mentality Russia is doomed to be the last type.

That means in strictly economic matters Westerners are obliged not to believe any figures, any statistics, or any laws which concern Russia. Everything is misrepresented, everything has double meaning, all the words are confused. Westerners doing business in Russia must be ready to handle all kinds of lies on every level (Gaidar, dissidents, and democrats are no exception.)

Why, then, do Russians speak the language of Western economists? Why do only marginal nationalistic groups dare to speak about collectivism (or communism) as a genuine Russian way?

First, it is necessary to be in contact the West. That is why China uses Western language. But there is a second reason which is totally absent in China: we feel guilty! Russia is not in the East because Christianity was proclaimed here and was received.

The idea of the free person (free from evil collectivism) is well known (or well felt) in Russia. So we are eager to build the economy on the Western model with the person, not the amorphous society, as the main unit of it. But it is not simple -- and we began with the easiest way by imitating Western language. This is not as unimportant as it may be thought, because language in itself has a magic quality of transforming even a person who uses it hypocritically.

Let Westerners not be confused and not try to force Russia to enter the Western world of linguistics or the industrial, political and financial levels. Currently in Russia two systems of values exist - and they are struggling with each other. The result is completely unpredictible.

2.1993. (000427, 000032).