The Ghost of Nationalization

13 August 2009
The government isn't prepared to face the contradictions of a policy that takes over and nationalises enterprises from inefficient and corrupt owners at taxpayers' expense, yet then seeks to restore the same companies to the same corrupt private hands.

For the time being Russia is not haunted by the ghost of Communism, but there is a more modest and pragmatic ghost of Nationalization. Those talks started at the beginning of the summer 2009 when some enterprises forming company towns were closed down, and in August when the main assembly line of the AvtoVAZ automobile plant stopped working, the issue of nationalization of this former Soviet industry giant was raised at the trade union protest rally. Not only would the AvtoVAZ workers like this enterprise to be nationalized, the public opinion polls show that about 80% of the Russian population would support the idea of the nationalization. It would seem that the politicians, who seek the people’s support, should have jumped at the idea and, at least, they should have discussed it. The authorities should have held one or two demonstrative events in order to calm the population showing that they take the people’s opinion into consideration, or the opposition should have reproached the government with its unwillingness to consider the working people’s requests. Meanwhile, the politicians are not ready to seriously raise the nationalization issue. The liberal oppositionists, who have always upbraided the authorities for the lack of democratism, are in no hurry to call for fulfilling the demands of the majority of the people and for nationalizing companies that were plundered and destroyed by their owners. Some members of the pro-government party “United Russia” propose the State Duma to approve a bill making it possible to nationalize enterprises under the certain circumstances. However law-makers shelved the bill when they had come to realize that the Kremlin officials were not enthusiastic about it. Both the President and the government are guided by the same principles of the liberal economy, so they are against encroachment on the private ownership institution. In their opinion they can deprive an owner of his property or deal shortly with an oligarch, but they cannot encroach on the private ownership institution as such. That’s why even if some nationalization decisions are made because they are necessary, no laws, which would regulate making of such decisions, will be worked out. For the present, the nationalization issue is not examined even as an administrative exception. The Russian authorities excel even their U.S. and British counterparts in adherence to the liberal economic dogmas. The Russian authorities are afraid to start the nationalization since they do not know when to stop it. The government is supposed to take enterprises from inefficient and corrupt owners, which even some liberal Western economists are ready to accept, but they say that afterwards those companies should be reprivatized. In other words, let the government restore the production, carry out the restructuring, renew technologies, secure orders and credits at the expense of the taxpayers, and then let the government give the property to those who are expected to become new, efficient owners. But what is to be done if almost all Russian company owners are inefficient and corrupt and if the Soviet industry developed in close connection with the welfare, was not organized for the free market and in principle it should have been managed in a way that would be completely different to what the businessmen could offer? At a time when it was possible to redistribute the incomes from very expensive oil, those problems could be ignored and the fact that the management became less efficient than in the Soviet period could be concealed. But now the government is faced with a burning question – either to nationalize the private property, or to destroy the rest of the industry realizing perfectly well that the industry collapse may be followed by the social collapse. The government will face that problem in full measure in the autumn 2009 when the second wave of the economic crisis starts, the petrodollars, which have been allocated to help businessmen, are stolen and squandered, and when decisions cannot be put off. There will be nothing else left for the Russian authorities to do but to nationalize private companies and enterprises. But after that the government will have to answer such questions as what it is going to do with enterprises, how it will make those enterprises more efficient and functional during the deepening crisis. The main reason why the government is afraid of the nationalization is the government officials realize that they should answer those questions. The government is afraid not only because it has no answers, but also because the ministers understand at heart that a different government can answer the questions rightly. So far, the ghost of nationalization is patiently waiting near the high-ranking officials’ offices and the halls of the State Duma. But sooner or later it will become much less patient and bashful.

Boris Kagarlitsky, a fellow of the Transnational Institute, is a Director of the Institute of Globalization and Social Movements, Moscow. His latest book is Empire of the Periphery: Russia and the World System (2008)