Falling between two stools, or towards a political economy of Ukraine
A new volume collects 25 years of essays on Ukraine’s successive crises.
A review of Marko Bojcun’s Towards a Political Economy of Ukraine: Selected Essays, 1990-2015; Ukrainian Voices, vol 3; Ibidem-Press, Stuttgart.
The history of post-Soviet Ukraine could be written as a succession of self-serving political leaderships and inspiring but failed popular protests, resulting in chronic economic underperformance that has left the country’s dwindling population among the poorest in Europe. A glance at World Bank data, for example, shows the country vying with Moldova for bottom place in European income rankings.
In a new collection of essays that spans 1990 to 2015, historian and analyst Marko Bojcun reminds us that this need not have been the case, and that other trajectories seemed possible at times. One example is to be found in an article from 2001, in which the prospect of Russia’s European integration is still lingering in the air, just about, whereas from the vantage point of today, this seems almost unthinkable.
One of the attractions of the author’s approach is that, from this angle, he give us a whizz through key waypoints in the political and economic development of independent Ukraine in an international context, running from the eve of the break-up of the Soviet Union to the onset of the war with Russia in 2014, triggered by president Viktor Yanukovych’s flight from Kyiv in the wake of popular revolt. Included are two essays on formative political events - the 1994 parliamentary election, the first national election following independence; and an assessment of the early results of the presidency of Leonid Kuchma, a former “red director” under whose leadership the broad post-Soviet institutional norms of Ukraine’s political system were established. Another series of articles on the catastrophic slump of the 1990s and the unbalanced recovery of the early 2000s, which exposed the economy to spectacular “adjustment” amid the global financial crisis of 2008-2009, chart the uneven construction of a market economy in Ukraine, and its global integration, often on unfavourable terms.
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The book concludes with an analysis of the main factors behind the “Ukraine crisis” of 2013-2014, the major episode in the country’s modern history. Bojcun folds many of the conclusions and perspectives worked out in earlier articles into this piece, and it serves as a kind of “master essay”, or summation of the main results of Ukraine’s first quarter century as a sovereign state. In brief, he sees the crisis as arising from the concurrence of the Maidan, as just the latest manifestation of the disappointment of popular domestic political and economic expectations, with a “zero sum choice” on foreign policy foisted on Ukraine by stronger external powers - namely, the EU and Russia.
In more detail, Bojcun’s argument is as follows. Domestically, the building of the modern Ukrainian state has been skewed by its role in the large-scale transfer of public assets to the newly rich oligarchs in the 1990s, as well as by its enablement of “new rounds of wealth accumulation from living labour employed in the growing private sector”. This basic institutional relation has been central to Ukraine’s political and economic life (and to many of its ailments) ever since.
For instance, the elite’s domination of politics and protracted failure on economic development (both to invest sufficiently in the Ukrainian economy and to offset the impact of increasing inequality) has undermined public trust in the state. During the Yanukovych presidency of 2010-2014, “alienation from the political order” was accentuated by increased authoritarianism. In turn, this permitted a new, more brazen wave of elite economic depredation to the benefit of Yanukovych’s inner circle. This included the exaction of bribes in return for state licences, a fresh round of insider privatisations and the re-erection of corrupt energy intermediary schemes - all at the state’s expense. Between them, elite parasitism on the public finances combined with popular alienation help to explain the persistent weakness of the Ukrainian state.
Internationally, wedged between Russia and the EU, Ukraine remained in a sort of no man’s land outside of the economic and security structures of both. Whereas the Ukrainian elite’s resistance to joining Russia’s orbit was driven by fear of re-subordination, overtures for membership of the Euro-Atlantic structures were more or less openly rebuffed. Both Russian and EU businesses had nevertheless tried to “incorporate Ukraine’s natural resources, cheap labour and markets onto a low technological echelon” of their own production and consumption chains.
As an outcome of the interaction of Ukraine's relatively weak international position with its dysfunctional domestic political economy model, the country became a “low wage, energy and materials intensive exporter of primary goods and semi-finished products in agriculture, energy, chemicals and minerals, the profits of which the oligarchs sent abroad”. Despite having developed significant economic links with Russia and the EU, from 2013, Bojcun contends, the two forced Ukraine to choose between them.
Rather than the US, the author sees Russia as the proactive external power militarising and internationalising the Ukrainian crisis. In this, his view diverges sharply from those parts of the Western left which, echoing the official line of Russian state media, were quick to brand the Maidan not just as a “fascist coup”, but also a CIA operation - thereby, under the banner of anti-imperialism, rendering “understandable” Russia’s violent coercion of a young nation state and former colonial territory struggling to retain its sovereignty.
The 2013-2014 events were not just a clash of two different “varieties” of capitalism, with correspondingly different tools at their disposal for securing capital accumulation across borders. It was also a clash of contrasting political systems with divergent economic outlooks
Bojcun brings deep knowledge of Ukrainian history and society, as well as attention to telling human detail, to his treatment of its political economy.
A small example of the first is a sketch of the stages of territorial formation of contemporary Ukraine that opens the collection. This provides context not just for understanding the March 1990 election (the subject of the essay in which it appears) but also issues that are crucial for making sense of its politics and geopolitics today. An instance of the second comes through especially in a section on the explosion of the informal economy during the depression of the 1990s. Another strength is that the empirical analysis is foregrounded, while the conceptual framework that informs it is handled unobtrusively. Combined with clear structuring, this makes the essays easy to follow, which is not mandatory in the field of political economy.
For me, the broad thrust of the author’s analysis was persuasive. However, I have some reservations.
The first is whether the Ukrainian oligarchy is adequately described as a ruling capitalist class. Here, I refer to the oligarchy as the informal institution of rule that unites the very rich and their business-criminal networks with currently successful politicians and their networks in the state apparatus.
Of course, as the owners of large chunks of the country’s physical and financial assets (some of it used to realise a profit through investment), oligarchs can be capitalists. However, Ukraine’s oligarchs are not distinguished by the use of state connections to facilitate the direct “exploitation of living labour”, nor even to aid the exclusion of competitors.
Rather, this group is marked by the operation of large-scale financial schemes of self-enrichment as a more indirect mechanism of extraction licensed and underwritten by the state. The most lucrative of these schemes have tended to run in the energy sector. Dmitry Firtash’s RosUkrEnergo intermediary is perhaps the most high-profile of these. With backing at the highest political levels in both Russia and Ukraine, from the middle of 2004 until early 2009 RosUkrEnergo was able to buy gas from Russia at low prices and sell it at higher prices in Ukraine and the EU, again to the cost of the Russian and Ukrainian public purse.
Second, the EU and Russia, it should be emphasised, are not “symmetrical” imperialisms occupying equivalent positions in the world hierarchy of capitalist powers. More could have been made of this, it seems to me - not least because of the important role they played in the unfolding crisis.
On the one hand, the author identifies the absence of a prospect of EU membership as a key flaw in Ukraine’s 2013 Association Agreement, which obliged the country to adopt common economic standards without participation in the decision-making about them. Here, Bojcun draws parallels between the mode of operation of contemporary Russian imperialism and US expansion in the twentieth century. This includes offering military security in return for foreign policy alignment, and access to home markets in return for a reduction in investment barriers.
However, at a geopolitical level, the 2013-2014 events were not just a clash of two different “varieties” of capitalism, with correspondingly different tools at their disposal for securing capital accumulation across borders. It was also a clash of contrasting political systems with divergent economic outlooks - and which did not appear equally attractive to many Ukrainians at the time.
To sum up, Marko Bojcun makes a strong and original contribution to the scholarship of post-Soviet political economy. As an exemplar of a historically informed, empirically rich, humanist analysis, it offers a refreshing corrective to some of the mainstream economic work that dominates the academic literature.
Unfortunately or otherwise, Bojcun’s is a minority approach within contemporary Marxism and mainstream economics, which continues to have trouble freeing itself both from an approach to social analysis borrowed from the natural sciences in the 19th century - and assumptions about the autonomy of the individual lifted from the 18th.
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