In all the commentary on the war in Ukraine and the debates about whether the West bears any responsibility, very few people have referred to the social and economic factors. Yet the Putin phenomenon has to be understood as a new type of socio-economic system that was produced by a mixture of oil dependence and market fundamentalism, in a context shaped by the Tsarist and Communist legacy.
In the aftermath of the Cold War, enthusiastic Western economists rushed to Eastern Europe to dismantle the centrally planned economies through reducing state budgets, privatising state enterprises and liberalising trade and investments. In only a handful of cases – mainly those Eastern European countries who joined the European Union – did these reforms result in bourgeois capitalism. Elsewhere, in varying degrees, it led to a new form of authoritarian kleptocracy.
In Communist times, the market was illegal and so market activities were considered a crime. That made it very difficult to distinguish between legitimate exchange and stealing. The consequence of economic reform was the normalisation of stealing from the state. Through privatisation, Communist bureaucrats became oligarchs and competed for state hand-outs. This situation was compounded by the increasingly rentier character of the Russian state as a consequence of dependence on oil and gas; there was no need for a social contract with citizens since state revenue did not depend on taxation. Something very similar could be observed in Saddam Hussein’s Iraq or Bashar al-Assad’s Syria.
