What is capitalism in Russia and how does it relate to the political regime?

Ilya Matveev: There is huge socio-economic inequality in Russia. In Moscow many people live as well as the London middle class. By contrast, the Yeltsin and Putin regimes systematically destroyed the social infrastructure in many economically depressed regions. It is precisely the residents of these places who go to war for $3,000 dollars a month, money which they have never seen in peacetime.

How is this organized politically? It would be wrong to call Russia “oligarchic capitalism” – rather, today’s Russia has a Bonapartist regime. Bonapartism is a concept of Marxist theory. It means that the ruling group or leader exercises power in the interests of the big capitalists, but gives no political power to the capitalists themselves. Until recently, Putin’s regime served the interests of big business. It is enough to look at the fact that the number of Russian billionaires from Forbes has multiplied during Putin’s presidency. However, big business owners have no political weight. But they have always had economic power and privileges. Now their economic interests have been sacrificed to the war. Sanctions, the closure of export markets for big businessmen, the impossibility of borrowing on international financial markets – all this is destroying big business right now.

How did it happen that the state in Russia served the interests of big business, and now it has stopped? This is the question political science must answer.

We can talk about a change in the essence of Russian imperialism. Until 2014, when Crimea was annexed, the Russian state politically strengthened the position of Russian business in post-Soviet countries. The aggressive foreign policy corresponded to the interests of business. But after 2014, owing to sanctions and even more so now, with the outbreak of war, there is a discord between these two vectors. War is incompatible with capital accumulation. Maybe the situation will change in 10-20 years, and then Russian business will be able to benefit from the new geopolitical situation. But this will not happen now. Right now I cannot see economic interests behind imperialist politics.

Volodymyr Ischenko: Ilya’s explanation is similar to the popular opinion today that Putin is an ideological fanatic or even a psychopath, that there is no rationality behind his actions. I do not agree with this position.

I believe that the war is being waged in the interests of the Russian ruling class as a whole. To understand this, we must ask ourselves: what kind of ruling class is this? Researchers call its members “political capitalists.” The Russian ruling class are businessmen whose competitive advantages on the market are not related to advanced technology or cheap labor, but to the political positions they occupy in the state. An example is corruption or the informal control of political elites over enterprises. Hence, the Russian elite’s preoccupation with protecting sovereignty. After all, if you make money by taking advantage of the political opportunities of the state, you must have monopoly power over the state. And this power can be threatened, for example, by transnational capital or influential groups within the country. What I’m saying is exactly in line with the Marxist theory of Bonapartism that Ilya talks about. Because Bonapartism is nothing more than a regime in which the state, independent of any particular factions of capital, forcefully defends the interests of the class of big capitalists as a whole against threats from particular capitalists or particular factions of that class. In this sense, particular capitalists are now losing out in profits because of war, but war in the long run serves the interests of the class as a whole.

Additionally, the war may be aimed at solving some of the fundamental problems of the Bonapartist regime itself. More precisely, its preservation, its reproduction. How to guarantee the stability of this regime? Usually, this stability is threatened when one ruler is replaced by another. How can you guarantee the personalized power during such a period? Especially when there are protests all around, as in Belarus or Kazakhstan? These countries’ regimes have survived thanks to Putin’s help. But if such protests happen in Russia, who would save Putin and his regime? War is needed to guarantee the continuity of power so that the incumbent won’t be killed by his own successors. The regime is now becoming more repressive, more mobilized, more ideological. The war is aimed at strengthening it.

Is war profitable?

Ilya Matveev: Volodymyr’s argument looks logical, but I still disagree. I did not say that Putin is irrational, I said that there is no economic rationality in his actions, but maybe there is geopolitical rationality in them.

Then, yes, we can call the Russian ruling class political capitalists. But let us ask ourselves the question: will they be able to enrich themselves after the war? I’m not sure, because the Russian economy is collapsing as it used to be so integrated into world markets. And now that the Russian economy is being deglobalized, what can replace the global regime of capital accumulation? Nothing! Even for the purposes of theft, it would be more logical to avoid war, continue trading oil and gas with the West, and to profit from this trade. And for this you need good ties with the West, which now seem irreversibly lost. I think this is exactly why Western elites thought there would be no war. They believed this because they understood that the Russian elites do not benefit from war.

Maybe when Putin and his entourage conceived of this war, they thought that they would quickly conquer all of Ukraine and that in 20 years the two countries together would be better able to compete with Europe and China, but that is a very distant prospect. In the meantime, the oligarchs are terrified, their whole lives are ruined. I don’t feel sorry for them, of course, but from their point of view the war is irrational.

Now about the consolidation of the regime. Of course, for Putin it is logical to seek to consolidate his regime. Yes, the war has further united elites around Putin. But very soon the war will become extremely unpopular with the population. And Bonapartism depends on the approval of the masses. And the masses are unlikely to approve of the war and the regime that has been waging it for so long.

Volodymyr Ischenko: Yes, there are experts who believe that the war will lead to terrible economic consequences for Russia. And there are other experts who believe that Russia will be able to overcome its economic dependence on the West and eventually become stronger. Through import substitution and reorientation of exports. Of course, from the point of view of risk prevention, war is illogical. But what if the problem is that risk-aversion has never saved Bonapartist regimes from collapse? What if a regime needs to fundamentally change politics, economics, and society in order to remain in power? War is a good chance for just such a transformation. This said, of course, incorrect calculations and forecasts, the clearly misguided expectation that Russia will quickly conquer Ukraine, can introduce a lot of unpredictability into the process of regime consolidation and succession of power.

Ilya Matveev: But how exactly can a war help this continuity?

Volodymyr Ishchenko: What is the problem of the inheritance of power? The fact that at the moment of transfer of power, everyone begins to fight with each other, the intra-elite struggle intensifies. Let’s imagine that Russia – as the Kremlin hoped – wins the war. This is a good way for Putin to take some [Minister of Defense Sergei] Shoigu and make him the heir apparent. Here is the man who won the war and annexed Ukraine to Russia! Who will compete with him?

Ilya Matveev: I think it’s the opposite. The war makes the problem of the inheritance of power more difficult for Putin. Because now the elites around Putin will try by all means possible to install someone else who could change tack, save the economy, improve relations with the West, lift sanctions, and allow them to continue making money from the state. Before the war, it would have been easier to nominate Shoigu – the TV would have given him legitimacy. And now the elites are thinking: we have to oust Putin somehow, we have to find and nominate our alternative candidate.

Volodymyr Ishchenko: I wouldn’t envy such a candidate! Now that Russia has already occupied some of the Ukrainian territories, whoever takes Putin’s place won’t be able to simply make peace with the West, because that would mean accepting defeat, surrendering Donbass and Crimea. Would the security forces allow that to happen? It threatens to cause new splits in the elites.

P.S. For an extended version of Volodymyr Ishchenko’s argument, please, watch the following lecture he delivered at the Marxisme 2022 festival at Amsterdam.

Volodymyr Ishchenko is a research associate at the Institute of East European Studies, Freie Universität Berlin.

Ilya Matveev is a political economist based in St. Petersburg and co-author of the Political Diary podcast

Click here to subscribe to ESSF newsletters in English and/or French.