Wild state capitalism, or what the dreams of the restoration of the USSR will turn out to be

Victoria Pavlova

The security forces launched an attack on entrepreneurs: in the first half of 2021, law enforcement agencies identified 78,290 economic crimes. This is the maximum since 2015, when more than 80 thousand crimes were found. But after the pandemic, the number of companies decreased. The Investigative Committee especially distinguished itself, which revealed 38% more economic crimes than a year earlier. Is it possible that businessmen all of a sudden, all of them, and overnight signed up as criminals?

State Above All

Security officials, by tradition, need to comply with the accepted system of the cane. You can understand. However, this year the Cabinet of Ministers has already repeatedly made it clear that we have no place for the free work of private business. Just a few days ago, the Ministry of Economic Development and Trade decided to cut subsidies on preferential loans of over 500 million rubles for micro-enterprises operating in the construction sector, as well as professional, scientific and technical activities, and a special commission has now received permission to cut subsidy limits to banks if in previous periods the issuance of preferential loans differed from the plan up or down. In May, the Ministry of Agriculture came up with an amazing initiative to create a state monopoly on duty-free sugar imports: this was not announced openly, but the conditions for exemption from duties were spelled out in such a way that only the state-owned United Grain Company complies with them. The state seeks to be present in every field of activity - it limits the prices of sugar and sunflower oil producers, interferes with the pricing in retail chains and in the markets.

Even the privatization program, which was carried out in calm 2017-2019 by only 25%, did not become a reason to accelerate in the period 2020-2022. The government has postponed the privatization of 186 joint-stock companies, 86 federal state unitary enterprises, the RF participation in 13 limited liability companies and more than 1000 objects of other state treasury property for another two years. For no good reason, like lack of demand, just for the sake of synchronization with the budget process. But what about privatization without synchronization?

The Soviet Union Is Closer Than It Looks

Not surprisingly, the United States has launched an investigation that could lead to the exclusion of Russia from the list of market economies to which anti-dumping duties are inapplicable. And our authorities do not give a constructive answer on this matter. Earlier, by the way, the European Union had already tried to exclude Russia from this list for the high share of the state in the economy. According to the EU, the state's share in the financial sector of our country is 59%, in energy and housing and communal services - 59%, in transport - 48%, in mining - 44%, in production - 21%.

So far, there are all the signs that a kind of restoration of the USSR is underway. A planned economy, full control of the state ... And the population seems to be not at all opposed to such a turn. VCIOM polls show that 67% of Russians regret the collapse of the USSR. And polls by the Levada Center show that people believe that things were better before perestroika. This is the opinion of 47% of Russians. Only 14% adhere to the opposite point of view. In addition to the fact that the USSR was a strong country, people are attracted by the order that was present in the country, confidence in the future and low stable prices. Distribution work, delicious ice cream and 13 kopeck bread - that's what people want. With such requests, it is not far from the liquidation of entrepreneurship. But such a radical turn is hardly possible, says entrepreneur Dmitry Potapenko:

- Rather, we are building neo-feudalism. And private business will remain, only of a smaller scale, which is not particularly noticed anywhere. Small businesses have a chance of survival.

To survive, the main thing is not to grow

Small business, and maybe, with luck, medium business in Russia will exist anyway. These forms of entrepreneurship are firmly established in society. Only, as economist Ivan Antropov notes, some freedom of action for small businesses is not yet an indicator of a market economy.

- Small businesses can be private. But its role is reduced to microenterprises, represented by individual entrepreneurs and self-employed. The state, with all its desire to control everything, will not have enough resources to penetrate into all areas. Government agencies have no desire to repair shoes and bake cakes for residents of the nearest quarter. But with the enlargement of business, a collision with the state is inevitable. Perhaps in the format of takeover or liquidation by a larger player associated with the state, or perhaps through participation in public procurement (sometimes this is simply necessary due to the low purchasing power of the population), where state-owned companies dictate their terms. The actual penetration of the state into the economy is much wider than the official figures and often does not depend on the organizational form of enterprises.

Analyst Dmitry Milin is also confident that small business will survive one way or another. Only for another reason - government agencies and civil servants really need it.

- The prospects for private business with an increase in the share of the state in the economy are bad, but not terrible. Firstly, a significant part of small and medium-sized businesses “feed” their respected comrades from the ranks of officials and “siloviki” who provide this business with a “roof”. Attempts to “nationalize” this part of the economy will come across a surprising “misunderstanding” and very active opposition from those who have “tribute” from this business. Secondly, for people who are far from technological issues and modern technology, everything produced by the country's largest state-owned companies appears as a product of the work exclusively of factories belonging to these NGOs, JSCs, etc. In reality, around all these state "monsters" there is a whole "ecosystem "Private companies that carry out part or even all of the work on the creation of important and necessary" technology for the state, which allows you to compensate for hundreds of percent of the "overhead costs" of state monsters and to conduct promising developments outside the framework of a rigid, suppressing initiative of the management system. Without these private companies, almost everything in the country will "stand up". Third, private business will remain in the public sector. Nobody, including supporters of the nationalization of everything and everyone, wants to "move" from cozy cafes and expensive restaurants to canteens of the Soviet type, as well as to lose the usual services rendered privately.

It turns out that the system itself is interested in preserving private business. Only there are doubts that the bureaucratic elite is aware of the current state of affairs. Over the past 12 months, almost 1.1 million small and medium-sized enterprises have closed in Russia. That is, almost every fifth. They were replaced by only 848.5 thousand new enterprises. In total, their number decreased by 4.2%. The tightening of concessional lending, and especially of administrative pressure, is also not conducive to business development.

Dreams of the Impossible

However, the prospect, albeit difficult, but still the survival of entrepreneurship is not yet a sentence for building an economy in the image of the Soviet one. In the USSR, the share of the state in GDP was also not 100%, but about 80% - collective farms did not belong to state structures. But when the authorities put things in order around them, put down greedy producers, “hucksters” in the person of retail chains and usurers in the person of banks, who set unaffordable interest rates on loans, how they carry out a new industrialization, return the factories and science - then the people will be satisfied. For this we have almost everything ready. As Deputy Prime Minister Dmitry Chernyshenko said recently, 70% of our science is financed by the state, and only 30% is private investment. Sergei Shoigu's proposal to build megacities in Siberia is also an excellent preparation for the restoration of the USSR. BAM, the development of virgin lands, labor camps for prisoners - how many warm images these words evoke for people who regret the collapse of the USSR. Maybe, after all, the authorities are going in the right direction: take everything away, divide, resettle people from provincial villages to cities with factories, and there will be happiness? But a return to a strong Soviet Union with its "social justice" is only a dream. This is what Dmitry Milin says.

- It is impossible to build any economy in the image of the USSR now. First, the economy of the USSR was extremely low-productivity̆, immune to innovations and almost half working for the defense industry, which ultimately led to a “stagnation” from the early 1970s and a natural collapse by 1991. Second, the builders of the Soviet-style economy have a very poor understanding of how it worked. The well-known achievements of Soviet industrialization were associated with the construction of factories under the leadership of foreign: German (at the first stage) and American specialists under the leadership of industrial design genius "Detroit architect" Albert Kahn, who designed more than 500 factories that became the basis for the industrial industry of the USSR. For example, Magnitka is an exact copy of the United Steel steel mill in Gary, Indiana. The blast furnace for this and all other metallurgical plants of the USSR was developed by the Chicago-based Freyn Engineering Co. Caterpillar supplied equipment for the Chelyabinsk and Kharkov tractors, as well as the Rostov and Saratov combine plants. The Stalingrad Tractor Plant, built according to Kahn's design in 1930, was originally built in the United States, and then was dismantled, transported to the USSR and assembled under the supervision of American engineers. With the current foreign policy of the Russian Federation, it is impossible to repeat the successes of the Soviet economy of the 1930s - foreign specialists will not come to us and they will not sell us modern industrial equipment. And there is no one standing next to the level of Albert Kahn in the world.

Ivan Antropov also does not believe in the real possibility of building a new USSR.

- What we are now seeing is just an attempt to flirt with people who continue to become poor, an answer to their requests. When there is an opportunity to make good money, then the Soviet social sphere is remembered less and less. But if the refrigerator is empty, then the Soviet restrictions and guarantees no longer seem excessive. In reality, there can be no talk of building an ideal socialist society. We are observing directly opposite processes. Medicine finally becomes paid in fact - there is little hope for one compulsory medical insurance policy, the pension system is undergoing constant changes, does not guarantee secure old age and stimulates the formation of its own savings, the official subsistence minimum is catastrophically lagging behind inflation, because it is now set once a year, and not once in quarter, state oil and gas companies do not hesitate to rewrite fuel price tags. This is wild state capitalism, but definitely not the socialism that the people dream of.

It turns out that in reality the opposite processes are now going on: the government is diligently creating the impression of building a new "USSR 2.0", but in fact it is building capitalism in a new format, not at all according to Marx, but according to its own plan, in which business is divided into castes. Some have been allocated space for minor work and inconspicuous servicing of state-owned companies, while others (a very narrow circle of people) are allowed to make abundant public investments. Investments by VEB.RF in infrastructure projects until 2024, for example, should amount to 6 trillion rubles, and the main executor is the company Natsproektstroy created by VEB together with Rotenberg. The funds of the NWF also cannot be simply put into the economy - only for megaprojects, to which a few large companies are admitted. We can’t come to either a market economy or socialism.

Russia finds itself suspended between two opposing concepts - unfinished Soviet-style socialism and a free market economy. Stuck in purgatory, which only a few people benefit from.