It all depends on the middle class

The middle class has traditionally been seen as the source of most of the good things in modern society –its commerce, science, art, politics. In a famous analysis, the political scientist Seymour Lipset argued that the chances for democracy improve when the social system shifts from an elongated pyramid with a large lower class base to a diamond shape with a growing middle-class. ‘A large middle class’, he wrote ‘plays a mitigating role in moderating conflict since it is able to reward moderate and democratic parties and penalize extremist groups’. Thus the degree of ‘embourgeoisement’ of Russian society is the best indicator of its possibilities.

Continue reading

Russia’s offshore aristocracy

When Vladimir Surkov talked about Russia’s ‘offshore aristocracy’ he meant that small class of rich Russians who own everything through offshore companies. They don’t pay tax in Russia, they do their IPOs abroad, and they do deals affecting millions of Russians without any regulatory body in Russia knowing what happens. Surkov wants these people to own Russian assets through Russian companies, do their business under Russian jurisdiction, with control from Russian regulators.

Continue reading

American idealism gone wrong

US Republican presidential candidate John McCain has proposed a radical new initiative. In his first year as president he would call a summit to set up a League of Democracies. The League would be equipped with a formidable military capacity, based in part on NATO, and in part on the ‘new quadrilateral security partnership’ in the Pacific between Australia, India, Japan, and the United States. Needless to say neither Russia nor China would be invited to join the League: indeed McCain would exclude Russia from the G8.

Continue reading

Russia under Medvedev: ‘A Window of Opportunity’

In Yeltsin’s day, reformers used to talk about ‘windows of opportunity’ for this or that reform. These windows had a nasty habit of closing before the reform was accomplished. Perhaps the Medvedev presidency, which started yesterday, offers another ‘window of opportunity’ for economic and political reform, and normalisation of relations with other countries.

Continue reading

Two Cheers for Kondratieff

Around 1930 the most famous Russian economist was undoubtedly Nikolai Dmyitreyvich Kondratieff. For years his famous ‘Kondratieff cycles – long boom-bust cycles of business activity – fascinated economists and business analysts. Then he fell out of fashion, and is now unknown. By abolishing capitalism, Stalin abolished the business cycle, and had Kondratieff liquidated. In the capitalist west, too, the business cycle disappeared in the 1950s and 1960s, as governments learnt how to ‘manage’ economies with fiscal tools and monetary tools bequeathed by John Maynard Keynes. Today, as food, energy, and raw material prices press relentlessly upwards, threatening poor-country consumers with starvation, and rich-country economies with stagnation, it is worth taking another look at what the old boy said.

Continue reading