Wednesday, 8 September 2010

Rule by Abaddon.

Orthodoxy, Autocracy and Nationality.

There are plenty of reasons to be concerned or even outraged at the conduct of the Kremlin in recent years. At the top of the list should be the atrocities committed by Russian troops in Chechnya. Let alone the anti-democratic and extreme nationalist tendencies of Putinism, which has led to the establishment of the Nashi movement, as well as the harassment of the opposition and attacks on civil society. To top this off the Kremlin has actively tried to stamp out all dissent in the mass-media and has succeeded in marginalising independent news. The judiciary has been "compromised" and the direct election of governors has been abolished. In short, Putin is busily "hollowing out" democracy in Russia. But at the top of every one's list right now is the Kremlin's move to ban wheat exports from Russia, which came after a severe drought and a series of wild-fires. As the protectionist measures of the Kremlin are forcing up prices all over the world, though the developing world will be hit hardest by this.

The genius of Putinism is that the Russian people seem indifferent to policies which infringe on civil liberties and human rights as they have been pacified. A rising standard of living is one reason for this, according to one source, when Putin came to power the middle-class consisted of 8 million people and today the middle-class consists of 55 million people. This is partly the reason that Putin's approval ratings have never dropped below 60%. The logic of the wheat ban is to minimise the impact on the electorate and to keep them at bay all at once. The last thing the Russian people want is to return to the 1990s when the economy descended into chaos as Boris Yeltsin put the country through economic "shock therapy". This "shock therapy" brought an end to all price controls, leading to rampant inflation, and saw all of Russian industry sold-off at dirt cheap prices to the likes of Boris Berezovsky.

This series of free-market reforms left the Russian people subject to the forces of the market and no adequate safety net to fall into. It was Putin who exiled and arrested the major oligarchs, under him a kind of order was brought to the economy along nationalist lines. It is the nationalist populism of Putin which filled the void left by the fall of Soviet communism in the early 90s. Whereas neoliberalism became a source of malfunction, servility and dispossession, from nationalism a sense of dignity, pride and security could be taken. Nationalist populism is also compatible with the permissive elements of late capitalism, as demonstrated in Putin's ridiculous public displays of machismo. Neoliberal dogmatism lacks the "You may!" quality which post-modern nationalism seems to provide for many. You may be proud of your country, you may use racial slurs, you may use violence in defence of the motherland and so on.

For the Motherland.

In banning wheat exports, in order to sustain his position in the Kremlin, Putin may have sentenced millions to death around the world. In 2008 the food crisis pushed 250 million more people to the verge of starvation, bringing the total number of the world's hungry to over 1 billion people - as a consequence of decisions made by banks and financial institutions. The food crisis led to riots in over 30 countries as prices soared, as food prices increased to a point where most people couldn't afford the most basic of food. The price of wheat had increased from $3 per 60-pound bushel to $25 per bushel in 2008. At a time when more wheat was produced in world history. This was a result of a "demand shock" created as the likes of Goldman Sachs and Lehman Brothers accumulated a mountain of long-only wheat futures. Once the financial crisis of 2008 began Western governments began to bailout banks, cutting down on food aid to the developing world along the way.

If leading economies like the US had created an international grain reserve this kind of crisis may have been averted. As it was an artificial "demand shock" that caused wheat prices to skyrocket as aggregate demand exceeded aggregate supply. Of course, the desperation of millions of people exacerbated the rise of prices. The price of retail wheat flour increased by 82% in Pakistan between 2007 and 2008. The global price of food increased by 80% in 2008, this included not just wheat that was affected but the price of soy, cooking oil, maize and rice etc. In Thailand the price of wholesale rice increased by 73% whilst the price of white maize in Ethiopia increased by 141%. Protectionist measures were taken in counties like the US, Britain and Russia to make sure that the impact on the market of these practices had minimal impact on the populations of their countries.

Now it looks as though a new global food bubble is on the way as speculation in the commodity futures market has led to the price of food to increase since 2009 - which is the result of financial deregulation. Putin's ban on wheat exports will further exacerbate the problem and has the potential to lead to a "domino effect" of intensified protectionist practices throughout the developed world. The bubble will inevitably burst, like the last one did in 2008. It could be that we need not just an international grain reserve, but greater economic integration, tight regulation and capital controls that transcend borders. Internationalism is the answer today, whereas nationalism should be tossed aside into the margins of history. Putin only offers the Russian people a crude answer to complex problems, at the expense of other peoples around the world, for the sake of personal gain and glory.


Anonymous said...

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J.T. White said...

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