Policymakers have warned that the “capacity to expand production in the Russian economy is increasingly limited by labor market conditions,” which are helping to stoke inflation risks alongside sanctions and surging government spending linked to the war.
Funny for Bloomberg to acknowledge that expanding economy is not limited by money but rather real resources and labour.
Fr tho, the self-sufficient economy inherited by Russia from the USSR is helping quite a lot.
Yeah exactly, turns out it’s the material economy that actually produces things that really matters.
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Now they just need to put the communist party back in charge and things can start getting back on track.
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I think once Putin is gone there’s going to be a possibility of that. There are a few things that make me optimistic in that regard. Lots of people who lived in USSR are still around, and they have overwhelmingly positive view of it. That means younger people get to hear about USSR from their parent and grandparents who lived there. This goes a long way to counter capitalist propaganda of the style we see in the west. Most people in Russia are also proud of what USSR was able to achieve and many see it as a high point for Russia where it was technologically advanced and respected globally. Polls show that majority of people think that a state run economy results in better outcomes. This poll in particular is illustrative. The chart below asks which economic system is most correct
- red is state run economy
- blue is market economy
- grey is undecided
Communist party in Russia is also polling pretty well, it’s around 30% of the vote. Of course, it’s important to keep in mind that it’s no longer a revolutionary party, and it is full of opportunists. However, it’s further left than pretty much anything we see in the west and it has significant support.
Another big factor is influence from China. It’s pretty clear that its development model is far more successful than the west, and it doesn’t seem like a huge leap for Russia to start emulating it going forward. Much of the core industry in Russia is already state owned, so it wouldn’t be a dramatic change to have an explicitly communist government in charge that allows for controlled private economic activity the way CPC does.
Theres not as much support for USSR or even socialism as you would like to believe. Of course people are not antagonizing it as much as western countries do, but you should also take into account that Russia uses Soviet imagery exclusively as an aesthetic selling point and does not attribute its successes to socialism but rather to the “spirit of the russian people”. Experiences of older people are often dismissed as “grass was greener in my youth” and young people are very much fed distilled anti-soviet propaganda. The great problem with bringing back socialism to Russia lies with general political apathy of the people, getting through it would require rapid and substantial changes of the living standarts, be it good or bad. Best hope lies with China influencing Russian state, otherwise I see no “stumbling into socialism” on Russia’s part without some great disaster to kick off radicalization.
Yeah, I don’t expect Russia is going to stumble into socialism and I absolutely agree with all the problems you’ve identified. Socialism is something people will have to fight for in the end, and it’s the job of socialists in Russia to educate people during the current conditions. China is definitely the biggest factor in my opinion as it shows a successful socialist model working at scale. Hopefully people in Russia will find the model aspirational as they get more exposure to it.
Well they do seem on board with shooting corrupt politicians, so I guess theres a foothold there
Even so, the ruble is approaching 100 per dollar after weakening almost 25% since the start of the year, a slump central bank Governor Elvira Nabiullina has blamed largely on the deterioration in foreign trade conditions
But have you considered that they can’t trade that well in the currency of the country sanctioning them??? It’s actually pretty funny how Russia has one of the highest growth European economies now. Can the EU stop hitting itself?
In fact, Russia might be the only European economy to have growth at this point.
My understanding of the ruble slump is that it is due primarily to the need to acquire foreign currency, particularly factoring in conditions of sanctions. I’d imagine this is mostly a short term worry ? I have lots of questions about how valuations of currencies like this will change as they rely less on USD trade going forward.
Also curious, I know we have some Russia based users on the board, has the devaluation impacted local economy and workers in particular in substantial ways ? Or is it just more media hype
If Russia is currently a war economy, won’t we see the after effects of this after the war is over?
I don’t think Russia is really in a war economy yet. They’ve ramped up military production, but life in Russia is basically unchanged for the civilian population.
Russia at the moment is not in a war economy, in fact this is one of the things that some of the more hardcore elements in Russia are criticising. The current government has approached this conflict in such a way as to try to cause as little disruption to normal life in Russia as possible, even when this came at a disadvantage on the battlefield, because their primary priority is internal stability and because they seem confident that time is on their side in Ukraine (and it’s starting to look like they were right).
There has been a considerable increase in the rate of production of military equipment but there hasn’t been any kind of major dislocation of the civilian economy in order to reorient it towards war like happened during WWII in all major participants. There also hasn’t been any kind of big draft or conscription drive, and with the exception of a callup of some reservists last year they have mostly relied on volunteer and professional soldiers.
So the vast majority of the population has been essentially completely unaffected. Only thing worth mentioning is that there have been some minor inconveniences due to the sanctions, like making it more difficult (but not impossible) to find western luxury brands or go on vacation to Europe…you know the kind of things that would bother the upper middle class but that the average worker would be pretty much indifferent to.
We could argue whether this is the right approach or not. As a communist i would personally be in favor of some kind of mobilization of a war economy because a war economy is a more planned economy and would come with a significant degree of centralization and of reduction of liberal market mechanisms. That would be a step in the right direction, but i also acknowledge that it may be destabilizing for the society if forced through when the people don’t see it as necessary.
I see, it seems I might have eaten a bit of the propaganda.
