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Revolution, democracy and the West.

Posted by democratist on July 28, 2011

28th July 2011,

Perhaps the strongest intellectual case made for the domestic benefits of democratic governance over authoritarianism was set out by the philosopher Karl Popper (1902-1994). Popper believed (see Popper by Bryan Magee, Fontana, 1973) that democracy was the best form of government because it allowed for the critical examination and correction of governments and their policies, and that it was therefore most able to correct previous policy mistakes, and more effectively address the social, political and economic problems a given society encounters than any other form of governance.

In order for this essential criticism to be assured, democracy must consist, not just of regular genuinely competitive elections, but critically also of the establishment and maintenance of “free institutions” (especially the rule of law), which enable the ruled to continue to criticize their rulers regardless of the government of the day.

Even in established democratic states, the threat from anti-democratic elements may remain considerable. Paradoxically therefore the free institutions which facilitate criticism must be protected from those who would use the very freedom they provide to destroy them. This is the responsibility of civil society, the media, an independent legal system, the police and security services. Many countries which formally claim to be democracies because they hold regular elections have weak institutions and therefore do not constitute democratic polities within the definition we are using here.

However, once institutional democracy has been established over a period of time, as noted by democratic peace theorists such as Michael Doyle, the democratization of formerly authoritarian states has proved beneficial for pre-existing democratic countries because democracies have very rarely (if ever) gone to war with one another. Entrenched internal democratization leads to increased international stability, and democratic countries therefore have an interest in the promotion of democratic governance.

Given the advantages outlined above, and the growing number of examples of relatively politically and economically successful democratic states over the past 70 years, as well as the current weakness of ideological alternatives, the democratic model has become an increasingly desirable one for many individuals and social movements in developing authoritarian states.

Recent examples of the trend towards democratization include the fall of communist regimes in 1989 and 1991, and revolutions in Serbia (2000), Georgia (2003), Ukraine (2004), Lebanon (2005), Kyrgyzstan (2005), Moldova (2009), as well as the “great Arab Spring” of 2011.  However, it is important to remember that revolutions by themselves by no means signal an automatic shift to democratization without an entrenchment of free institutions over a lengthy period, and indeed very many of the cases cited above have been witness to subsequent setbacks.

From a historical sociological perspective Democratist would suggest that this process of revolution and democratization has been partly one of attraction towards an ideal manifested externally (the relative political and economic success of a growing “core” of democratic states), and partly of internal economic, technological and social developments, and the inevitable social tensions capitalist modernity provokes.

But since specifically internal political and economic developments play a critical role in the spread of democracy, it is foolish for western states to believe that it is possible to export democracy at the barrel of a gun (as the US has attempted in Afghanistan and Iraq), or that they can have any overall control of the democratization process in developing countries. Instead, the West should try to carefully balance the gradualist facilitation of democratic development (through diplomatic, trade, media and other initiatives) with necessary realist policies so that when revolutions (almost inevitably) occur in developing authoritarian states, they can retain at least some influence with the social movements and political parties constituting the new regime, and can press for the introduction and development of the critical democratic institutions.

Posted in Democratization, Historical Materialism, Historical Sociology of International Relations (HSIR), Historical Sociology of IR, Karl Popper, Liberalism, Revolutions, Revolutions in IR Theory, Western Foreign Policy | 5 Comments »

Russia 2012: Mr. Kudrin takes a (semi) stand.

Posted by democratist on April 23, 2011

23rd April 2011,

Some fascinating statements from Russian Finance Minister, Aleksey Kudrin at a meeting of the Board of the Russian Union of Industrialists and Entrepreneurs on 21st April. These have so far received limited coverage in the Russian press, but we have pieced them together from reports in Izvestia and elsewhere.

Kudrin said he considers any GDP growth below 3% as tantamount to stagnation, and 3% -4.5% as “minor, unsteady” growth, because at less than 4.5% growth companies would have no time to update their fixed assets.

He stated the Russian economy is currently growing at about 3% and that investment growth is currently 8% - compared with the 30% annual increase he believes is required for modernization.

While the price of oil has climbed about 30% so far this year to $124 per barrel (auguring a dramatic improvement of Russia’s fiscal situation) Kudrin believes that a further increase in oil prices will have a negative effect on the Russian economy through inflation, and that petrostate model of development “has failed.”

He explained that the government has prepared several hypothetical scenarios for the economy, which include various possible price levels for oil, but in all the scenarios, the growth rate remains the same. He stated,”This is confirmation of the unfortunate fact that the price of oil, which before the crisis was an impetus for growth, is no longer such.”

Kudrin’s position is rather telling when compared with Putin’s statement to the Duma the previous day. Putin stated growth would be 4.2% this year, and much of his speech seemed to consist of assurances to various sectors of society that the state would soon lavish spending on them.

The model reflected in Putin’s speech then could be characterised as “back to 2008.” It is dependent on a continued growth in oil prices (or at least a continuation of the current price), and the distribution of the resultant wealth throughout Russian society in a nation-wide divvying up of the spoils. Despite some lip-service to technocratic modernization, there is little prospect that this is going to take place, leading to both stagnation and a continued withering of Russian industry, not least the high-tech sector, including military innovation.

In this light Putin’s position appears shortsighted – and Kudrin is strongly aligning himself with a liberalising agenda, without (as yet) openly backing Medvedev.

Will he go that far? Or is this just political manoeuvring designed to have a moderating influence on Putin? Either way Kudrin is levering himself into a more influential position which will become more evident and important as we move towards Parliamentary and Presidential elections over the next few months.

Posted in Autocracy and Innovation, Democratization, Hydrocarbons, Liberalism, Russia 2012 Elections, Russian Economy, Russian Liberalization, Russian Politics | 3 Comments »

Nomenklatura has little interest in Russia’s WTO accession.

Posted by democratist on April 12, 2011

12th April 2011,

At the beginning of the year, Democratist commented on Russia’s chances of joining the WTO, following an agreement with the EU in December 2010 which had supposedly brought accession closer to reality.

At the time we said,

“…there remains a great deal of protectionist sentiment domestically within Russia. This is best exemplified by Putin’s own attempts last year to modernize domestic industry through a renewed emphasis on industrial policy (to be funded by raw materials rents). A lack of cash seems to have put paid to that strategy for the time being, but Democratist maintains that a rise in raw materials prices beyond a certain point will likely prompt a shift back towards protectionism.”

And lo and behold! With oil heading up towards the $125 per barrel mark, yesterday’s Vedmosti reports  on a recent spot of petulance from Vladimir Putin with regard to WTO (at a conference in Saint Petersburg last Friday). Apparently, “Russia is not going to meet the demands extended to WTO members before becoming a member itself…We are not going to observe anything of the sort as long as we are not members. Period.”

But as the paper ruefully notes, in relation to Russia’s (frequently diverted) path towards possible WTO membership over the last decade; “the government of Russia and Putin himself bear at least part of the blame for the state of affairs where Russia cannot make use of any WTO advantages. As happened on several occasions already, the moment Russia approached the coveted membership, Putin pulled off something unexpected that caused a delay or detour…All speculations on how Russia is kept out of the WTO are really a smoke-screen designed to conceal the lack of genuine interest in the membership. Russian businesses keep seeing the WTO as a threat. The Russian leadership has but a dim awareness of the advantages that go with the membership but know that at the very least it will require transparency of the kind Russia is not accustomed to. There is no powerful group of interests in Russia interested in the WTO membership.”

WTO membership, and the huge boost it would imply for liberalization, is not an option unless the nomenklatura decides it is serious about economic reform. But as long as the oil price remains high there is no incentive. Why risk “instability”, when you can just divvy up the spoils with your old chums from the KGB – with enough left over to keep the proles in line, until the next crisis?

It is this old guard whose opinions count, and which will still count after the Presidential elections, regardless of whether Putin or Medvedev “wins.”

Posted in Autocracy and Innovation, Elections, International Political Economy, Liberalism, Russia & the WTO, Russian Liberalization | Leave a Comment »

Democracy and Innovation: Mevedev’s Skolkovo Illusion.

Posted by democratist on March 10, 2011

 

10th March 2011,

In our last article, Democratist looked at Niall Ferguson’s insightful analysis of the impact of autocratic government and the command economy on the Soviet Union, and the effect this had on the USSR’s ability to compete with the United States, and its eventual collapse.

But the Soviet Union has been history for almost twenty years. The more skeptical among our readers will doubtless be thinking, “The Command economy may be finished, but surely the Chinese example shows that authoritarian capitalism can come up with the goods just as well as democracy, if not better. Why shouldn’t Russia follow an authoritarian capitalist model?”

One obvious answer to this question is that the Russian elite has been following their own interpretation of just such a model since 2000, and that the results in terms of Russian economic diversity, industry and technological capability have been poor at best. 

While economic growth was indeed strong for much of the last decade (and is returning) this has been largely a result of Russia’s vast natural resource endowments, which account for around 70% of exports, and which played an important role in attracting the financial flows that boosted other sectors such as construction and the retail trade: Given easy access to money from hydrocarbons after 2002, and an ingrained fear of the social dislocation that would arise from the introduction of a genuine market economy, with a couple of notable exceptions at the start of Putin’s first term in office, the nomenklatura came to largely ignore the need for economic reform between 2000 and 2008.

One of the results of this has been that the Russian industrial and technological base has stagnated; while Soviet science and technology were inefficient and generally lacking in innovation, they at least had the advantage of being seen as strategically important and prestigious: Under the current system a mixture of cynicism and deep corruption, misjudged industrial policy and protectionism have set in, and while recently the government has again come to see science and technology as strategically critical, they face the problem that (following the nomenklatura’s own example) many of their brightest young people seem more interested in milking the state than serving the nation as scientists. Subsequently, the old Soviet engineering culture is slowly starting to die out.

But, as Andrey Kolesnikov, a columnist for Novaya Gazeta wrote in an excellent article for Open Democracy last July, even since 2008 President Medvedev has felt obliged to restrict his plans for Russian innovation within the confines of the “ghetto” of the Skolkovo project, and in a manner heavily reliant on foreign investment, as opposed to domestic innovation.

According to Kolesnilov, Medvedev is attempting, just like Peter the Great, Stalin, Khrushchev and Brezhnev before him, to import technological know-how into Russia from the West, lest the reforms necessary for the development of an innovative culture at home threaten Russia’s social order, and the existing power structure.

But as we saw in our piece about the roots of innovation, genuine innovation (as opposed to re-engineering the ideas of others) can only come from the kind of flexible, creative and inventive culture that emerges from a competitive market economy, backed up by democracy and the rule of law.

Kolesnikov states that the results of this are that;

 “…currently just over 9% of Russian enterprises invest in innovative technology. A comparison: in Germany, the number is eight times that. Fundamentally new Russian products account for just over 70 billion roubles (£1.5 billion). This was 0.4% of the total volume of industrial production in 2007 (in Finland, the figure was 16%). The percentage of innovative production in the total volume of sales in Russian industry is around 5%. Put another way, Russia is backward. 98.5% of patentable innovations are created by 15% of the world’s population, and Russians do not number among them (we are talking in the main about OECD countries)…And this technological gap can only get worse, since the speed of progress is increasing with each year: if in earlier times, moving from one technological generation to another was a matter of 10 or 15 years, now we see that, in aviation at least, this is happening every five years (my source of data are the four 2009 editions of Moscow’s Higher School of Economics Foresight magazine).”

In the first article we posted to Democratist in May last year, we quoted Dimitry Trenin as saying, “The Kremlin …[has been]… forced to come to terms with the fact that Russia cannot modernize on its own and that it needs Western investment and strong business partnerships with the West.”

But upon reflection, even if that partnership were to bear fruit in Skolkovo this still would not really resolve the broader problem of the stagnation of Russian science and technology: That kind of change implies a deeper political and cultural shift.

 

Posted in Autocracy and Innovation, FDI, International Political Economy, Liberalism, Russia - US Relations, Russian Corruption, Russian Economy, US - Russia | 3 Comments »

Democracy and Innovation: the Liberal Model.

Posted by democratist on March 8, 2011

March 8th 2011,

As many of our readers will be aware, Democratist is fascinated by the interrelationship between democracy, economic growth, and scientific innovation.

We have often suggested that autocratic rule in Russia (and its attendant corruption) is having a devastating (and continuing) impact on Russian industry and technology.

Recently however, we decided to look at this question from a slightly different perspective. Instead of saying what we think is wrong with the Russian government, and the impact this is having on Russian S&T, we decided to go back to basics a little and look at what actually it takes for a country to develop an advanced industrial economy, and a flexible, creative, inventive culture.

We have found a good general explanatory model of the social, political and cultural basis of innovation in Why Globalization Works (Yale, 2004) by Financial Times chief economics commentator Martin Wolf. We will call this the “liberal model.”

Wolf writes that the historical record suggests that the really key thing you need to promote an inventive culture is a market economy, backed up by the rule of law.

As Wolf states;

“The liberating technological changes of Promethean [i.e. technological] growth did not emerge from nowhere. They reflected a new way of organizing the economic activities of society as a whole – a sophisticated market economy with secure protection of property rights. Unshackled from the constraints of tradition and driven by hope of gain, economic actors were tied by competition to the wheel of what the great Austrian economist Joseph Schumpeter called “creative destruction.” To achieve success in their battles with their competitors, businesses have been driven to exploit the ever burgeoning power of technology and science. Within a market economy the hope of gain and fear of loss drive inventors and innovators to apply new ways of doing things, or to produce new products.”

But how does democracy fit in here?

First of all, Wolf explains that democracy has the same cultural roots as the market economy: historically, protestant culture put an intrinsic value on all individuals, and moulded them to accept personal responsibility for their actions. Moreover, this was a key factor in promoting the initial development of liberal political and economic institutions in countries such as Great Britain (although evidently the post-1945 record demonstrates that their implementation is by no means restricted to protestant countries).

As Wolf explains;

“The bedrock of a liberal society is, as John Locke argued in the seventeenth century, the right of all individuals to own and use property freely, subject to well-defined, law-governed constraints. A liberal society is therefore a commercial society. But freedom to seek one’s own way in life, outside the boundaries of caste, class, community or, more recently of gender, cannot be restricted to economic activities alone. The culture of a liberal society is, for this reason, inimical to established hierarchies of power or opinion. It is no accident that commercial societies came to consider freedom of thought and expression of great value. A merchant is a practical man who must make rational judgements about the world, not least the risks he runs…The combination of practicality, rationalism and freedom of inquiry became the basis for the West’s greatest achievement – modern science. It is again, no accident that science reached its greatest flowering in a commercial West.”

If individuals are to be free, they need protection both by – and from – the state. For individuals to enter into long-term investments (which promote strong growth and innovation) they need to be able to trust each other, and the state. The condition for such confidence is normally expressed as the rule of law. This is a key driver of both economic growth and scientific innovation.

Historically, states which were both strong and beneficent emerged from a combination of forces including regulatory competition and internal representation; Regulatory competition developed from the multiplicity of competing states in medieval Europe. But;

“Regulatory reform is not enough. An absolute monarch may still seize the wealth of his subjects or default on his debts when his dynasty is threatened. Secure freedom requires governments interested in the long-term health of their countries. The best solution is a constitutional democracy with representative parliaments – government accountable to the governed. Such a democracy must be constitutional, that is law governed. It is not enough to move from the tyranny of one person to the majority.”

So democratic (or at least meaningfully representative) government an institutional prerequisite, according to the liberal model. This form of government will be accountable and therefore have a high degree of interest in the long-term health of the country it governs.  The rule of law is another sine qua non of long-term investment, the development of a market economy, and a creative competitive culture that leads to technological innovation and the emergence of an advanced industrial base and economic growth.

Posted in Autocracy and Innovation, Book Reviews, Liberalism, Russian Economy, Russian Liberalization, Russian Science | 3 Comments »

The Strategy 2020 Review: A Dangerous Display of Independent Thought and Common Sense.

Posted by democratist on March 2, 2011

2nd March 2011,

Last September, Democratist wrote that we believed Russian President Medvedev’s attempts to introduce an“innovation scenario” (in accordance with the Ministry of Economic Development and Trade’s 2020 Strategy) was beginning to show signs that it was encountering increased resistance from within the elite.

As we said at the time; 

The reason for this emerging impasse is that many in the nomenklatura, grown rich under Putin on the proceeds of  corruption, are implacably opposed both to reform itself (which threatens their privileged position) and even more so to the implied political reforms which would be the backbone of an innovative economy, and which Medvedev tentatively began to promulgate over the summer…we consider Putin’s hints at the Valdai club meeting in Sochi on September 6th that he intends to make a return to the Presidency in 2012 as indicative of a broader reassertion of power by these interests, and an indication that the nomenklatura remains eager to avoid the potentially “destabilizing” effects of the political reform required to both attract increased western investment, and achieve the “innovation” scenario. Instead, the elite appears to be hoping that a recovery in hydrocarbon prices over the next few years will allow them to return to a greater emphasis on the second, ”energy and raw materials” development path, with its promise of a (still robust) 5.3% average annual growth. This does not necessarily imply that the “innovation” scenario or its rhetoric is to be abandoned wholesale, or that Russia will instantly return to an openly confrontational and anti-Western foreign policy stance, but rather it seems more plausible that, over the next few years, where the needs of meaningful innovation come into conflict with intrenched elite interests (including in relation to  encouraging foreign investment), innovation will have to give way.”

As we draw to towards the next round of parliamentary and presidential elections (due to begin in December), it appears that the contradiction between the need for the political and economic reform needed to allow Russia to benefit from the opportunities presented by globalization and develop its S&T base on the one hand, and elite rent-seeking on the other, is becoming ever more apparent and public. 

An Editorial in Nezavisimaya Gazeta yesterday, entitled “Strategy 2020 Writers Turn into Mutineers: Government’s Economists: Success of economic modernization requires political reforms,” describes the current situation as follows;

“[The] Strategy’ 2020 revision initiated by the government might spring some nasty surprises on the powers-that-be. Premier Vladimir Putin’s first meeting with experts took place in mid-February. Economists then advised the government to cut social expenses and concentrate on reduction of the budget deficit. Soon afterwards, however, the economists got down to criticism of the very fundamental principles of the economic and political model functioning in Russia…Strategy 2020 writers drew a direct connection between success of economic modernization and political reforms in Russia. These latter ought to introduce free and fair elections, political competition, and genuine rather than declaratory division of powers. The economists said that no modernization was possible and that there was no way to tackle the strategic tasks the county was facing without all of that. It is fair to add that it was not renegades or mavericks like Nemtsov, Kasparov, or Limonov who made the list of the necessary reforms. The list was made by the economists who could never be suspected of any disloyalty – Vladimir Mau of the Russian Academy of Economy and Civil Service, Yevsei Gurvich of the Economic Expert Group, Yevgeny Yasin of the Supreme School of Economics, etc. The economists in question cannot help knowing that any reform on the list they made will essentially dismantle the model established in Russia and functioning since circa 2000. And yet, degradation of [the] economy is the only alternative to the reforms, and this unpalatable truth compelled scientists to call a spade a spade. Without the radical reforms, the gap between Russia on the one hand and the advanced countries and emerging markets on the other will keep broadening. The Russian economy will develop at a slower rate than in 2010 at least until 2050. There is no way to keep up the development rate at more than 4% a year without modernization which in its turn requires dramatic reforms.”

It will be interesting to see how Putin reacts to this dangerous display of independent thought and common sense.

Posted in Autocracy and Innovation, Democratization, Elections, Liberalism | 1 Comment »

 
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