Russia is taking back energy resources into state control. The latest move is to take back control of the Sakhalin 2 project from Shell. It has used similar methods to that used against Khodorkovsky, the Russian oligarch, to take back control of Yukos. The state now owns the majority of energy resources in Russia through the medium of the state owned Gazprom. It has also used the huige financial resources of Gazprom to extend state control of other industries totally unrelated. For example, the majority of the media is now back in state hands with Gazprom recently acquiring further media interests.
The BBC reported on Sakhalin 2
On the CNBC Business Channel yesterday a specialist in Russia from one of the investment funds commented that western companies should be very wary of investing in Russia. The majority of state officials he said, were brought up and trained in the mentality of nationalised industry, and economic planning. The idea that private companies should be able to operate freely, and the idea of competition rather than planning were totally alien to them, he said.
Trotsky commenting on the aftermath of the defeat of Napoleon made similar comments. Despite the return of the Monarchy in France the dominance of the new capitalist property relations, and the links of the state officials into that capitalist economy made it impossible for the restored monarchy to undo the change of property relations, and the nature of the state. Despite Yeltsin’s bourgeois political counter-revolution, a similar process seems to be unfolding in Russia, the nationalised and socialised property relations appear to be far more resilient than many had believed possible. The dire effects of capitalist restoration on the economy and on the population during the 90’s, and the changes in ideology brought about by 70 years of a workers state seem to be reasserting themselves. Of course given the deformed nature of that workers state for all that time and the political domination of the Stalinist bureaucracy it is reasserting itself in familiar forms, not the direct action of workers to reclaim their property, but the bureaucratic action of the state. Nevertheless, current developments throw a spanner in the works of the state capitalist and bureaucratic collectivist theories that assumed the new ruling class in Russia would when they could privatise state property into their own hands.
I haven’t read the following article fully, but skimming it this morning, it seemed to have some interesting ideas.
Meanwhile the situation in China appears far more confused. Where the Bolsheviks based themselves on the advanced workers, but utilised a Peasant War to carry through their political revolution, Mao was from the beginning based on a Peasant Army. The nature of the state created was therefore far more contradictory reflecting those peasant influences. The process of combined and uneven development in China also seems to have been less pronounced in China than it was in Russia. If anything Mao’s regime under those peasant influences tended closer to the feudalism of Pol Pot rather than the workers state created by the Bolsheviks. But as Marx commented about the role of the battering ram of capitalist low prices, any society other than the most primitive cannot stand in isolation from the need to modernise. The Chinese Stalinists witnessing the political counter-revolutions in Eastern Europe seemed to have woken up and smelled the coffee.
After the revolution in Russia and faced with a similar situation of a country that was 80% agricultural, Lenin looked to his association with the US magnate Armand Hammer who was CEO of Occidental petroleum, for a solution. Lenin sought through Hammer to attract foreign companies to invest in Russia. These state capitalist enterprises either wholly owned by foreign companies or preferably joint ventures the workers state would fulfil three functions. Firstly, they would act as a competitive whip on the enterprises that Lenin described as being of the “socialist type” i.e. the nationalised, collectivised and co-operative enterprises. Secondly, these enterprises would provide the goods and services the people required and which the infant Soviet enterprises could not yet provide. Thirdly, by introducing the latest capital equipment and techniques they would educate and train Soviet workers, technicians and managers in these techniques and use of this equipment, so that this knowledge could be taken out into the rest of the economy.
For fairly obvious reasons that the state in Russia was nationalising capitalist property foreign capitalist enterprises were reluctant to locate in Russia, and the idea never took off.
But the idea does seem to have been adopted successfully by the Chinese and Cuban Stalinists that have been successful in attracting foreign capital into such joint ventures. Although it could be argued that the price of such joint ventures is exploitation of the workers within them, Lenin himself recognised that such exploitation would be a price that would have to be paid, whilst arguing that at the end of the day such capitalist enterprises had to operate within the limits set by the state.
What many might find surprising is that the source of the boom in China is not capitalist enterprises but new collective enterprises based on the village commune as this Economist article sets out.
The source of the boom in China – Economist
And according to the a BBC report the idea of state firms in China being complete basket cases compared to the capitalist enterprises is also a misconception. On the contrary they appear to compare with similar firms in the US.
Chinese state firms compare with US
But the idea that China has become Capitalist also seems to be an overstatement. Most of the foreign capital employed in China is in the form of Joint Ventures, moreoever the majority of loans from state banks (80-90%) goes to state owned enterprises. In one report I read a while ago from the Economist Intelligence Unit State Owned Enterprises continue to absorb 70% of industrial capital, and labour. And although the state is opening up the banking sector it retains control over the issuing of credit, both in terms of interest rates, and quantitative and qualitative controls, direct of finance to state projects etc.
Economist - Continued State Ownership and Direction
The following UNCTAD paper also appears to contain some useful information in respect of China and property relations.
Unctad Paper on China “Are Socialist Property Rights Compatible with Teechnological Catching Up?”
As the Socialist Appeal article quotes Lenin.
“"History knows transformations of all sorts."
Lenin.
It appears that despite the claims of “the end of history”, history has not finished with us yet. The workers of Russia, China and Cuba may yet have a chance to simply lay hold of socialised property relations via a political revolution.