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the end stage of socialism is kleptocracy

If you read The Communist Manifesto, Marx and Engels give a poetic account of how societies evolve. Western society moved out of antiquity into feudalism and then into capitalism. In their view, capitalism is so exploitative and unstable that revolutionary forces will topple the system and impose state control over the economy. Ideally, the state itself will wither and you’ll get an idyllic communist society.

But we now know that’s wrong. The industrialized nations of the West never turned to socialism, though they did institute welfare states in the 20th century. Instead, more rural societies like China and Russia were the biggest customers of Marxism. And very few socialist states of the 20th century remained socialist in the classical senses. Socialism, and communism, was not the end of the story.

So what did we get? If you follow someone like Francis Fukuyama, you might believe that liberal capitalism is the end state. It’d be great if it were true, but that’s also wrong. Liberal capitalism, understood as private ownership of most of the economy with a government that redistributes a lot of income, is still not what most people in the world experience and it’s probably not what the residents of Russia and China have.

Instead, people have kleptocracy – a state that has some features of capitalism and democracy, but is mainly designed to help a narrow elite suck up all the wealth through graft, bribery, and coercion. That is probably the most likely end state of socialist development. This is made extremely clear by a book called Putin’s Kleptocracy: Who Owns Russia?, by political scientist Karen Dawisha. The book provides an illuminating account of how the Russian state grew out of the Soviet Union and by doing so, explains how kleptocracy is a very natural outcome of socialist government.

Here’s the story in brief: Socialist states have piles of cash. They can print their own but they also acquire hard currency through sales of oil and minerals. Socialist states use these piles of cash for the enrichment of elites, the purchase of capital goods, and supporting socialist parties abroad. So, most socialist states already have a nice system of bank accounts and elites understand how financial institutions work.

When socialist states collapse (e.g., Russia 1989) or evolve (e.g., China in the 1990s/2000s), elites with the socialist state then embezzle these piles of cash and set up their own firms. They also use the state to impose all kinds rules that require that outsiders deal with them and they also use state violence to harass or kill rival business owners. The end point is that you get a coherent group of state participants who essentially set up a mafia under the aegis of state legitimacy.

Dawisha’s book chronicles this story in extreme detail and shows how Putin’s ring of KGB allies stepped in and set up a kleptocracy in the waning days of the Yeltsin administration. It is a story that likely has analogs in China, Africa, and anywhere else you’ve seen socialist governments pop up. It’s also a story of how many authoritarian states on the right evolve. They’re just skipping the socialist step in their trajectory.

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Written by fabiorojas

September 17, 2019 at 4:43 pm

Posted in uncategorized

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