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How Capitalism Destroyed Russia — Transcript

by Second Thought · 3,236 words · 509 segments · language en · Watch on YouTube

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0:00this episode and others like it are made
0:02possible by the generous support of my
0:03patrons on patreon
0:05[Music]
0:07here's a Parliament building being
0:08shelled by its president here's a
0:11starving Russian and here's Mikhail
0:12Gorbachev with a big old pizza pie
0:16this week we're talking about liberal
0:18shock therapy
0:24sometimes nothing brings people together
0:26like a nice hot pizza from Pizza
0:31[Applause]
0:33this is the USSR back in the 20th
0:37century the USSR was a country now not
0:40so much and the history of this
0:42transition has typically been told one
0:44specific way as you probably already
0:46know in the west the end of the USSR is
0:50a story of inevitable Triumph a sort of
0:52teleological proof of the superiority of
0:54capitalism and the definitive nail in
0:56the coffin for any kind of socialist
0:58project you'll certainly have
1:00experienced this yourself but all over
1:02America and in Western countries in
1:04general people are taught pretty early
1:06on about events like the fall of the
1:08Berlin wall or Reagan's speech by the
1:10Brandenburg gate from these moments The
1:12Story Goes came the inevitable end of
1:15the USSR of the Cold War and to some
1:17even of History itself the story is
1:21usually told as though it couldn't have
1:22gone any other way capitalism was always
1:25going to win in the end it's a very
1:27Marvel movie kind of way to tell history
1:29for most people then the period
1:31following the dissolution of the USSR
1:33has been been folded neatly into the
1:35US's overarching narrative for the 20th
1:37and 21st centuries it's a narrative of
1:39manifest destiny where the US is the
1:41Vanguard of democracy for the rest of
1:43the world and extends freedom and peace
1:45and justice benevolently to all who
1:47suffer under the Yoke of tyranny in this
1:50narrative there is democracy on one side
1:52and communism on the other and the U.S
1:55Prides itself on bringing democracy
1:57everywhere it goes including in Russia
2:00but as you can probably expect from all
2:02the other times the US has quote unquote
2:04brought freedom and democracy to other
2:06countries
2:07that whole narrative doesn't really line
2:10up with what actually happened the end
2:12of the Soviet Union was not the arrival
2:14of democracy to the former Soviet
2:15countries Russian capitalism was not the
2:18product of a democratic Reawakening and
2:20it was certainly not inevitable the
2:23whole transition period between the
2:24Soviet era of Russia to its modern
2:26capitalist iteration was in reality a
2:29time of brutally anti-democratic
2:30violence massive and immediate misery
2:33for millions and the beginning of a new
2:35period of insecurity and it all started
2:38with a process called shock therapy as
2:41you might already know in economics
2:43shock therapy is the process of suddenly
2:45transitioning from a planned economy to
2:47a capitalist economy said differently
2:49shock therapy is the abrupt simultaneous
2:51and top-down implementation of multiple
2:54capitalist economic principles where
2:55they once did not exist the kinds of
2:58policies implemented are usually
2:59centered around your typical capitalist
3:01stuff like privatizations as well as
3:03things like removing price controls
3:04opening the domestic economy to
3:06International capital and of course
3:08austerity Politics the goal of shock
3:10therapy is to bring in rugged
3:12quote-unquote free market neoliberal
3:14capitalism quickly and at pretty much
3:16any cost it's called shock therapy by
3:19its Advocates to try to evoke a positive
3:21almost medical notion of economic
3:23transition something like ripping off a
3:25Band-Aid a little shock at first but an
3:27overall therapeutic outcome in the end
3:29in reality though shock therapy is about
3:32as gentle and medical as a bath with a
3:34toaster and it can hardly be said to
3:37have cured any of the countries where
3:38it's been implemented but that's not
3:40model the term shock therapy has more
3:43recently come to have a sort of double
3:45meaning not only does the shock part of
3:47shock therapy evoke the sudden pace of
3:49change and the electric violence of the
3:51whole process as we've already covered
3:53it also captures the let's say
3:56convenient use of shocking events to
3:58push capitalism through at Breakneck
4:00speed in the words of Naomi Klein shock
4:03therapy is the brutal tactic of using
4:05the Public's disorientation following a
4:07collective shock Wars coups terrorist
4:10attacks Market crashes or natural
4:12disasters to push through radical
4:14pro-corporate measures so what did all
4:17this look like in Russia for starters in
4:20order to bring shock therapy to Russia
4:22the idea of democracy had to be severely
4:24let's say reinterpreted
4:27following a wave of liberalization under
4:29the last president of the USSR Mikhail
4:32Gorbachev and the continuing effects of
4:34the Cold War the USSR was suddenly
4:37illegally and undemocratically dissolved
4:39from within Boris Yeltsin then President
4:42of Russia a republic within the USSR
4:45signed an accord with the heads of two
4:47other Soviet republics to mutually
4:48recognize each other's Independence the
4:51leaders of Ukraine Belarus and Russia
4:53all sat at a table called themselves and
4:55each other independent countries and
4:57then they just were at the end of the
5:00day to be a country you really only need
5:02to say you are and find another country
5:04to agree with you just like that the
5:06Soviet Union was functionally over since
5:08without the u that was pretty much it
5:10for the SSR a couple weeks later then
5:13Gorbachev resigned as leader of the USSR
5:16and the Supreme Soviet the equivalent of
5:18a parliament or a congress announced the
5:20formal dissolution of the Union I
5:22summarized that pretty quickly and
5:24that's partly because things happened
5:26really fast in real life too the sudden
5:29dissolution of the USSR really caught
5:31Soviet citizens by surprise since just a
5:33couple months earlier the USSR had held
5:36a Countrywide referendum in which 80
5:38percent of the population voted
5:39overwhelmingly in favor of preserving
5:41the union with some reforms to how it
5:43would function close to 80 percent of
5:46Soviet citizens wanted to keep the USSR
5:48around including large majorities in
5:51Ukraine Belarus and Russia the same
5:53countries that would announce their
5:55independence in other words the
5:57dissolution was not the fruit of some
5:59Democratic process it just kind of
6:01happened one day the USSR was unified
6:04then it was multiple countries and then
6:07it stopped existing what was left in its
6:09wake was a cluster of Nations and most
6:12importantly for this video the new
6:14Russian Federation led by liberal
6:16capitalist and nationalist president
6:18Boris Yeltsin to be clear this summary
6:21skips so many important events but this
6:24video is about liberal shock therapy not
6:26the dissolution of the USSR so we got to
6:28keep moving
6:29and speaking of keep moving is exactly
6:31what the Russian Federation did using
6:34the shock of the sudden collapse of the
6:35USSR Yeltsin began pushing through more
6:38capitalist reforms in the newly born
6:39Russian Federation he brought in
6:41capitalist institutions like the IMF as
6:44well as capitalist economists like
6:45Jeffrey sacks more on him later to help
6:48radically transform the Russian economy
6:50with the goal of bringing neoliberal
6:51capitalism in Fast and it started very
6:54early the final month of the ussr's
6:57existence was December 1991 and by
7:00January of 1992 shock therapy was
7:03Unleashed first price controls on
7:05consumer goods were dropped almost
7:07entirely leading to an immediate 250
7:10percent increase in price of basic
7:12necessities then came the layoffs and
7:14the hyperinflation unemployment
7:16skyrocketed by 56 percent GDP fell 14.5
7:20percent in a single year industrial
7:23production declined by almost 20 percent
7:26inflation ballooned to a ridiculous 1
7:29354 percent and real incomes were cut in
7:33half the government cut spending on
7:35education and health and between 1989
7:38and 2002 deaths increased by 12.8
7:42percent and life expectancy for men
7:44declined by a full six years between
7:461991 and 1994. for reference the drop in
7:51life expectancy due to kovid is about
7:53one year in the U.S but that's not all
7:56according to Tony wood an author on the
7:59transition to Modern Russia the ILO
8:01classified 85 percent of Russia citizens
8:04as under the poverty line in 1992 which
8:07the Yeltsin government swiftly corrected
8:09quote unquote to a teeny tiny 35 or in
8:13other words one in three people and all
8:16of this mind you after the USSR stopped
8:19being at war with the world's largest
8:21economic and military power this
8:23humanitarian crisis happened not during
8:26a violent paralyzing War but during a
8:28Time time of relatively unprecedented
8:30piece for Russia these reforms and
8:33crises were accompanied with a decree
8:35from Yeltsin allowing anyone to sell
8:37anything at any time with no permit
8:39anywhere in Russia prompting recently
8:41impoverished Russians to fill the
8:43streets in makeshift bazaars selling
8:45family heirlooms personal belongings and
8:48really anything they could to make ends
8:50meet perversely this was commented on by
8:52Jeffrey Sachs The Economist leading the
8:54shock therapy project in Russia as
8:56evidence of spontaneous Market activity
8:59as though people were being good little
9:01capitalists and not desperately trying
9:03to salvage what they could to Stave off
9:05hunger unsurprisingly as a consequence
9:08of this whole mess organized crime found
9:10a welcoming home in the chaotic and
9:12deregulated environment of capitalist
9:15transition leading according to multiple
9:17accounts to the development of the
9:19Russian mafia but still that's not all
9:22we haven't even gotten to the
9:24privatizations in 1992 alone 47 000
9:28state companies were privatized a number
9:31that nearly doubled to ninety thousand
9:33by the end of the following year
9:34companies formally integrated into the
9:37planned economy were cut up into shares
9:39and offered for sale to the Russian
9:40people well that is in theory
9:42unsurprisingly this process was done in
9:45a quick and dirty way that completely
9:46screwed over Russian people immediately
9:48to privatize the economy Soviet
9:51Industries within the planned economy
9:52were available for purchase in shares
9:54Russians would receive a voucher worth
9:57about twenty dollars with which they
9:59could technically buy shares in
10:00privatized companies or if they wanted
10:03they could just resell them as common
10:05sense would suggest when you're starving
10:07a share isn't worth as much as cash but
10:10regardless of what Russians did with
10:12these vouchers it was almost always a
10:14losing investment behind yeltsin's
10:16rhetoric of creating a society of quote
10:18millions of owners was the reality that
10:21Russian capitalism was being built to
10:23look like every other capitalism
10:25top-heavy like a shampoo bottle like
10:28when you flip it over to get that last
10:30little bit of shampoo From the Bottom by
10:31getting it to the top you already know
10:33what top heavy means I don't know why I
10:35felt like making an analogy in any case
10:37only 14 percent of companies privatized
10:39during the transitional period were ever
10:41available at public auction or for
10:43public stock purchase most
10:44privatizations went to insiders or
10:47company managers people who could take
10:49advantage of the new capitalist system
10:51effectively thus in a very short amount
10:53of time Russian capitalism caught up
10:56with its peers with wealth concentrating
10:58at the top of society and inequality
11:00following the same trajectory this by
11:03the way is what created the Russian
11:05oligarchy we know today and here I'll
11:07pause for a second because it might seem
11:09like this whole Spiel is evidence of
11:11some sort of bureaucratic inefficiency
11:12or simple corruption or that neo-liberal
11:15economists had good intentions but made
11:17a mistake in their execution that in
11:19theory this process could have happened
11:21in some fair and productive way but no
11:24it couldn't have one even if
11:27privatizations have been coordinated
11:28fairly it wouldn't have mattered
11:30capitalism naturally tends towards the
11:33concentration of money at the top
11:34regardless of if there's a fair starting
11:36point the oligarchy we all know and love
11:39would have shown up it might have just
11:41taken a bit longer two the reality is
11:44that privatization was sloppy and
11:46corrupt not by some accident but because
11:48neoliberal economists wanted it to be
11:50shock therapists wanted privatization to
11:53happen fast before anyone could stop it
11:55and sloppiness was just part of the deal
11:58Jeffrey Sachs put it extremely clearly
12:00when in 1993 he wrote quote as early
12:03advisors on the privatization process we
12:06argued strongly for Speed above
12:08perfection in the distribution of shares
12:10for the general success of the reforms
12:12which were extremely precarious from the
12:15start it was important to make facts by
12:18establishing widespread private property
12:20rights if that meant heavy Insider
12:22representation that was a cost that
12:24should be accepted
12:25fun fact here's a quote from 2012 where
12:28he denies ever saying this so why did
12:31neoliberals like sax care so little
12:32about quote-unquote perfection and care
12:34so much about speed because they all
12:37knew that if this process didn't happen
12:38immediately it would not pass Democratic
12:41muster
12:42here's another sax quote where he pretty
12:44much says that out loud but more
12:46convincing proof of this disregard for
12:48and even fear of democracy than what
12:51sack said is what the IMF and Boris
12:54Yeltsin actually did for starters the
12:57IMF did what the IMF has always done
12:59after giving its recommendations for how
13:01to restructure the economy meaning
13:03gutting it and letting capitalists strip
13:05it to Pieces the IMF withheld crucially
13:07necessary funds until those neoliberal
13:10reforms went through I don't think it's
13:12being a wacky political extremist to say
13:14that an international organization
13:16paying for a country to change their
13:18economy is maybe not the most democratic
13:20process but maybe that's just me IMF and
13:23American pressure notwithstanding in
13:26order to bring about the full and Rapid
13:27transition to a capitalist economy that
13:29shock therapy required Yeltsin also had
13:32to Brute Force his reforms which he did
13:34by rapidly consolidating power in the
13:36executive branch of the Russian
13:38government over the course of the early
13:4090s Yeltsin would increasingly rule
13:42without Russian parliament in a series
13:44of constitutional changes and periods of
13:46exceptional power something that made
13:48the parliament a little upset and which
13:50Yeltsin acknowledged by let me check my
13:52notes
13:54thank you
13:56all right ordering the Army to Shell the
13:58[ __ ] out of him in 1993. again I'm no
14:01democracy expert here but maybe this is
14:04not really what democracy is about this
14:06also doesn't feel very invisible hand to
14:09me just a thought and all this is
14:11setting aside the massive advantages the
14:13ultin got in preserving his presidential
14:15Powers thanks to Russia's privatized
14:17press institutions which turned an eight
14:19percent approval rating into a
14:21successful presidential victory thanks
14:23to more time on television and more
14:25favorable coverage as well as all the
14:27Electoral rigging ultimately though some
14:29Devil's Advocate type could justify
14:31these brutal interpretations of bringing
14:33democracy to the east with some sort of
14:35post-shock therapy super democracy or
14:37something it wouldn't be convincing but
14:40I guess it's something you could do yet
14:42here again you'd have trouble finding
14:44anything of the sort there was no
14:46democracy Aftershock therapy just like
14:48there was no democracy during shock
14:50therapy democracy was of course never
14:53the intended outcome of any of these
14:54reforms the purpose was to kill labor
14:57power in all its forms and replace it
14:59with capitalist hegemony so democracy
15:02never came during the Yeltsin era nor
15:04has it during Putin's turn in the hot
15:05seat consolidating the power of the
15:08government into a single person highly
15:10beholden to the interest of the
15:11capitalist class was both the goal and
15:13the necessary means for the reforms to
15:16go through the parliament would have to
15:18be sidelined for capitalism to happen
15:19and disregarding governmental democracy
15:22in this way handled the political half
15:24of the shock therapy equation
15:25unsurprisingly then crushing democracy
15:28was also the goal in the economic half
15:30of the equation and here again we have
15:33proof in the form of a concise sex quote
15:35telling us exactly how shock therapy
15:37works quote privatization requires a
15:40disenfranchisement of the workers
15:42Council in other words workers the
15:44majority of the population having a say
15:46in the economy is bad but the minority
15:49of capitalists doing the same is good in
15:52short capitalism went through by
15:54destroying any governmental size of
15:56democracy and any democracy in the
15:58sphere of economic production all that
16:01is left after this thorough gutting of
16:02the democratic process is sham elections
16:05and the domination of the capitalist
16:06class Russia is characterized by today
16:08the picture you get from this series of
16:11events is one that's pretty contrary to
16:13how Russia's historical trajectory
16:15usually gets depicted that is to say
16:17with an undemocratic Communist Regime
16:19being saved by capitalism and democracy
16:21only to be perverted later by Vladimir
16:24Putin as the historical record shows
16:26that's just not what happened democracy
16:29was never the goal of the transition it
16:32was never even the means of this process
16:34either and therefore It ultimately only
16:36served as a rhetorical smoke screen for
16:39acts of heinous State and market-based
16:41violence setting up an undemocratic
16:43government and an undemocratic economy
16:45was the only way to bring capitalism to
16:48Russia for its liberal reformers so like
16:50for chile and other patients of the
16:52shock therapy treatment it was not
16:54democracy that came to Russia but
16:56political repression and economic
16:58domination now just a few decades later
17:01we see even more consequences of the
17:04system which has recently given us the
17:06Ukraine conflict the concentration of
17:08wealth into a few hands and a domestic
17:10Russian economy paired down to a
17:12complete dependency on oil and gas by
17:14the forces of international market
17:16competition has predictably resulted in
17:18the capitalist class of one country
17:20battling the capitalist class of another
17:22to see who will get to profit from
17:24fossil fuel exports this battle is not
17:27just numbers on a screen it is fueled by
17:29the loss of human lives in an actual war
17:32and will most likely result in a
17:34ruthless and certainly fatal winter for
17:36a whole continent it's high time for
17:39actual democracy and actual peace and
17:42capitalism will never provide that
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18:58[Music]

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