Falling between two stools
A review of Marko Bojcun’s Towards a Political Economy of Ukraine: Selected Essays, 1990-2015; Ukrainian Voices, vol 3; Ibidem-Press, Stuttgart.
A.
The history of post-Soviet Ukraine could be written as that of a succession of self-serving political leaderships, and of inspiring but failed popular protests, resulting in chronic economic underperformance that has left the country’s dwindling population among the poorest in Europe. A glance at IMF data, for example, shows the country vying for bottom place in the European income rankings with Moldova.
In these essays, written close on the events they analyse, Marko Bojcun reminds us that this need not have been the case, and that other trajectories at times seemed possible. One example is to be found in an article from 2001, in which the prospect of Russia’s European integration is still in the air, just about, whereas from the vantage point of today, this is almost unthinkable.
B.
The collection covers key waypoints in the political and economic development of independent Ukraine in an international context, running from the eve of the break-up of the Soviet Union to the onset of the war with Russia in 2014, triggered by the flight from Kyiv of the Ukrainian president, Viktor Yanukovych, following a popular revolt, known as the Maidan. Included are two essays on formative political events—the 1994 parliamentary election, the first national election following independence; and an assessment of the early results of the presidency of Leonid Kuchma, a former “red director” under whose leadership the broad post-Soviet institutional norms of the political system were established. Two essays explore different dimensions affecting Ukraine’s international context. Another series of articles—on the catastrophic slump of the 1990s and on the unbalanced recovery of the early 2000s, which exposed the economy to spectacular “adjustment” amid the global financial crisis of 2008-09—chart the uneven construction of a market economy in Ukraine, and its integration into the world economy, often on unfavourable terms.
The book concludes with an analysis of the main factors behind the “Ukraine crisis” of 2013-14, the major episode in the country’s modern history. As Bojcun folds into this piece many of the conclusions and perspectives worked out in earlier ones, it serves as a kind “master” essay, or summation of the main results of Ukraine’s first quarter century as a sovereign nation state. In brief, he sees the crisis as arising from the concurrence of the Maidan, as just the latest manifestation of the disappointment of popular domestic political and economic expectations, with a “zero sum choice” on foreign policy foisted on Ukraine by stronger external powers—namely, the EU and Russia.
C.
In more detail, his argument is as follows.
Domestically, the building of the modern Ukrainian state has been skewed by its role in the large-scale transfer of public assets to the newly rich oligarchs in the 1990s, as well as by its enablement of “new rounds of wealth accumulation from living labour employed in the growing private sector”. This basic institutional relation has been central to Ukraine’s political and economic life, and to many of its ailments, ever since. For instance, the elite’s domination of politics and protracted failure on economic development—both to invest sufficiently in the Ukrainian economy and to offset the impact of increasing inequality—has undermined public trust in the state. During Yanukovych presidency of 2010-14, “alienation from the political order” was accentuated by increased authoritarianism, which, however, permitted a new, more brazen wave of elite economic depredation, to the benefit Yanukovych’s inner circle. This included the exaction of bribes in return for state licences, a fresh round of insider privatisations and the re-erection of corrupt energy intermediary schemes—all at the state’s expense. Between them, elite parasitism on the public finances combined with popular alienation help to explain the persistent weakness of the Ukrainian state.
Internationally, wedged between Russia and the EU, Ukraine remained in a sort of no man’s land, outside of the economic and security structures of both. Whereas the Ukrainian elite’s resistance to re-joining Russia’s orbit was driven by fear of re-subordination, overtures for membership of the Euro-Atlantic structures were more or less openly rebuffed. Both Russian and EU businesses had nevertheless tried to “incorporate Ukraine’s natural resources, cheap labour and markets onto a low technological echelon” of their own production and consumption chains. As an outcome of the interaction of this with Ukraine’s dysfunctional domestic political economy model, Ukraine became a “low wage, energy and materials intensive exporter of primary goods and semi-finished products in agriculture, energy, chemicals and minerals, the profits of which the oligarchs sent abroad”. Despite having developed significant economic links with Russia and the EU, from 2013, Bojcun contends, the two forced Ukraine to choose between them.
Rather than the US, the author sees Russia as the proactive external power militarising and internationalising the Ukrainian crisis. In this, his view diverges sharply from those parts of the Western left which, echoing the official line of Russian state media, were quick to brand the Maidan not just as a fascist coup, but also a CIA operation—thereby, under the banner of anti-imperialism, rendering “understandable” Russia’s violent coercion of a young nation state and former colonial territory struggling to retain its sovereignty.
D.
Bojcun brings deep knowledge of Ukrainian history and society, as well attention to telling human detail, to his treatment of its political economy. A small example of the first is a sketch of the stages of territorial formation of contemporary Ukraine that opens the collection. This provides context not just for understanding the March 1990 election—the subject of the essay in which it appears—but also issues, such as the nature of modern Ukrainian statehood, that are crucial for making sense of its politics and geo-politics today. An instance of the second comes through especially in a section on the explosion of the informal economy during the depression of the 1990s.
This is one of the strengths of the author’s approach. Another is that the empirical analysis is foregrounded, while the conceptual framework that informs it is handled unobtrusively. Combined with clear structuring, this makes the essays easy to follow, which is not mandatory in the field of political economy.
E.
For me, the broad thrust of the author’s analysis was persuasive. However, I have a few reservations.
The first is whether the Ukrainian oligarchy—the informal institution of rule that unites the very rich and their business-criminal networks with currently successful politicians and their networks in the state apparatus—is adequately described as a ruling capitalist class. Of course, as the owners of large chunks of the country’s physical and financial assets, some of it used to realise a profit through investment, oligarchs can be capitalists. However, it is not by the use of state connections to facilitate the direct “exploitation of living labour” that they are distinguished, nor even to aid the exclusion of competitors, but rather by the operation of corrupt financial schemes, a more indirect mechanism of extraction licensed and underwritten by the state. The most lucrative such schemes, around which the Ukrainian elite cohered, have tended to run in the energy sector. Dmitry Firtash’s RosUkrEnergo intermediary is perhaps the most high-profile of these. With political backing at the highest levels in both Russia and Ukraine, from the middle of 2004 until early 2009 it was able to buy gas from Russia at low prices and sell it at higher prices in Ukraine and the EU, to the cost of the Russian and Ukrainian public purse.
Second, the EU and Russia, it should be emphasised, are not “symmetrical” imperialisms occupying equivalent positions in the world hierarchy of capitalist powers. More could have been made of this, it seems to me, not least because of the important role it played in the unfolding crisis. On the one hand, the author identifies the absence of a prospect of EU membership as a key flaw in Ukraine’s 2013 association agreement, obliging the adoption of common economic standards without participation in the decision-making process. He also draws parallels between the mode of operation of contemporary Russian imperialism and US expansion in the twentieth century. This includes offering military security in return for foreign policy alignment, and access to home markets in return for a reduction in investment barriers. However, at a geo-political level, the 2013-14 events were not just a clash of two different “varieties” of capitalism, with correspondingly different tools at their disposal for securing accumulation across borders, but also of political systems and economic outlooks that did not appear equally attractive to most Ukrainians at the time.
F.
To sum up, in this volume Marko Bojcun makes a strong and original contribution to the scholarship of post-Soviet political economy, as an exemplar of a historically informed, empirical, humanist scholarship that is arguably now, and perhaps usually has been, a minority approach, even within Marxism.
A.
The history of post-Soviet Ukraine could be written as that of a succession of self-serving political leaderships, and of inspiring but failed popular protests, resulting in chronic economic underperformance that has left the country’s dwindling population among the poorest in Europe. A glance at IMF data, for example, shows the country vying for bottom place in the European income rankings with Moldova.
In these essays, written close on the events they analyse, Marko Bojcun reminds us that this need not have been the case, and that other trajectories at times seemed possible. One example is to be found in an article from 2001, in which the prospect of Russia’s European integration is still in the air, just about, whereas from the vantage point of today, this is almost unthinkable.
B.
The collection covers key waypoints in the political and economic development of independent Ukraine in an international context, running from the eve of the break-up of the Soviet Union to the onset of the war with Russia in 2014, triggered by the flight from Kyiv of the Ukrainian president, Viktor Yanukovych, following a popular revolt, known as the Maidan. Included are two essays on formative political events—the 1994 parliamentary election, the first national election following independence; and an assessment of the early results of the presidency of Leonid Kuchma, a former “red director” under whose leadership the broad post-Soviet institutional norms of the political system were established. Two essays explore different dimensions affecting Ukraine’s international context. Another series of articles—on the catastrophic slump of the 1990s and on the unbalanced recovery of the early 2000s, which exposed the economy to spectacular “adjustment” amid the global financial crisis of 2008-09—chart the uneven construction of a market economy in Ukraine, and its integration into the world economy, often on unfavourable terms.
The book concludes with an analysis of the main factors behind the “Ukraine crisis” of 2013-14, the major episode in the country’s modern history. As Bojcun folds into this piece many of the conclusions and perspectives worked out in earlier ones, it serves as a kind “master” essay, or summation of the main results of Ukraine’s first quarter century as a sovereign nation state. In brief, he sees the crisis as arising from the concurrence of the Maidan, as just the latest manifestation of the disappointment of popular domestic political and economic expectations, with a “zero sum choice” on foreign policy foisted on Ukraine by stronger external powers—namely, the EU and Russia.
C.
In more detail, his argument is as follows.
Domestically, the building of the modern Ukrainian state has been skewed by its role in the large-scale transfer of public assets to the newly rich oligarchs in the 1990s, as well as by its enablement of “new rounds of wealth accumulation from living labour employed in the growing private sector”. This basic institutional relation has been central to Ukraine’s political and economic life, and to many of its ailments, ever since. For instance, the elite’s domination of politics and protracted failure on economic development—both to invest sufficiently in the Ukrainian economy and to offset the impact of increasing inequality—has undermined public trust in the state. During Yanukovych presidency of 2010-14, “alienation from the political order” was accentuated by increased authoritarianism, which, however, permitted a new, more brazen wave of elite economic depredation, to the benefit Yanukovych’s inner circle. This included the exaction of bribes in return for state licences, a fresh round of insider privatisations and the re-erection of corrupt energy intermediary schemes—all at the state’s expense. Between them, elite parasitism on the public finances combined with popular alienation help to explain the persistent weakness of the Ukrainian state.
Internationally, wedged between Russia and the EU, Ukraine remained in a sort of no man’s land, outside of the economic and security structures of both. Whereas the Ukrainian elite’s resistance to re-joining Russia’s orbit was driven by fear of re-subordination, overtures for membership of the Euro-Atlantic structures were more or less openly rebuffed. Both Russian and EU businesses had nevertheless tried to “incorporate Ukraine’s natural resources, cheap labour and markets onto a low technological echelon” of their own production and consumption chains. As an outcome of the interaction of this with Ukraine’s dysfunctional domestic political economy model, Ukraine became a “low wage, energy and materials intensive exporter of primary goods and semi-finished products in agriculture, energy, chemicals and minerals, the profits of which the oligarchs sent abroad”. Despite having developed significant economic links with Russia and the EU, from 2013, Bojcun contends, the two forced Ukraine to choose between them.
Rather than the US, the author sees Russia as the proactive external power militarising and internationalising the Ukrainian crisis. In this, his view diverges sharply from those parts of the Western left which, echoing the official line of Russian state media, were quick to brand the Maidan not just as a fascist coup, but also a CIA operation—thereby, under the banner of anti-imperialism, rendering “understandable” Russia’s violent coercion of a young nation state and former colonial territory struggling to retain its sovereignty.
D.
Bojcun brings deep knowledge of Ukrainian history and society, as well attention to telling human detail, to his treatment of its political economy. A small example of the first is a sketch of the stages of territorial formation of contemporary Ukraine that opens the collection. This provides context not just for understanding the March 1990 election—the subject of the essay in which it appears—but also issues, such as the nature of modern Ukrainian statehood, that are crucial for making sense of its politics and geo-politics today. An instance of the second comes through especially in a section on the explosion of the informal economy during the depression of the 1990s.
This is one of the strengths of the author’s approach. Another is that the empirical analysis is foregrounded, while the conceptual framework that informs it is handled unobtrusively. Combined with clear structuring, this makes the essays easy to follow, which is not mandatory in the field of political economy.
E.
For me, the broad thrust of the author’s analysis was persuasive. However, I have a few reservations.
The first is whether the Ukrainian oligarchy—the informal institution of rule that unites the very rich and their business-criminal networks with currently successful politicians and their networks in the state apparatus—is adequately described as a ruling capitalist class. Of course, as the owners of large chunks of the country’s physical and financial assets, some of it used to realise a profit through investment, oligarchs can be capitalists. However, it is not by the use of state connections to facilitate the direct “exploitation of living labour” that they are distinguished, nor even to aid the exclusion of competitors, but rather by the operation of corrupt financial schemes, a more indirect mechanism of extraction licensed and underwritten by the state. The most lucrative such schemes, around which the Ukrainian elite cohered, have tended to run in the energy sector. Dmitry Firtash’s RosUkrEnergo intermediary is perhaps the most high-profile of these. With political backing at the highest levels in both Russia and Ukraine, from the middle of 2004 until early 2009 it was able to buy gas from Russia at low prices and sell it at higher prices in Ukraine and the EU, to the cost of the Russian and Ukrainian public purse.
Second, the EU and Russia, it should be emphasised, are not “symmetrical” imperialisms occupying equivalent positions in the world hierarchy of capitalist powers. More could have been made of this, it seems to me, not least because of the important role it played in the unfolding crisis. On the one hand, the author identifies the absence of a prospect of EU membership as a key flaw in Ukraine’s 2013 association agreement, obliging the adoption of common economic standards without participation in the decision-making process. He also draws parallels between the mode of operation of contemporary Russian imperialism and US expansion in the twentieth century. This includes offering military security in return for foreign policy alignment, and access to home markets in return for a reduction in investment barriers. However, at a geo-political level, the 2013-14 events were not just a clash of two different “varieties” of capitalism, with correspondingly different tools at their disposal for securing accumulation across borders, but also of political systems and economic outlooks that did not appear equally attractive to most Ukrainians at the time.
F.
To sum up, in this volume Marko Bojcun makes a strong and original contribution to the scholarship of post-Soviet political economy, as an exemplar of a historically informed, empirical, humanist scholarship that is arguably now, and perhaps usually has been, a minority approach, even within Marxism.
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