Petr Sarukhanov/»Novaya»
Three decades have passed since the moment when the red flag over the Kremlin was replaced by the Russian tricolor — a whole generation. But many years later, we continue to listen to speculations about the catastrophe that befell the Soviet Union, and that everything should have been done wrong.
It's funny when people who, in the new Russia, became ministers, billionaires, or even both at the same time, lament about the collapse of the USSR. It’s the same as if in the USSR in 1947, members of the Stalinist Politburo were vying with each other to talk about the collapse of the Russian Empire and how well they lived under the tsar-father.
At the end of 1979, the Leningrad writer and philosopher Igor Efimov published in Frankfurt the book «Without the Bourgeoisie», in which he described the realities of the socialist economy — relying solely on documents and materials openly published in the Soviet press. The picture turned out to be bleak, at that time everyone already understood that something went wrong with the construction of communism in a particular country.
In the last chapter of his book, Efimov discusses what could have happened if The USSR began market reforms. And he gives the following forecast:
From the book «Without the bourgeoisie»
“… in our huge power, the corporate market economy would lead to an even more rapid distortion of the entire economic ship. The Baltics and Transcarpathia would begin to grow richer, Central Asia would grow poorer, in the Caucasus corporations would acquire a mafia character. In addition to economic inefficiency, you would receive spontaneous waves of violence. The migration of the population from impoverished to wealthy areas would have reached such threatening proportions that the central government would have to ban all transfers altogether … «.
Republics rich and poor
Thirty years later, after the republics of the former USSR went to capitalism — each in its own way, we can assess how justified this forecast.
To do this, the easiest way is to use the data of the International Monetary Fund, which keeps statistics per capita GDP, expressed in dollars. For reference, let us compare the indicators of the countries of the former USSR with those of China — after all, the PRC is still perceived by many as an example of economic transformation.
In the early 1990s, the global average GDP per capita did not exceed $ 5,000. The economies of all post-Soviet republics «collapsed» below this level and remained so until the early 2000s —
despite different policies and different economic potential. Everyone turned out to be “poor”, and the former republics of the USSR entered the growth trajectory only ten years after 1991.
The first country that was able to exceed the world average of $ 6,240 in 2003 was Estonia — its per capita GDP was $ 7,220. It was followed by Lithuania ($ 5500) and Latvia ($ 5110). In fourth place was, unexpectedly, Turkmenistan ($ 4190), and Russia — only in fifth, with a per capita GDP of $ 3200.
Azerbaijan ($ 880) lagged behind both Georgia ($ 1030) and Armenia ($ 920) … In the countries of Central Asia, with the exception of Turkmenistan and Kazakhstan, per capita GDP did not exceed $ 500. In Ukraine, it was only $ 1060 — almost half as much as in Belarus ($ 1900). Almost the same result — $ 2060 — was achieved by Kazakhstan. Interestingly, China at this time remained a poor country — $ 1280 per capita GDP.
But then oil prices began to rise. And already in 2008 the picture looked different. The world average per capita GDP grew by one and a half times, to $ 9600. Estonia doubled it, its GDP per capita was $ 18,300. Latvia ($ 16,400) has surpassed Lithuania ($ 15,000), and the overall size of the Baltic economies has tripled in five years.
Russia achieved an even more outstanding result — $ 12,500, an increase of almost four times. Kazakhstan came in fifth with a result of $ 8,350, Turkmenistan came in sixth with $ 7,450, Belarus grew at the same pace as its Baltic neighbors — up to $ 6,600. Azerbaijan accelerated rapidly — $ 5,600, showing a sixfold increase. Ukraine and Armenia almost caught up — $ 3900 each.
China was still poorer than all of them — its GDP per capita was $ 3450.
Growth and stagnation
After the 2008 crisis The world economy recovered during the past two years, but the pace of this recovery for the post-Soviet USSR was very different.
In 2013, the Baltic states reclaimed everything they lost during the crisis. Russia came out on the second place, Kazakhstan held on the fifth place. Turkmenistan slowed down, Ukraine returned to its previous level, and the economies of Armenia and Georgia were at about the same level. But China was able to double in five years — to $ 7000.
The next five years cost dearly all post-Soviet countries — except for the Baltic.
Estonia ($ 23,100) was twice the world average ($ 11,500), followed by Lithuania and Latvia. And the per capita GDP of the Russian Federation turned out to be below the world average — $ 11,300 — citizens lost more than a quarter of their wealth. Ukraine lost $ 900 per capita GDP, and Kazakhstan — $ 4000 — also a quarter of its wealth.
Georgia ($ 4700) and Armenia ($ 4200) were able to maintain their previous level or even increase it. The prosperity of Uzbekistan decreased by a third (from $ 2,400 to $ 1,600), and Belarus — from $ 8,000 to $ 6,500. Turkmenistan turned out to be richer — $ 7000. (China also continued to grow — $ 9850.)
What can we expect in 2022? The IMF forecast clearly shows where in the post-Soviet space lies the border between the «first» and «second» world.
The average global level of per capita GDP will reach $ 13,100, Estonia will reach $ 29,400, Lithuania — $ 24,200, Latvia — $ 21,500. But Russia will continue to slow down — both in relation to the world and in relation to its neighbors — its per capita GDP will amount to $ 11,700. China is ahead of Russia — it has $ 13,000, which is almost the world average.
Rent, capital and dictatorship
What conclusions can we draw by looking at these figures, remembering how the post-Soviet countries are actually «arranged»? Back in 2011, the Russian economist Sergei Zhuravlev, analyzing the achievements and failures of the economies of the post-Soviet states, identified three factors that ensure the economic viability of such countries:
- «oil and gas»,
- «capital «
- » dictatorship «.
Four «petrocracies» — Azerbaijan, Kazakhstan, Turkmenistan and the Russian Federation have not invented anything in twenty or thirty years that would save them from dependence on raw materials, and took their place at the very bottom of international production chains. This place does not mean poverty, but it also does not give people a chance for wealth — with the exception of the wealth of the elites, who simply cannot have any motivation for any development — they see their main task in maintaining personal well-being and transmitting it by inheritance.
Since the elites in the «petrocracies» have not been able to create any institutions guaranteeing property in thirty years, they will be able to transfer their property to their heirs only together with the authorities. Here, by the way, such regimes have a vulnerable spot —
the ruling grandfather-generals will transfer power and money to their sons and even grandchildren, not letting the conditional “majors and colonels” to the heights, called upon to protect the process of this transfer.
And just the hired guardians may turn out to be the most disloyal stratum of society.
Those who did not have the raw materials had to rely on foreign capital — and therefore, create institutions that guarantee the rights of this capital. An independent court, separation of powers, a change of government, and so on … The Baltic states followed this path, and then Georgia, Armenia and Moldova (it was able to increase its per capita GDP from $ 1200 to $ 4800 in 15 years, from 2006 to 2021). Practice has shown that this gives results — but «over a long distance», and not immediately.
Option number three — tough authoritarianism and manual control. This is an example of Uzbekistan for almost 25 years, and Belarus. Yes, it works — especially when your small country is integrated with one of the “petrocracies” — either through capital, like Belarus, or “through labor,” like Uzbekistan.
Why Tajikistan and Kyrgyzstan are not on this list ? Because they were unlucky back in the USSR — in these countries the share of agriculture in GDP exceeded the share of industry, they simply did not have their own production. And this is a bad condition for an independent economic start at the end of the twentieth century — so their per capita GDP turned out to be «like in Africa» about $ 1000.
Ukrainian lesson
But what about Ukraine, you ask — a real star of the USSR economy, which seemed to have everything for an economic breakthrough? How did it happen that she ended up in the «laggards»? For example, according to the IMF, for October 2021, the per capita GDP of the Russian Federation was $ 11,273 (63rd place in the world, between Bulgaria and Malaysia), and per capita GDP of Ukraine was $ 4384 (109th place in the world, between Jordan and the Marshall Islands).
The income gap between Ukrainians and Russians is not nearly as significant as one might think. If the per capita GDP of the Russian Federation is 2.6 times higher than the per capita GDP of Ukraine, then the salary of a Ukrainian worker should be 2.6 times less than the Russian one? This is not true.
Real incomes of people are best reflected by the so-called «median salary» — 50% of employees receive less than this amount, 50% — more than this amount. We can say that the median salary is “the salary of the average person.”
In Russia, Rosstat calculated the official median salary for the first time only this year — at the end of 2020, it amounted to 32,422 rubles. ($ 430). The average salary is almost one and a half times more — 51,352 rubles. ($ 690). Taking into account shadow employment, the average monthly labor income in 2020 was about 42,400 rubles. ($ 570), according to Rosstat. There are no official data for 2021, but according to a study by SberIndex and Rabota.ru, the median salary increased by about 9%, that is, now it is about 35,000 rubles. ($ 470).
The “median salary” is closer to the real income of the “average person” because the “average salary” takes into account the extreme earnings of top management. The wider the gap between the average and median wages, the higher the difference in incomes between the upper class and everyone else.
According to the State Statistics Committee of Ukraine, the average salary in the country is 14045 hryvnia ($ 520), in Kiev — 20,000 hryvnia ($ 740 ). Ukrainian statisticians estimate the median salary in the country at about 70% of the average salary, which is $ 364.
This, of course, is $ 100 (1.3 times) less than in the Russian Federation. But this is not such a dramatic gap, as one might suppose when comparing the size of Ukrainian and Russian per capita GDP.
And here, most likely, the answer to the “Ukrainian riddle” is hidden. Ukraine did not have an advantage in the form of raw materials, which means, according to the hypothesis of Sergei Zhuravlev, it could rely either on authoritarianism or on attracting foreign capital, requiring developed public institutions. And if such institutions were created, this country could become an impressive example for the entire post-Soviet space.
But even now we see that
Ukrainian workers receive a large share of the national income of Ukraine, than the Russian worker — the share of the national income of Russia.
This, of course, is connected with the structure of the economy, of course (in the Russian Federation there is a raw materials sector with its super profits, in which few people are employed). But a worker in the Russian Federation could lay claim to more. If Russia relied on “labor” and not on “rent”.