Every day, in our media, we hear experts in international relations and strategic studies comment on the Russian invasion of Ukraine. Here, we want to better understand Russia’s winding road that led it to invade Ukraine at the outset. That road, before being a military foreign operation, started in Russia itself, internally as it were, with its failing institutions.
What, indeed, is the portrait of today’s everyday life in Russia?
Let’s start by asking a question: when was the last time you purchased a great Russian product? Apart from oil and gas, or a great Russian novel, or maybe vodka that is, but a product that would be comparable to a great car from Germany or Japan, an electronic device from South Korea, or a great wine from France or Italy?
In other words, the economy in Russia is at best stagnant, with its GDP comparable to much-smaller Italy and substantially below, in terms of personal income, China, and way, way behind South Korea.
Yet Russia has respectable scientists and a decent education system. What, then, does it not have?
The answer is at the same time simple and complicated. It does not have solid institutions or a rule of law, a rule of law that would guarantee respect for contracts and lead to authentic innovation and a dynamic division of labor.
Indeed, the rule of law is not only a moral question, but it is also, possibly, above all, an economic one. Individuals are less likely to engage in business and economic exchanges when they are unsure that their input will be respected and not stolen by either the state or its cronies.
In other words, things must be fair before they become prosperous.
The next question is: yes, but, in the early 1990s, did the Russians not convert to capitalism, big time?
Yes, but it was a Russian interpretation of capitalism. The Russian interpretation of capitalism had cherry-picked only small portions of an authentic capitalist institutional framework. Capitalism was interpreted as a money-power grab system. Not surprising, since under communism, the capitalist economies were seen as corrupt and immoral. Russia’s move to capitalism was a kind of enactment of this twisted and tortured vision.
So Russian capitalism is only capitalism in name. It is a get-rich-quick scheme for those who were close to political power at the uncertain and fluid times of the transfer between communism and private ownership, between 1990 and 2000, when public property was taken by those who were quick to change allegiance from communism to capitalism by opportunistic individuals not particularly known for honesty and good manners. The formerly public goods were thus apportioned between oligarchs, unscrupulous politicians, and higher civil servants. That is still the system today in a country where there are spectacular riches for some and stagnating income for most.
The next question becomes: how does this winding road to fake capitalism lead to the Russian invasion of Ukraine?
From the winding road to war
The winding Russian road of fake capitalism that now leads to the invasion of Ukraine is where the internal-institutional dynamics meet their external dynamics.
The countries surrounding Russia are increasingly attracted to the liberal democracies and their institutions of capitalism, which requires minimal respect for the rule of law and a certain degree of economic and political freedom. Russia, on the road taken since the 1990s, cannot compete with this Western attraction without taking apart its present institutional culture of extreme power authority and the concentration of riches in the hands of regime-friendly oligarchs. This conversion could be possible for Russia, later, but not for its present leadership and institutional setup.
Consequently, if this institutional conversion is impossible for the present regime, it can only resist the liberal model’s influence in neighboring countries by military action. “If you can’t join them, beat them” then becomes the plan of action.
Therefore, we sense or fear that the military action of Russia could go beyond Ukraine and extend to other countries that are tempted by, or have already converted to, the Western package of institutions. Russian leaders can indeed feel under attack, not a military attack, but a strategic and economic one because many of its neighbors and former allies have been moving towards the West ever since the 1990s.
This is where the external-institutional dynamics merge with the international-strategic dynamics. John Mearsheimer of the University of Chicago has pointed out that, little by little, the West has encircled Russia over the years 1990-2020, sometimes by design, sometimes accidentally. Not without some justification, at least in their own eyes, Russian leaders feel encircled and, incapable of responding and competing through trade and goods, Russia only has the military left to assert its power and very existence.
There is thus no easy way out of the present Ukrainian crisis since the real challenge is a very sticky one: it would necessitate a change in Russia to a different institutional package, not necessarily like that of Europe or the United States. Different forms of productive capitalism as Japan, South Korea, and China have shown an institutional package that would enforce stronger respect for the rule of law, different from the “Wild-Wild-West-Kleptocratic” type of capitalism that is present in Russia now.
Our basic point is that a good part of this Russian-Ukrainian crisis needs a Russian internal-institutional explanation to better understand its international dimension. That is not to say that this internal dimension is sufficient, but it is necessary, and it tends to be neglected, as international and strategic aspects, possibly sexier and more spectacular, have monopolized the comments and debates.