In my book,

“Origins of the Fourth World War,”
I describe the former Soviet Union as an empire against empires and a system of oppression built in the name of emancipation. I also describe the USSR as a proletarian state founded in a land of peasants, with a black market “communist” economy led by a regime of criminal policemen. Even as the Soviet Union was economically backward, it was nonetheless first into space. Russia’s nuclear missile forces could level the United States in a matter of minutes. And this only proves that there has always been a strong economy in Russia, but it is a military economy with the facade of a consumer economy tacked onto it. It is not an economy which maintains the civilian infrastructure, or which facilitates a comfortable life for the Russian masses.

Today the economic structure in Russia is the same as it was under the Soviet Union. Nothing significant has changed, except in a presentational sense. Russia is now a democracy led by former totalitarian functionaries, who engage in continual mock-reform. In Russia there is a market economy (in theory), but property rights are not seriously protected — in law or in fact.

Nothing could illustrate this point better than recent moves to “rein in” Russia’s tycoons (by the Kremlin and the State Duma). The very process by which Russian state companies were privatized is now being questioned. In other words, a private citizen might own a large enterprise on Tuesday, but on Wednesday the state prosecutor might say this ownership is invalid.

Consider what recently happened to Vladimir Potanin, the owner of Norilsk Nickel (the world’s largest nickel producer). Last June the Moscow prosecutor’s office filed a lawsuit, claiming that the privatization of Norilsk was illegal. Who, then, owns Norilsk? It seems that the Kremlin owns Norilsk — as it owns everything else in Russia. The state in Russia is yet the ultimate power. If people are allowed free speech, if they are allowed (for the moment) to run large business enterprises, the privilege can yet be curtailed at any moment. In the case of Potanin, if he refuses to cooperate, if he departs from the Kremlin’s instructions, his company can be re-nationalized or given to someone who will work more amiably and constructively with the secret structures of the former Soviet Union.

Potanin is important in the sense that a puppet is important to a puppet-master. He provides the old communist oligarchs with a fake capitalist front. The idea that Potanin actually owns Norilsk Nickel, or that any of Russia’s capitalist “oligarchs” own their companies, is a major misconception. In Russia the state is everything and the private sector is compliant. Step out of line and you will find the state prosecutor opening, or reopening, a case against you.

Potanin probably got himself into trouble, in the current situation, by criticizing the Russian government for arresting fellow-oligarch Vladimir Gusinsky, a Russian tycoon and media mogul who owns a majority share in Russia’s only commercial television channel, NTV.

As it happens, Gusinsky recently made a serious mistake in his career. His television channel has been producing a show called “Kukly,” which employs latex puppets for the amusement of Russian viewers. And one of the puppets in this show is President Vladimir Putin, who attempted to recruit U.S. President Bill Clinton, code-named Saxophonist, in an early June episode. In the course of the episode the Putin puppet was informed that KGB Lieutenant Maria Ivanovna Levinsky had already made contact, discovering for her Kremlin bosses that Saxophonist loves cigars.

Gusinsky was a very bad boy to broadcast this show. And he was arrested shortly thereafter (for embezzlement). It was a terribly funny stunt, which anyone with a sense of humor would have found hard to resist, and it amused all of Russia. Government raids and threats prior to the broadcast failed to deter Gusinsky. For some people good satire is worth government harassment. But it is possible that Gusinsky did not know how severely he trampled on the Kremlin’s toes.

One is reminded, by this, of the Chinese joke about a demonstrator in Tiananmen Square who was heard shouting: “Li Peng is an idiot! Li Peng is an idiot!” In due course the demonstrator was arrested and charged with 15 years in the camps while other demonstrators were only given five. “That is unfair,” he protested. “Why do they only get five years?” The judge in the case replied: “anti-government agitation only merits five years, but revealing a state secret carries a 15-year sentence.”

Gusinsky may not have shouted that Li Peng is an idiot, but his puppet show might have inadvertently revealed a state secret. In this context we should note that Vladimir Gusinsky was, by vocation, a theater director. As such, he probably experienced a professional urge to stick his thumb in the censor’s eye. But when it comes to puppet shows, theater director Gusinsky should realize who pulls the strings on Russia’s great stage. After all, Gusinsky himself is a puppet who might end up in a labor camp, like his grandmother. Or maybe he will be put against the wall and shot, like his grandfather.

Which leads us to our next point about free enterprise in Russia. Vladimir Gusinsky supposedly acquired his wealth through banking, which makes him a very special kind of theater director (and a very Russian kind, as well). We have to remember that 50 Russian bankers were shot in 1994 alone, and about 60 have been gunned down since then. But Gusinsky was not on the target range. He was not pulled up, like other capitalist weeds. Somebody fed him and protected him. Somebody with enough power to murder a whole banking community in its infancy.

In the 1930s the Kremlin held show trials and shot the “wreckers” and capitalists. In the 1990s the show — along with theater director Gusinsky — would be staged a bit differently. In the 1990s there would be no need for trials. There would only be the high theater of national corruption and ethnically Jewish corrupters, who would naturally be hated by the Russian audience. Those who are not in the script are simply gunned down without any fuss. (Under state capitalism — the system introduced by Lenin himself — competition must be strictly regulated by the party.)

It should be apparent by now that the Kremlin doesn’t want capitalism to overstep its bounds. As a matter of fact, if property rights were respected in Russia, if there were decent laws and a passable court system, then Russia might genuinely be overrun by tycoons and business leaders. And what a horror for communist eyes to behold Russia’s stores filled with quality goods, and to see Russia’s factories spitting out television sets and kitchen appliances for export to America and Western Europe (instead of heavy weapons and missiles for export to rogue states). In that event, the Russian people would finally see that capitalism and its political instrument, democracy, delivers a life of dignity and comfort.

But in that event, the real oligarchs of Russia — the functionaries of the former Soviet state — would have no leg on which to stand.

Edward Luttwak, in his book “Coup d’etat,” tells us that the state can best triumph over society if the society is poor. In other words, economic underdevelopment makes state control easier. Therefore, if you control the state in an impoverished country, you control everything. It is quite different in countries like America, where the state is only one power among many. In America, for example, we find that giant corporations have a great deal of influence over the state — perhaps too much.

In political terms, writes Luttwak, “the power of the giant corporation is … just one of the forces competing in the political life of the nation. The corporation may be a giant, but it is a giant amongst many.”

The fact of so many competing corporate interests, says Luttwak, contributes to America’s stability. This arrangement also tends to check the abuse of power (however imperfectly). It seems there are too many competing interests in a rich country, all attempting to harmonize with one another.

In a country like Russia, however, there is only the state interest. And the other forces within the country must adjust themselves to the Kremlin or be swept away.

This is the evil of statism, and the reality behind Russia’s phony capitalist economy. Those that attempted to build capitalism in Russia, who were not gunned down by the KGB-controlled Mafia or bankrupted by lawsuits from the prosecutor’s office, are yet under a constant threat from the real power in Russia — the state.

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