BRIC’s of Stability: Why Occupy Wall Street Isn’t Coming To Moscow Or Beijing

As repeatedly noted by Mark Adomanis, the Russian liberals and the Western media have predicted about 10 of the last zero Russian revolutions. Likewise, the “Jasmine Revolution” in China that was the subject of so much talk about a year ago has fizzled out like a wet firework. Meanwhile, the Arab world remains in the midst of convulsions, and political instability is spreading into the West – most visibly in Greece and the Med, but also in the guise of Occupy Wall Street and associated movements in the US.

This is no doubt disturbing and aggravating to Western supremacists (it is telling that that the media organization providing the most detailed coverage of OWS, RT, is both non-Western and the object of venomous bile from the American exceptionalism culture warriors). Doesn’t the West (and the US in particular) have democracy, freedom of assembly, freedom of speech, free media, economic opportunities, equality under the law, etc. – things that are all starkly and completely absent in countries of the Other, e.g. Russia and China? What the hell are the hippies and liberals protesting? Are they doped up unemployed losers, useful idiots of Leninist agents of influence, or both?

I think the answer is far simpler than it seems. In Russia, younger people tend to be both higher earning (their skills are better fitted to a capitalist economy) and more economically optimistic than their parents, not to mention their grandparents. They are also far more pro-capitalist, and substantially more supportive of Putin and Co. than the older generations (who have not done as well under capitalism, and who have fonder memories of communism). In fact, in the minds of Russian youth – and in stark contrast to the picture drawn by uninformed commentators – capitalism, prosperity, and the Putin era are closely linked. Hence, no real Russian equivalent of OWS (at least for now).

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Russia’s Economic “Stagnation” In Global Perspective

Иn the wake of the 2009 recession, declinist rhetoric has come to dominate discussion of Russia’s economic prospects. Jim O’Neill, the founder of the BRIC’s concept, has his work cut out defending Russia’s expulsion from the group in favor of IndonesiaMexico, or some other random middle-sized country. Journalists in the Western media claim its economy is “not growing”, as do liberal Russian newspapers such as Vedomosti. Comparisons between Putin and Brezhnev (who presided over the Soviet Union’s period of stagnation, or zastoi) are piling up. Even President Medvedev isn’t helping the situation, telling a forum of international businesspeople that Russia’s “slow growth” hides stagnation (good job promoting your country, DAM! not….).

I don’t want to exchange rhetorical barbs in this post (which you may note is not tagged as a “rant“), and my skills at mockery and picking apart tropes aren’t nearly as well developed as those of Mark Adomanis or Kremlin Stooge, so I’ll do what I do best and go straight to the statistics. And so we have Fact #1: what is described as stagnation for Russia is a growth rate of 4%. It grew 4.0% for 2010. It was 4.1% in Q1 2011, and the government predicts it will be 4.2% for the whole year. The World Bank predicts 4.4% in 2011, 4.0% in 2012; the OECD expects 4.9% in 2011 and 4.5% in 2012; and the IMF forecasts 4.8% in 2011, 4.5% in 2012, tapering off to less than 4.0% in the “medium-term.”

This does not strike me as being particularly bad by global standards. This is obviously no miracle economy of Chinese-like 10% growth rates, but Russia (4.4%; 4.0%) does not compare badly to the World Bank’s projected growth for other typical middle-income countries such as Turkey (4.1%; 4.3%), Thailand (3.2%; 4.2%), Brazil (4.4%; 4.3%), Mexico (3.6%; 3.8%), or South Africa (3.5%; 4.1%). Facing real stagnation, many countries in the developed world such as the UK could only wish for Russia’s growth rate; though this is an unfair comparison, because Russia is poorer and can therefore find it easier to grow faster (see economic convergence), it is not less unfair comparing Russia to countries such as India (8.4%; 8.7%) or Indonesia (6.2%; 6.5%) because the latter are so much poorer than Russia in their turn.

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Why Russia is Cemented to the Other BRICs

In the wake of the economic crisis in which Russia’s GDP fell by a stunning 7.9% in 2009, its status as a BRIC economy – with its connotations of promise and progress – was brought into question. After all, isn’t it a dying nation with rapidly degrading infrastructure? Isn’t it amazingly corrupt? Wouldn’t its contempt for liberal democratic values doom it to stagnation? And what happens now that oil production, the main locomotive of the Russia economy, has stalled thanks to the politicized persecution of “brilliant entrepreneurs” like Mikhail Khodorkovsky? Indeed, was not its economic collapse in 2009 a portent of things to come? And so on*.

There are many reasons to dismiss these arguments, as I will try to show in this post. First, the very inventor of the BRICs concept, Jim O’Neill of Goldman Sachs (who has probably thought more about it than anyone else) dismisses the argument that Russia is ineligible on the basis that is was the only country amongst them to show (highly) negative growth during the economic crisis as “rubbish”. He goes on to add that “the only reason that Russia was hurt so badly was unlike the others, it borrowed heavily on the international capital markets and, of course, it is dependent on the price of oil.” ** Of course, the Russian economy’s dependence on Western intermediation for its credit is a structural weakness, and one that was exposed in late 2008. But potential faultlines like this are hardly unique amongst the BRICs – its most promising member, China, critically depends on exports for continued growth***, and its banks are saddled with bad debts.

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