In Garry Kasparov’s book, Winter is Coming, he mentions in passing the possibility that Vladimir Putin is the wealthiest individual in the world. There’s no way to prove that, but it is possible. Now, what does that mean? I contend that the mere possibility that Putin is the richest person on earth tells us something important about our world.
Putin himself is of course no businessman, neither an inventor or investor. He was a KGB agent, so he’s good at assassinating people and destabilizing foreign governments, and he’s decent at judo, but otherwise he has no identifiable job skills. He doesn’t even have an executive MBA! Also, he had to read a lot of Karl Marx as a student, and of all the world’s billionaires, Putin is probably the only one who could pass a written test on Marxism.
Putin could only be the wealthiest person on earth if the goal of Russia’s economy was to enrich the politically powerful, which does indeed appear to be the case. Of course, Putin wants the economy to run well enough to provide some urban dwellers with a middle-class living, but he doesn’t want any disruptive technologies or improvements in productivity that would create wealth outside the orbit of his cronies. His idea is to use political power to concentrate wealth in the hands of a few. There’s obviously no room in that vision for an educated and self-confident middle class, or for entrepreneurs, or for an independent judiciary or a free media, and consequently none of those exist in Russia. Opponents are shamelessly shot dead on the street or jailed. Since most people will sense that this system isn’t working for them, Putin has an aggressive propaganda machine to blame all of Russia’s problems on the West. And he’s built a military to complement that propaganda line. The Russian Orthodox Church has been co-opted to support all this, including the murders.
Now, let’s compare Putin’s Russia with, say, Saudi Arabia. The goal of that system is clearly to concentrate (or preserve) wealth in the hands of the few. While the Kingdom of Saud is more willing than Putin to divert money to social needs, such as health care, the overall effect is similar to Russia. Everyone must adhere to Wahhabism, an extreme form of Islam which regards non-Wahhabists as either heretics or enemies. Antagonism to Iran (or earlier, toward Israel), is a staple of Saudi propaganda.
So, in Russia, it’s nationalism that distracts ordinary people from the corruption and injustice of Putin’s system, and in Saudi Arabia it’s religion. In both cases people must not view other countries as potential models or allies.
What about China? Again, some of the details are different—while China’s industrialization, with skilled workers, engineers and middle managers, implies a middle class, this is not a politically engaged middle class. The Chinese middle class might be compared to the skilled foreign workers in Saudi Arabia, who enjoy high wages and a secure lifestyle, but who have no political influence at all. The goal of the Chinese system is to concentrate wealth and power into the hands of a small number of Communist Party officials and their families, and also to advance the power and prestige of the Chinese state. Currently there is a drift toward dictatorship under Xi, but that is a bit beside the point, which is that political power is used to concentrate wealth. The internal propaganda line emphasizes China’s victimization by the West in the 19th century and promotes a sense of being surrounded by enemies.
These systems often imply stagnant or declining living standards for the vast majority, although in China the growth rate has been high enough to allow for rising real wages. But as soon as China’s growth rate slows, ordinary Chinese workers will discover what Russian workers discovered long ago—that the interests of the elite have priority. (Chinese farmers have already learned this lesson).
The manifest injustice and corruption of this system can only be maintained by intensive propaganda and force. Violations of human rights are the norm and indeed these systems could not survive if they respected human rights. Naturally, free elections are out of the question.
Although Russia, China and Saudi Arabia all have nationalistic or sectarian goals in addition to the concentration of wealth, the latter is always the main goal. If that seems like a bold assertion, consider this thought experiment: if Putin could equal the US in international power by allowing free elections, an independent judiciary, a complete range of human rights, a free media—-all with the likely outcome of a re-distribution of wealth—would he do so? Of course not. The goal of his bristling foreign policy is to distract his people from the injustice and harmfulness of his internal policies; it plays a supporting role only. Sacrificing the domestic system for any reason would make no sense to him. Someone who may have become the richest man on earth through political power will never put that power at risk.
What should we call such systems? Certainly “kleptocracy” works for Russia, where there was recent mass theft of state assets after the fall of the Soviet Union. It does not work as well for Saudi Arabia, where the oil wasn’t stolen from anyone, although you could argue a kind of metaphorical theft from the economic potential of the entire region. Ideally, the oil wealth of the House of Saud could have been used to develop the economies of the entire Arab world. But a missed opportunity is not actual theft.
And in China the distinction between kleptocrats and skilled managers of complex manufacturing empires seems theoretical. The industrial development of China and the diversion of vast profits to the Communist Party elite do not appear to be independent processes—-they grew up together. Only in the case of land do we see outright theft, and that seems to occur on a large scale. Without clear title of ownership due to a legal system based on Communism, the farmers are pushed aside and left homeless. To push someone off land that their ancestors have occupied for centuries or millennia is certainly a cold act, and it shows that the Chinese oligarchy is capable of acting as kleptocrats when necessary.
And that is a key point. Without an impartial legal system and an independent judiciary, the ruling elites of Russia, China and Saudi Arabia always have the option to simply seize the property of their citizens. In Saudi Arabia, with its small population and great oil wealth, this is unnecessary, but if circumstances changed that option would be exercised, because the concentration of wealth in the hands of a few is the goal of the entire system.
But the outright theft is only a tactic, it’s not necessarily a defining characteristic. We might say these are “concentrating-wealth regimes” or “redistributionist regimes,” or “anti-democratic concentrating-wealth systems,” none of which exactly roll off the tongue. But instead of trying to describe these systems by their methods, let’s look at their results.
One result in all cases is a staggering number of extremely wealthy individuals. It’s quite clear in all three of these cases that innovation, productivity gains and improvements in education and health are beside the point. China innovates grudgingly and prefers to steal intellectual property from the West and Japan—and Russia and Saudi Arabia innovate not at all. Anyone in Russia who invents anything useful can expect a visit from Putin’s friends.
Instead of creating new products and services, these systems create billionaires through raw political power. Just as a Mafia chieftain who seizes a restaurant doesn’t concern himself with buying better stoves or mixing machines, the elites of these systems are not focused on productivity gains or innovation. Yes, in China there are competent, even brilliant managers, but the goal is short-term profit. Although China spends a lot of borrowed money on infrastructure, it shorts education, health and the environment. And infrastructure spending is easily diverted to the elite….
So it’s fair to describe these systems as “billionaire capitalism.” That is, it’s capitalism re-shaped to produce billionaires, not products or services. Any products created are only a means to the end of concentrating wealth. The anti-democratic tendencies are implied, because such systems can only persist where the majority are powerless and deceived.
And “billionaire capitalism” is also a useful concept when we look beyond Russia, China and Saudi Arabia.
The Socialist Investor 