TRNN Summer 2018 Fundraising Banner
TRNN Summer 2018 Campaign Banner Mobile

Wealth of the Russian Elite and the Growing Poverty of its People (1/3)


Professor Aleksandr Buzgalin of Moscow State University says 1% of Russians own 70% of the nation’s wealth, while 20 million are living in official poverty

SHARMINI PERIES, TRNN: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

Back in January of 2016, Russian prime minister Dmitry Medvedev conceded that rising poverty was one of the most painful consequences of the current economic crisis. At a major year-end press conference in 2015, President Vladimir Putin said that the Russian economy has passed the peak of its crisis. The World Bank in its annual forecast has predicted that the Russian economy will shrink by approximately 2 percent this year. The World Bank also forecasts that the nation’s recent experience with crumbling oil prices and sanctions in the wake of its annexation of Crimea back in 2014 as one of the reasons behind the economic wars. Again, according to the World Bank, it is expected that 20.3 million people will be living at or below the official poverty level by the year end.

Let’s get deeper into analyzing the Russian economy and the poverty. For that we have a guest, Aleksandr Buzgalin. Aleksandr is professor of political economy at Moscow State University, and editor of the left magazine Alternatives, and author of many books, over 20 of them. Thank you so much for joining us today, Aleksandr.

ALEKSANDR BUZGALIN: Nice to be with you.

PERIES: So, Aleksandr, according to Credit Suisse Research Institute, Russia’s top 1 percent owns about 70 percent of its entire wealth of the country. This is pretty close to what it is in the U.S. Are we going to see any different forms of policy to address these issues in the coming year?

BUZGALIN: Really Russia is one of the countries where concentration of wealth in the hands of 1 percent of the richest population is enormous. And in this aspect Russia is really similar with the United States. It has some other aspects. It shows that Russian economic policy and institutions are [formally] very liberal. They do not have progressive income tax, and this is [an] [inaud.] in the United States. We have the decline of free of charge education, healthcare, and the decline of budget spending for healthcare, education, science, and so on.

So this is what it [liberal] matters. And the economic policy itself as market ideology, or even market–fundamentalist market ideology, if I can say so. On the other hand in Russia we have also some elements of [inaud.] relations. This is the difference with the United States, and so-called shadow management, shadow state regulation and other forms which shows that Russia is far more [very very] capitalist. On another hand also, Russia is a country which is trying to be small in [inaud.] in politics, but this is another question.

As far as quality is concerned, it’s really terrible because, you mentioned, 20 million people are under the official poverty level. And this is 10,000 Roubles per month, which is put into [official course] approximately $150 per month. No big money. Of course, purchasing power is high in Russia, so it may take into account purchasing power, it will be maybe $300 per month. But still, for 20 million people this is a very poor life because rent of apartments is more or less the same like in the United States. You can understand what does it mean for Russians.

PERIES: And Aleksandr, you are involved in many social movements and struggles. Are there any kind of resistance mounted to this kind of poverty among the working classes here?

BUZGALIN: Unfortunately not, and this is one of the contradictions of [our] life. Reasons are, the reasons are understandable. First of all, it’s very difficult to organize any form of political struggle or legal, democratic political struggle in our country. Some people who were organizers of such events were arrested when they had big demonstrations a few years ago, and now it’s very difficult to create strong, really independent trade unions, for example. It’s very difficult to organize a try.

But in any case, we had some forms of struggle, and they were successful. And we have social movements which are trying to prevent this decline of incomes. One of the paradoxes of my country is a very poor life of ordinary intelligentsia. Teachers, professors, and doctors, and so on. This is not elite like in the West, and not even middle class. This is a really poor part of population. Just one example. A young researcher or assistant of a professor in the university with Ph.D., they’ll have a maximum $200 monthly wage. You can understand what that means. That’s why they had different parts of organizations, [inaud.] organization, of these people of Congress or put in place [inaud.] for education, healthcare, science, and so on, a movement to education for everybody. Trade union, teacher, a trade union of students. But also they have [inaud.] strikes and to struggle in the automobile industry and [inaud.] and so on and so far.

There is also another reason. In Russia we have a very long history of paternalistic traditions. I mentioned about some feudal elements, elements of feudalism in our life. And still there are a lot of people who believe that [inaud.] president of Russia is [good] or that an economic block of government is bad. And this is one of the games, because typically we have good decorations from the top of [inaud.] from president, from leaders of [united] Russia, ruling political party. And letting antisocial policy. But these policies typically organized, realized by ministers, not by top, top officials. And the people are still believing in this game also because of the terrible propagandistic machine, [TV] and so on.

There is also reason for such relatively peaceful, if I can say so, peaceful behavior. If this is the new tension in relations with the West and NATO countries, this is again another question. But in Russia many people have the image that NATO is a real enemy and big threat for Russia, and the country must mobilize resources, and this is the reason of crisis. I think not [inaud.] is the reason of crisis, but economic policy, economic institutions. The whole system of social relations which we have in our country. But this is a Marxist point of view, and that is not very popular in my country.

PERIES: Now, the concentration of wealth, where top 70 percent of the, top 1 percent of the populations owns 70 percent of the wealth. Now, this kind of concentration is unprecedented, of course, in Russia. Now, did the Panama papers contribute to this kind of concentration of wealth?

BUZGALIN: This concentration is mainly based on the specific structure of the Russian economy. The only sector which is prosperity [inaud.] even in the situation of low prices on oil and gas, and gas is a sector which produces and then exports raw materials, of course again it’s gas and oil. And huge corporations, both state and private, are main actors of the economy, and owners of these corporations, and even inside of state corporations became extremely wealthy. There are also some financial groups around these corporations, not only. So together with government and the spending of state budget for very profitable for private business projects, all this together gives this concentration of wealth, of capital in the hands of a few people, and Russia is still one of the leading countries, if it’s possible to say leading, leading countries as part of the amount of [inaud.] billionaires is concerned. And one of the reasons is the situation with distribution and redistribution of income. As I mentioned, in Russia we do not have progressive income tax and other forms of redistribution of enormous incomes of super-rich people. But absolute majority of Russians are in favor of such redistribution, and they understood this is not support for lazy people. This is support for the, well, if not for social justice, for healthcare, education, and this is the basis for progress, for development, not only for just distribution.

PERIES: Aleksandr, let’s continue this discussion in our next segment. Please join us.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a

recording of the program. TRNN cannot guarantee their complete accuracy.