Liberalism in Crisis: What Is to Be Done?

April 1, 2004

By Mikhail Khodorkovsky

April 1, 2004

This material was first printed in The Moscow Times on April 1, 2004. Used with permission.

Russian liberals were routed because they tried to ignore certain important national peculiarities of Russia’s historical development, as well as the vital interests of the vast majority of Russians. And they were pathologically afraid to tell the truth.

I do not mean to say that Anatoly Chubais, Yegor Gaidar et al. set themselves the objective of deceiving the country. Many liberals of the first “Yeltsin wave” sincerely believed in the historical rightness of liberalism and the need for a “liberal revolution” in a tired country which had hardly known the benefits of freedom. However, having suddenly got their hands on power, the liberals were too superficial – if not downright frivolous – in their attitude towards the revolution. They only thought about the 10 percent of the population that were prepared for the sweeping changes which came with the end of state paternalism, while they forgot about the other 90 percent. And more often than not, they resorted to deception to gloss over their tragic policy failures.

They cheated 90 percent of the population with their lavish promises that each privatization voucher would be worth two Volga cars. Certainly, an entrepreneurial person with access to closed information and the necessary skills to analyze such information could figure out how to make the equivalent of 10 Volgas using his privatization voucher. But the promise was made to everybody. They turned a blind eye to social realities when they conducted sweeping privatization, ignoring the negative consequences and disingenuously claiming the process was painless, open and fair. We know full well what ordinary people now think of mass privatization.

They did not stop to consider the catastrophic consequences of decimating people’s Sberbank deposits, even though it would have been perfectly simple to resolve the problem through state bonds, which could have been redeemed through a capital gains tax (or using stakes in the country’s top privatized companies). The imperious liberals could not spare a minute of their precious time, and anyway they did not want to overtax their gray matter.

In the 1990s, no one took upon themselves to reform education, healthcare, the housing sector; nor did anyone get around to addressing the issue of targeted support for the poorer sections of society. Yet these were and remain critical issues for the vast majority of our fellow citizens.

Russian liberals ignored social stability, the only basis for any long-term and wide reaching set of reforms. A huge gulf separated them from the people – a gulf which they tried to fill with rosy liberal notions about the state of things, and manipulative PR. Indeed, it was in the 1990s that the myth was born of the omnipotence of certain PR specialists, who were purportedly able to compensate for the absence of real policies in this or that area.

The 1995-96 election season amply demonstrated that the Russian people had rejected their liberal rulers. As one of the major sponsors of Yeltsin’s 1996 re-election campaign, I know just what a gargantuan effort it took to make the Russian people “vote with their heart.”

What were the country’s liberal top managers thinking when they insisted that there was no alternative to the 1998 default? There was an alternative: devaluation of the ruble. Moreover, in February or even June 1998, it would have been possible to get away with devaluing from five rubles to 10-12 rubles to the dollar. I, along with many of my colleagues, supported such a plan for averting the impending financial crisis, but despite the considerable influence we had at the time we were unable to get our point across – and therefore must share moral responsibility with the irresponsible incompetents then in power for the default.

Liberal leaders liked to call themselves kamikazes and martyrs, and at the outset it seems that was indeed the case. By the mid-1990s, however, they had developed expensive tastes for Mercedes, dachas, villas, night clubs and gold cards. The stoic fighters for liberalism, who were prepared to die for their ideals, were superseded by effete bohemians, who did not even attempt to conceal their indifference towards the fate of ordinary people, the silent masses. This Bohemian image, coupled with the overt cynicism, did a great deal to discredit the cause of liberalism.

Liberals told fairytales about how standards of living were getting better and better because they themselves neither knew nor really understood what life was like for the majority. Now they have to listen to, and acknowledge, these facts, and I hope they do so with a sense of shame.

Even regarding their declared values, adherents of liberalism were often dishonest or inconsistent. For example, they spoke about freedom of speech, and yet they did everything within their power to establish financial and administrative control over the media for their own ends. Often this was justified by reference to the “threat of communism,” arguing that the end justified the means. However, not a word was uttered about the underlying causes of the “red-brown plague,” i.e. the liberal leadership’s ignorance of the people’s real problems.

Media outlets choked on the words “the diversified economy of the future,” when in reality Russia remained firmly dependent on raw materials. Needless to say, the profound technological crisis experienced at this time was a direct consequence of the Soviet Union’s collapse and a sharp drop in investment due to high inflation. It was the liberals’ job to deal with this problem by, inter alia, recruiting into government strong professionals from the left end of the political spectrum. But, instead, they preferred to ignore the problem. Is it any surprise, then, that millions of people who make up the science/technology intelligentsia (the driving force of the democratic movement in the late 1980s) now vote for Rodina and the Communist Party?

Dismissing all assertions to the contrary, the liberals always insisted that you could do whatever you liked with the Russian people, that “in this country” everything is decided by the elite and there’s no need to worry about hoi polloi; in their view, the people would swallow any old rubbish or lies like it was manna from heaven. That is why the need for “social policies,” “sharing” and the like was brushed aside and rejected with a smirk.

Well, Judgment Day finally came: In the December parliamentary elections, the Russian people bid a firm and tearless farewell to the official leaders of the country’s liberal parties.

This reflected general disgust at the gaping gulf between the imperious liberals and the rest of the country.

So where was big business all this time? Standing shoulder-to-shoulder with the liberal rulers. We were accomplices in their misdeeds and lies.

We never entertained any illusions about the authorities, of course, but neither did we oppose them, not wanting to jeopardize our own piece of the pie. It is laughable to hear propagandists call us “oligarchs.” An oligarchy is a small group of people who genuinely hold power. We, however, were always dependent on some mighty bureaucrat in his ultra-liberal thousand-dollar suit. And our collective visits to Yeltsin were a complete sham: We were being trotted out as the main culprits responsible for the country’s woes, although we did not immediately understand this.

We had sufficient resources to question the rules of the game or, to be more precise, to question the game without rules. But through our subservience and our servile desire to give when we were asked to (and even when we were not), we nurtured official lawlessness and the “Basmanny” legal system.

We genuinely revived industries that had been laid low by the final years of the Soviet system, and we created more than 2 million highly paid jobs all told. But we were incapable of persuading the country of our good deeds. Why? Quite simply because the country could not forgive business its complicity with the “party of irresponsibility,” the “party of deceit.”

Business at Large

It is a common mistake to consider liberal sections of society and the business community to be one and the same.

Business’ ideology is to make money, and a liberal environment is not needed for that.

The major U.S. corporations that invested billions of dollars in the Soviet Union were very keen on the Soviet regime because it guaranteed stability and a business environment free from interference by society.

Civil society more often obstructs than assists business: It stands up for workers’ rights, environmental protection, the transparency of business projects and serves as a counterweight to corruption. All of these things affect the bottom line. Speaking from experience, I can say it is much easier to come to an arrangement with a handful of greedy (within reason) officials than it is to coordinate one’s actions with an active network of civic institutions.

Business does not crave liberal political reforms, nor is it obsessed with freedom. On the contrary, it will always find a common language with whatever regime is in place. First and foremost, it seeks the state’s protection from civil society and organized labor. That is why relations between business (particularly big business) and genuine civil society unavoidably tend towards the antagonistic.

In addition, business can find a home anywhere in the world, and money is not patriotic. Business sets up shop wherever there is a profit to be made and invests in those projects with the highest return. For many of our businessmen (though certainly not all), Russia is not their homeland, but merely a free hunting ground. And their main interests and longterm strategies are tied to the West.

As far as I am concerned, Russia is my motherland. I want to live, work and die here. I want my offspring to be proud of Russia and proud of me as a small part of this country and this unique civilization. Perhaps I was too late in understanding this: I only started my involvement in philanthropy and my support for civic organizations in 2000. Although, as they say, better late than never.

That is why I decided to stop working in business, and speak not on behalf of the “business community” but for myself and one behalf of the liberal part of society and the people whom I consider my comrades-in-arms. There are among our ranks, of course, major businessmen – the world of genuine freedom and democracy is open to all.

At the Crossroads

So what can we and what should we now be doing? I will enumerate seven priorities.

• Coming up with a new strategy for interaction with the state. The state and the bureaucracy are not synonymous. The time has come for people to ask themselves what they have done for Russia. We already know what Russia has done for us since 1991.

• Learning to search for the truth in Russia, not in the West. Building a good image in the United States and Europe is very good, but it is no substitute for the respect of one’s compatriots. We have to prove – to ourselves first and foremost – that we are here in Russia for the long haul. We must cease to neglect the interests of our country and people. These interests are our interests.

• Abandoning futile attempts to call into question the president’s legitimacy. Irrespective of whether we like Vladimir Putin or not, it is time to comprehend that the head of state is not just an individual: The president is an institution that guarantees the country’s territorial integrity and stability. God forbid that we should live to see the day when this institution collapses – Russia will not withstand another February 1917. History teaches us that a bad regime is still better than no regime.

• Stopping lying to ourselves and to society. We are already sufficiently grown up to tell the truth. I hold Irina Khakamada in high regard, but unlike my partner, Leonid Nevzlin, I refused to sponsor her presidential campaign because I saw in her campaign disturbing adumbrations of falsehood. For example, no matter what one’s attitude to Putin may be, it is wrong and unfair to accuse him of the Nord Ost tragedy.

• Leaving the cosmopolitan worldview behind and acknowledging that the liberal project can only work in the context of national interests.

• Legitimizing privatization. We must accept that 90 percent of the population considers the results of privatization to be unjust, and its beneficiaries not to be legitimate owners. While this situation prevails, there will always be forces – political, bureaucratic or even terrorist – attempting to encroach on private property. In order to rehabilitate privatization in the eyes of the nation, big business will have to be forced to share with the people – probably by reforming taxation of mineral resources and perhaps through other measures which big business will not find very agreeable. It is better to start the process, influence and control it, than to put up futile resistance and fall victim to the inevitable. The authorities have no great desire to legitimize privatization since they prefer to keep us on tenterhooks. But we need it, as do our children, who will have to live in this country and walk the streets without large security details.

• Investing capital and brains in the creation of new social institutions, unsullied by the lies of the past. We need to create real civic institutions, not ones that we treat as playthings. We must attract conscientious and talented people who will form the core of the new Russian elite. Russia’s worst problem today is brain drain, for the country’s competitiveness in the 21st century will depend more on its intellectual capital than on its diminishing reserves of natural resources. Brains will always congregate where they receive the right sort of nourishment: civil society, in other words.

To change the country, we must change ourselves. In order to persuade Russia of the necessity and inevitability of a liberal path of development, we must overcome the complexes and phobias of the past decade, as well as the disagreeable history of Russian liberalism. We must believe in freedom in order to return it to our country.

Mikhail Khodorkovsky, former CEO of Yukos, is currently in detention awaiting trial.

The full version of this comment first appeared in Monday’s edition of Vedomosti; the first part of this comment appeared in Wednesday’s edition of The Moscow Times.