Putin's Labor Dilemma

Russian Politics between Stability and Stagnation

Stephen Crowley

• Publisher: ILR Press
• Year: 2021
• ISBN:
  9781501756290
• Topic: Law
• Subtopic: Labour & Employment Law
• Index: Law

In Putin's Labor Dilemma, Stephen Crowley investigates how the fear of labor protest has inhibited substantial economic transformation in Russia. Putin boasts he has the backing of workers in the country's industrial heartland, but as economic growth slows in Russia, reviving the economy will require restructuring the country's industrial landscape. At the same time, doing so threatens to generate protest and instability from a key regime constituency. However, continuing to prop up Russia's Soviet-era workplaces, writes Crowley, could lead to declining wages and economic stagnation, threatening protest and instability.

Crowley explores the dynamics of a Russian labor market that generally avoids mass unemployment, the potentially explosive role of Russia's monotowns, conflicts generated by massive downsizing in "Russia's Detroit" (Tol'yatti), and the rapid politicization of the truck drivers movement.

Labor protests currently show little sign of threatening Putin's hold on power, but the manner in which they are being conducted point to substantial chronic problems that will be difficult to resolve. Putin's Labor Dilemma demonstrates that the Russian economy must either find new sources of economic growth or face stagnation. Either scenario—market reforms or economic stagnation—raises the possibility, even probability, of destabilizing social unrest.

1

THE POLITICAL CONSEQUENCES OF RUSSIAN DEINDUSTRIALIZATION

What is the relationship between Russia’s political leaders and the country’s working class? As a first take on that question, consider two contrasting anecdotes. In December 2011, when ostensibly cosmopolitan and middle-class protesters were denouncing President Vladimir Putin in the streets in Moscow and St. Petersburg, Igor Kholmanskikh, a factory foreman at the Ural Tank Factory in Nizhniy Tagil, told Putin on national television that “if the militia . . . can’t handle it, then me and the guys [muzhiki] are ready to come out and defend stability.” Putin’s administration played up this event considerably, with Putin later appointing Kholmanskikh, despite his lack of relevant credentials, as the presidential representative for the Urals Federal Region, a human symbol of Putin’s working-class support.1 Yet a few years later, in December 2015, a slight increase in a road tax for tractor-trailers united truck drivers across Russia in protest. While initially they raised only economic demands—and even pleaded, “President, help us!”—in little over a year they became politicized, calling for the resignation of the government and no-confidence in the president, and a leader of the truckers’ movement announced his intention to run for president against Putin.

While some commentators have argued that Putin has survived the protests of liberals in Moscow by pitting “rural and Rust Belt Russia against urban and modernizing Russia,” others have argued that the country’s industrial centers are struggling, and its many “monotowns”—one-industry working-class towns left from the Soviet era—are a “time bomb” for Russian politics.2 So, which is it? Is Russia’s working class the ballast of stability for the Putin regime, or combustible material that might sink the ship of state? This book is not about Putin, not centrally anyway. Rather it is about the dilemmas that arise in Russia’s many industrial regions and centers, or what Natalia Zubarevich has called—in contrast to Moscow and St. Petersburg—“second Russia,” as well as a range of “social concerns” about public expectations for the provision of a minimal level of social benefits, expectations that constrain the seemingly invincible Russian leadership.3

Russia’s workers neither make up an unquestioning pillar of support for Putin, nor are they ready to explode in a mass movement demanding regime change. But their actions remain central to the question of social and ultimately political stability in Russia, a stability that becomes much harder to maintain in challenging economic times. So the central question is: How have the fears of social unrest placed limits on, constrained, and helped mold Russia’s political and economic system? Indeed, the challenge for Russia’s leaders is not only to prevent social instability, but to craft a legitimation strategy that allows for generating economic growth while also maintaining sufficient popular support. Such are the concerns for top Kremlin officials, as well as for oligarchs and various economic and political power holders seeking to maintain their wealth and authority. Though often less articulated, such concerns should also weigh on Russia’s liberals: both economic liberals who seek greater market reforms but too often fail to comprehend the likely social and political consequences of those reforms, and political liberals who seek greater democracy but too often fail to reconcile their own desires with the wishes and preferences of much of the Russian population.

One might assume that a rather authoritarian state like Russia’s should be able to push past the dilemmas mentioned above and any protest that might result. Indeed, the probability of labor and social protest directly leading to political instability in Russia is fairly low. That probability is not zero, however, and the stakes are high. Russian leaders have a palpable fear of a “color revolution” (such as Ukraine’s 2014 “Maidan revolution”) that might depose them, and the steep costs that losing power might entail. Quite clearly, that concern overrides all others, including building a more vibrant economy. In his study of “Putinomics,” Chris Miller concludes that there is a hierarchy of goals at work in Russia’s political economy: “first, political control; second, social stability; third, efficiency and profit.”4 Yet the contradictions in such a goal ranking soon become clear. Political control cannot rely indefinitely on repression and propaganda, especially if the third goal—an efficient economy that provides some public benefit—is not being met. Yet prioritizing that third goal, especially in contemporary Russian society, risks undermining the second goal, and ultimately the first.

Too often in discussion of nondemocratic regimes such as Russia’s, “stability” is counterposed with “revolution,” as if the alternatives were simply one or the other. Yet leaders seeking to remain in power must also be concerned with popular support and legitimacy, the absence of which might be perceived by rival elites and others as a sign of vulnerability. Hence Putin’s well-known concern with his approval ratings (long famously high but now fluctuating) and his maneuvering to amend the constitution to potentially extend his time in office and avoid the dreaded “succession question.” Such trepidation is deepened when the economy faces slow growth or even stagnation, and—particularly given dependence on global commodities markets—the potential threat of another economic crisis.

Indeed, beneath the façade of strength and stability, Russia’s political economy faces a number of critical challenges. Not least among them is the continuing predicament of deindustrialization. During the economic collapse in the 1990s, amid fears of “social explosion,” Russia’s labor market took a peculiar form: rather than the expected mass unemployment and closure of large factories, it adjusted instead through very flexible and very low (often unpaid) wages (chapter 2). This reliance on adjusting to economic conditions through flexible wages rather than employment levels has contributed to a level of labor productivity—arguably the key driver of economic growth, and of crucial importance given Russia’s demographic crunch—that is extremely low by comparative standards. This, if left unchanged, could consign Russia to the status of a middle-income country for the foreseeable future (chapter 3). The paths out of that trap soon run into the obstacle of the industrial infrastructure left behind by the old Soviet coal-and-steel economy, including many large yet inefficient industrial enterprises, not least those in Russia’s “monotowns”—the large number of one-company towns where an entire population is dependent on a single, often struggling, factory (chapter 4). While Russia’s state and society struggled to survive the tumultuous 1990s, such impasses appeared to fade from view with the oil boom of the 2000s. With the global economic crisis of 2008–9, however, and the drop in oil prices in 2014, the Russian economy has struggled again, and as of this writing appears to be stuck somewhere between slow growth and stagnation. While accurate predictions are difficult, current projections put Russian economic growth over the next decade at around 1–2 percent per year. This would have Russia lagging behind the world average, and while the economy would technically be growing, in terms of living standards it would almost certainly be experienced as stagnation.

Given such dilemmas, the obvious question would seem to be, why not reform? If such challenges were not resolved during the tumultuous changes of the 1990s, why not during the boom years of the 2000s, or any time since? A return to solid economic growth, and avoiding perpetual status as a middle-income country, would appear to be a goal all would welcome. Various explanations have been proposed as to why such reform steps have not been taken: some point to the dependence on oil and the “resource curse,” others to the lack of political will for modernization, with the siloviki (security officials turned politicians) topping the liberal reformers in the Kremlin, and still others point to elites trapped in a system of self-enrichment.5 While each of these explanations has some merit, here we will advance another explanation—the specter of labor and social protest looming over Russia’s leadership. Russia’s postcommunist economy has experienced only a partial transformation and remains faced with challenges that can only be resolved through high social—and ultimately political—costs.

Why might Russia’s leadership, centered on President Putin, be concerned with labor protest? By all accounts, Putin, who has been in office (either as president or prime minister) for over two decades, has a solid grasp on power and has greatly strengthened the Russian state, not least its security services (or “power ministries,” in the Russian parlance). Labor and related social protests have been relatively few and sporadic, especially compared with those under Putin’s predecessor Boris Yeltsin. True, pensioners rose up in large numbers to protest the monetization of benefits in 2005, and protests erupted in 2018 over the raising of the pension age. Russia did experience a large-scale strike wave in the late 1990s. Yet as Graeme Robertson concluded about that earlier episode, “Despite all this evidence of protest mobilization, it is clear that the contention did not add up to a sustained challenge to the authorities.” He adds, “Protests were very numerous but mostly isolated, mainly local in nature, and focused on very basic, bread-and-butter issues.”6

Why then should we expect the situation to be any different now, especially since following that earlier strike wave, the Russian economy experienced close to a decade of wage hikes and economic growth? Moreover, the growth contributed to a huge rise in public support for President Putin—an almost complete contrast from the Yeltsin years—and was accompanied by significant constricting of the political space for protest from workers and society at large. Indeed, it would seem rather paradoxical to argue that a much smaller amount of protests in the current political and economic conditions could be potentially more destabilizing than a much larger amount of protest was in the 1990s.

Further still, the Kremlin’s fear of a color revolution would hardly seem to center on workers, since the color revolutions that have removed leaders from power in postcommunist states have typically centered on allegations of electoral fraud, and rarely have workers played a central role.7 The “Russia without Putin” protests that arose around the parliamentary and presidential elections of 2011–12, while not successful in removing Putin from power, underscored the fact that such large-scale protests were typically spurred not by labor or social protests but by charges of electoral deception. Moreover, these protests were said to be driven by the “middle class”—educated professionals in Russia’s largest urban centers.8 During the 2011–12 protests, Russia’s workers appeared to be defenders of authoritarianism, as the case of Igor Kholmanskikh suggests.

Yet the Putin-era economic growth has wavered, and the downturns in 2008–9 and again after 2014 exposed the largely unchanged and potentially explosive nature of Russia’s industrial and other workplaces, where loyalist unions refrain from disruption, and disruptive unions are marginalized. This leads to labor relations that are both rigidly controlled and yet paradoxically deinstitutionalized, with economic downturns prompting a return to the spontaneous direct actions (if on a smaller scale) that Russia witnessed in the 1990s. Thus, Simon Clarke’s description of Russian labor relations, while made in very different economic and political conditions over twenty years ago, remains remarkably relevant today. He argued then that there were “no established institutional channels through which workers can express their grievances,” with the result that “grievances build up until they reach the point of explosion.” He predicted, rather presciently, that “worker opposition is likely to take primarily negative and destructive forms, with workers increasingly looking to populist and extremist politicians for their salvation.”9

More troubling for the Kremlin, the trepidations over a possible Russian color revolution were heightened considerably by the uprising in Belarus in mid-2020 (chapter 9). Once again, the protests were generated by charges of fraudulent elections; but given worsening economic conditions, the protests were soon joined by workers in a number of major industrial enterprises, amid calls for a general strike. More so than the protests in Minsk and other major cities, the worker protests clearly unnerved Belarus’s long-standing president Alexander Lukashenko. He went directly to the protesting factories, telling the workers that they were betraying his trust, and that their protests were to him like a knife in the back (udar v spinu).10 Once seen as Lukashenko’s traditional constituency, the workers responded, “It’s time for you to go!” and “The people are tired [of you]!”11 While as of this writing Lukashenko has remained in power thanks to the backing of Russia, the image of workers at major factories calling for the leader’s removal provides a stark warning for Russia’s leaders. Protests by students and middle-class professionals might be challenging, but for reasons that will become clear, strikes and protests by Russia’s workers could become crippling to the country’s leadership.

Most studies of Russian politics focus attention on the country’s elites, and understandably so. Putin is clearly in charge, and from him extend a number of concentric circles: to Kremlin insiders; to various oligarchs; to government officials on various levels; and so on. Discussions about the possibility for political change in Russia tend to revolve around debates between liberal economists and statist officials, or struggles between various government factions, and from there extend to the political opposition. By comparison, beyond survey data, much less attention has been placed on what major segments of the Russian people want, such as better lives for themselves and their families, and how this might impact the possibilities (and limitations) for political change. On one hand, there is little wonder in this—at most Russia is a political hybrid of democracy and dictatorship, increasingly weighted toward the latter. Thus, an assumption is often made that preferences of the bulk of the population matter little or are easily manipulated. And yet when social or economic policy changes are debated inside Russia, the question of their social consequences—a euphemism for the potential for protest—is never far from the surface. In short, to what extent do even seemingly powerful leaders, with high approval ratings and a firm grip on state power, have to contemplate taking a step too far, a step that might cross the threshold of a population’s breaking point?

All states face the dilemma of seeking to extract resources from society (such as through taxation) without provoking rebellion.12 In a very different context from Russia, the German sociologist Claus Offe characterized the challenges facing advanced capitalist societies as a contradiction between accumulation and legitimation—that is, of accumulating wealth and capital on the one hand while maintaining political legitimacy on the other.13 Yet when we look at Russia, we see a society that has, within twenty-five years, been transformed from (whatever its other faults) a relatively egalitarian and self-described “workers’ state” to one with—at least by some accounts—the most unequal distribution of wealth in the world.14 However, despite some scattered protests, in Russia today there would appear to be little conflict, let alone contradiction, between accumulation and legitimation.

Indeed, however counterintuitively, much research in the field of comparative political economy suggests only a weak relationship between inequality and political conflict.15 Yet the challenge for Russian leaders may stem less from legitimating the inequitable accumulation of wealth and assets than from maintaining economic growth sufficient to satisfy oligarchs and other elites while also preventing unrest from a disgruntled population. This was fairly easily done during the oil boom, but much less so in the absence of high oil and gas prices. Given the latter, t...