“The great drama of Russia…”

Peter Pomerantsev:

…the great drama of Russia is not the “transition” between communism and capitalism, between one fervently held set of beliefs and another, but that during the final decades of the USSR no one believed in communism and yet carried on living as if they did, and now they can only create a society of simulations. For this remains the common, everyday psychology: the Ostankino producers who make news worshiping the President in the day and then switch on an opposition radio as soon as they get off work; the political technologists who morph from role to role with liquid ease – a nationalist autocrat one moment and a liberal aesthete the next; the “orthodox” oligarchs who sing hymns to Russian religious conservatism – and keep their money and families in London. All cultures have differences between “public” and “private” selves, but in Russia the contradiction can be quite extreme.

Nothing Is True and Everything Is Possible: The Surreal Heart of the New Russia [Amazon]

January 24, 2016  |  

Beznalichnye

Fascinating stuff from David E. Hoffmann’s stellar book on the rise of Russian oligarchs:

The Soviet system also had another kind of funds, known as non-cash, or ‘beznalichnye’. This was not banknotes or coins, but a kind of virtual money that was widely distributed as government subsidies to factories. The beznalichnye, or noncash, existed only as an accounting unit. A factory would be transferred subsidies in beznalichnye, which it would record on its books and might use to pay another enterprise—but it was not something you could put in your wallet.

The key dilemma for a factory manager was that the system was rigid: mixing the two kinds of money was prohibited. The factory manager was not allowed to take the beznalichnye and turn it into real cash. Both kinds of money were controlled by Gosbank, the official state bank, and by the central planners.

However, factory managers almost always needed more cash than they could get out of the system. The supply of cash was tight, but the supply of beznalichnye was very plentiful — maybe because there was not much use for it. The result was an imbalance in the value of the two kinds of money. Cash was much more valuable and sought after. By some estimates, a cash ruble was worth ten times a noncash ruble.

This imbalance was an invitation to huge profits. Someone who figured out how to turn the beznalichnye into cash would make a fortune. The planners’ greatest nightmare was that someone would do this and pump the relatively worthless state subsidies into real cash rubles.

Guess who figured it out: Mikhail Khodorkovsky.

The Oligarchs: Wealth And Power In The New Russia [Amazon]