Economic collapse up close

I’ve linked before to Dmitri Orlov’s essays about the experiences of average Russian citizens during the post-Soviet economic collapse of the 1990s. Now he is putting together a book on the topic, Reinventing Collapse. Here’s what James Howard Kunstler had to say about it (I reproduce this section rather than linking to it in order to spare the reader some of Kunstler’s more colorful language):

Dmitry Orlov’s publisher sent me the galley proof to get a blurb for the dust-jacket, and I’ll furnish one in short order because Reinventing Collapse is an exceptionally clear, authoritative, witty, and original view of our prospects. The thesis is that the United States is headed for troubles as broad and deep as the ones that brought down the Soviet system in Russia, though we will get there via a somewhat different route. Orlov has been in the privileged position of living under both systems at critical times, and the parallels are striking, but the differences even more so.

The Soviet experience was a collapse of consensual reality as much as of economy. Nobody could continue to support the credibility of a one-party, centrally-planned, “command” economy best represented by the joke: “We pretend to work and they pretend to pay us.” An economy in which nobody had any real stake other than ideological finally ground ignominiously to a halt. Once the state surrendered its authority, the society was stripped of assets. The social safety net dissolved. A lot of people on the margins slipped through the cracks and died. Eventually, the Russian economy (and government) reorganized on a different basis—largely because its remaining oil resources and annual production exceed its domestic consumption. So, this reorganized new oil-exporting state, with its shocking poles of extreme wealth and poverty, will go on for a while until the oil is gone, and then it will face more transformations.

The comparison with the American situation is chilling. For all its gross faults, Soviet Russia was ironically better prepared for economic collapse and political turmoil than we will be. For one thing, all housing there was owned by the state, and allocated under bare nominal rents, so when the economy collapsed, people just stayed in their apartments. Nobody got evicted. There was scant private car ownership in pre-1990 Russia, so gasoline allocation problems did not paralyze movement. Train service was excellent and cheap, and the cities all had a rich matrix of underground metros, on-street electric trams, and trolley-buses, which continued to run even when central authority flickered out. There was no suburban sprawl to strand and isolate people (in homes owned by banks, that can be taken away after the third monthly failure to make a mortgage payment). Official Soviet agriculture was such a fiasco for half a century that the Soviet people were long-conditioned to provide for themselves. For decades, 90 percent of the food was coming from tiny household gardens, wherever it was possible to grow stuff. When America’s just-in-time supermarket resupply system wobbles, and the Cheez Doodles disappear from the WalMart shelves, few Americans will have a Plan B.

Perhaps most striking is that the Soviet collapse provoked almost no bloodshed (at least in Russia itself). The political failure was so comprehensive that the party leadership didn’t even have the will to defend its prerogatives anymore, and for a while politics simply slipped into a vacuum—until Mr. Putin came along and revived the oil industry and managed to get the police back on a payroll that inspired them to do their jobs. Meanwhile, the tremendous drain of the Soviet armed forces and all their equipment—apart from the nuclear arsenal (as far as we know)—was allowed to wither away, along with its monumental demands on the nation’s resources.

As we wait for Orlov’s book, we can learn a few more things about the Russian collapse from this essay I just ran across. The anonymous writer’s conclusions are not all that profound, but some of the details he offers are helpful.

As I was thinking about this topic, I was struck by the following realization, counterintuitive but supported by evidence. The limiting factor in the survival, on both the level of the individual and the community, was not the ability to produce your own products and not even the available resources or lack of them. It was transport and infrastructure – the ability to trade, deliver your surplus elsewhere and from there get other things you need.

This is why rural areas and small towns in Russia took a very hard hit in the 90s, and may never fully recover, as some say. One would think it should be exactly the opposite—people would have gone into the remote villages and live off the land and the woods. However, even in the most self-sufficient household one cannot produce or make everything needed. And being in a remote location makes it difficult to deliver surplus to others in a timely manner for trading or exchange, especially with the roads being as atrocious as they were (a problem endemic to Russia, but can be an important factor elsewhere as well). Plus, as the government budgets dry up, the collective farms go bust, the village school is closed, the general store (already empty) is closed; there is no library, no cars and no gas for them, no TV reception—in short, absolutely nothing to do other than to drink yourself into oblivion, making bad home-made vodka from your decaying surplus grain. The sense of community is gone, people flee like rats from a sinking ship. The “dachas”, mentioned earlier were a different matter—they were clustered in suburbs and used by town dwellers and they were flourishing, but in the villages there are still many deserted houses to this day.

A similar thing happened in small towns. For example, in the town where my relatives had resided (population 15, 000), the only industrial enterprise—an assembly line for radio-transmitters—had closed; the rest of the industry (a bakery and a milk and cheese processing facility) served local needs only. In a town such as that, the roads are better and one can bring in things to trade—but one can only sell as much as people can purchase, and people can’t purchase much since there is no other way to make money besides the meager salaries of teachers and doctors. Again, the sense of community weakens, people begin to leave.

Those who stayed back and managed to work in the new conditions—reorganizing collective farms efficiently, running their own personal farms, organizing local industries (my relatives had a small fish-smoking plant that was making good profit) and revitalizing their communities through those activities—did well though.

It’s surprising to me that non-local trade played such an important role in keeping the society going. The writer also mentions that many people who either couldn’t or chose not to produce goods for sale survived by transporting goods, i.e. they would travel to border locations where goods were available for purchase, then bring them inland for resale. One critical element seems to have been cheap public transportation; I wonder how they kept it running? And would things unfold differently for us, given that we are much more widely dispersed and don’t have much public transportation to begin with?

And I’m puzzled by the idea that in the villages a loss of modern services—schools, stores, libraries, cars, television—translated into a loss of the will to live. Given that they were surviving, was there no value to spending time in one another’s company?


3 thoughts on “Economic collapse up close

  1. I think the answers to those questions have at least little to do with the specific context of the agrarian situation in Russia, which was always significantly different than in the West. Most pre-Soviet agriculture was already organized communally, albeit in a rather brutal fashion, and “worked,” although there was little surplus produced, almost no investment in infrastructure, and not much personal freedom for the participants, including an exceedingly low educational level in most of the peasant communities. (This generalization does not apply to places like Ukraine where there were significant numbers of free landholding peasants, but true for significant parts of the rest of the territory that became the Soviet Union). In much of Russia before 1917 output levels were at about the level they were in western Europe in the 12th century. What I find interesting about these remarks is how little things have changed since 1917. The problem is that the Soviet government over the years, as an aspect of its policy for dealing with its internal nationalism problems, created a lot of settlements in places where there were none before, or created unsustainably large settlements in place where there had been small communities before. So a lot of these dying settlements today have people who have very little history where they are or sense that they belong where they are. Many of the settlements were placed there to exploit energy resources and were really only sustainable by longdistance trade because of climate conditions–almost all of their food had to be imported. In big chunks of the former Soviet Union the growing season is unbelievably short, so the question of needing to trade what you have to obtain other items is fairly crucial. it’s not a matter of saying “I can live without oranges or bananas or grapes because I have preserved apples I can eat,” but areas where the things that grow to maturity are very limited (certain grains, cabbage) and need to be supplemented for basic health reasons if you don’t want to suffer the health problems your ancestors did in the 19th century. Also, in many of these places, the Communist Party was responsible for subsidizing and organizing cultural life around institutions like schools or libraries. (Many of these subsidized communities had not had churches before the Revolution, and-or the Communists did what they could to stamp them out during the Soviet period). The school in such communities wasn’t just there to teach the kids how to write, it served as the meeting place for cultural events like plays and concerts and offered opportunities for adult education and so on, for everyone in the community. And because the distances were so vast, there was little alternative; if your local institution closed, you couldn’t just get in the car (assuming you had one) and easily drive to a place where such things were available. So public transportation kept all of that going and its collapse has been significant. I think people can indeed choose to live without contact to others outside their families and without cultural stimulation (books, plays, films, etc.). But I think it would be very hard, and if I were in that situation, the weather were unpleasant and the climate seemed unhealthy, there was little cultural stimulation, I had no idea what my kids were going to do when they grew up, and there was a place for me to go, well, I think I would. (Especially during the Russian winter, which is very cold and where the days are very short. If you only have 4-5 hours of daylight, drinking and sleeping become much more attractive). Just some thoughts.

  2. Rick,
    I hope you will post this on the linky tomorrow or if not I will link to eat through delicious because I discuss collapse in my post and I think this is interesting. I am a firm believer in a collapse rather than a reformation or perhaps and combination.

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