Nature's Evil [calibre 5.27.0]

Because of oil and gas, a positive trade balance has been characteristic of the post-Soviet period. Every year, the country has exported an average of 10 per cent more than it has imported, and over eighteen years that gives more than 200 per cent of cumulative growth. But, strangely, domestic assets – state-owned and private – have hardly grown. The reason is the flight of capital. 39 The offshore wealth of Russian officials, oiligarchs and their entourage is close to $1 trillion. Placed abroad, this wealth equals all the financial assets kept within Russia’s borders. In other words, all its economically active agents – the government, corporations and citizens – keep half of their capital abroad and half inside the country. According to the total estimate given by Thomas Piketty, 1 per cent of Russians control a quarter of the national income. This means that inequality in Russia is the same as in the USA, higher than in France and almost double that in China. Russia has more billionaires relative to the size of its economy than any other large country. Year after year, the richest British subjects turn out to be Russian. Furthermore, regional inequalities within the Russian Federation are much higher than in the United States or any European country. 40

Why did the ‘liberal’ governments of the 1990s and 2000s do so little to redistribute the income from oil and gas to benefit the population and the environment of their country? Their logic reproduced not the liberal but the mercantilist tradition. The export of raw materials, the restraint on domestic consumption, the growth of gold reserves and the enrichment of the trusted elite – these are mercantilist policies. Their theoretical grounds can be found in Britain’s ‘old colonial theory’ of the eighteenth century. The speeches of the most influential of post-Soviet economists, Yegor Gaidar, articulated his deep mistrust of the Russian population – unqualified, unproductive and, in a word, indolent. In contrast, he hoped that investing in the elite – boosting the salaries of bureaucrats and judges or letting new oligarchs grow their capital – would stop corruption and improve the quality of management. In this world view, the people weren’t ready for reform but the elite was, and petrodollars were distributed according to readiness.

When the price of oil increases, the value of labour decreases. Discontent grows, but the oilmen don’t strike; the political ideas from the era of coal do not work in the era of oil. The rich become richer, the poor poorer, the elite dumber. New social theories compare modern life to a fossil resource but do not suggest how to change it. Zygmunt Bauman’s idea of ‘liquid modernity’ plays with the oily idea of liquidity. The actor-network theory of Bruno Latour results in diagrams that resemble gas pipelines. Having stabilised and subsidised neoliberal states throughout the world, oil has, eventually, been excluded from their privatisation policies: selling other businesses, they have not touched the oil sector. On the contrary, in the 2000s a new wave of nationalisation swept through Venezuela, Bolivia, Ecuador and Russia, bringing oil-extracting companies under state control. Huge price fluctuations enriched some speculators, impoverished others and boosted the financialisation of the market. Inequality of all sorts – between countries, classes, genders and cohorts – increased even further.

What is the moral justification for inequality? A good worker should live well, so that he’ll work even harder. But the problem is deeper. Adam Smith hoped that, although any individual’s action could lead to evil, myriads of their transactions would bring good. John Maynard Keynes believed that the concentration of wealth enables massive investment in ‘fixed capital’, or infrastructure. The railways would not have been built, wrote Keynes, if capital had been equally distributed. 41 In 1971, the Harvard philosopher John Rawls formulated two principles of justice. It is fine if the rich become even richer, in accordance with Rawls’s first principle, only if the poor become less poor in accordance with his second. Since the era of Rawls and Reagan, the total effect has been known as the trickle-down economy. 42 Working with the World Bank, Branko Milanović has demonstrated that the differences between countries, and not the differences within a country, are the main culprit in global inequality. 43 Different nations redistribute capital by subsidising farms, financing health services and encouraging the trickle-down; but redistributing capital among states would require a world government. Monopoly is another issue for moral philosophy. If entrepreneurs want a moral justification, their business should not be founded on stolen property or monopoly trade. We saw that Jakob Fugger, for example, extracted untold wealth thanks to resource monopolies. Luther gave his blessings to merchants and even bankers, but threatened Fugger with hellfire. Smith’s ‘invisible hand’ also left monopolies and cartels behind. Bentham cursed them as a road to slavery. But resource monopolies are still a big part of modern capitalism.