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. Last Updated: 07/27/2016

It's Trotsky and Bukharin All Over Again

The debate over economic strategy is becoming increasingly heated in Russia's ruling circles. One would have thought that the high global energy prices would have cooled off this discussion by taking the edge off the urgency in economic decision making.

However, the reality is that the ruling elite is deeply divided between two opposing economic policies, represented by Economic Development and Trade Minister German Gref on the one hand and President Vladimir Putin’s economic adviser Andrei Illarionov, on the other. This is odd because both Gref and Illarionov are committed to capitalism, private enterprise, free markets and liberal principles. They both steadfastly oppose even the slightest social-democratic initiatives.

Nonetheless, in recent months, the two camps they represent have become increasingly hostile to one another. Why?

It goes without saying that different concrete business interests (and considerable sums of money) stand behind each of these camps. But there are also important disagreements on principle between these two schools. It would be a mistake to say that Gref is less liberal than Illarionov. Even a quick glance at his program (which includes tax reductions, a stern Labor Code, privatization and the further commercialization of the social sphere) dispels this notion.

The difference is that Gref is a gradualist. The current situation is not that bad, according to this view, and it is important not to rock the boat. Gref views the current hard-won political stability as an asset that should not be lightly squandered.

Illarionov, on the other hand, is certain that the government is missing a unique opportunity. He believes that now is the time to force the next wave of liberal reform. He criticizes Gref for opportunism, inaction and cowardice. For their part, Gref and his supporters accuse Illarionov of irresponsibility, radicalism and utopianism.

Ironically, this debate mirrors the argument between the "left" and "right" Bolsheviks in the 1920s. The economy then was improving steadily, and grain exports were bringing a steady inflow of foreign currency. The time was ripe to start "building socialism." The problem was that the general population had absolutely no interest whatsoever in carrying out any kind of economic experiments.

The only difference was that in the 1920s, this reluctant majority was the peasantry, who were unwilling to sacrifice themselves to build socialist industry. Today, the tired masses are urban workers, who cannot even imagine that they might benefit in some way from more liberalism.

It is instructive, then, to remember how the conflict ended in the 1920s. As long as the economic situation remained more or less positive, the "right" Bolsheviks (led by Nikolai Bukharin) were able to keep the upper hand over the "left" Bolsheviks (led by Leon Trotsky). However, as soon as a global economic crisis developed and grain prices fell, it became clear that something radical had to be done.

Then something completely unexpected happened. The central bureaucracy, headed by Josef Stalin, adopted its own economic model, which, for all intents and purposes, spelled the end of the socialist experiment altogether. And both Bukharin and Trotsky fell victim to the purges that ensued.

Now oil prices are falling, and talk of a global recession is in the air. Will liberalism suffer the same fate as Russian socialism?

Putin’s situation is not very similar to Stalin’s. It is not possible today to use administrative controls to restructure the economy for the simple reason that an effective, Stalinist bureaucratic machine does not exist today.

In short, there is no threat of a return to Stalinism. However, I don’t think liberal reform has much of a chance either. As economic instability increases, a political crisis here becomes more likely. Since a clear victor is not apparent, all we can say is that that crisis will be long and profound.

Boris Kagarlitsky is a Moscow-based sociologist.