Coping in the global financial system: the political economy of nonpayment in Russia

Abstract

A phenomenal spread of unconventional means of payments has been one of the most controversial features of Russia's post-socialist economic development. Orthodox analyses tend to trace the causes of the non-monetary economy to the inconsistency of political reforms, to the legacy of the past, and to endemic corruption. This article challenges such accounts. From the perspective of international political economy, the proliferation of nonpayments, severe liquidity squeeze and the structural disjuncture between Russia's financial and productive circuits are the outcomes of the country's pursuit of the paradigm of the Washington Consensus. In this light, barter and nonpayments in Russia are neither the 'inevitable' features of the market restructuring, nor simply the residue of the command system. The non-monetary economy in Russia is a peculiar reaction to the politicoeconomic imperatives brought onto the country by the deregulated financial markets and by the neoliberal political ideology that underpins their global expansion.

Fictitious Capital, Real Debts: Systemic Illiquidity in the Financial Crises of the Late 1990s

“…But while the aggregate statistics showed an excess of liquidity, the process of mopping up liquidity reduced credit in a situation where many firms were already credit starved, translating liquidity shortages into solvency crises (Stiglitz and Greenwald 2003: 273). In Russia, similarly, the stringent monetarist drive of the 1990s reforms, accompanied by radical and ill-timed financial liberalization, led to severe liquidity shortages in the real economy, aggravating the fragility of banking and financial sectors (Nesvetailova 2004).…”

Russian state visions of world order and the limits to universal liberalism

“…This condition was exacerbated rather than resolved by actions undertaken to promote liberalization. The monetarist drive along with financial liberalization in the 1990s created severe liquidity problems in the industrial sector and the emergence of barter trade, non-payment and other forms of endogenous credit creation in Russia which were decidedly not indicative of a monetary economy (Krueger & Linz, 2002;Nesvetailova, 2004a). In light of this imperfect monetarization, the new elite in post-Soviet Russia is a complex and uneasy mix of a "bureaucratic bourgeoisie"…”