Ukraine and the Empire of Capital

Yulia Yurchenko has produced an important new book on the crises in Ukraine. Ukraine and the Empire of Capital: From Marketisation to Armed Conflict (Pluto Press, 2018) takes a very different approach to the usual ‘pro-Russia’ or pro-western’ explanations to be found in both the main stream media and the left press. Geoff Ryan looks at some of the issues raised by Yurchenko.

Yulia Yurchenko’s starting point is a historical materialist analysis of the dynamics that led up to the conflicts in eastern Ukraine and the annexation by Vladimir Putin of the Crimea. She looks at the class dynamics and political economy that have led to the current state of conflict. Of necessity this involves looking at the collapse of the Soviet Union since independence for Ukraine is integrally a part of the break-up of the USSR.

More importantly the same dynamics that saw the formation of a capitalist class in the Soviet Union also came into play in Ukraine. The factory directors, Communist party officials, members of Komsomol (the party youth movement) joined together with major gangsters and other criminal elements to take advantage of the privatisations introduced into the USSR under Perestroika and into eastern Europe after the fall of the Berlin wall. They began the process of creating a capitalist class. According to Yurchenko since 1991 this bloc of directors, Komsomol, nomenklatura and criminals ‘have utilised political and economic marketisation reforms, as well as crime, to institutionalise themselves as the ruling and capitalist class of present day Ukraine’.

In reality there is no homogenous capitalist class, rather a series of fractions linked to ‘shell’ political parties and ownership of Financial Industrial Groups. These fractions are often in conflict with one another. In particular there was considerable conflict between the initially dominant fraction based in and around Dnipropetrovsk and the Donetsk based fraction which rose to political dominance – in the form of the Party of Regions and Prime Minister Viktor Yanukovych – after the elections of 2007. And Yulia is also clear that the supposed anti-corruption parties of the ‘Orange Revolution’ were equally as corrupt as either the Donetsk or Dnipropetrovsk blocs. All three can be seen as a ruling kleptocracy.

Yurchenko looks at 4 myths related to the development of Ukraine:

  • The Myth of Transition.

The form of transition from the command economy of the Soviet era to a capitalist economy was not decided by Ukrainians but by the International Monetary Fund (IMF), the World Bank, European Bank for Reconstruction and Development (EBRD) and, at a slightly later date, the World Trade Organization (WTO). As Yurchenko points out:

‘Prescriptions based on marketisation set the parameters of right and wrong necessitated by the underlying hegemonic belief of neoliberal economists that there is a need to help the newly independent countries to the ‘correct path’ of social evolution based on the free market model’ (p.11). Moreover the transition was accompanied by large scale shock therapy with significant cuts in living standards for workers. The Ukrainian economy has still not recovered and remains heavily indebted to this day.

  • The Myth of Democracy

According to the theorists of capitalism the existence of markets is accompanied by democracy. However, the state that emerged in Ukraine following independence was imposed on its people, not least because the transnational nature of the institutions requires the loss of sovereignty. The old apparatchiks remained in power following independence in 1991 and they remain there today. The masses were not only disempowered economically but also politically. The differences between the political parties are minimal, As Yurchenko says: ‘one gets marketisation with each electoral choice (p.15)’.

  • The Myth of Two Ukraines

Ukraine is a multi-national, multi-cultural and multi-religious country. This has been the case for a long time. The current divisions are manufactured not the product of longstanding and unresolved conflicts. ‘The true conflicts are class formation and accumulation struggles between foreign and domestic capital, that is, oligarchs, the EU, the USA and Russian business’ (p. 19).

  • The Myth of The Other

This flows from the previous myth but given added emphasis because of the conflicts between ‘Ukrainians’ and ‘Russians’ within Ukraine, conflicts given a helping hand by governments in Russia, the USA, the EU and the pro-western regime in Kyiv. But, as Yurchenko points out, there is such a significant overlap between Ukrainian and Russian history, culture and language that it only possible to create separate identities by top-down methods aimed at reshaping national identity and consciousness. This reshaping requires the demonization of ‘the Other’. But there is by no means homogeneity. Not every ‘Russian’ in Donetsk supports the separatist movement nor does every ‘Ukrainian’ in Kyiv consider ‘Russians’ to be ‘the Other’.

Only a small part of the book, basically the last 2 chapters, deals with the armed conflict in eastern Ukraine, the Odessa massacre of ethnic Russian pro-separatist supporters, the annexation of Crimea, the ant-Communist legislation and the issues that have dominated western news reporting. Yurchenko clearly rejects the way in which the conflict has been portrayed in the west but she is equally clear about the guilt of Putin and the Russian oligarchy.

Nor does she accept that western interventions have been wholly benign but nor does she go along with the conspiracy theorists of much of the left in Europe, the USA and Ukraine itself. The Maidan protests were legitimate protests against an increasingly autocratic government and not the creation of some western plot against Ukraine. They became increasingly legitimate after Yanukovych tried to suppress them. But for Yurchenko the events at Maidan are the Bloody Winter not the Revolution of Dignity proclaimed by the current regime.

Yurchenko understands that the governments of the EU, USA and the current regime in Kyiv are all capitalist: but equally so are Putin and the previous regime of Yanukovych in Ukraine. And she is aware that governments in some of the western ‘democracies’ have ordered very brutal suppression of protests, particularly against austerity (pp. 200-201).

She concludes by arguing that ‘The combination of neoliberal marketisation and politically empowered kleptocratic and the internally heterogeneous ruling/capitalist bloc of Ukraine have created the combustive atmosphere in the country that has not gone away with Yanukovych’s escape. Instead the rule of neoliberal kleptocrats entrenched even deeper’ (p. 210). But she does hold out hope in the form of ongoing and growing protests against the Kyiv government. ‘Ukraine is pregnant with the next, more violent Maidan’ are the final words of the book.

Ukraine and the Empire of Capital is not an easy read – at least I didn’t find it easy, but then I’m not an economist and much of the book deals with the economic issues that lie behind the political conflict. I also think the book could do with a more comprehensive index and an expanded ‘Abbreviations’ section at the front.

But on the whole Yulia Yurchenko has made a valuable contribution to our understanding of the conflict in Ukraine and has helped to dispel much of the myths surrounding it.

Ukraine and the Empire of Capital: From Marketisation to Armed Conflict, by Yulia Yurchenko, LondonPluto Press, 2018, RRP £19.99.

Yulia Yurchenko is Lecturer in International Business and Researcher at the Public Services International Research Unit at the University of Greenwich.

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