By Viktor Shapinov, translated from the Ukrainian website Liva (The Left), translated by Renfrey Clarke for Links International Journal of Socialist Renewal
June 13, 2014 -- The social and class origins of the Ukrainian crisis have not been well researched. Attention has been focused mainly on the political side of events, and their socio-economic basis has been allowed to drop from sight. What were the class forces behind the overthrow of the Yanukovich regime, the installing of a new regime in Kiev, and the rise of the anti-Maidan and of the movement in the south-east?
The crisis of Ukrainian capitalism
The Ukrainian crisis is not a unique national phenomenon. For a number of reasons, Ukraine has been a “weak link” and has become the first victim of the collapse of the economic model based on the rule of the dollar as the world reserve currency and on the stimulation through credit of consumer demand as a mechanism of economic growth.[1] Ukraine’s economy has been among the most vulnerable in the context of the global crisis, and this has resulted in a split within the ruling class and in a fierce political struggle that has been visible now for several months.
The economy of Ukrainian capitalism acquired its form in the course of the collapse of the Soviet economic complex, the privatisation of socially owned property, and integration into the world market. These processes had the effect of degrading the economic structure of the Ukrainian Soviet Socialist Republic, which in terms of economic development had ranked 10th in the world. Ukraine in Soviet times had a complex, developed economy in which a leading role was played by machine building and the production of goods with a high degree of added value.
Integration into the world market led to the collapse of the high-technology sectors. “While the economy of the USSR was oriented toward satisfying the needs of production and personal consumption within the country, and developed in a more or less complex and rounded fashion, Ukraine’s capitalist economy is ‘formatted’ in line with the demands of the world division of labour. The main victim of this process has been knowledge-intensive production – machine building, light industry, output of machine tools, instruments and radio-electronics, and the production of turbines, aircraft and automobiles.”[2]
Once complex production had been destroyed, the role played by the export-oriented raw materials sector and by sectors with a low degree of added value took on a catastrophically high level of importance. The owners of enterprises in these sectors formed a layer within the oligarchy that has controlled the bulk of the country’s economy throughout almost the entire period of “independence”. This layer, oriented toward the production of raw materials for export, has ruthlessly exploited the productive potential inherited from the USSR. As a result of its economic position, the Ukrainian oligarchy has not only been uninterested in developing the country’s internal market, but in many cases has also taken a predatory attitude to its own productive assets, preferring to export capital to offshore havens instead of using it to develop production. A total of more than $165 billion has been taken out of Ukraine and invested offshore.[3]
The model of the peripheral export economy had a “cannibal” character, and was based on consuming the inheritance from the Soviet Union. Even before the onset of the global economic crisis, ferrous metallurgy – the “locomotive” of Ukraine’s peripheral economy, providing 40-50 per cent of exports – showed “obvious structural weaknesses: outmoded technologies, high labour intensity (producing a ton of steel in Ukraine required 52.8 work hours, compared with 38.1 in Russia and 16.8 in Germany), high energy consumption and dependence on foreign (mainly Russian) energy sources. So long as prices were high these weaknesses were not of decisive importance, but any worsening of the conjuncture made them a serious threat.
Complete story at - A class analysis of the Ukrainian crisis | Links International Journal of Socialist Renewal
June 13, 2014 -- The social and class origins of the Ukrainian crisis have not been well researched. Attention has been focused mainly on the political side of events, and their socio-economic basis has been allowed to drop from sight. What were the class forces behind the overthrow of the Yanukovich regime, the installing of a new regime in Kiev, and the rise of the anti-Maidan and of the movement in the south-east?
The crisis of Ukrainian capitalism
The Ukrainian crisis is not a unique national phenomenon. For a number of reasons, Ukraine has been a “weak link” and has become the first victim of the collapse of the economic model based on the rule of the dollar as the world reserve currency and on the stimulation through credit of consumer demand as a mechanism of economic growth.[1] Ukraine’s economy has been among the most vulnerable in the context of the global crisis, and this has resulted in a split within the ruling class and in a fierce political struggle that has been visible now for several months.
The economy of Ukrainian capitalism acquired its form in the course of the collapse of the Soviet economic complex, the privatisation of socially owned property, and integration into the world market. These processes had the effect of degrading the economic structure of the Ukrainian Soviet Socialist Republic, which in terms of economic development had ranked 10th in the world. Ukraine in Soviet times had a complex, developed economy in which a leading role was played by machine building and the production of goods with a high degree of added value.
Integration into the world market led to the collapse of the high-technology sectors. “While the economy of the USSR was oriented toward satisfying the needs of production and personal consumption within the country, and developed in a more or less complex and rounded fashion, Ukraine’s capitalist economy is ‘formatted’ in line with the demands of the world division of labour. The main victim of this process has been knowledge-intensive production – machine building, light industry, output of machine tools, instruments and radio-electronics, and the production of turbines, aircraft and automobiles.”[2]
Once complex production had been destroyed, the role played by the export-oriented raw materials sector and by sectors with a low degree of added value took on a catastrophically high level of importance. The owners of enterprises in these sectors formed a layer within the oligarchy that has controlled the bulk of the country’s economy throughout almost the entire period of “independence”. This layer, oriented toward the production of raw materials for export, has ruthlessly exploited the productive potential inherited from the USSR. As a result of its economic position, the Ukrainian oligarchy has not only been uninterested in developing the country’s internal market, but in many cases has also taken a predatory attitude to its own productive assets, preferring to export capital to offshore havens instead of using it to develop production. A total of more than $165 billion has been taken out of Ukraine and invested offshore.[3]
The model of the peripheral export economy had a “cannibal” character, and was based on consuming the inheritance from the Soviet Union. Even before the onset of the global economic crisis, ferrous metallurgy – the “locomotive” of Ukraine’s peripheral economy, providing 40-50 per cent of exports – showed “obvious structural weaknesses: outmoded technologies, high labour intensity (producing a ton of steel in Ukraine required 52.8 work hours, compared with 38.1 in Russia and 16.8 in Germany), high energy consumption and dependence on foreign (mainly Russian) energy sources. So long as prices were high these weaknesses were not of decisive importance, but any worsening of the conjuncture made them a serious threat.
Complete story at - A class analysis of the Ukrainian crisis | Links International Journal of Socialist Renewal
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