Privatisation as a Method of Economic Euthanasia

As you may have noticed long ago, one of the first items on the agenda of almost any pro-Western candidate in almost any illiberal country is economic reform, starting with privatisation.

In liberal economics textbooks (and others are simply not brought to the regional libraries of countries with “bloody regimes”) we are told that this should generate competition and thus drag the economy up, and straighten the shoulders of local Atlanteans. Of course, there is a politically correct circumvention of questions: is the local economy at such a low point that it can be dragged up by shock therapy, and how many percent of the population will end up among the coveted “Atlanteans” (and they promise that it will be everyone!).

Therefore, I will try to explain on my fingers why in the vast majority of cases, this total privatisation proposed by liberals is a method of euthanising, and not at all reviving, the victim country’s economy.

In most countries where “pro-western candidates” try to come, a certain version of state capitalism is usually built. They can call it whatever they want, even communism, but if the state (and not labour collectives) is the largest employer and it also sets salaries – this is state capitalism. It can be relatively healthy (Russia after 2014, China, Belarus, Libya under Gaddafi) or strange and sick (Venezuela, Cuba, the USSR in the 80’s).

But it has three main values anyway:

1) well-established production links in strategic industries;

2) a well-built process of profit redistribution;

3) a well-developed social component that allows insuring broad segments of citizens from sliding into poverty and disenfranchisement.

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At the same time, three main phenomena can traditionally lead to the disease and decay of state capitalism:

1) nepotism and domestic corruption;

2) voluntarism instead of mathematical models in planning;

3) when the state takes over non-strategic industries for the production of consumer goods and services (e.g. restaurant and hotel business, consumer electronics, clothing, etc.) and outlaws entrepreneurship.

Ideally, the capitalist state should lead a merciless fight against these evils on its own, but given the mentality of native elites, this does not always work.

The evil of the “liberal candidates” is that under the pretext of eliminating the three negative phenomena of state capitalism, they kill its three main values, and then transnational corporations and neocolonial economies, such as the US, profit from the wreckage of the defeated economy and society.

Why is this happening?

Here we need to return to understanding what state capitalism is for. It arises in response to the need for the state to assemble a permanent tool for resource mobilisation to respond to complex geopolitical and natural challenges.

The state is coming to realise that in order to respond to these challenges, it will have to bear specific costs. And these costs inevitably make a number of spheres, industries, or geographical areas unprofitable. But, since abandoning these industries or territories is not an option, the state must find a way to compensate for these losses through profits made elsewhere. In order for the owner of these profitable sectors to agree to give part of the money to compensate losses to unprofitable sectors, they must own both profitable and unprofitable sectors at the same time. Since the unprofitable sector is almost always the social sphere, then giving this sector to a private owner is not an option – they will “optimise” this social sphere at the first opportunity. Here we naturally come to the idea of a set of state-owned corporations, or even a state-corporation.

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Healthy state capitalism is a strong organism made up of different organs, each of which generates a certain resource to transfer its excess to another, and consumes the resources produced by other organs.

What happens when each element of the state corporate structure is privatised? First of all, it is ripped out of the body, where previously its personal needs were met by someone, its expenses were covered by someone, and the demand for the result of its work was guaranteed to a certain extent.

You had a robot that walked briskly and did the work. You took it apart for parts, laid them out separately on the floor and said: “now let each part move itself as it can.” The servomotor stopped spinning without power supply? Damn it! This is probably because it is ineffective! Let’s throw it out, we don’t need inefficient motors. The robot’s motorless leg stopped bending? Yes, it’s a kind of inefficient leg. And why do we need an ineffective leg – we will scrap it. Does the battery continue to emit energy? Cool! This is an efficient battery. Let’s sell it to a neighbour, they will effectively put it in their garage.

Yes, you guessed right. As a result of mass privatisation, “inefficient owners” suddenly start appearing from somewhere in a mysterious way. Liberals immediately start jumping for joy and shouting: “Here! All the problems in your old economy were caused by these people running it inefficiently! Look – they don’t fit into the free market and drag you to the bottom! Crush them!” In fact, they were well integrated into the cost-balancing scheme and inter-corporate production chains, and they were quite, and even very effective, within it all. They were not ineffective, but BECAME when the “privatiser” ripped them away from all the sources of their past efficiency and exposed them naked in the cold.

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In addition, the crafty liberal candidate usually suggests privatising not only hairdressers, hotels, and ateliers, but immediately starting with the national power grid, water supply, railways, city-forming enterprises, and defence plants. Behind him/her, emissaries of multinational corporations and neocolonial governments are waiting in luxury hotel rooms to immediately start buying up assets that have suddenly become “inefficient” for a pittance and luring away the most valuable human capital that generated the main added value in your former economy.

Here they are, liberal candidates with a big smile and a firm handshake.


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