Saturday, November 22, 2014

Lavrov's October 20, 2014 Speech. III

"The “end of history” proclaimed in the early 1990s failed to materialise. It became clear that the present stage of international relations can be described in terms of competition, not only in economics and finance, but also in values and development models.

"In this context, constraints of the liberal economy became clearly visible. Following the Cold War, the economy shrugged off much of its state controls, which led to large-scale crises."

The financial crisis that led to the Great Recession was harder felt in Russia. There were runs on banks, people lost their savings. It was worse than in the U.S. The 2008-09 crisis worked a gestalt shift on Russia's leaders. They had had no experience with liberal capitalism. When they tried it after the collapse of the Soviet Union it wreaked too much havoc, as they saw it, and then a decade later the Great Recession. I remember reading at the time American economists writing that this was all new to the Russians, that they did not have the requisite patience, hey had no experience with the ups and downs of capitalism and the downs came as shocks. In Lavrov's own words here, the Great Recession worked a gestalt shift in Russia's leaders. Western liberal capitalism was not what they wanted if they could avoid it and when they looked to their left they saw a working example of an alternative way, one that had ridden out the 2008-09 crisis better than they had. And better than the Americans had.

The years since have only proved to the Russians the correctness of their gestalt shift. China is now the world's largest economy and Western economists, most recently Lawrence Summers, have been saying repeatedly this entire millennium "It can't last." It's like the boy who repeatedly cried Fire! After a while, in Russia's case after the Great Recession, you stop listening to him.


China has broken all the West's rules: Economic growth for 38 consecutive years is impossible: cuò, nepravil'no, wrong. Democracy and capitalism go hand-in-hand: Méiyǒu, nyet, and no. A command economy can't work: Tóngshàng, to zhe samoye, ditto. And the, national, cultural, racial aspect of it. America is the most polyglot society on earth and China the most homogeneous. Putin would be "lost" without Russia. Which one is he going to emulate? Duh.

China was proof to the Russians, and to the Chinese, that the "end of history" had not happened.