“Change Yourself for the Better.” If you read the following article, about the OECD’s forecast for economic growth in Russia, between the lines, you will discover a takeaway message that has been apparent to numerous observers for a long time. Until Russia does away with official kleptocracy, rampant corruption, outrageously bad governance, and the shock-and-awe policing of politics and business by the siloviki—i.e., unless it renounces Putinism and all its ways—there is little chance the living standards of ordinary Russians will improve much in the next forty years. Photo by the Russian Reader
Russia Set to Fall Further Behind US in Terms of Living Standards OECD’s Experts Have Predicted the Futures of the World’s Major Economies
Tatyana Lomskaya Vedomosti
March 7, 2018
Russia is one of the few member states and parters of the Organization for Economic Cooperation and Development (OECD), in which real per capita GDP will fall by 2060 relative to the benchmark, the United States, according to an OECD reported entitled “Long-Term Prospects: Scenarios for the World Economy, 2060.” Vedomosti has had access to the eport. A source at the OECD confirmed its authenticity while noting it was a preliminary draft.
In the absence of reforms, Russia’s per capita GDP will grow only 0.7% in the next twelve years, predict OECD economists. The stumbling block is low workforce productivity. In recent years, it has not increased at all, and it will accelerate to a mere 0.5% in the period 2018–2030. Another brake on economic growth is poor demography: the economically active and able-bodied segment of the populace has been declining. By way of comparison, due to its positive demographic circumstances, Turkey’s standard of living will increase considerably by 2060 to about three fourths of the figures for the US, write the report’s authors. In Russia, it will increase to 40% of the benchmark before decreasing slightly.
It is hard not concur with the diagnosis, notes Alexander Isakov, VTB Capital’s chief economist for Russia. Demography and workforce productivity are the biggest constraints on economic growth in Russia.
The goal can be brought within reach by applying active budgetary (e.g., tax cuts and increases in oil and gas costs) and monetary (e.g., lending) stimuli, says Kirill Tremasov, director of the analytics department at Locko Invest, but this is fraught with great risks.
Without reforms, Russian and the other BRICS countries will slow the growth of the world’s real GDP for forty years beginning in 2019, warn the report’s authors. To accelerate growth, they must increase workforce productivity by reforming governance, increasing the duration of schooling, and reducing trade tariffs.
If during the period 2020–2060, the BRICS countries develop the rule of law (which the World Bank evaluates on a scale from minus two to plus two), increase schooling to the median level of the OECD countries, and decrease trade tariffs to OECD median levels by 2030, the growth of per capita GDP will be 25% to 40% higher than in the baseline scenario. A key factor is governance reforms: combating corruption, improving law enforcement and the judiciary, increasing the efficiency of the civil service, and involving ordinary citizens more actively in politics.
The report notes this is especially important for Russia. Among the BRICS countries, Russia has the worst score for rule of law (-0.8) and the best score for average length of schooling (10.8 years). The Russian civil service has been adapted to the current political system, which assumes maximum centralization and the absence of political competition. Tremasov is skeptical: it is impossible and pointless to reform the civil service without democratizing the political system.
“How Living Standards Will Change: The OECD’s Baseline Scenario. Real Per Capita GDP at Purchasing Power Parity in 2010 Prices (US=100).” The blue horizontal lines represent predicted outcomes for 2018; the red lines, predicted figures for 2060. The countries included in the survey, as listed from top to bottom, are Brazil, Russia, Turkey, Poland, Italy, France, Great Britain, Finland, Germany, Switzerland, Norway, and Ireland. Source: Preliminary Calculations from the OECD. Courtesy of Vedomosti
In his May 2012 decrees, Putin charged the government with increasing workforce productivity by one and a half times by 2018, but it had increased only by 3.8% as of 2016. Minister Oreshkin listed the obstacles: underinvestment, insufficiently developed infrastructure, and a lack of resources to upgrade productive assets.
Managers do not have a “culture of constantly improving efficiency and productivity,” he complained.
Workforce productivity is indeed the main obstacle to economic growth, but an increase of investments is needed in order to increase it, notes Natalya Orlova, chief economist at Alfa Bank. In 2017, about 50% of the increased investments in Russia were due to the extractive resources sector, although the bulk of GDP is generated in other sectors, says Orlova. Investments in agriculture grew by a mere 1.3%, fell in manufacturing and construction, and the commercial sector crashed altogther, falling 9.7%. Investment growth has been hindered by economic and geopolitical uncertainty, and the government has an ever harder time of reducing that uncertaintlywith sanctions in place, notes Orlova. Business, on the contrary, needs guarantees the rules of the game will not change for a long time.
Growth in productivity is impossible without increased competition, Tremasov points out. It is competition that compels companies to introduce new technology, reduce costs, and improve management. The more intense the competition in a sector, the higher the productivity, he notes, citing the retail trade and metallurgy as examples. Therefore, the main means of increasing economic efficiency is reducing the state’s share in the economy, argues Tremasov, as well as attracting foreign investors, reforming the judiciary, and reining in the security services [siloviki].
Measures to improve the country’s demographic circumstances will bear fruit in twenty-five years, when the corresponding generation enters the labor market, notes Isakov. The authorities should thus concentrate on increasing productivity. If the market functions smoothly, the difference in productivity between companies in the same industry decreases, he argues, because they borrow technology and methods from each other, while inefficient companies are forced out of the market. In Russia, on the contrary, differences in productivity within industries are some of the highest in the world, due in part to gray sector employment practices, Isakov concludes.
Economic growth could take off if reforms are implemented, argues Orlova. The Russian economy is currently so inefficient that the jumpstart supplied by reforms would be huge.
The minimum monthly wage in Russia [often referred to by its abbreviation, MROT] has been pegged to the subsistence minimum. This gift to employees will come into effect on May 1, 2018, when the minimum monthly wage will grow from the current ₽9,489 to ₽11,163 [approx. €160 at current exchange rates]. Regional minimum wages might be higher. For example, in Moscow, it will be set at ₽18,700 a month, while in Petersburg it will rise to ₽17,000. According to former federal deputy labor minister Pavel Kudyukin, the lowest paid category of workers will benefit from the rise in the minimum wage, but there will more losers.
Pavel Kudyukin, Russia Federal Deputy Labor Minister, 1991–1993; currently, council member, Confederation of Labor of Russia (KTR):
The principle that the minimum monthly wage cannot be lower than the subsistence minimum was incorporated into the Russian Labor Code way back in 2001, with the proviso, however, it would be implemented gradually.
The fact this decision has been made amidst less than propitious economic circumstances is undoubtedly an election campaign gambit. Theoretically, it is a measure that had to be taken. Having a minimum monthly wage lower than the subsistence minimum, especially Russia’s subsistence minimum, is simply shameful. Some people will stand to gain from the decision, but fairly broad segments of the populace will also suffer serious losses. But the propagandists, of course, will talk about the gains, especially as we are in an election campaign.
The general opinion of nearly all social policy experts is that Russia’s subsistence minimum is equivalent to the poverty level. It will keep a person from starving to death, but it would be a great exaggeration to call it a means to a full-fledged, dignified life.
International standards are also quite modest, of course: the subsistence minimum is defined for the poorest countries. Naturally, the developed countries have their own notions of the subsistence minimum. It is an essential tool of social policy. Various welfare payments are pegged to it, and it determines the level at which households are seen to need additional assistance. It is measured in different ways. Measuring the subsistence minimum in terms of the consumer goods basket, as is done in Russia, is deemed quite an archaic method, although the US uses the same method to calculate it.
The question, of course, is how the contents of the consumer goods basket are decided. Russia does not fully take into account the needs of the modern individual. It bases its calculations on the assumption people have no need of such an important social benefit as housing. The costs of utilities are at least included in the basket, but the possibility of improving one’s living conditions are not. Cultural needs are very poorly represented. Most of the so-called non-product needs are calculated through an adjustment, as a percentage of the consumer basket given over to products. It is no wonder the subsistence minimum, as it is imagined in Russia, satisfies neither the experts nor ordinary people.
The subsistence minimum has also been reduced from time to time with reference to drops in prices. This has also provoked a slew of questions. How are prices determined? Inflation affects different income brackets in very different ways. The poorer people are, the greater their personal level of inflation. If the price for a Mercedes suddenly drops, it does not mean the price of sunflower seed oil will not go up.
There is an important brake on seriously expanding the subsistence minimum in Russia. When the number of poor people is between fifteen and twenty percent, you can provide them with supplemental financial assistance and benefits. If the percentage of poor people is fifty percent or greater, it is quite tricky for the state to do anything for them. When half of the populace is receiving poverty assistance payments, either the payments are utterly paltry and spread thin or the state simply cannot make them.
For people who earn the least of all, pegging the mininum monthly wage to the subsistence minimum does constitute an increase in wages. It is a quite decent increase in some cases, especially if you consider the fact there are people in Russia—Deputy Prime Minister Olga Golodets has estimated there are nearly five million such people—who received a salary lower than the previous minimum monthly wage.
The workers who really have a chance to improve their lot are mainly those employed in the public sector in various auxiliary positions: maintenance personnel, cleaners, and so on. They will earn more.
Formally, there will be winners, but there will be more losers. The rise in the minimum monthly wage will cause serious problems in the regions, since poor public sectorsworkers are usually paid from regional and municpal budgets. The new expenditures they incure will be only partly covered by transfers from the federal budget. Regional officials will once again have to optimize some things and lay off people. This is a quite significant aspect of the headache generated every time the parliament passes laws or the president signs decrees increasing payments to people who do not get them from the federal budget.
The rise in the monthly minimum wage will be a considerable problem for a number of businesses, especially small businesses. There is a risk it will expand the gray sector of the employment market. This is also an unpleasant consequence for workers, for when they are employed in the gray sector, payments to the Pension Fund are not deducted from their wages, and they lose pension payments they would have received in the future. People in Russia usually disregard this, because, one, they do not actually believe they will live until pension age, and two, they really do not believe the state will not think up more mischief by the time their pensions come due.
Another important question: what is included in the minimum monthly wage? Currently, there are several court rulings that the minimum monthly wage should not include any sort of compensatory pay, such as the northern hardship bonus. This pay must be disbursed over and above the minimum wage. These are sound rulings, but the problem is Russia does not have a precedents-based judicial system, and one court’s ruling is anything but obligatory for other courts. Every individual whose minimum monthly wage includes compensatory or incentive pay must file suit in court to have his or her wages individually recalculated. So, the problem is not only the amount of the minimum monthly wage and how it correlates with the subsistence minimum but also what is included in the minimum monthly wage.
A Band-Aid for the Poor
Increasing the minimum monthly wage cannot be implemented in isolation. It should be complemented by serious reforms in other areas. We must radically change our entire social and economic policy, including, as an obligatory part of such reforms, our taxation policy. It has not always been understood in Russia that there is no such thing as a welfare state* without progressive taxation. The introduction of progressive taxation, of course, will be an unpopular measure amongst a large number of people. Plus, given the inefficiency of the Russian state and the social irresponsibility of the rich, such an attempt would push the growth of the gray economy.
Poverty is not only a problem of social policy. It is not eliminated by paying people social benefits. We need a completely different economic policy that would give people the opportunity to work in well-paid jobs and thus make decent pension contributions. The problem of poverty is not solved merely by redistributing resources, although it is also necessary. Treating poverty with social benefits means treating the symptoms. Treating poverty with economic growth means treating the causes.
* According to Article 7 of the Russian Federal Constitution, the Russian Federation “is a social State whose policy is aimed at creating conditions for a worthy life and a free development of man [and where] the labour and health of people shall be protected, a guaranteed minimum wages and salaries shall be established, state support ensured to the family, maternity, paternity and childhood, to disabled persons and the elderly, the system of social services developed, state pensions, allowances and other social security guarantees shall be established.” For more on the practical implications of this constitutional guarantee in a quasi-populist kleptocratic tyranny, see Ilya Matveev, “The ‘Welfare’ State Doesn’t Get Any Better Than This,” Chtodelat News, October 12, 2012.
The Tsentrosoyuz Building, on Sakharov Avenue in Moscow, was designed in 1933 by Le Corbusier and Nikolai Kolli. Originally built as headquarters of the Central Union of Consumer Cooperatives, it now houses Rosstat and the Russian Federal Financial Monitoring Service. Photo courtesy of Wikipedia
Rosstat “Stopped” Populace’s Incomes from Falling Analysts Accuse Agency of Fudging the Figures
Yelizaveta Bazanova and Filipp Sterkin Vedomosti
February 19, 2019
“The worst thing you can do is mess around with statistics. […] When we lose sight of our system of coordinates, we wander in the dark, and anything we say is fraught with delusions,” said German Gref when sizing up the resubordination of Rosstat (Russian Federal State Statistics Service) to the Economic Development and Trade Ministry in 2007 during Gref’s tenure as minister.
Rosstat has several times been reassigned from the Russian government’s oversight to the Economic Development Ministry, and back again. The last time Rosstat came under the ministry’s wing was spring 2017. Economists also predicted at the time Rosstat would have to produce statistics showing he authorities in a good light.
On Monday, Rosstat reported on the populace’s real incomes in January 2018. For the first time in a long time, they did not decline in annual terms, nor did they increase, according to the agency’s estimate. But a fall in incomes was prevented only due to the fact that Rosstat did not take into account income a segment of the populace had earned a year ago: a one-time payment to pensioners of ₽5,000. At the time, it allowed the agency immediately to record a growth in incomes of 8.8%. This was the only month in 2017 when such growth was recorded. If this payment is not included in calculations, incomes grew only by 1.3% a year ago, Rosstat said on Monday. Rosstat took this payment into account all last year and did not reconsider its results: a decline in incomes by 1.7%. The data had been corrected for the sake of its comparability, the agency explained.
This is “frank manipulation,” claims Kirill Tremasov, director of the analytics department at Locko Invest. According to his own computations, incomes actually fell by 7% last month, but in the run-up to the March presidential election there is no stomach, apparently, for publishing figures about this decrease in incomes. Rosstat should publish real data, possibly furnishing them with adjusted calculations. Or the figures for all of 2017 should be revised, in which case incomes would be shown to have fallen by 2.1–2.2%, not by 1.7%, argues Tremasov.
Real Incomes of the Russian Populace in Terms of Percentages Relative to the Previous Year. The seven-percent drop in January 2018 is based on Kirill Tremasov’s estimate (see above). Source: Rosstat. Courtesy of Vedomosti
The statistics would have then deviated even more from the forecast of the Economic Development Ministry, which had anticipated a 1.3% uptick in incomes in 2017. Rosstat’s figure mislead the public, Tremasov concludes.
The way Rosstat treated the indicator was wrong, says Vladimir Bessonov, head of the Laboratory for Research in Inflation and Growth at the Higher School of Economics. He is certain that if the one-time payment to pensioners was taken into account in January 2017, it must also be taken into account now. Although it is unlikely Rosstat cheated on purpose, he argues, because hat would pose much too serious reputational risks to the agency.
This approach changes the picture of trends, say Igor Polyakov of the Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF). Both the one-time payment and seasonal phenomena should not be factored into calculations for the whole of 2017. Compared to December 2017, incomes increased by 1.5% in January 2018, he claims, but public sector wages were indexed by 4%at the beginning of the year, and the pensions of unemployed pensioners by 3.7%. To get a real take on incomes, we should wait for February’s figures, which will be free of temporary factors, argues Polyakov.
In reality, real incomes are 3.3% lower than they were in 2011, and 11.4% lower than their peak values in 2014, Tremasov has estimated. 2017 was the fourth year in which people’s incomes fell. In 2014, 2015, and 2016, they contracted by 0.7%, 3.2%, and 5.8%, respectively.
In 2018, incomes will continue their downward trend, argues Vladimir Tikhomirov, chief economist at BCS Financial Group. According to its own forecast, however, the Economic Development Ministry anticipates a 2.3% growth in real incomes.
“Monthly data on people’s incomes are unrepresentative anyway. The reliability of the primary data used in the methodology is not perfect, to put it mildly, sometimes to the point of directly contradicting reality,” a federal official says in response to Rosstat’s report.
Bessonov confirms there are, indeed, many bones to pick with the performance figures for the populace’s real income, and problems with the methology for estimating them.
The indicator has not been terribly representative since 2014, argues Natalya Orlova, chief economist at Alfa Bank. We need it, among other things, to estimate the performance of the informal sector, where wages are counted as income. However, whereas miscellaneous income had grown by 25% in 2015, it fell by 7% in nominal terms in 2016. But even if the indicator is not representative, says Orlova, this does not mean it can be treated the way Rosstat has treated it.
A spokesperson for the Economic Development Ministry did not respond to our request to comment on this article, while Rosstat refused to comment.
Burrow City versus Hipster Urbanism Sociologist Victor Vakhshtayn on why Moscow is a metropolis for newcomers
August 1, 2015 Lenta.ru
Why do Moscow residents not trust each other? Why do they not want to live here? Why is Moscow still “rubbery”? Who perverted the concept of hipster urbanism and why? Lenta.ru discussed this with Viktor Vakhshtayn, director of the Centre for Sociological Research at the Russian Presidential Academy of National Economy and Public Administration (RANEPA) in Moscow and a professor at the Moscow School of Social and Economic Sciences[.]
You have repeatedly said that one percent of the population in Moscow trusts each other, meaning this is a society of mutual distrust. But what is Moscow really like in terms of interpersonal communication?
Victor Vakhshtayn: When sociologists talk about interpersonal communication in cities they usually mention two interrelated topics.
The first is the problem of public spaces, places where urbanites meet face to face. It is thought that such spaces shapes the identity of the city, because this is where its inhabitants face each other not as colleagues, friends or drinking buddies, but namely as urbanites. In Moscow, (as, indeed, in many large Russian cities), the problem of public spaces is very serious. In recent decades, they have either been privatized and redeveloped or strategically destroyed. The example of Moscow’s Manege Square, a source of constant concern for the authorities, is telling in this instance. When the Okhotny Ryad shopping center was being designed, the architects were tasked with making it impossible for large numbers of people to gather in this space. The problem was solved elegantly. The square was made the roof of the [underground] shopping center, which, however, did not prevent protesters from spontaneously mobilizing a few years ago.
A city that has no public spaces is rigidly divided into home, work, and transit. Your life is divided among apartment, office, and subway, car or commuter train. Hence the horror of the entryways in Russian apartment buildings, and the specific perception of the city that architects dub “burrowness.” (Bedroom communities are containers for burrows, and the subway is the crossing point between apartment-as-burrow and office-as-burrow.)
In recent years, much has been done in Moscow to bring public spaces back to life, but now the process of revitalization have stalled. We partly have ourselves to blame: the theme of public space very quickly began to be perceived à la the hipster urbanism of Richard Florida and Jan Gehl, meaning in terms of things like bike lanes, lawns for doing yoga, and eating cotton candy outdoors. The people who returned public spaces as a focus of discussion and planning preferred not to recall that the prototype of such spaces is not the promenade, but the Greek agora and the Roman Forum. Khimki Forest and the field in Troparevo-Nikulino are much more public spaces than Sokolniki Park.
But what about local communities?
The problem of local communities is the second talking point about communication in the city. Two thirds of Moscow’s permanent residents were not born here. More than half of them do not own their own dwellings. The average apartment rental lasts between two and three years. In other words, this is a city of nomads constantly on the move between rented encampments and the steppes of the office blocks. That is why it is nearly impossible to answer a seemingly simple question: how many people live in Moscow? According to official statistics, the figure is twelve and a half million people. But economists have calculated that twenty million people consume food daily in Moscow. It is hardly the case that twelve million people are eating for twenty million.
So the argument that Moscow is overpopulated has to be corrected. The nomads have not overpopulated the steppe. At worst, they have trampled it.
The metaphor of a city of nomads also nicely describes Moscow’s relations with the surrounding areas. When Pavel Stepantsov and I attempted to measure the density of social ties in Moscow and Moscow Region, we discovered that an alienation belt had formed round Moscow. In the surrounding towns, no urban life as such is left. Moscow attracts all the resources (primarily, of course, human resources).
So talking about local communities, as urbanists in Moscow like to do, is just ridiculous in such circumstances. As recent studies by the Moscow Institute of Sociocultural Programs (MISCP) have shown, local ties and identities have been preserved primarily in New Moscow and Zelenograd Administrative District. But these are the areas that are the least urbanized.
The price for the nomadic lifestyle is people’s total mistrust of each other and the place where they live. Moscow is a rare metropolis where parents see their children to the subway and ask them to call when they get downtown. People see their own neighborhoods as more dangerous than the city center, although statistics show the exact opposite: most crimes are committed in the central districts. According to our study “Eurobarometer in Russia” (RANEPA) and the latest research by MISCP, half of Muscovites do not know the neighbors on their landing, much less in their stairwell. More than sixty percent believe that returning home late at night is either dangerous or very dangerous. About a quarter of the Russian population believe that people are not such malevolent creatures, and they can generally be trusted, but in Moscow this figure tends toward zero. (More precisely, only one percent of Muscovites believe people can be trusted.)
Hence the expectations for courtyard culture and local communities as little factory for the production of trust in the city. The argument that we need to work with local communities has become the new ideological cliché (like a few years earlier the argument that we had to make this city an interesting place to live). But I would caution against such community optimism. City and neighborhood are antonyms. As a final illustration, I can give you fresh data from MISCP’s project “Mechanics of Moscow.” It turned out that people feel anxious about their places of residence if they don’t know any of their neighbors by sight and have no acquaintances living in the neighborhoods. The feeling of insecurity wanes if they recognizer neighbors by site and develop a few weak, friendly ties. But when strong ties of friendship emerge in people’s habitat and their number grows, the feeling of insecurity and mistrust of the area is again high. When neighbors and friends are the same people, it is the first sign of ghettoization. In the end, the urban community’s ultimate is the ghetto, not the courtyard.
As a person who considers himself a Muscovite, you think that twelve to twenty million residents is a normal figure for Moscow and doesn’t need to be reduced, that the city and its transport system can serve so many people?
Again, nomads cannot overpopulate the steppe. If you cannot say for sure whether twelve or twenty million people live here, it is strange to speak of overpopulation. Is twelve million people a lot? What about eleven million? How many people is normal? At what point does it begin to be a lot?
It’s not a matter of infrastructure or service, but the impact people make. The economic rise of Moscow in the 2000s was in part an effect of its overcrowding and hyperconcentration of resources.
Okay, your stance on the issue of the number of people living in Moscow is clear. But this raises another topic: the capital’s population is constantly increasing. You yourself mentioned the economic upturn of the 2000s was triggered by the influx of new people in the city. Hence the conclusion: if Russia has this center of gravity that is constantly growing, is it worth leaving everything as it is and keep expanding the city? And then everyone will want to move to Moscow, it will expand, and in thirty years or so, it will be twice as big. In this case, is a metropolis where, thirty years from now, forty million people, for example, a problem? And is it necessary to address this issue, for example, by moving some administrative offices and headquarters of major companies, developing other cities, and making them more appealing places to live?
That’s a good question. But first, let’s deal with the economic history. There was an American urban planner Robert Moses, to whom we owe much of the look of modern New York and the whole despised ideology of modernist urbanism. Moses was a bit like a New York Luzhkov, but with a better understanding of the urban economy. He understood that the main competitive advantage of the metropolis is the hyperconcentration of heterogeneous resources in a limited area. His idols were the density, speed, and mobility that make the city a “growth machine.” The more human, economic, administrative, and cognitive resources are compressed in one place, the higher the return, the faster the pace of urban development.
Now let me digress a bit. In 1997, a UK parliamentary committee led by Ron Dearing tried to answer the question of why Scottish universities were consistently outperforming English universities on all fronts. It turned out their competitive advantage was historical: the first (“ancient”) universities of Scotland—Edinburgh, Aberdeen, Glasgow, and St Andrews—were founded as centers of English political influence, and hence they were built in the major cities of the time. Conversely, the English universities of Cambridge and Oxford were established far from the bustle of the city, in the image of the monasteries. When rapid industrialization kicked off in the nineteenth century, urban universities stood to gain due to their location. They become resources for the economic growth of their host cities, and the cities, resources for their development. This is why ideology of hyperconcentration—having the all universities, factories, people, money, and power in one place—is not so absurd and outdated an idea as it might seem to a normal person.
Moscow today is a hypermobile city, 1870s Edinburgh and 1950s New York at the same time. I hesitate to say 1930s Vienna, although in some respects, this parallel is also not without grounds. The city’s economic growth in recent decades is not so much the cause as a consequence of the influx of migrants. Moreover, the migrants are very different: they include qualified young professionals willing to work for thirteen to fourteen hours a day to pay for food and rent, and unskilled migrant workers, who have become targets of exploitation unknown in Marx’s time. People who with a contemptuous grimace hold forth today about the “problem of migration” are usually the same people whose incomes and rapid career growth have been secured by the influx of migrants, who took the jobs they otherwise would have had to take.
Decentralizing Moscow is not just a utopia. It is a dystopia for a city that is a melting pot of people, money, power, and knowledge. As long it is being stoked with firewood, it can afford to grow. Forty million? Even fifty million people is possible if nothing changes. But change is inevitable. It can be triggered by both internal and external factors.
The external factors are more or less clear, and we are now seeing their effect on the city’s economy. The internal changes begin with the question, What it is like to live in a melting pot? What is it like to raise children and ensure a decent life for elderly parents in a melting pot? When such issues arise, then the stage of economic history in which the city is a machine of economic development is over.
Rising prosperity has side effects such as increased expectations for the quality of the urban environment. People no longer want to live and die in an office or on a construction site. The above-mentioned “Eurobarometer in Russia,” recorded an interesting effect two years ago: Moscow’s appeal had begun to rapidly decline, and within Moscow even more rapidly than outside Moscow. A rather remarkable group of potential migrants who put the quality of the urban environment above economic opportunities had taken shape. Economist Sergei Guriev and I then came up with a project: calculating the value of the ruble in Moscow. Because if you make money in a city where you don’t want to spend it, if you feel deeply unhappy and leave whenever possible (for example, on the weekend) for somewhere far away, it is possible that at some point you would prefer to make less money but in better conditions. And then the Moscow ruble is worth less than, for example, . the Petersburg ruble. Alas, for obvious reasons [Sergei Guriev’s emigration from Russia – Lenta.ru], the project has not been implemented.
This, then, is an interesting point. If the capital’s appeal is shrinking, the quality of the urban environment does not satisfy people, could Moscow in thirty years become a city for migrants only? As you say, one big office, only on a larger scale, where the houses have been turned into dormitories for workers and employees, and Muscovites themselves, no longer wishing to live in this office, en masse become rentiers and depart, for example, to comfortable suburban agglomerations or Thailand? Many are already doing this now. Will Moscow 2045 be a city unfit for normal life?
No, of course not. By 2045, Moscow will be radically decentralized. All the organs of state power will have been transferred to Petersburg and Vladivostok. Left without work, migrants will disperse to other cities and countries, and the residential areas, inhabited mainly by indigenous Muscovites, will all fit inside the Boulevard Ring. People will again visit each other at home and move around the city on foot.
But what will be left for them to do when unemployment is at seventy percent? By the way, there is a remarkable study, done at Columbia University, on how the pace at which men and women walked changed when there was mass unemployment. It was found that during the most severe years of the Great Depression in the United States, men began to walk more slowly around the city, and women, more quickly. Because women, unlike men, did not have less to d0.
Both scenarios we have described, yours and mine, are probably products of a morbid Muscovite imagination and have little to do with the urban reality. But yours is more realistic, with suburban Moscow dachas playing the role of Thailand, bedroom districts standing in for workers hostels, and the very meaning of normal life in the metropolis rapidly mutating. It is this situation that brought the ideology of hipster urbanism, probably the best thing that has happened with Moscow in recent years, onto the scene. But this is a separate and a slightly sad story.
I will elaborate on the topic by mentioning two talking points. The first is changing perceptions of law enforcement under these circumstance. According to “Eurobarometer in Russia,” forty-three percent of Moscow residents believe that “the police are a threat to ordinary people, perpetrating lawlessness and violence.” (Fifty-one percent of respondents hold the opposite opinion). This is even more than in the Republic of Dagestan (34%), which holds the second place in our sample.
Another talking point is who in Moscow feels most like Muscovites. According to our data, it is not people who were born in Moscow, but those who came here over ten years ago. They have the strongest Muscovite identity. They are the most active users of the city (from museums and exhibitions to citywide celebrations). It is they, rather than the notorious hipsters, who have shown the most lively response to transformations of the urban environment in recent years.
The main thing to remember is that these people arrived in Moscow ten to twenty years ago not for a “normal” life but for the sake of self-realization. And it is they who now define Moscow.
I understand that you are not a big fan of hipster urbanism. What is bad about it?
To be honest, today I regret that a few years ago I came up with the phrase hipster urbanism. Then it was necessary to more accurately capture the object of our study: the impact on specific urban spaces of the metaphor of the city as a stage, which had gained a foothold in the language of policy makers and officials. I naively supposed that if this concept were terminologically defined in an academic paper, the risk of erosion would be minimal. However, the phrase hipster urbanism caught on first as a cliché in critical journalism, then as a self-designation. Sergei Kapkov [Moscow’s former culture head] then decided to give a lecture on hipster urbanism. Some people in Samara, responsible for the reconstruction of the embankment, authoritatively reported they were working in terms of hipster urbanism. These words can stand for anything today. They do not refer to anything specific and only vaguely link Kapkov’s Moscow and abstract hipsters in a loose associative unity.
Essentially, the modern city is less an arena where social groups, stable community or collective agents clash, and more an arena where languages, models of representation, and different urban ideologies clash. The metaphor of the city is the hard core of ideology; it determines how people see urban space, and what decisions they take in regard to it. Imagine officials from two rival departments at a planning meeting on “mayor’s Tuesday” dealing with city parks. For the some of them, the city is a giant organism in which the parks have been the given the place of “green lungs.” The parks are tasked with producing oxygen. Accordingly, they should be financed in terms of the number of green spaces. For the other officials, parks are public spaces, the city’s “stages.” And they should be financed according to the number of activities staged there, the number of people who attended them, and the public eventfulness they generate. The conflict of metaphors will have real consequences for the city.
At some point, the hipster metaphors—city as stage, city as generator of experiences, city as a set of events—suddenly comes into competition with the two Big City metaphors of the twentieth century: city as growth machine (modernist urbanism) and city as generator of inequality (Marxist urbanism). Moreover, in Moscow the hipster ideology beat out the other ways of thinking about the city for a short period. This is a very curious phenomenon that remains to be researched.
My criticism of hipster urbanism concerned the rhetorical strategies it employed (the way it substituted societal [obshchestvennye] spaces with “public” [publichnye] spaces, its use of vague clichés like creative class and livability), its blind spots (its inability to discuss, for example, migration), and its superficiality and unbending utopianism.
But today, it must be recognized, it is a quite workable ideology that changed the look of the city. Now, when a very different rhetoric and semantics has engrossed the minds of city managers, hipster urbanism looks like the last conquest of public policy. It reminds us of those glorious times when decisions were still determined by the clash of metaphors and ways of thinking, and even city managers needed to answer the question, What is a city?
Under these new cultural circumstances, I will defend the achievements of hipster urbanism to the last.
How do you think the city has changed under the impact of newcomers from the Russian provinces and migrants?
That is a funny way of putting the question. You used the words migrants (apparently from Central Asia) and newcomers (apparently from the provinces). I do not want to upset you, but the newcomers are also migrants, and the migrants are also newcomers. And, given the statistics I cited above, the category of migrants and newcomers must encompass two thirds of the adult population of Moscow, including the Russian president and the mayor of the capital. I find it difficult to answer the question of how their migration has impacted the image of our city.
In general, the notion of the city and migrants as two opposing forces (something like the Eternal City of Rome and the barbarians besieging it) is mistaken, to put it mildly. Because the city equals migration. This just applies to Moscow a bit more than to other Russian metropolises.
Translated by the Russian Reader. Thanks to Comrade ASK for the heads-up.
Pavlensky, however, may have been on to something. The apathy and fatalism he so dramatically depicted is clear in the Russian economic ministry’s long-term economic development forecast. The forecast, which stretches through 2030, is a major strategy document meant to serve as the basis for policy decisions — though in this case the most probable scenario does not require much action at all.
In March, when the previous version of the forecast was adopted, the basic scenario was a moderately optimistic one that had the Russian economy growing at an average of 4 percent a year, noticeably faster than developed countries like the U.S. and members of the European Union. The current version is based on a “conservative” scenario, with average growth limited to 2.5 percent annually and a drop in Russia’s share of global output to 3.4 percent in 2030 from 4 percent in 2012. In other words, despite consistently high energy prices — in 2030, the forecast sees oil at $90 to $110 per barrel in 2010 prices — Russia will keep lagging behind other developing nations, especially China and other Asian countries.
While the previous version of the forecast envisioned a net capital inflow of 1.5 percent gross domestic product, the current one says capital flows will be “balanced” — an improvement on the $80 billion capital flight expected this year but not an overly ambitious goal.
Other parts of the forecast look just as dismal. For example, private investment in research and development is not expected to make any contribution to economic growth. Russia will only be able to increase productivity by importing technology, which by 2030 will allow it to reach 66 percent of the U.S.’s productivity level, up from the current 39 percent. There will be more income inequality; incomes and domestic demand will grow about as slowly as the economy as a whole.
“The expected trends in global raw materials markets will not be able to re-emerge as prime drivers of economic growth,” the forecast says. “At the same time, structural constraints to growth have significantly increased. They include undeveloped infrastructure, obsolescent equipment, unfavorable demographics and a growing deficit of qualified personnel. That means in the next 20 years, the Russian economy will not be able to return to the 2000-2008 growth trajectory and even keeping up a lower growth tempo will require significant reforms.”
Such depressing reading gave rise to frustrated and angry comments. “A new strategy for Russia: we have lost the last shred of conscience and we are too lazy even to pretend that we are doing something,” money manager Yulia Bushueva wrote on Facebook. “Don’t bother us, we are busy stealing.”