December 27th, 2012

What Putin really meant in his state-of-the nation address

“Economic freedom, private property, competition and a modern market economy, rather than state capitalism, must be the core of a new growth model”-, proclaimed Vladimir Putin in the annual Presidential Address to the Federal Assembly of the Russian Federation. However, as Mr Putin himself once mentioned, words are given to a spy to hide his real thoughts. No surprise that the most important messages of the address are hidden between the lines.

Kremlin's imperial beauty emphasizes the sacrality of the Putin's power

Despite the liberal economic rhetoric, the structure of the address reveals Putin’s paternalistic approach to solving the problems of the Russian economy. According to the President, the government should create 25 million of jobs, provide people with housing, raise salaries in healthcare and education and build infrastructure. Vladimir Putin fails to understand that it’s the private sector, not the government that hires people and builds houses. He ignores any economic policies other than direct intervention of the state.

Mr Putin defines the role of the businesses in his world: “Businesses should work to achieve their own success as well as that of the nation; and should breed talented, sensible organisers, patrons and patriots.” In fact, the President believes that business people owe a lot to the country. He downgrades entrepreneurs to “organizers”, who fulfill somebody else’s will, not generate their own initiatives. Vladimir Putin can tolerate business only when it is loyal (“patriotic”) and generous. If businessmen don’t spread their wealth around and pledge to love their motherland they can’t “gain widespread public respect”.

Whatever Vladimir Putin says, the most liberal economy he can imagine is the state capitalism. In his world, the government directs the economy, delegating to the private sector some tasks and requiring in return loyalty and generosity. Perhaps, Mr President is also willing to recommend businessmen best places to donate their money.

The Economist

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