The Madoff enigma

            I watched a four-part excellent documentary on Bernie Madoff’s “scam of the century”. (The series is not exactly a documentary because most scenes are re-enacted, but this is done in a very good, and rather discrete, way, combining the actual footage with the enacting, so that we can still call it a documentary). The film has several professors of finance and Wall Stret specialists explaining very clearly the mechanism of the fraud (I liked in particular Diana Henriques who is the author of a book on Madoff).

            But the movie never comes close to explaining “the why” of the scheme. We know “the how”, but not “the why”. The banal explanation that Madoff did it in order to steal the money does not work, and the movie—to give the producers credit—never tries to push it. The explanation does not hold for at least two reasons. The outstanding amount of the scheme at the time when Madoff’s was apprehended was $65 billion. His possessions that are highlighted a few times in the four episodes are minute compared to that amount: a penthouse in New York, a villa in Southern France, and a house in Florida. Readers can probably check on the Web the values of these properties but it is unlikely that the are worth more than $20-$30 million all together. Compare $20-30 million to $65 billion. Second, Madoff had all the time run two businesses: a highly successful legitimate business, and two floors below the shadowy Ponzi shame. His legitimate business generated huge income; surely more than enough to buy the three properties. So he did not need the Ponzi scheme to be rich.

            The payments to the other people who were involved in the “secret” business on  the 17^th floor were small too. For example, the pay for one of the assistants in the scam was a paltry $60,000 per year and Madoff was nickel-and-diming her. Thus nothing in the secret scheme smells like big money—for those who did it: for Madoff and his helpers.

            But not so for these who invested. There, the movie shows, the four major investors, who each had billions (yes, billions) invested with Madoff, and given that they received steady annual returns of 10%, who, in turn, made billons out of Madoff’s scheme. One of the four big investors, the movie rather persuasively claims, realized that the whole thing was a big scam rather early on, but his interest was that the scam continues as long as possible, that is as long as he continues to receive exorbitant returns. At one point when Madoff is in serious trouble, this big investor deposited billions that Madoff needed to pay off people who, as the stock market tanked, began to withdraw money. The big investor did this to help Madoff survive the panic, and of course, to continue the Ponzi scheme. That investor was later about to be indicted as co-conspirator but rather conveniently was found dead in the pool of his Florida house.

            So why did Madoff do it? The reason, just slightly alluded to in the movie, might have to do with Madoff’s need/desire/wish to be loved, even adored and –yes- to achieve that devotion by delivering to his friends incredible presents, in terms of money returns they could never obtain elsewhere. The cause of the fraud thus lies in the psychological domain: it does not need to be studied by financiers or economists. What we need is therapists.

            And the light moves from Madoff to his investors. Why did they clamor so much to invest with him?; why did they queue, beg him to take their money, intercept him on the beach to give him millions? The answer is greed. Not only among the top big investors who, as I wrote, might have known what is afoot all along, but also among hundreds of medium and even smaller investors. Why did Elie Wiesel need a special investment opportunity that would generate 10% per year? Aren’t there hundreds of wealth management and investment funds that would take his money? Hasn’t he heard of Fidelity, Vanguard, Chase? And the same is true for many others.

            Of course, in the court case, and even to some extent in the movie, the story-tellers insist  on “normal” investors, many of them however extremely rich by usual standards even if not billionaires. Even for them, one wonders, why did they do it? Didn’t they have other, more standard, opportunities? I know that many people will argue that this is blaming the victim, and while there is no doubt that legally Madoff was guilty, ethically, one wonders, if the victims’ guilt was not as great. If Madoff was doing all of this in order to be admired and loved, didn’t they exploit his psychological weakness to make money? Wasn’t Madoff used by his “victims”? Was he a victim of his pride and they the victims of their greed?

 

 

Distinguishing incomes from capital and labor

           When I recently received my copy-edited chapter dealing with Adam Smith (from my forthcoming book "Visions of Inequality"), I noticed that in several instances the editor changed my “the rate of profit on capital” to the “rate of profit on investment” or “profits on invested capital”. I changed it back to the original, but I thought that the edits summarize well very different visions of capitalism. Or how capitalism, in the eyes of many, has changed from its 19^th century variety of industrial capitalism to the 21^st century version where we often think of capitalism as financial, and of “capital” as “free” money in search of best placement. (Of course, capitalism is still industrial—somebody has to produce physical cars, smart phones and T-shirts—but that industrial aspect is concealed under the overwhelming financialization.)

            Thus to the editor, who has a background in business, a capitalist is naturally an investor; to Smith, Ricardo and Marx, though, the capitalist was (preponderantly) somebody who used his own money to start the process of production, hire labor, advance wages, buy the machines, decide what to produce. As the business grew, the capitalist would hire others to do some of these tasks, but he would remain dedicated to, and in charge of, his business. This is still the role of capitalists/entrepreneurs in many advanced economies, and even more so in the less financialized economies, but, in common parlance a capitalist has become somebody who has enough money to “place” (‘invest”) it in individual stocks, government paper,  mutual funds or other financial instruments.

            This has led to the introduction of the misleading term “investor” that nowadays masquerades as an occupation. A number of times I have met people describing themselves as “investors” in a way that somebody would describe himself as a shoemaker, medical doctor, cashier, IT developer etc. The appellation which is misleading (except in cases which I describe below) is not only the product of financial capitalism as such but of deliberate attempts to “equalize” the two factors of production, capital and labor, Thus, you may be working ten hours a day in a warehouse, and I may working ten hours looking for the best investment opportunity for my money, and we are equal: we both work ten hours per day, and I am as much of a worker as you. You are just called a warehouse worker, and I am called “investor.”

            Why is it misleading? Not that somebody cannot spend ten hours every day on his computer “investing”, but that the real earning from his work is only the additional income that he may make on top of what he would have earned if he did nothing but simply invested that money once (and let it “work”) or gave it to a mutual fund to invest. Thus if in ten hours of work, he earns $100 from his investment, and if with zero hours of work he would earn $90 with that same money, the labor earning for ten hours of work is $10. He needs to decide whether it makes sense for him to continue spending ten hours of work for $10. But this is entirely different from a worker’s situation: if our warehouse worker does not show up at the Amazon warehouse, his pay is  zero. Consequently,—and this is key—zero hours of work in one case gives you $90 and in the other case $0. “Investor” is not just another laborer like a warehouse worker.

(When I hear somebody describe themselves as “investor” I am reminded of people who define their profession as “philanthropist”, literally, a “lover of mankind”—a weird profession indeed. In both cases, they are rich people, who earn money for no work, but feel bad acknowledging it and thus when asked “what do you do?” they do not say, “well, I do nothing, I just live on money I own/inherited”, but rather “I am a lover of mankind” or “I am an investor”.)

However, the term investor is not misleading as a profession in the case of individuals who are hired workers working within the investment banks and paid to find the best ways to maximize return to the rich people who entrusted them with their money. Their income is indeed a wage income—even when they are paid exorbitant bonuses. In income distribution studies, we have this problem: how do we treat a CEO of an investment company that earns a wage of $1 million, and a bonus (in the form of shares) of $2 million? The answer simply is that we treat all of that income ($3 million) as labor income. If the CEO decides to go off to the Bahamas, and never shows up for work, his earnings would be zero. So for him, like for the Amazon warehouse worker, presence at his job (virtual  or in-person) is indispensable to earn an income. Hence that income is a wage.

Some people are confused by that classification because for them a trader for an investment company or its CEO are not workers since their income depends on the performance of stocks and their salaries are too high. But the amount of earnings does not determine whether it is labor or capital income. Capital income can be one dollar and labor income a million, but they are still labor income, and capital income. Neither does the payment in stocks, nor whether that income is linked with the performance of the stock market matter. Note that payment in stocks are done for ordinary workers too. When such a payment is made, it is always a wage. Only later, if the worker or the CEO decides to keep the stock, the return on that stock becomes capital income.

Now, what is the difference,  somebody may ask, between our individual “investor” whom we saw spending ten hours a day on his computer, and the trader in a wealth management company that also spends ten hours per day investing? The difference is that in the first case, a person’s labor earning (wage) is only the incremental amount of money made compared to what he would have earned with zero work: $10 in our example. In the second case, the trader is a hired worker and his income is entirely result of his labor. Marx would have said that such a trader is no different from our Amazon warehouse worker. Both are working within companies they do not own, both are producing surplus value for the owners (Amazon and the wealth find) and both are hired workers.

When in a recent paper, authors claimed that the decrease in the US labor share was overestimated because up to a third of that decrease was due to the misclassification, that is to the failure to account for the specific labor inputs (including entrepreneurship) of individuals owning S-corporations, their point was accurate. That part which is linked to specific labor input cannot be ascribed to capital, but to labor and entrepreneurship.   

             

Not a new Xi

            In today’s Financial Times Ruchir Sharma has a very nice article about the recent readjustments in China’s policies: discontinuation of zero-covid restrictions, stronger support for globalization, and a nod toward the private sector.  As the title (“The Xi nobody saw coming”) says, Sharma sees them as a sudden and unexpected volte-face of Xi. Instead of going down the Maoist path as the Western mainstream media and majority of the academics have been predicting during the past several years, Xi has decided to suddenly change course.

I liked Sharma’s article, but his main hypothesis is, I think, wrong. There is no sudden turn-around or change. This is still the same Xi, and the policy is one of “readjustment” or “rectification”.

To understand how intelligent politicians (and I think Xi belongs to that category) operate in the countries of political capitalism, one needs  to start with two cardinal principles of governance: tactical flexibility, and the “bird in a cage”. The first term goes back to Lenin. Its meaning is clear. Policies ought to be flexible, in a tactical sense, while never losing sight of an ultimate vision. In Xi’s case, this ultimate vision is “socialism with Chinese characteristics”, “moderately prosperous society” and “common prosperity.” The second term goes back to Chen Yun (the father of China’s First Five-year plan). If the private sector is controlled too tightly,  it will,  like an imprisoned  bird, suffocate. And the people will suffer. But if is left entirely free, it will fly away, bringing (as it did in the second term of Hu Jintao’s rule) all the negative effects of capitalism: increased inequality, lack of social mobility, monopolies, rule of moneyed elite, corruption etc. Thus, a smart politician needs permanently to maintain the middle line. But maintaining the middle line, in a strategic sense, is possible only by favoring alternatively pro-leftist and pro-rightist policies. 

With the situation that Xi inherited in 2012, the only way forward was to move against pervasive corruption by arresting those engaged in grand embezzlement and sale of favors, to try to lessen economic inequality through state transfers and more recently the relaxation of the hukou system, and to reduce locational inequality of opportunities by implementing an ambitious policy of investments in the Western provinces. Further, after covid slowed things down, to “correct” the power of the very loosely regulated financial and non-financial giants (like Alibaba).

These corrective measures were, perhaps because they were also accompanied by Xi’s cult of personality, interpreted as steps toward a new Maoism. But they were never that: they were tactical movements necessitated by the desire to keep the achievement of the strategic objective in mind.

This policy is not markedly different from Deng’s. Although Sharma explicitly mentions Deng as the architect of China’s liberalization and its stable policies, it is forgotten that Deng’s policies were “tactically flexible”, both when he came back to having some measure of power in the last years of Mao (before being “purged” again), and most obviously during and after the Tiananmen events. The Tiananmen crackdown—decided by Deng—led to the strong leftward lurch in economic policy. Thus it was not just a political, but also economic policy, shock. Yet, after three years of “leftist policies”, Deng through his Southern Tour inaugurated the reintroduction of “pro-rightist” policies. To an unsophisticated observer, these appear as sudden policy shifts; they seem as movements that presage further policy changes in the same direction. But they are not: they are tactical “rectifications”. And such policies in one direction will, necessarily, be followed after several years by policies in the opposite direction.

When the Air France plane crashed in the Atlantic in 2009, the inquiry revealed that the main cause of the crash was inability of the crew, when the plane was losing altitude, to perform a complicated maneuver, where in order to regain altitude, the plane needed first to dive down. The same holds for economic policy makers in state capitalist societies. In order to make the economy “harmoniously” grow in the long term, they have to accept short-term slow-downs and policy changes. To simple observers, they look like zig-zags; to the perceptive eye, they look like a straight line.

The book of the dead: Victor Serge's Notebooks 1936-47

        Born to Russian anti-Czarist emigrés in Belgium in 1890 => engaged in revolutionary anarchist activity as a teenager in France => condemned to five years in jail at 17 => expelled to Spain => exchanged for French soldiers held by the Bolsheviks in 1919 => joined the Bolsheviks => participated in the Civil War and worked for the Comintern => joined the Left Opposition after Kronstadt rebellion => arrested, imprisoned in Lublianka in 1928 => released =>  member of the Trotskyist opposition => arrested again in 1933 and exiled to Siberia => released after international protests and sent to France  in 1936 => joined POUM and fought in Spain => fled to France after Franco’s victory => left France on a refugee boat to Mexico in 1941 => engaged in Trotskyist activities in Mexico=> died in 1947.

         How does that look for a biography? Incredible, one could say. But not an unusual one for the people among whom Serge moved and lived. His Notebooks, not written for publication and discovered only in the 21st century, are a compelling mixture of historical reminiscences, reflections on Marxism and psychoanalysis, attacks on Stalinist totalitarianism (the term is often used), defense of democratic socialism, descriptions of Mexico, literary criticism, and art history. Most entries are mid-size, between one to three pages. They can be read separately although chronology is important, as we see how Serge’s own thinking evolves with the war that he is observing from faraway, in Mexico.

 

        The entire Who Is Who of the artistic and revolutionary world of continental Europe is included in these notes. There is, it seems, no significant revolutionary nor writer or painter whom Serge has not met during the forty years of febrile activity. Of the leaders of the Russian revolution, Serge was the closest to Trotsky. Not all the time though. He joined the Left Opposition after Kronstadt—but the attack on rebellious sailors was led by no other than Trotsky. Nor did Serge later agree with the formation of the Fourth International. Still in the Soviet Union he was jailed as Trotskyist and in Spain he worked with POUM, the Trotskyist militia. He arrived in Mexico after Trotsky’s assassination. Serge’s descriptions of the “tomb” of Coyoácan, the compound where Trotsky lived and was murdered, the utter desolation of the house which still had armed guards and gun turrets, with Natalia, Trotsky’s widow, emaciated, forlorn, children killed, utterly alone, are among the most poignant parts of the Notebooks.

 

        The swirling activity around Trotsky, even after his death, is described. Serge (we do not know how) managed to meet in jail –where he is given royal treatment—Trotsky’s assassin. Here is a part of Ramón Mercader’s (whose identity was then not known) description: “Tall, well-built, vigorous, supple, even athletic. Thick-necked…a strong, well-formed head. A man with animal vigor. A fleeing gaze, sometimes hard and revealing. His features are sharp, fleshy, vigorous.  Very well dressed; coffee-colored leather jacket; expensive. Under it a silk sport short, fashionable, khaki. Khaki gabardine slacks with a sharp crease; yellow shoes; good soles.”

 

        The freres enemies, Alfaro Siqueiros and Diego Rivera, are present throughout the book: the first, the co-organizer of the unsuccessful assassination of Trotsky who then fled to Chile thanks to Pablo Neruda; the second, Trotsky’s inconsistent defender; both “reunited” in the Mexican Communist Party that  Diego Rivera joined after the war on the wave of pro-Stalinist enthusiasm that swept the word after the Soviet victory over the Nazi Germany.  

 

        The Comintern’s Who is Who (Willi Mūnzenberg, Franz Mehring, Otto Rūhle, Anton Pannekoek) is accompanied by the Russian and continental European intellectual elite: Ossip Mandelstam, Anna Akhmatova, Maxim Gorky, Boris Pasternak, Andrei Tolstoy, André Breton, André Gide, Antoine de Saint Exupéry, Romain Rolland, Stefan Zweig, Pablo Picasso. Each of them is, often in passing, sketched in a few paragraphs: Andrei Tolstoy, the kindly count who gives fabulous parties while famine rages and is chauffeured in Stalin’s private car; Anna Akhmatova “her enormous brown eyes in the face of an emaciated child”;  André Gide in search of popularity, complaining of Malraux trying to upstage him, yet with sufficient intellectual honesty to write “Le retour de l’URSS”; Romain Rolland, to whom Serge owed his release from Siberian exile but who gradually moves to a pro-Stalinist position and refuses to condemn the Moscow Trials; the sky- high vanity of André Breton, “a personality that is nothing but a pose”; the petty-bourgeois Stefan Zweig; Picasso painting for “art galleries catering to bourgeois collectors fed on intellectual refuse.”

 

        It is a book of the dead. In an orgy of ideologically-inspired killings that engulfed Europe, those who were not killed by Stalin, were killed by Hitler, and those who have survived both, were either killed in wars or committed suicide. Almost no one died in his or her bed.

 

        How about politics? Serge does not present a coherent view of it, nor can one expect this in a diary. He sees the world as composed of four political forces: conservative capitalist, Stalinist, democratic socialist and fascist. The defeat in the War seems to have eliminated fascism. The fate of Europe and the world depends on the interaction of the remaining three. Capitalism is ideologically bankrupt and the development of technology requires planning. So, it is doomed. Stalinism is ascendent. It destroys human freedom and human soul and has besmirched all the communist ideals. It needs to be opposed at all costs; intransigently. Democratic socialism is, Serge believes, the only humane alternative, but can it win as Stalin is poised to conquer half of Europe?  (Serge was right on that even if he was often wrong in a number of predictions made while the war was going on). Like with every contemporary observer and participant in thus struggle, we are left with possibilities. No one knows which one will turn out to be right.

 

        The essential dilemmas and the main forces that shaped the post-War are nevertheless described with remarkable prescience. If we consider the period 1945-1990, it can indeed be described as the struggle between these three ideologies which have each evolved over time: capitalism towards a more liberal state, democratic socialism toward a pro-capitalist position than Serge could not have imagined, and Stalinism toward a much softer variant of Brezhnev-like sovietism.

 

        There are forces that Serge underestimated though. Mostly because of his historical background. As the very partial list of people mentioned here should make clear, the ideological world within which Serge moved was that of continental Europe, of five great nations: Russia, Germany, France, Spain and Italy. Anglo-Saxon world is hardly present at all—especially absent is Britain. The Third World is non-existent. In a few dispersed remarks, Serge strangely failed to see the enormous revolutionary potential of Africa, India, China, Indonesia. His descriptions of Mexico, as he travels through the country, are worth reading for their glimpses of rural and urban life in the 1940s, pyramids and lost civilizations, but they are observations of a tourist. While his engagement with Europe is close and passionate, his engagement with Mexico is refracted only through the role that Mexico plays in European conflicts and particularly in the Spanish Civil War.  There is a total dearth of political or social observations on Mexico itself.

 

        I would like to finish with Serge’s observations on two fascists whom he personally knew at the time when they were communists: Jacques Doriot (“Zinoviev liked him”) and Nicola Bombacci. They were both killed in retribution at the end of the War. Bombacci was one of the fifteen executed together with Mussolini. Their transition from communism to fascism is explained by the need for restless activity, great organizational skills, and ambition.  But there is one interesting, small ideological detail: both, Serge thinks, might have seen fascism within Marxist scheme as a ruse of history where decrepit capitalism adopts fascism as a way to save itself; yet fascism, by imposing a strong state rule over private sector, gradually transforms it, and creates an economy that can, in a future evolution, be readily taken over by workers. In such a bizarre way, fascism was, he believes, seen by the former communists, as a way to end capitalism.

 

 

PS. The editing of the book is close to catastrophic (the translation however is good and fluid). Dozens of people mentioned by Serge are unidentified; those who are, are so in minimalistic endnotes; many events alluded to in the Notebooks are left unexplained; the introduction is brief and not very helpful. Quite incredibly, the book lacks the name index. The publisher was clearly saving on money.

 

Four historico-ideological theories about the origin of the current war in Ukraine (Part II)

             The third view about the origins of the conflict looks at the roots of the current nationalism. It starts from the historical events of 1989-1992 which led to the fall of communism. The fall of communism was not precipitated by democratic revolutions as is often claimed in the popular narrative in the West. These were in reality revolutions of national liberation from the indirect rule by the Soviet Union. They took the seemingly democratic form because of a broad agreement on national self-determination among many sections of the population in 1989. Thus nationalism and democracy were fused and it was difficult to distinguish them. This was especially so in countries that were ethnically homogeneous like Poland or Hungary: nationalism and democracy were the same, and it is understandable that both domestic revolutionaries and the Western observers preferred to emphasize the latter and to downplay the former (nationalism). We can distinguish the two only when we look at what happened in multi-ethnic federations. No theory  which sees democracy as being the guiding light of the 1989 revolutions can explain the fact that all communist ethnic federations broke up. For if democracy was the main concern of the revolutionaries there was no reason for such federations to break up once they became democratic. Moreover the break-up does not make sense at all within the broader liberal narrative which takes multiculturalism in addition to democracy (or even as a part of democracy) as a desideratum. If democracy and multiculturalism were the guiding forces of the 1989 revolutions then the communist federations of the Soviet Union, Czechoslovakia and Yugoslavia should have survived. The fact that they did not clearly indicates that the leading forces behind  the revolution were those of nationalism and self determination.

Further, as I mentioned, the theory of the democratic nature of the revolutions of 1989 cannot explain why all conflicts and wars have taken place in the dissolved communist federations, and why 11 out of 12, including the current war in Ukraine, are the ethnic conflicts about the borders. Such conflicts have nothing to do with the type of internal arrangement or government (democracy vs autocracy), but they have a lot to do with conquest of territory, nationalism, and desire of minorities which happen to be in the “wrong” states to have their own states or to join a neighboring state. These elementary facts are almost never mentioned in the mainstream story-telling. There is a good reason for it: they run against the simplistic “democratic narrative.”

The fourth theory takes its starting point from the third but goes a step further.  It does ask the crucial question,  ignored by all other theories: whence did nationalism that led to the break-up of ethnic federations come from? The answer has to be sought in the constitutional set-up of communist federations and in economics. As is well-known, communists tried not only to solve the economic problems linked with capitalism, but also the ethnic problem which has bedeviled Eastern Europe for several centuries. They followed broadly speaking the Austro-Marxist approach that evolved from arguing for personal autonomy to favoring national self-determination. This is why the Soviet Union was created as a federation of ethnically based states. The Soviet Union should have transcended the ethnic issue by giving each ethnicity its own republic, a homeland. The Soviet Union, in this view, provided the blueprint for a future global federal state that would also be composed of nationally-based states that fulfilled two functions: provision of national security to its members and fast economic development thanks to the abolishment of capitalism. The same approach was adopted by two other ethnic federations: Czechoslovakia and Yugoslavia.

That approach made lots of sense on paper and would have probably solved the ethnic problem had communism delivered on its promise of fast economic growth.

The reason why communist federations failed to solve the ethnic problem became much more obvious in the 1970s. The principal reason lied in the economic failure to catch up with the developed West. As that failure became more apparent, under the condition of a single party system the only legitimacy that different Communist party elites could seek was to represent themselves as the standard bearers of national interests of their own republics. In the absence of market relations and with arbitrary pricing, every republic could claim to have been exploited by the others. The republican elites latched on that to become more popular at home (in their republics), and, in the absence of elections, to garner some legitimacy. They were helped by the fact that the republican political structures were considered legitimate structures within the one party state. The republican elites did not thus have to go outside the existing political system (which would have rendered them liable for repression) to obtain the mantle of legitimacy and popular support.  Ironically had these republican structures not existed, that is, were the multinational states simple unitary states, then the local communist elites would not have had the tools nor the political basis from which to challenge the other elites and project themselves as defenders of national interests. By doing so, however, they also created the basis for the spread and acceptance of nationalist ideologies that eventually broke up the countries.

Thus to get a better understanding of the current war it is important to go back into history. What we observe today is caused by two factors: first, the unsuccessful economic development of the formerly communist countries, and second, the structural political setup that enabled republican elites to cover-up the economic failure by defending the nationalist interests of their constituents. The latter was both an easy solution, and was permitted by the way the regime was organized. If one argued for the return to capitalism, he was likely to end up dismissed from his job, or in jail. But if one argued that his republic was unequally treated, he was likely to climb up the ladders of power.

Legitimation of the national interest as such provied then for the legitimation of nationalist ideologies and ultimately for the desire for national independence, and the wave of nationalism that motivated and followed the revolutions in 1989. The moving force of these revolutions was the same in both ethnically homogeneous and ethically heterogeneous countries: it was nationalism. But nationalism in the first group of countries coalesced with democracy, and nationalism in the latter group of countries, because of unresolved territorial issues, led to wars. Russia was slow to move to a strong nationalist posture, and its reaction can be seen as delayed. But because of its size, large population and enormous military, it represents a much greater threat to peace once nationalism is dominant. For obviously a very small state with the same nationalist ideology is much less of a threat to the world peace than a state with 6,000 nuclear missiles.

Without seeing that the roots of the current conflict are historical and are lodged in the initial setup of communist federations and in the economic failure of the communist model of development, we are unlikely to understand the current conflict, all the unresolved one, and possibly even those that may come.

 

Four historico-ideological theories about the origin of the current war in Ukraine (part I)

             The first and the most popular theory sees the war as a war between democracy and autocracy. It is based on a premise that Russia is run by a dictator and that Ukraine is run by a president who is popularly elected. That view however neglects a number of facts including that the governmental change in Ukraine in 2004 was the result of a social revolt against the unfair elections while the 2014 change was a coup against a legitimately elected government. Moreover Ukraine was, before the war and even before 2014, the most unsuccessful state in the former Soviet Union. Not only was the level of corruption extremely high, the parliament largely dysfunctional, various oligarchs, including the one who helped bring Zelensky to power, rampant,  but Ukraine’s economic performance was probably the worst of all the republics of the former Soviet Union. While in 1990 the GDP per capita of Russia and Ukraine were quite similar, on the eve of Russia's invasion, Russia’s GDP per capita was more than twice as high as Ukraine’s. The view that somehow Ukraine represents, or represented, in Russians’ own view a desired alternative to Russia’s autocracy is belied by the facts:  the movement of population was in the “wrong” direction: Ukrainians moved to Russia and worked in Russia because the wages in Russia were about three times as high as in Ukraine, rather than Russians moving to Ukraine.

This naïve theory fails to address the fact that all conflicts in post-communist space took place in the former federal states that were dissolved along the ethically-based republican borders. And that 11 out of 12 such conflicts were the old-fashioned conflicts about the control of the territory. They had nothing to do with democracy or autocracy. The naive theory also disregards the fact that the autocratic states are not neatly aligned: for every Belarus that is aligned with Russia there is an equally autocratic Azerbaijan that is aligned with Ukraine.

The naive theory is popular in the first place because of its simplicity. It does not require any knowledge of history, neither of Russia nor Ukraine, it does not require any knowledge about communism, it does not even require any view (or even knowledge) of the reasons for the break-up of communist  federations. It is a theory based on ignorance, and supported by ignorance. Secondly, such a naïve theory is in the interests  of the more bellicose liberal and right-wing circles in the West who see the current conflict as a precursor to a much larger conflict pitting the United States against China. That potential conflict becomes much more acceptable if it is seen as a conflict of values, and not as a conflict about the geopolitical primacy.

          The second explanation of the current conflict takes the position that the war is the result of Russian imperialism. According to that theory, the Putin regime is the inheritor of the Tsarist  regime that sought to subdue and control the areas around Russia, from Romania (Moldova) to Poland, the Baltics and Finland. That theory is supported to a large extent by Putin's own remarks made just before the war that tried to provide a justification for it. Russia underwent, in Putin’s view, “the century of betrayals” where its historical territories  (including the Novorossiya, conquered by Catherine the Great that Putin openly revendicates today) were frittered away by communists. Putin thus attacks first Lenin for having given to Ukraine the Donbas, Stalin for giving the eastern part of Poland to Ukraine, and Khrushchev for transferring Crimea from Russia to Ukraine. The implication, often made by nationalist Greater Russian authors, is that the communist regime was an anti Russian “conspiracy” that dispersed left and right the traditional historical territories of Russia and gave them to other nationalities in order to assuage their feeling of grievance against Great Russian chauvinism. The theory thus interestingly unites those who argue that Russian imperialism is somehow innate to the Russian psyche, and Putin’s propagandists. The theory has some relationship to reality but the problem is that it does not address the origin of the current wave of Russian nationalism and imperialism. It might explain Russian nationalism of the nineteenth century but not Russian nationalism today, whose roots are much more plausibly explained by what happened since 1917.

A boy’s obsession with football in the Socialist Federative Republic of Yugoslavia

When I was a young boy, I was obsessed with football (soccer). What are the sociological and political origins of this obsession and what political role football played in Titoist Yugoslavia, I’ll leave for another post. This is just a story of boys—or rather of a boy—and of the love of the game.

I would like to divide the post in four parts: playing, reading, watching, and impersonating.

I was a mediocre player. My biggest success in elementary school was playing a couple of games on the B team of my school, in downtown Belgrade. It was a rather unexpected success for me. Objectively it was not a big deal, but I was content and proud of this achievement.

I played football almost every day, as soon as the weather, in early Spring got nice. These were not organized games. We played in a street, on concrete, among the parked cars. We would either make two small goals (using bricks as the goal posts) that required no goalie, or would play a somewhat strange kind of a game called “Viktoria” where one kid would be a goalie and two teams would play against each other, both trying to score on that one (bigger) goal. The way we played football reflected both the scarcity of space (we played in the middle of the street) and difficulty of finding goalies. Nobody wanted to be a goalie.

We would play for hours. I vividly remember being woken up by the sound of the bouncing ball in the street just below my window (we lived on the second floor). It was a delightful way to be woken up because it presaged, so loudly and so clearly, a whole day of shooting the ball, dribbling, drinking water afterwards (water never tasted so well!), arguing with other kids.  

As cars became more common and the traffic denser, we moved to play in two internal courtyards next to my building; rather small spaces, again on concrete. The game required lots of dribbling; there were no long passes, and there were always arguments about whether a goal was scored or not: it is difficult to tell if the ball passed over the brick, and thus presumably hit the post, or got in and the goal was scored.

Reading. I read all the football news I could find. In those days in Belgrade there were there sports newspapers. The general one which was daily (plus a Croatian sports daily which I also read), and two other, dedicated to football alone. They were published on Tuesdays and Fridays. On Tuesday morning, if that week my school was in the afternoon (due to the lack of school space, classes were held in two shifts: one shift in the morning, another in the afternoon, in alternate weeks), I would rush out even before breakfast to buy both newspapers. I particularly liked historical pieces about football before World War II and reports about Latin American players and clubs. I always thought, perhaps influenced by the remoteness and brilliance of Latin America, that Brazil, Argentina, and Uruguay were very special. No European team, club or national, ever seemed to me to be as exciting.

I read of course a lot about the Yugoslav first division but also about the Italian Serie A. The reason why Serie A was so much written about was because  the National Lottery was offering betting on domestic and Italian football scores. It was a copy of the Italian Toto Calcio. I played it from time to time, and one of close friends once did extremely well and earned (for us) a huge amount of money which, of course, he quickly wasted.

I also liked to read books about football; historical books but also books about kids of my age playing football. I remember a book I borrowed in our school library written by a Polish author, probably in the late 1950s. The title (in the Serbian translation) was “First half 0-1”  I still remember the kids from the book, practicing headers and free kicks, losing 0-1 in the first half, and then winning. It was a book about football, music, vespas and girls.

Watching. Belgrade is well known for the rivalry of the two teams, Red Star and Partizan. They were both created by communists after the revolution. Their political histories are, as I said, a matter for another article. My father, perhaps because of his love of the underdog and because he did not want to take political sides, decided that he supported a third, much weaker team, OFK Beograd. So, he would often take me to their games. They played on a small stadium, about half-an-hour walk from our apartment. We would leave after a Sunday lunch, walk to the stadium, and I would happily eat peanuts and watch the game.

Going to the Red Star or Partizan game in those days was hard. The stadiums were far from my house. They were big and forbidding.  We were too young to know where to buy the tickets, which bus to take to get to the stadium. So, these two big clubs, and their big stadiums, were almost mythical to me, even if we were all in the same city.

One of the best Red Star players, Dragoslav Šekularac, a star of the 1962 World Cup in Chile, transferred to OFK Beograd, after some of his turbulent fights with the Red Star management. My father took me to his first game for OFK Beograd and I remember an impossible crowd shouting, fighting, shoving, kicking to buy the tickets and get in. I do not think that I saw any of the game. Šekularac was immensely popular, and after the 1962 World Cup he had offers from big European clubs, in particular Juventus, to play for them. But in those days, Yugoslav footballers were not allowed to play abroad. When asked to make an exception for Šekularac, the then head of domestic security ruled it out by saying that Šekularac is a national treasure and that his duty is to entertain the working class.

Impersonating. In my love for the game, I organized my own international tournaments, including World Cups. I had a very elaborate system where, on a carpet (which with its rimmed ends does look like a soccer field with the athletic track around) playing cards would be players, and a small light coin would be a ball. I would direct them all, comment on the game imitating the radio reporters whom I admired, and then write in detail about these fantasy games. When I think about it now, I see it as a precursor to the electronic games that kids play today. The difference was that I had to create everything, from physically putting together the goal posts by using Lego blocks, to the teams, the spectators, and even do the reporting. I learned how to type then—in order to describe the fantasy football that I played in the evenings when my parents would go out and I could “commandeer” the entire living room.

My boyhood was soaked in football.