Hopelessness?

 That today’s world situation is the worst since the end of the Second World War is not an excessive, nor original, statement. As we teeter on the brink of a nuclear war, it does not require too  many words to convince people that this is so.

The question is: how did we get here? And is there a way out?

To understand how we got here, we need to go to the end of the Cold War. That war, like the World War I, ended with the two sides understanding the end differently: the West understood the end of the Cold War as its comprehensive victory over Russia; Russia understood it as the end of the ideological competition between capitalism and communism: Russia jettisoned communism, and hence it was to be just another power alongside other capitalist powers.

The origin of today’s conflict lies in that misunderstanding. Many books have already been written about it, and more will be. But this is not all. The Euro-American world took a bad turn in the 1990s because both the (former) West and the (former) East took a bad turn. The West rejected social-democracy with its conciliatory attitude domestically and willingness to envisage a world without adversarial military blocs internationally for neoliberalism at home and militant expansion abroad. The (former) East embraced privatization and deregulation in economics, and an exclusivist nationalism in the national ideologies underlying the newly-independent states.

These extreme ideologies, East and West, were the very opposite of what people of goodwill hoped for. The world they wished for, after Western colonial and quasi-colonial wars and Soviet invasions ended, was the world of convergence of the two systems, with mild social-democracy in both, dissolution of war-mongering alliances, and end of militarism. They got nothing of the sort: one system swallowed the other; social democracy died or was corrupted or co-opted by the rich, and militarism through adventuresome foreign invasions and NATO expansion became the new norm. In the former Third World, the victory of the West led to the reinterpretation of the struggle against colonialism. It was now shorn of all of its domestically progressive elements. This facilitated massive corruption in the newly liberated countries.

The “trivialists”, the intellectuals who misunderstood, either because of their lack of perspicacity or pure interest, the nature of the changes in Eastern Europe, proclaimed the revolutions of 1989 to have been the revolutions of liberalism, multiculturalism, and democracy. They failed to notice that if they were the revolutions of multiculturalism and tolerance, there was hardly any need to break multinational states. Nay, that such a break-up was antithetical to the idea of multiculturalism. Nationalism was thus conflated with democracy.

The trivialists succeeded in turning the progressiveness of the post-War on its head. Instead of development and progress meaning a combination of the best elements of market (capitalist) economy and socialism, elimination of power-politics in world affairs, and the adherence to the rules of the United Nations, progressiveness in their new reading of history meant unbridled market economics at home, “liberal international order” of unequal power abroad, and pensée unique in ideology.

Instead of a social-democratic capitalism with peace, to be progressive began to mean neo-liberalism with the permission to wage war on anyone who disagreed with it. Instead of mild and innocuous mixture of socialism and capitalism at home and equal power of all states internationally, we got served the power of the rich at home, and the power of big countries internationally. It was a weird return to the quasi-colonial hegemony, taking place—incongruously, at first—at the time of “liberal victory”.

The rest, from today’s perspective, seems almost preordained. The virulent nationalism of Eastern Europe that fueled the revolutions of 1989 finally engulfed the most powerful country in that part of the world: Russia. Xenophobic nationalism is the same everywhere: in Estonia, Serbia, Ukraine, Russia or Azerbaijan. But the greater the country, the more destabilizing and imperialistic it is. What began as the nationalist revolutions in Eastern Europe ends now as the revolution of unchained nationalism in Russia: the same ideological movement but with the regain of “lost” territories as its objective rather than their “liberation”.

The rule of the rich locally and of the powerful internationally seems so ideologically entrenched today that no hope of betterment, no hope of national nor economic equality seems on the horizon. A lot of responsibility for this disastrous state of affairs lies on the “trivialists”, the intellectual elite who defined, promoted, and defended this pernicious ideology of inequality. The hopelessness envelops not only the present where we stand on the precipice of the extinction of a part of humankind, but the future too. Progressive thought has been vitiated, remodeled, and extirpated. The medieval darkness, under the name of “liberty”, is descending.

The rule of nihilists

 A friend sent me recently an abbreviated version of Xi Jinping’s January 2013 speech to the members of the Central Committee of CPC (the English translation is here). The speech is often mentioned, generally in the context of greater ideological control and “authoritarian tendencies” of Xi Jinping, but I have not read it until I got it from him.

It is rather fortuitous that I read it now, almost ten years after it was pronounced, because it sheds light on the very current problem of the Russian war on Ukraine. This statement might come as a surprise to many (“What does Xi’s speech of 2013 have to do with Mariupol 2022”) but I will explain it in the rest of the text.

Xi’s argumentation is very tight and logical. One may agree or disagree with the objectives posited by Xi and even some interpretations, but there is no doubt that the main points regarding the role of the CPC in making China first independent, and then strong are true, as well as his point that "ideological nihilism" leads to the end of the system, and, implicitly, to the disastrous outcomes that we see today in Russia.

Two points are worth highlighting. Xi’s interpretation of the end of the Soviet Union, and his accent on ideology.

Xi sees the break-up of the Soviet Union and the end of the CPSU as the result of “ideological nihilism”: the ruling strata have ceased to believe in the advantages and the value of the system, but lacked any other ideological coordinates within which to situate their thinking. (Incidentally, I have noticed that when I recently read Andrei Kozyrev’s, Yeltsin’s minister of foreign affairs, book of memoirs, reviewed here; the book is striking by its total absence of any ideology.)

Here is Xi: “Why did the Soviet Union disintegrate? Why did the Communist Party of the Soviet Union fall to pieces? An important reason is that in the ideological domain, competition is fierce! To completely repudiate the historical experience of the Soviet Union, to repudiate the history of the CPSU, to repudiate Lenin, to repudiate Stalin was to wreck chaos in Soviet ideology and engage in historical nihilism. It caused Party organizations at all levels to have barely any function whatsoever. It robbed the Party of its leadership of the military. In the end the CPSU — as great a Party as it was — scattered like a flock of frightened beasts! The Soviet Union — as great a socialist state as it was — shattered into pieces.”

The lack of belief in the system stemmed from the failure of the Soviet Union in the economic arena, and inability to propose a system of participation in the decision-making that appealed to, or was acceptable to, most of its population. The roots of the debacle were both economic and ideological.  Once the party loses the control of the ideology, Xi argues, once it fails to provide a satisfactory explanation for its own rule, objectives and purposes, it dissolves into a party of loosely connected individuals linked only by personal goals of enrichment and power.

The party is then taken over by “ideological nihilism”. While in some cases, this ideological void caused by the disappearance of communist ideology was filled by nationalism, it was almost nowhere filled by liberalism (as I argued many years ago in this piece, namely that the revolutions of 1989 were not revolutions of democracy but of national independence and self-determination). This however was not –as we can see from Xi’s speech—the worst outcome. The worst outcome, and perhaps what Xi fears for China, is that the country be taken over by people with no ideology whatsoever but with an entirely cynical and self-serving desire to rule. This is what happened in Russia where the Communist Party of the Soviet Union was succeeded, and the country hijacked, by the ideological nihilists of the intelligence services.

The ideological nihilists of the KGB were often seen, in the West, as much more preferable rulers than communists. Thus for John Lewis Gaddis,  perhaps the most well-known US historian of the Cold War, the only praiseworthy Soviet leader before Gorbachev (in The Cold War: A New History) was Beria precisely because Beria was completely non-ideological and willing to serve any system so long as he remained in charge. In the latter days of the Soviet Union, KGB people were seen as the only ones who could impose some order and get the economy growing. Hence the election of Andropov to lead the CPSU—a total reversal of the traditional subservience of the intelligence apparatus to the Party. (It is not for nothing that Stalin never allowed Cheka in its various appellation to decide on policies, but only to execute them, at times literally by shooting people.) The dependence on the intelligence service was repeated in the last years of Yeltsin’s rule when four out of his last five prime ministers (a position from which the person would quasi-automatically succeed Yeltsin) were linked with KGB (Primakov, Stepashin, Kirienko and finally Putin). This intellectual void enabled the rule of ideological nihilists—people who by the very nature of their jobs were pragmatists to the bone, without any concern with, or interest in, ideology.

The focus on the external features of one’s rule, and disregard of ideology that motives those in power, leads many liberal commentators to speak of “autocracies” of Xi and Putin as if they belonged to the same specie. But, as Xi’s speech shows, they do not. What differentiates them is that in one case there is an attempt (I cannot judge how successful) to preserve the hegemonic rule of the communist ideology, and therefore to control the organs of brute power (the Army and the police), and in the other case, there was a complete replacement of the ideological and the political by pragmatism of power.

Unlike the original and very ebullient commentators of the end of communism who liked to think that its end will bring forth the flowering of democracy, Xi rightly puts the emphasis on something much more grim and perhaps realistic: “ideological nihilism” that opens the way to adventuresome policies devoid of any ideological or even logical justifications. They might have been, as in the case of Putin’s Russia’s attack on Ukraine, adopted either because of misjudgment or because of a desire to provide same superficial nationalist veneer to an otherwise ideologically empty regime. Whatever the case, they were unmoored from any ideology. Xi is right to argue that once belief in a better society of the future and focus on economic success that is supposed to bring that future society along are abandoned, the power is surrendered to “opportunistic cliques” who may plunge their countries into wars and destruction either because they believe in nothing or because they are in search of some justification for their nihilistic rule.

China’s household incomes and inequality in the Year I of covid

 There has been an enormous talk of the new inequalities wrought by covid-19 between and within countries: in mortality and morbidity, vaccination rates, style of life (those who had to show up physically at work vs those who could stay at home), unemployment rates, gender, age etc. But it is only now that actual information about income inequality in year 2020, the year I of covid, is becoming available. A couple of months ago, US micro data from the Current Population Survey, harmonized by Luxembourg Income Study, showed a significant decrease in disposable income inequality in 2020. US inequality went down by 1.7 Gini points which is the largest annual drop in at least thirty years. The decrease in inequality was driven by very generous government transfers (2020 CARES Act alone disbursed funds equal to 11% of GDP) whose objective was to help individuals and businesses that were most affected by the epidemic. Since the support was (very broadly) income tested, it helped much more those in the lower income brackets.

            Chinese National Bureau of Statistics has also published (in the Statistical Yearbook for 2021 available here), the data on incomes and distribution in rural, urban areas and for China as a whole. The Chinese data that are provided are rather minimalist (as usual, the Yearbook publishes per capita incomes of only five quintiles for rural and urban areas, and all-China), but they do allow us to see the effects of the crisis, especially when we compare the developments in 2020 with the previous years. It is important to recall that for China, year 2020 was much less traumatic than for almost the entire rest of the world. China’s real GDP per capita rose by almost 2% while more than 100 countries in the world experienced negative growth, and the global real GDP shrank by more than 5%.  

            It is therefore not surprising that the average per capita incomes went up in both rural and urban areas, by respectively 3.9 and 1.4 percent (and for all-China by 2.5%). The faster growth in rural areas also slightly reduced the gap in average incomes between urban and rural areas from 2.7 to 2.6 (i.e., the average per capita income in urban areas is 2.6 times greater than the average per capita income in rural areas). As graph below shows, growth was stronger in rural areas across income distribution: income of every rural quintile increased by more than that of a corresponding urban quintile. Most interesting is what happened to the poorest (first) quintile in the two areas: poorest rural incomes went up by more than 7%, while poorest urban incomes registered a slight negative  growth.

If one looks more carefully at what happened to urban incomes (in red), it becomes apparent that growth in 2020 was pro-rich, in the sense that percentage growth was higher for richer income groups (2.3% for the top group vs. -2.1% for the lowest-income group). In the rural areas, the situation was more mixed, with the poorest, as we have seen, growing the most, while for the others quintiles growth rates were broadly the same. High growth rates among the rural poor may be related to the government explicit policy to eliminate rural poverty that was particularly actively pursued in 2020.

            The overall impact of such changes was that the rural Gini remained unchanged, while the urban Gini increased. It is important to highlight that these Ginis are calculated from only five data points (five quintiles) and thus probably understate the “true” Gini by several Gini points.  China is unusual because its rural inequality is consistently higher than urban. As we note here (graph below), rural Gini is about 35, urban around 32. To obtain the all-China Gini, one needs also to include  the differences in mean incomes between rural and urban areas. Since 2013 (when China unified its rural and urban household surveys), overall inequality was, according to the official sources, remarkably stable at just under 40 Gini points.

For the years for which we have more detailed micro data, and/or rural and urban ventiles, we can compare such results with the ones that we obtain from the much more compressed data published in China’s Statistical Yearbook: in 2013, China’s overall Gini was 43 (based on micro data) and 40 (based on government published quintiles); in 2018, it was 47 vs. 40. The published results therefore underestimate inequality by at least several Gini points.

Government statistics also provide information on aggregate consumption. Here, the interesting result is that per capita consumption decreased in urban areas by 4.5% and increased, by the Chinese standards, by the modest 2.7% in rural areas. Overall real per capita consumption, for the first time since 1978 when such results have been published recorded a decline of 2.2% (see Table 3.1 in the 2021 Statistical Yearbook). It will be noticed that the decrease in consumption occurred while real incomes went up by 2.5%. Thus obviously—if all these numbers are mutually consistent—the share of savings in household incomes must have increased substantially.

            Overall, based on the published numbers, 2020 certainly was not a “normal” year in China either. Household overall income growth slowed down, the poor in urban areas saw negative growth (very unusual), while the real incomes of the poor in rural areas increased by more than 7%. Urban inequality slightly increased. The typical features of China’s distribution, namely that rural incomes are more unequally distributed than urban, and that they are much lower on average, remained unchanged.

 

 

A short essay on the differences between Marx and Keynes

 This short piece is stimulated by my recent reading of the French translation of Joan Robinson’s 1942 Essay on Marxian Economics published together with several additional texts on Marx, Marshall and Keynes written by Robinson over the years. (The translation and preface by Ulysse Lojkine.) It was also stimulated by a very nice review of Joan Robinson’s life and The Essay just published by Carolina Alves in “The Journal of Economic Perspectives”.

Before I begin, let me set the knowledge limits right. My knowledge of Marx had always been good, and since only a couple of months ago I finished writing a long chapter on Marx’s views on income distribution (for my forthcoming book) that deals with the usual topics of the real wage, rising organic composition of capital, tendency of the profit rate to fall etc., all of that is fresh in my mind.

Keynes is much less so—although I have to say that I had many years ago an extraordinary person as my tutor in Keynes’s General Theory. I had a year of tutoring (one-on-one) from Abba Lerner who, of course, was one of the earliest disciples of Keynes. Lerner’s approach was to make me read a chapter from the GT, then to summarize it and discuss it and send it to Abba, who next week would bring my text all corrected in red. I admired Keynes for his brilliance. I still remember vividly (and I am writing this very far from any book by Keynes) his chapter on the “own rate of interest” and the “carriage cost of money” that Lerner made me read and reread.  But I have not at all followed Keynesian macroeconomic developments, and I am generally quite uninterested in macroeconomics. So here I will speak of what I think of Keynes, not of Keynesians.

The objective of Joan Robinson’s Essay was to enact a “rapprochement” between the Marx’s and Keynes’ economics, by showing similarities between Marx’s view of capitalist relations of production resulting in a lack of effective demand and the themes from The General Theory. Here is one of the supporting quotes from Marx: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses, in the face of the drive of capitalist production to develop the productive forces as if only the absolute consumption capacity of society set a limit to them.” (Capital, vol. 3, Ch. XXX). One can produce more,  and Joan Robinson does. Or as Marx writes—I paraphrase—for every individual capitalist, his own workers are his antagonists: he wants to pay them less; but workers of other capitalists are his “friends”, they are his customers. When all capitalists try to squeeze workers, and when they all succeed, the outcome is the economic crisis.

The other explanation of economic crises in Marx is the unbalanced growth of departments that produce consumption goods and those that produce investment goods but this explanation holds less interest for Keynesians. Robinson also provides a very nice summary of other Marx’s ideas, including the labor theory of value, the transformation problem, the tendency of the profit rate to fall etc.,  but the emphasis is, as I mentioned, on the origin of crises and the effective demand.

When she contrasts Marx, Marshall and Keynes, Robinson argues that we should try to separate in the study of each the “scientific” prepositions about the functioning of the economy from the “ideological” drivers present in all three authors: in Marx, the conviction that capitalism is a historical (and thus transitory) mode of production, in Marshall, the assumption of capitalism as the “natural” way to organize production, and in Keynes, a desire to improve capitalism or to save it from self-destruction.

To me, it seems that the difference at least between Marx and Keynes is not so much ideological (although I would not deny that it is real) but in the time-horizon they use in their analyses. (I think that Schumpeter had something similar in mind, so this may not be a very original view.)

For Marx, the time horizon is always long-term, even when he discusses crises. Crises are temporary manifestations of the long-term (inherent) issues faced by capitalist production, and it is thus not surprising that Marxist authors  like Grossman, Bukharin and Mandel would –I think closely following Marx—see the overlap between the long-run declining rate of profit and the short-term instability as bringing capitalism to an end. (It is also not surprising that Robinson rejects the tendency of the rate of profit to fall, but supports the explanation of the crises.)  Everything in Marx, as Joan Robinson rightly says, is historical. The reader is always directed to look forward, to think about the fundamental forces that drive capitalism.

In Keynes, the situation is different, almost the reverse. The entire Keynes’s edifice (not necessarily Keynesian) is short-term: the objective is to stabilize the economy and to return it to the condition of full- or near-full employment. Keynes is not particularly concerned with capitalism’s long-term. Implicitly, I think, he believed that capitalism can go on forever so long as it is “fixed” in such a way as to produce full employment of resources. “Fixing” it might involve government-directed investment, or the euthanasia of the rentier, but Keynes is not a purist: he would take any, including seemingly socialist, tool to mend things.

Let me illustrate the difference between the Marx’s long-run and Keynes’ short-run on two concepts where our authors seem to speak of the same thing: “the animal spirits” and “the reserve army of labor.” “The animal spirits” was, as is well-known, the idea that Keynes introduced to explain capitalists’ investment decisions; capitalists are most the time not led by the exact calculus of expected gain and  loss but act on their gut feeling (“animal spirit”), and if, for whatever reason, that gut feeling changes, the economy can experience sudden expansions or contractions of demand. Joan Robinson mentions how this largely irrational (in the strict sense) incentive to invest is similar to Marx’s point of view where capitalists qua capitalists always strive not only to achieve maximum profit but also to reinvest it. For Marx, they become capitalists only when they do not consume profit but reinvest it. Accumulation is (to use another famous quote) “Moses and all the prophets.” In both cases we see that the incentive to invest is given from the outside the economics proper: through sudden bursts of optimism or pessimist, or by the definition of what we may call “the capitalist spirit.” But in Keynes’ case, the concept is used to explain short-term fluctuations; in Marx, it is the definitional feature of the whole class, and thus obviously long-term.  

            Or take the “reserve army of labor” which shrinks and expands as the economic activity waxes and wanes. It is very similar to the cyclical unemployment that plays such a big role in Keynes (actually, one could say, motivates the entire book). But Marx’s “reserve army” is an ever-present, hence long-term, feature of capitalism. Capitalists need it in order to discipline labor, and if, in some periods, the reserve army shrinks, thus reducing the relative power of the capitalist class, it immediately sets in motion forces that will bring it back to life: labor-saving investments. The reserve army can never disappear in Marx. In Keynes, however, cyclical unemployment is ideally to be reduced to zero. It is something that capitalism, being judiciously managed, can eliminate. Again, the horizons are different: for Marx, it is the long-term structural feature, for Keynes, it is the short-term interplay between key economic variables.

            Marx was the first student of fundamental historical features of capitalism, Keynes, the last cameralist. Marx was a historian who believed that economics shapes history, Keynes, the smartest adviser to power. In Capital, we have a Bible of capitalism, in General Theory, we have The Prince for economic management of capitalism.  

  

What if Putin’s true goals are different?

 By any standard indicator that measures the achievements by the extent to which the stated objectives have been realized, Russia’s war against Ukraine has been a failure. Ukraine is much more militarized than ever; it is probably one of the most militarized countries in the world right now; Russia’s security has markedly deteriorated; NATO has not returned to its 1997 positions, but has further advanced and become much more consolidated. The West is stronger than before. So, is Putin failing?

Perhaps. Or perhaps not. For suppose that the real objectives of the “special military operation” were not the announced ones, but very different.

Sovereignty vs. income. To see what they might be, I have to go back to my October 1996 paper published as a World Bank Working Paper and later in an edited volume (available here) which I recently briefly summarized on Twitter here. The paper is pretty complex because it deals with economic and political forces that lead countries to create unions and conglomerates, or to prefer secession, but its core model is simple. It is as follows. Countries (and their leaders) aspire to two goods: sovereignty and wealth. Sovereignty means freedom to make political and economic decision as little constrained by other countries as possible; wealth means having high income level (high GDP per capita). Now, the problem is that there is a trade-off between these two objectives. Countries can become rich only if they become less sovereign, that is more globally integrated. To be rich requires to trade, develop technology jointly with others, send people abroad to learn new skills, consult with and even hire foreigners. All of this implies much greater interdependence between the economies and observance of international norms and rules regarding trade, intellectual property rights, domestic economic policies, convertibility of currencies and the like.

To fix the ideas take the two extreme examples: North Korea and Belgium. North Korea is practically unconstrained in its economic and political decision-making: it can make nukes because it is not a signatory to the non-proliferation treaty, it can impose tariffs or ban imports of goods as it likes, it can print as much or as little money as it wants because its currency is not exchangeable for any other etc.  But, for all these reasons, it is also very poor. On the other end of the spectrum is Belgium, which does not have own currency, whose fiscal policy is hemmed in by the EU rules (the Maastricht treaty), trade determined by the EU and WTO (Krugman, as cited in my 1996 paper: "Europe’s 1992 is not so much a trade agreement as an agreement to coordinate policies that have historically been regarded as domestic”), foreign policy decided by the EU, and military engagement by NATO. In terms of domestic policy autonomy or sovereignty, it practically has none. But it is rich.

Other countries will be aligned along the different points of the sovereignty-income trade-off.  The size of the county will matter also: the US will enjoy more sovereignty for a given level of income because it is a big country: it issues a reserve currency, it is the main actor in a number of trade negotiations, it leads NATO etc. But it will not be immune to the trade-off. Consider Trump’s decision to start the trade war with China. It gave greater political space to the US (including the very ability to impose new tariffs), but it probably reduced its income.

Russian isolationism. Now, with this idea of a trade-off between these two desirable things, let’s go back to Putin and his group of advisers from the power ministries. Suppose that they came to the following conclusion: Russia’s attempts to Westernize since Peter the Great have been a failure. Russia failed to catch up with the West prior to 1917, it then it adopted an extreme Westernizing doctrine that diminished Russia by giving independence outright to Finland, Poland etc., and then proclaimed equality of nations and self-determination for all which ultimately led to the break up of the country in 1992. Afterwards, it adopted liberalism, also imported from the West, whose results were the dramatic impoverishment of the population, increased mortality and suicides, and the astounding stealing of assets created by the millions of Russian citizens. During that period Russia lost its ability to decide alone on its policies: it blindly followed the West. It offered its military bases in Kyrgyzstan to the US; it got nothing in return; it acquiesced to limited expansion of NATO, but was treated to an expansion up to its borders; it joined various European bodies, but only to be criticized by them; it privatized its economy as Western experts suggested, but all the money went abroad. Thus, in order to regain its economic and political autonomy, it needs to break decisively with the West. It needs to become an independent Eurasian power whose interaction with Europe will be limited to the minimum. Eventually, Russia has to move in the direction opposite from the one charted by Peter the Great in the early 18^th century.

West builds the Iron Curtain. Such increase in sovereignty would lead to lower income. But the problem is: neither would the break with Europe, if announced by the leaders, nor lower income, be welcome by the population. Russian government cannot thus, on its own, begin to create a new Iron Curtain. But what if the Iron Curtain were built by the West against Russia as a punishment for something that, from the Russian point of view, could be considered an entirely justified policy? Enter Ukraine. Reconquista, in some ways, was always popular among the Russian public. But the West will not see it as such but will impose sanctions and pile up costs on Russia. The West would,  by its own will, cut Russia off from Europe. It will build a new, impenetrable Iron Curtain. The objective of detaching Russia from the West –desired under this scenario by the Russian leadership—will be achieved not by the Russian leadership, but by the West. The Russian leaders will not be seen by its population (or at least not by the majority of the population) as responsible for undoing Peter the Great’s dream. On the contrary, the West will be seen as unwilling to accept Russia as an equal partner, and Russia hence will have no option but to become a Eurasian power, fully sovereign, untrammeled by treaties and rules, and free of Western ideologies of Marxism and liberalism.

The new Brest-Litovsk. But, in the longer-run –the leaders might fear—would not people, having realized that the greater sovereignty comes with lower income, try to find some accommodation with the West? How to avoid this? How to make the rupture permanent? The only way to do so is to make the costs of returning to the West extraordinary high. That is, to make sure that, when the first feelers of reconciliations are sent by the post-Putin governments, the bill submitted by the West will be so high that most of the Russian policy-making elite and the public opinion will reject it out of hand. Think of another Brest-Litovsk, but this time without Lenin who put all his power and authority on balance to have it accepted. The new Brest-Litovsk may include not only the withdrawal of all Russian forces from the Ukraine, and the return of Crimea to Ukraine; it might include reparations, extradition of officers responsible for war crimes, reduction in the size of the army, limits to military exercises, even possibly control of Russia’s nuclear program. Thus, the Putin government has an incentive to make the West pile up demand upon demand from which it will have hard time climbing down. For only such extensive and even unreasonable demands will ensure that they are rejected by the successor Russian governments, and that the anti-Petrine policy favored by Putin and his entourage will remain in force for a very long time.

This does not mean that the current government is totally indifferent to the cost of sanctions. But it will accept increased sanctions so long as the income cost of new sanctions is less than the gain in sovereignty. At some point, it will decide that the trade-off had gone far enough, and at that point it will negotiate. But before it does so it will make sure that it has gained sufficiently, and for a long time, in the ability to independently decide on its policies.

The implication of this way of seeing the Russian objectives is that sanctions and decoupling between the West and Russia are no longer seen only as costs that Russia is paying, but rather as West doing what the current leadership believes is in the fundamental long-term interest of Russia: breaking off of all links between Russia and the West, and thus freeing Russia to follow its own course.