Russia's Middle Class

Written by Sam Vaknin

Continued from page 1

"In democraciesrepparttar middle class isrepparttar 132299 nation proper. The typical member of a national community is a member ofrepparttar 132300 middle class. When democratic governments need a social group they can address, a universal class that carriesrepparttar 132301 overarching, common interest ofrepparttar 132302 country, they appeal torepparttar 132303 middle class. This appeal, while it calls on a common interest, also acknowledges that there are conflicting interests within society. The middle class is not everyone, but it isrepparttar 132304 majority and it represents what everyone else can become."

Russia has a long way to go to achieve this ubiquity. Its middle class, far from representingrepparttar 132305 consensus, reifiesrepparttar 132306 growing abyss between haves and haves not. Its members' conspicuous consumption, mostly of imports, does little to supportrepparttar 132307 local economy. Its political might is self-serving. It has no ethos, or distinct morality, no narrative, or ideology. The Russian middle class is at a Hobbesian and primordial stage.

Whether it emerges from its narcissistic cocoon to become a leading and guiding social force, is doubtful. The middle class' youth, urbaneness, cosmopolitanism, polyglotism, mobility, avarice and drive are viewed with suspicion and envy byrepparttar 132308 great unwashed -repparttar 132309 overwhelming majority of Russia's destitute population. Empowered by their wealth,repparttar 132310 new bourgeoisie, in turn, regardsrepparttar 132311 "people" with naive admiration, patronizing condescension, or horror.

Granted, this muted, subterranean, interaction is not entirely deleterious. It isrepparttar 132312 social role ofrepparttar 132313 rich to generate demand by provoking inrepparttar 132314 poor jealousy and attempts at emulation. The wealthy arerepparttar 132315 trendsetters,repparttar 132316 early adopters,repparttar 132317 pioneers,repparttar 132318 buzz leaders. They arerepparttar 132319 engine that engenders social and economic mobility.

A similar dynamic is admittedly evident in Russia - but, again, it is tampered by a curious local phenomenon.

Writing forrepparttar 132320 Globalist, two Brookings Institution scholars, Carol Graham, a Senior Fellow of Economic Studies and Clifford Gaddy, a Fellow of Foreign Policy and Governance Studies described it thus:

"The eyes of Russia's middle class, onrepparttar 132321 other hand, are figuratively directed downward, towardsrepparttar 132322 poor. In fact, as poverty in Russia increased dramatically inrepparttar 132323 1990s,repparttar 132324 middle class's reference norms shifted downward as well. As a result, Russia may berepparttar 132325 only country inrepparttar 132326 world whererepparttar 132327 'subjective poverty line' is falling. That is,repparttar 132328 amount of money that Russians say that they need in order to stay out of poverty has been steadily falling overrepparttar 132329 past five years. It is even belowrepparttar 132330 objective poverty line. Forrepparttar 132331 time being, at least, these curious Russian attitudes, along withrepparttar 132332 existence ofrepparttar 132333 non-monetary virtual economy, have insulatedrepparttar 132334 country against political upheaval."

The list of anomalies is not exhausted.

The new middle class comprisesrepparttar 132335 embryonic legitimate business elite - entrepreneurs, professionals and managers - but notrepparttar 132336 remnants ofrepparttar 132337 financially strapped intelligentsia. It is brawn with little brains. In dissonance with western Europe, according to a survey published inrepparttar 132338 last two years by Expert magazine,repparttar 132339 majority of its members are nationalistic, authoritarian and xenophobic. Their self-interested economic liberalism is coupled with social and political intolerance. But two thirds of them support some kind of welfare state.

Thus, there are major differences betweenrepparttar 132340 middle class inrepparttar 132341 West and its ostensible counterpart in Russia.

The Russian parvenus - many of them women - do not believe their state, their banks, or their compatriots. They fear a precarious future and its inevitable calamities though they are not risk averse and are rather optimistic inrepparttar 132342 short run. They keep their money underrepparttar 132343 proverbial mattress, invest it surreptitiously in their ventures, or smuggle it abroad. They are not - yet - stakeholders in their country's stability and prosperity.

Often bamboozled by other businessmen and fleeced by a rapacious bureaucracy, they are paranoid. Tax evasion is still rampant, though abating. They trust in equity and avoid debt. Some of them have criminal roots or a criminal mindset - or are former members of Russia's shady security services.

Three fifths, according torepparttar 132344 Expert-Komkon survey, find it "hard to survive" when "observing all laws". "Strong leaders are better than all sorts of laws" is their motto, quoted by Izvestia. Generally, they are closer to being robbers than barons.

Early capitalism is always unruly. It is transformed into a highly structured edifice byrepparttar 132345 ownership of land and realty (the prime collateral),repparttar 132346 protection of private property, a functioning financial system comprised of both banks and capital markets andrepparttar 132347 just and expedient application ofrepparttar 132348 rule of law.

Russia has none of these. According to Business Week, bank deposits amount to 4 percent ofrepparttar 132349 country's mid-size GDP - compared to half of GDP in other industrialized countries. Mortgages are unheard of, deposits are not insured and land ownership is a novel proposition. The judiciary is venal and incompetent. Might is still right in vast swathes ofrepparttar 132350 land.

The state andrepparttar 132351 oligarchs continue to represent a rent-seeking opportunity. Businessmen spend time seeking concessions, permits, exemptions and licenses rather than conducting business. The "civic institutions" they form - chambers of commerce, clubs - are often mere glorified lobbying outfits of special and vested interests. Informal networks of contacts count more than any statute or regulation. In such a mock "modern state" no wonder Russia ended up with a Potemkin "middle class".

Sam Vaknin ( ) is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, and eBookWeb , and Bellaonline, and as a United Press International (UPI) Senior Business Correspondent. He is the the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

Entrepreneurship and Workaholism - Part I

Written by Sam Vaknin

Continued from page 1

The crash deflated this tsunami - but only temporarily. US venture capitalists still invest four timesrepparttar average of their brethren elsewhere - c. 0.5 percent of GDP. This translates to an average investment per start up ten times larger thanrepparttar 132297 average investment outside America.

American investors also powerrepparttar 132298 VC industry inrepparttar 132299 UK, Israel, and Japan. A Deloitte Touche survey conducted last month (and reported inrepparttar 132300 Financial Times) shows that a whopping 89 percent of all venture capitalists predict an increase inrepparttar 132301 value of their investments and in their exit valuations inrepparttar 132302 next 6 months.

Entrepreneurs inrepparttar 132303 USA still face many obstacles - from insufficient infrastructure to severe shortages in skilled manpower. The July 2001 report ofrepparttar 132304 National Commission on Entrepreneurship (NCOE) said that less than 5 percent of American firms that existed in 1991 grew their employment by 15 percent annually since, or doubled their employment inrepparttar 132305 feverish markets of 1992-7. Butrepparttar 132306 report found high growth companies virtually everywhere - and most of them were not "hi-tech" either. Start-ups capitalized onrepparttar 132307 economic strengths of each ofrepparttar 132308 394 regions ofrepparttar 132309 USA.

As opposed torepparttar 132310 stodgy countries ofrepparttar 132311 EU, many post-communist countries in transition (e.g., Russia, Estonia) have chosen to emulaterepparttar 132312 American model of job creation and economic growth throughrepparttar 132313 formation of new businesses. International financial institutions - such asrepparttar 132314 EBRD andrepparttar 132315 World Bank - provided credit lines dedicated to small and medium enterprises in these countries. As opposed torepparttar 132316 USA, entrepreneurship has spread among all segments ofrepparttar 132317 population in Central and Eastern Europe.

In a paper, prepared for USAID byrepparttar 132318 IRIS Centre inrepparttar 132319 University of Maryland,repparttar 132320 authors noterepparttar 132321 surprising participation of women - they own more than 40% of all businesses established between 1990-7 in Hungary and 38% of all businesses in Poland.

Virtually all governments, east and west, support their "small business" or "small and medium enterprises" sector.

The USA's Small Business Administration had its loan guarantee authority cut by half - yet to a still enviable $5 billion in FY 2003. But other departments have picked uprepparttar 132322 slack.

The US Department of Agriculture (USDA) beefed up its Rural Business-Cooperative Service. The Economic Development Administration (EDA) supports "economically-distressed areas, regions, and communities". The International Trade Administration (ITA) helps exporters - as do OPIC (Overseas Private Investment Corporation),repparttar 132323 US Commercial Service,repparttar 132324 Department of Commerce (mainly through its Technology Administration),repparttar 132325 Minority Business Development Agency,repparttar 132326 US Department of Treasury, and a myriad other organizations - governmental, non-governmental, and private sector.

Another key player is academe. New proposed bipartisan legislation will earmark $20 million to encourage universities to set up business incubators. Research institutes all overrepparttar 132327 world - from Israel torepparttar 132328 UK - work closely with start-ups and entrepreneurs to develop new products and license them. They often spawn joint ventures with commercial enterprises or spin-off their own firms to exploit technologies developed by their scientists.

MIT's Technology Licensing Office processes two inventions a day and files 3-5 patent applications a week. Since 1988, it started 100 new companies. It works closely withrepparttar 132329 Cambridge Entrepreneurship Center (UK),repparttar 132330 Asian Entrepreneurship Development Center (Taiwan),repparttar 132331 Turkish Venture Capital Association, and other institutions in Japan, Israel, Canada, and Latin America.


Sam Vaknin ( ) is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He served as a columnist for Central Europe Review, PopMatters, and eBookWeb , and Bellaonline, and as a United Press International (UPI) Senior Business Correspondent. He is the the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

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