Writing for Transitions Online, Andrei Piontkovksy, a visiting fellow at the Hudson Institute in Washington, D.C., tells it like it is: "The road we are following is the Third Road to Serfdom, and there shall be no fourth, because this is a system that will bring Russia to ruin." His word for Putin: "Mutant."

If reform comes to Russia, it’s not likely to come from the propertied class, which has signed on to a particularly deformed social contract.

Liberal defenders and apologists of Vladimir Putin’s regime, from Carnegie analyst Dmitry Trenin in Russia to George W. Bush in the United States (who recently ascribed to the Russian people “a kind of basic Russian DNA, which is a centralized authority”), trot out a pet argument that migrates from one publication to another.

What is most important for Russia right now is not abstract “democracy” but the development of capitalism, they say. A growing middle class of property owners with a vested interest in security for their property will ultimately demand the establishment of liberal institutions. There is nothing fundamentally new or specific about this, the argument goes. Any freedom, as the history of the world testifies, begins with freedom for the barons and gradually extends down, to finally include the ordinary Joe in the street. So a middle class of property owners in Russia will come with time, we are to believe, to recognize its rights and introduce liberal institutions in Russia. This extremely popular theory ignores the actual nature of Russian capitalism. The right to property in Russia is entirely conditional on the property owner’s loyalty to the Russian government.

The system is tending to evolve, not in the direction of freedom and a post-industrial society, but rather back toward feudalism, when the sovereign distributed privileges and lands to his vassals and could take them away at any moment. The only difference is that, in today’s Russia, what Putin is distributing and taking away is not lands but gas and oil companies.

VICE, INSTITUTIONALIZED

Over the last 10 to 15 years, a mutant has evolved in Russia that is neither socialism nor capitalism but some hitherto-unknown creature. Its defining characteristics are a merging of money and power, the institutionalization of corruption, and domination of the economy by major corporations, chiefly trading in commodities, that flourish at the expense of the administrative resources they have privatized.

Eight years of Putin’s presidency have finally dispelled the illusion that this mutant would somehow wither away of its own accord, yielding to a dynamic, transparent market economy. All that was supposedly needed was for the Duma to adopt a number of liberal bills and for a number of wicked oligarchs to be replaced by good, bushy-bearded, Russian Orthodox oligarchs. It has not withered away and continues to obstruct the country’s modernization and its leap forward into the post-industrial age. This is gendarme-bureaucratic capitalism with the Father of the Nation at its head.

Putin did replace some of the Yeltsin generation of oligarchs by new, “patriotically oriented” scions of the intelligence services and, in a major way, by that great collective oligarch, the bureaucracy and its armed units, the security agencies. Putinism and the politico-economic model that it has engendered amaze us by their sheer esthetic and intellectual squalor, but we can live with that. The real problem is that they are totally inefficient and only exacerbate the innate vices of Russian capitalism, the criminal merging of wealth and government power and the institutionalization of corruption.

Such a model of a petro-state cannot deliver consistent economic growth, overcome the enormous gulf between rich and poor in society, or ensure a breakthrough to post-industrial society. This model of provincial capitalism dooms Russia to economic degradation, marginalization, and, in the final analysis, to implosion. It will not survive for decades, as the Stalin and Brezhnev models did, and indeed it may be that in this Putin backwater Russia is destined finally to run out of historical time.
Our remarkable compatriot, the westward-looking writer Peter Chaadaev, expressed the thought almost 200 years ago that Russia’s historical role seemed only to be to serve as a warning to other peoples of what they should not, under any circumstances, do themselves. We seem to have been providing this service, with masochistic zeal, for the past 200 years. Another great thinker, the Austrian economist Friedrich von Hayek, could never have imagined in 1944, when he wrote his famous ***The Road to Serfdom,*** that, in addition to the two roads to serfdom that he described, fascism and communism, there could be a third, along which people would be led under the banner of von Hayek himself.

In one of Vladimir Putin’s studies stands a small bust of von Hayek. This is not solely for the recruitment of foreign investors, who sometimes visit the office. Vladimir Vladimirovich sincerely seems to believe himself to be quite the liberal reformer, as his advisers keep assuring him he is.

But the result of his eight years in power is what the Soviet-KGB bureaucracy dreamed of when it invented perestroika in the mid-1980s. Twenty years down the line, what has been achieved? A total monopoly of political power, just as before; enormous personal fortunes, which were off limits to it before; and a completely different lifestyle (some of them bask in Courchevel, some in Sardinia). Lastly, and most agreeably of all, they are no longer burdened with any kind of social responsibility. They no longer need to parrot that “the goal of our life is the happiness of ordinary people,” a piece of hypocrisy they found nauseating even then.

WRONG MODELS

The Putin Project is also the long-standing aspiration of "liberal" economists to find a Russian Pinochet who will introduce liberal reforms with an iron fist. Their faith in the Pinochet approach was constantly strengthened by the example of a whole succession of countries where it was supposedly implemented successfully: Chile, and certain of the states of East and Southeast Asia.

But what these countries were implementing by authoritarian methods was the transition from an agrarian to an industrial society, a task very effectively accomplished by Joseph Vissarionovich Stalin 60 or 70 years ago and, also not in the most humane manner, in Europe in the 18th and 19th centuries.

The problem Russia faces today, of breaking through to a post-industrial society, simply cannot be resolved by these methods. This became evident from the experience of the very Asian tigers and dragons that our authoritarian liberals refer us to. In South Korea the model had run out of steam by the late 1990; it is wholly unsuited to the post-industrial development of a society.

We face an additional very serious drawback: we are rich in raw materials and energy resources. This combination of authoritarian bureaucratic power with an abundance of resources is disastrous for Russia’s development, because it deprives the bureaucracy of any feedback from reality. This results in its complete corruption and decay, which is something we can see happening day by day.

Russia’s golden million live as no Russian elite has ever lived before. More than that, in terms of conspicuous consumption they far exceed the golden million of any developed state. The Russian golden million are true supporters of the Putin regime that requires, in return for making a fairy tale come true, only the purely nominal membership fee of total political loyalty. In this milieu, no new perestroika is ever going to happen; or if it does, then, as in the case of the USSR, only when it is far too late.

The road we are following is the Third Road to Serfdom, and there shall be no fourth, because this is a system that will bring Russia to ruin. Unless, of course, we find the courage within ourselves to turn off this road, in which case the entire Putin period will lodge in our historical memory as a final inoculation against the philosophy of serfdom.