This is the third of a six-part series that I wrote for, the official online source for the Investigative Journalists of Armenia. The English-language editor posted this installment on December 20, 2010. The article appears here with slight changes.



Economic Liberalism Is Still Riding High, but It Has Ruined More that It Has Enriched

by Markar Melkonian


In a famous 1989 article entitled “The End of History?” philosopher Francis Fukuyama proclaimed the “unabashed victory of economic and political liberalism.” At about the same time, a popular politician in Armenia expressed what had been an almost unanimous belief among Yerevan’s intellectuals: “free market reform,” he wrote, was the path “which has been traveled by many other nations and which leads to happiness” (Vazken Manoukyan, in J. Libaridian (ed.), Armenia at the Crossroads, 1991, p. 52).

Since then, the soundtrack to our lives has been the hymn of a thousand-voice choir celebrating the victory of economic liberalism in “the war of ideas.”

One might have thought that the horrendous results of free market reform in Armenia have rendered their own self-evident verdict on these celebrations. It would be a mistake, however, to assume such a thing: intellectuals in Armenia--a country ravaged by economic liberalism--still worship the Zeus of the Free Market. Or at least they automatically mouth their adoration when they are in the presence of a microphone.

But Fukuyama did not believe that the Soviet Union had failed economically, and he was right at least about that. For one thing, Soviet socialism provided bread, jobs, shelter, education, and security to growing populations whose life spans it had extended by decades. Moreover, if states fail because they fail to deliver the goods for the larger part of the population, then most of the capitalist regimes in place today, from Moscow to Cairo and from Jakarta to Port au Prince, should be wracked by rebellion. The Soviet Union did not fail economically. Rather, it failed the only way a state can fail: it failed to reproduce the state power of the incumbent ruling class.

For decades during the last century, well-placed and well-connected leaders of the nomenklatura in Soviet Russia had been congealing as a capitalist class-in-formation. This class and their domestic allies waged and won one battle after another in an ideological war of position, attacking residual pockets of working-class resistance within state structures and the Party. Eventually, and with more than a little help from the agencies of enemy states, this class-in-formation got their hands all the way around the public institutions, to dismantle and transform them, to overthrow legally sanctioned property relations, and to smash remaining obstacles to private capital accumulation. The why’s and the wherefore’s of this transformation are crucial, but they lie far out of range of brief discussion. For our purposes, the following point will suffice: without anything in the way of a grand over-arching conspiracy, a portion of the nomenklatura and upstart tycoons in Soviet Russia willy-nilly grabbed up privatized assets and cashed out their connections and economic power into political power, remaking the state and the legal system (such as it was) in their own image.

The transformation in the center opened spaces in the regions and the Republics for massive seizures of privatized assets and resources. Local “entrepreneurs” rushed into the open spaces, elbowed their competitors, and pushed their snouts into the privatized trough. Their resulting wealth and economic power itself constituted political power, which they extended into the state bureaucracy and transformed into ever-tighter and firmer control over the revamped institutions of governance. In Armenia, the new local rulers included miniature replicas of the “New Russians”—upstart “family businessmen” for the most part, with a few scattered scions of the former Soviet nomenklatura. Capitalist class solidarity is still far from complete, but the feuding mafia dons have been groping for a modus vivendi. Before our eyes, Armenia’s plutocrats are drawing together to consolidate their position as a respectable, unified and therefore invisible ruling class.

Armenia’s new rulers, however, are a far cry from the ascendant bourgeoisies of early modern Europe and the native bourgeoisies that won the anti-colonial struggles of the last century. Armenia’s rulers do not constitute a national class with an interest in unifying and expanding domestic markets and extending domestic production. Rather, they are essentially brokers and middle-men, franchise owners working for foreign imperialists.

Needless to say, most entrepreneurs themselves are thoroughly convinced that in fact there is no such thing as class struggle, class rule, or class distinctions. This is the most obvious thing in the world to them, and it is an insult to common sense to believe otherwise. The more successful they are in convincing others of this, the more successfully they have waged the class struggle and reproduced capitalist class rule. 

Fukuyama contended that ideas won the Cold War. If there really were such a thing as a war of ideas, then the winning ideas, presumably, would be the ideas that the tens of millions have taken up as part of a new, unchallenged consensus--the ideas that “capture their time in thought.”

And if this is the case, then the idea that won the Cold War was not Fukuyama’s “Western idea” of democracy and liberalism. Whatever these terms may be taken to mean, they are already passé and partially discredited. (According to a Global Attitudes Project opinion poll published by the western-oriented Pew Research Center in November 2009, a majority of the respondents in Poland and the Czech Republic—two countries often cited as success stories by the free-marketeers--agreed that they had been better off “under communism” than they are under capitalism.)

If any idea won the Cold War, rather, it was Wahabi Islam. The Wahabists took credit for the defeat of the Soviet Union, an Empire so singularly Evil that it offended God, nature, and decency by invading and occupying poor little Afghanistan, of all places. And ever since its first victory there, Wahabism has shot up like a rocket, winning millions upon millions of converts, in the West as well as the Middle East, and fighting the most powerful military in history to a standstill on three fronts.

Aside from that, the ideas that came out on top in the Cold War were bigotry, the usual array of fundamentalisms, and a profusion of conspiracy theories. These are the ideas that enraptured the masses, that moved the Velvet and Color (counter-) revolutionaries, the ethnic cleansers, and the rape camp commandants.

In the early 1990’s, Yerevan’s intellectuals, from members of the Academy of Sciences to local poets and folk singers, were not notably fired up by monetarism or supply-side economics. (True, there might have been some mention of Adam Smith, but the Free Marketeers could never add The Wealth of Nation to their required reading list, because they could never fully embrace the advice contained in that brilliant book--notably the unencumbered movement of workers across borders.)

Armenia’s secessionist intellectuals were not moved by the musings of classical liberals like John Locke or the political ideas of Thomas Jefferson and company. And the ideas of free market economists like F.A. Hayek, Ludwig von Mises, and Milton Friedman, did not rev up the crowds either. For one thing, it’s not clear that many people in Armenia and the other so-called Captive Nations were even aware of these ideas. Besides, in the memorable phrase of one exemplary anti-Soviet intellectual, “We don’t need any more Jewish economists.”

Nor were the crowds in the public squares fired up by the “Western idea” of economic liberalism either. Rather, just like their counterparts in Azerbaijan, they were transfixed by medieval superstitions, by the racial theories of their favorite Nazi collaborators, and by a profusion of offbeat conspiracy theories.

And what of the “Western idea” of democracy and human rights? We know about the “flawed” elections, the repression of demonstrators, the censorship and impunity in Free Independent Armenia. What’s more, some of the loudest self-identified human-rights activists in Yerevan did not utter one syllable of protest when members of Armenia’s Azeri minority were being thrown out of their homes. Instead, many of them made excuses for these evictions, excuses that that former dissidents would have excoriated if they had come from the mouths of Soviet authorities.

Even bad arithmetic has had its role to play. On April 28, 2009, Mosnews uncritically reported that Gary Kasparov, the chess champion and free-market booster, had publicly accused the KGB (founded in 1953) of having “organized” the Armenian genocide.*

Liberalism, democracy, human rights—these are not ideas that won the Cold War. Too often, rather, they were just politically correct catch phrases that chauvinists and megalomaniacs got used to chanting while pursuing less noble goals.

Meanwhile, our most generous and thoughtful compatriots were shamed into silence, shouted down, and pushed aside by professional dissidents, and by ambitious poets and philologists on their way up to the megaphones. Bigotry and dogmatism have upstaged a serious, reasoned commitment to the well-being of the people of Armenia.  

Just because an idea comes out on top in the class struggle, this does not guarantee that it is a better idea across-the-board. Aristotle’s physical theories dominated Europe for two thousand years before atomism made a comeback, and Charles Darwin—that other “obsolete nineteenth-century system-builder”-- has not fared much better than Karl Marx in the post-Soviet popularity contest.

In any case, ideas did not win the Cold War. The imperialists did.

The ruling ideas are the ideas of the ruling class. The moment this ceases to be the case, a ruling class is in trouble. Perhaps the generation of Armenians has not yet been born that will one day grow tired of being ashamed that they are workers. But that generation will come, and it will learn lessons that freemarketeers will never be able to un-teach. Why? Because ideas are not the sort of things that die. Not even metaphorically.


* A commenter on wrote that Kasparov was referring in this instance to alleged complicity on the part of some Soviet officials during anti-Armenian pogroms in the Azerbaijani cities of Sumgait and Baku in the final days of the Soviet period. If the Grand Master was indeed referring to these pogroms, then he has distinguished himself not as a bad arithmatician but as an obscurantist and a cynical manipulator of the memory of the Armenian genocide.


[previous] [more information] [home] [next]