This is the fifth installment 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 March 14, 2011. It appears here with only slight changes, including an exchange with an astute reader. .



In Armenia Today, Economic Power Just Is Political Power

by Markar Melkonian


In the run-up to the May 2012 National Assembly elections and the February 2013 presidential elections in Armenia, we can expect more of the same. Decibel levels will rise in the public squares, accusations will fly, candidates will squabble, and each one will pose as the nation’s worst enemy of corruption. And on the first morning of the new term, too, nothing will have changed. The deputies and the Chief of State, whether they are incumbents or newcomers, will continue to pursue the same old policies without skipping a beat.

In the past twenty years, five presidential elections have taken place, three administrations have assumed office, and a succession of deputies has paraded through the National Assembly. But throughout it all, and despite personal animosities and campaign speeches, successive administrations have treaded the same path on domestic policy. They privatize ever more state property, from farmland to mining rights to real estate in Yerevan. They divert public funds to private investors (including social security*--“to finance domestic capital markets,” as an honest bureaucrat admitted). They chip away at labor codes (including the recent proposal to extend the work week from five to six days); and they cut back a broad range of public programs that might accidentally benefit anyone but the tycoons and their cronies. And all of this in the name of that endless process that the Freemarketeers still call Free Market Reform.

The Freemarketeers tell us that these policies are just a result of recognizing the inevitable. As former British Prime Minister Margaret Thatcher was fond of saying, “there is no alternative.” Here we encounter Iron Laws of History as crude as anything one might have found in the crudest Soviet-era textbooks.

But the Free Market determinists might well be right, after all. It may well be the case that Yerevan’s fixed policy orientation is indeed inevitable. But it is inevitable only if we assume at the outset that the wealthiest minority must continue to run the country.


Armenia ’s Tycoons:

Let us step back a moment and pose the question clearly: how do we account for the striking continuity in domestic policy from one administration to another in post-Soviet Armenia? The short answer is that successive administrations have been dominated by cliques that have in common the fact that they own and control a large part of the country’s productive wealth. The presidents, deputies, and ministers have mostly been cronies or hired hands of the wealthiest “family businessmen,” and their politics reflect loyalty to the “big” capitalist class.

The official line, of course, is that there is no ruling class in Armenia. Milton Friedman’s disciples have learned fifty-seven tricks for denying the reality of class rule. Moreover, the plutocrats have the habit of proposing banquet toasts “to national unity”—even as they grind Armenia’s workers into the ground. Despite banquet toasts and official denials, though, few adults in Armenia will make themselves ridiculous by disputing the fact that a handful of tycoons rules the country.

In an all-too-exceptional article, we read that “an easily distinguishable lineup” of businessmen in Armeniamade its fortune by dominating key commodity imports, such as gas, wheat, oil, butter, and sugar. (Serouj Aprahamian, and Allen Yekikan, “In Whose Interests?” Haytoug online, January 8, 2010.) A large portion of this super-rich minority now owes its wealth to the fact that it controls the mining and export of minerals and metals. Today, most of these tycoons are also land barons. These observations (together with other factors, notably the role of foreign remittances in the economy) help to explain Armenia’s “skewed economic landscape as a whole,” dominated by imports (making up 40% of GDP), while exports account for only 10% of GDP.

Although individual tycoons are often economic competitors, they share much in common, including “a common set of economic interests, living standards, values, and norms of behavior,” as the authors of the aforementioned article note. As the years have passed, the tycoons have put aside their worst animosities and have drawn together to define common interests. Today they constitute a group that commands power “far surpassing the influence of any other segment of the general population.” They and their respective cliques may quarrel with each other, and they might occasionally resort to more direct methods of persuasion, too. But as a group they increasingly act as though they recognize common interests. T he “family businessmen” and their cronies draw together in trade associations, Chambers of Commerce, and the one-man shops that pass for political parties these days.


Armenia ’s Rulers:

It also happens that they draw together in state institutions, including ministries, the National Assembly, mayoral offices, courts, and a range of public agencies. This is especially easy in a country like Armenia, where they can simply buy offices, judges, elections, and politicians. From the perspective of an individual “family businessman,” having friends in high office constitutes a big advantage over the competition. So does inside information, access to public coffers, and parliamentary immunity. But the state institutions also advance the power of their fellow capitalists as a whole. Before too long, as the authors of the article note, the wealthiest capitalists have become “ a distinct social class with tight links to one another, who operate on a political plane detached from the general public.”

And so it has happened that a class that comprises a tiny minority of the population has come to wield a near-monopoly on economic and political power. In Free Independent Armenia, as in so many other countries, there is a tight fit between the economically dominant class—the class that owns and controls the wealth—and what American sociologist C. Wright Mills has called the “power elite.”

In Armenia today it is surely the case that, as the authors of the Communist Manifesto put it 163 years ago, “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

It seems that the baldest forms of corruption and impunity have only been escalating in Armenia. Perhaps the lessons from Tunis and Cairo will remind Armenia’s rulers of the risks of untrammeled impunity. In any case, we should expect somewhere along to line for the most flagrant abuses to recede, as the demands of capital extraction and social stability force the capitalists to put internal conflicts aside, for the sake of ruling class solidarity.


Class Analysis:

There is of course much more to add to this story. One might describe the “easily distinguishable lineup” of Armenia’s wealthiest minority more thoroughly than we have done here, by describing its relationship to other easily distinguishable groups in the country. The latter groups would include wage earners, small farmers, small businessmen, the unemployed, the underemployed, the self-employed, and so forth.

One might also report how these relationships of domination and cooperation have developed historically. One might delineate the origins of Armenia’s ruling class in the Soviet-era nomenklatura, and then describe how, in the post-Soviet years, privatization of state owned resources produced the “New Russians” and their counterparts in Armenia. Part of this story will describe how the sons of the nomenklatura alternately cooperated and contended with the upstart “New” tycoons.

And then there is the story of how “family businessmen” from both groups got their hands around local governments and ministries in the post-Soviet period, and how they expanded their economic and political power to the republican level.

There is also a chapter to be written about the transformation of state institutions in post-Soviet Armenia. In the course of drawing together, Armenia’s plutocrats have not simply grabbed pre-existing state institutions and then proceeded to use them for their own purposes. Rather, they have dismantled old public institutions, created news ones, and revamped many others.

Public institutions of the Third Republic advance the power of Armenia’s plutocrats. From the Power Ministries to the public schools, these institutions promote the compactness, agility, and sense of purpose of the ruling class. At the same time, these institutions fragment workers, demoralize them, and hamstring attempts at self-organization from the bottom up.

Recognizing the class character of the state is crucial for any genuine political science. If one were then to describe the country’s ruling class as local brokers for global capital, and to examine the function of that class within the larger regional and global setting, then one would have produced something approaching a complete picture of class rule in Armenia.

This is not a picture of a grand overarching conspiracy. It may seem as though an evil cabal has somehow seized power in Yerevan, but this is not the case. What emerges from a careful class analysis is a picture of how things have shaken out, in the course of the one-sided struggle that capitalists have waged against Armenia’s workers from day to day and hour to hour, over the past twenty years.

This is a story that is crying out to be told. It is a long story, with many twists and turns, and it will not fit into the small space of an article. But one point that should have emerged already is that there is nothing crude about class analysis if it is carried out carefully. On the contrary, it is crude to deny the reality of class divisions, class struggle, and the class character of the state. Those who do so squash reality flat in order to push it under the locked door of their pro-capitalist dogmas.

Ironically, the very fact that these dogmas prevail is further evidence that capitalism dominates our imaginations no less than our lives. But this is another topic for another time.



* Thus, with a sweep of the hand, Armenia's capitalist rulers have set the stage for the creation of more poverty than all of the charitable organizations and all of the wealthy philanthropists in the diaspora have been able to mitigate in the past twenty years.


The folllowing is an exchange of views with an astute reader, commenting on the article above:

Aram Says:
March 14th, 2011

Armenia did not too well under Communism nor is it doing well under “went amock ” Capitalism. We know these things. What do you suggest?

Markar Says:
March 15th, 2011

With reference to Aram’s very common view that Armenia did not do well under “Communism,” two points:

1.) The Soviets claimed that the USSR was socialist, not communist. That’s what the second “S” in “ USSR” is all about. Lenin and his comrades renamed their party the Communist Party because communism–a highly productive society that is not dominated by market relations–was their most distant, long-term hope. They believed that only by fighting for socialism–that is to say, the state power of workers rather than capitalists–could a future generation ever achieve communism. Lenin and his comrades succeeded briefly in establishing workers’ power. But sadly, and for many reasons, it did not endure. Soviet socialism was defeated long before 1991.

It is a very common mistake to describe the demise of the Soviet Union as “the collapse of communism.” The resulting confusion is obviously useful for worshipers of the status quo.

2.) Aram’s contention that Armenia did not do well during the Soviet period is another politically correct article of historical revisionism. Many people in Armenia, including older people who have had the most experience during the Soviet period, would dispute this contention.

I wonder if people who repeat the politically correct line would care to consider the following question: When, in the last twenty-five centuries, have more Armenians been better fed, more secure, better educated, and more numerous in their homeland than during the seventy years of the Soviet period?

In the years since the demise of Soviet Armenia, we have all seen what miracles the Free Market has wrought. Capitalism in post-Soviet Armenia has a track record for all to consider.

The automatic response to these sorts of challenges is that Armenia was not “free” during the Soviet period. But the Soviet Union was changing, moving in the direction of greater freedom. Countries change, sometimes on balance for the better. (And sometimes, as in Armenia, countries change for the worse.)

In any case, I suspect that a future generation of Armenians is going to get tired of this way of talking. Raised in a country that has been ravaged by capitalism, many of them are going to take another look, and conclude that under the circumstance, Armenia did well during the Soviet period.




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