The following isn’t Russia related, at least not directly. I’m reading David Harvey’s A Companion to Marx’s Capital, which anyone interested in getting through Marx’s opus should pick up. Harvey has transformed his lectures on Capital into book form. Anyway, I’m going through the chapter on money and a question popped into my head regarding its dual nature as a measurement between things and its existence as a commodity. Harvey writes:
We would obviously prefer the quantitative representation of value to be a stable standard of measurement. Gold is a specific commodity, though; its value is given by the socially necessary labor-time embodied in it, and this is not, as we have seen, constant. Fluctuations in the concrete conditions of production affect the value of gold (or any other money commodity). Since, however, such changes affect “all commodities simultaneously,” then “other things being equal . . . the mutual relations between their values [are] unaltered, although those values are now all expressed in higher or lower gold-prices than before” (57)
Gold no longer plays the role as the universal equivalent between commodities. The power of money as a universal equivalent is based as much on faith as it is on the control of its quantity in circulation. However, money, either as paper or coin, is still a physical commodity produced somewhere out of something by someone. The material it’s made of, the machines that shape it, the ink used to imprint the faces of dead presidents, and the transportation systems that send it into its virginal circulation are part and parcel to any commodity. Human labor is behind all these processes used to create the money commodity.
Hence my question: If money is a commodity, does the cost of producing it factor into its value? Or, to put it in another way, what is the cost of money?
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- By Sean — 10 years ago
If Russian Finance Minister Alexei Kudrin’s warning last week that Russia’s recent economic bump will most likely be short lived got you down, don’t fret there are some economic spheres besides McDonald’s that are going strong. As Time reports, leech farming is a “flourishing industry” and “a bright spot in a Russian economy.” That’s right, leeches. Not the oligarch kind that sucks wealth like a like a crack addict hits the pipe. The slimy, waterborne, blood sucking kind, or as known by its Latin moniker, Hirudo medicinalis.
Russia is leech producing central, churning out 10 times more blood suckers that any other country. The base of operations is the International Medical Leech Center at Udelnaya, southeast of Moscow. The Institute has a long history. Beginning in 1937, Udelnaya was the center of Soviet leech production. It’s unknown what their production quota was in Stalin’s Third Five Year Plan (1938-1941), but the Center produced about 3 million leeches a year. The number is evidence of how widespread leeches were used in Soviet medicine. Every Soviet pharmacy was required to carry a stock of at least 25.
The use of leeches continues to be a sound medical practice. According to Time,
[The Center] is now taking advantage of the growing popularity of leech therapy, also known as Hirudotherapy, around the world. Demi Moore last year spoke about the cleansing effects of leeches; Britain’s National Health Service buys 50,000 bloodsuckers every year; the U.S. Food and Drug Administration approved leech therapy in 2004 because they proved beneficial in increasing blood circulation for patients who have had skin grafts.
Today the center sells the leeches to plastic surgeons, who put them on wounds to reduce the chance of scarring, to dentists, who apply them on gums to reduce swelling, and even to gynecologists, who use them to treat sexually transmitted diseases (Yes. You imagine right.). The oral cavity of the leech is rich with an anticoagulant, which allows the animal to feed continuously on blood but which also delivers the anti-clotting substance more effectively to the area of a wound than would a small injection puncture. Indeed, leeches are used very much like syringes. After a leech is used on a patient it has to be killed. “It’s like a disposable syringe, it isn’t good sanitary practice to use it twice,” says Gennady Nikonov the director of the Leech Center.
Perhaps strangest of all are the emotional relationships technicians at the Leech Center have formed with their leeches. Their jars require constant cleaning because, as Elena Titova, a 25 year veteran at the Center, explains, “Leeches urinate non-stop for three days after they are fed. You have to clean their jars very frequently during this time; otherwise they poison themselves with their own waste.” The staff feeds its stock “certified cattle blood” except on holidays when they treat the leeches to veal blood “as a treat.” According to Nikonov, raising leeches has a gender component. Women are more nurturing than men, and since each employee is responsible for their own crop, some organize their vacations around feeding so no one fiddles with their leeches. “Leeches are very attached to their owners,” Titova believes.
Besides their use in surgeries and other procedures, leeches are also the central ingredient of Nikonov’s skin care line, Bio Energy:
Some of the leeches go into Nikonov’s own skin care range “Bio Energy,” which is made at the Center. The most expensive product, an anti-aging cream, contains dried, freshly-hatched larvae and retails for 47,000 rubles ($1,300) for 15 grams. The idea for the cosmetic range came after the collapse of Communism, when pharmacies were no longer required to sell leeches. “We had no money and the staff would go several months without wages,” says Nikonov. “We had too many leeches and we wanted to try and create something exciting and profitable.” Nikonov explains that the deconstructed leeches become ingredients in a cream, helping it the skin’s surface to improve circulation of oxygen, fats and protein. All this, he claims, leads to younger looking skin.
The biggest export market for the Center’s leeches is France. Nikonov, however, says that he remains very selective about his clientele. “We are careful about who we export them to,” he says. “I know in certain cuisines people put the leech on a goose. They wait until it gets fat on the goose blood and then fry the leech like it’s a sausage. This is considered a delicacy. I feel sorry for the leech. They should not be used this way.”
Okay . . . I guess it works if you work it.
- By Sean — 9 years ago
The belief that God says that the rich should rule appears to be a belief held by many of Russia’s entrepreneurs. So much so that when the economic crisis wiped away much of their fictitious wealth, they turned to the Orthodox Church to find out why He had smitten them.
- By Sean — 10 years ago
David Woodruff gives a brutal assessment of Anders Aslund’s How Capitalism Was Built in the Jan/Feb 2009 issue of the New Left Review. It’s unfortunate that the review is only accessible to subscribers.
Readers should know Aslund’s own personal contribution to the building of Russian capitalism well. In the 1990s, he was part of the Jeffrey Sachs’ team of Western economists that “advised” the Yeltsin government on “shock therapy.” Despite the disastrous social costs of his “market bolshevism,” Aslund remains a frequent commentator on Russian affairs by providing a well rehearsed and repeated denunciatory performance. Aslund’s trick is to emphasize the standard narrative about Russia with all the appropriate mentions of Khodorkovsky, liberal oppositionists like Nemtsov and Milov, “transparency,” and the impending doom of “Putinomics.” Most of all, Aslund’s move is to give a uncompromising defense of his contribution to the “reforms” of the 1990s.
It is Aslund’s continued championing of the rapid implementation of neoliberal reforms regardless of their social, political, and human cost that irks Woodruff the most. Woodruff writes,
Opening with a brief triumphalist survey of the downfall of Communism, the book then turns to making the case that shock therapy is preferable to any and all forms of gradualism. A third chapter seeks to downplay the colossal slump in output after 1989—claiming that ‘a substantial part of the big recorded decline, probably about half, was not real’, and should instead be put down to ‘mismeasurement, an expansion of the unregistered economy, and the elimination of value detraction’. Separate chapters then deal, respectively, with liberalization, stabilization and privatization, recording satisfaction with governments that have deregulated their economies, curbed inflation and established private property rights—though Åslund does display some concern about the security of the latter, and consequently about the ‘political legitimacy of privatization’.
The rest of the book records Åslund’s views on a variety of areas where the implementation and outcomes of market reforms have been criticized. With regard to social welfare, he blithely asserts that ‘there was certainly trauma, but the initial perception of social disaster was exaggerated’, and that ‘the course of reforms did not have much impact’ on levels of inequality. On law and order, he notes the explosion of crime, but describes it as ‘a natural consequence of the breaking down of the old order’, bemoaning the fact that lawyers both in the region and abroad have not sought to mould a post-Soviet legal system ‘with the single-mindedness of the IMF in its pursuit of macroeconomic stability’. Further topics covered include the compatibility of democracy with reform (total, according to Åslund), the ‘oligarchs’ (whom he lionizes), and the role of the international community (whose stinginess he bemoans).
Although published by an academic press, How Capitalism Was Built is not a scientific endeavour. Those with a true calling for science, as Max Weber remarked, are tormented with doubt over the accuracy of their conclusions. All doubt is banished here. Even when contradicting himself, Åslund displays absolute assurance. Countervailing evidence is ignored or dismissed.
Interestingly, Woodruff locates Aslund’s chest pumping self-assurance and quick dismissal of contrary evidence to an anxiety that his economic faith might just be the work of false gods.
The source of Åslund’s hypertrophied self-assurance is perhaps a deeply buried anxiety that he might be wrong—and that being wrong, after making such categorical statements in an effort to shift the terms of public debate, would be a moral failing. Whatever the reasons, he evidently feels a duty to provide a moral exculpation of radical reform. He offers a kind of theodicy of the ills of post-communism, absolving the shock therapists of blame for each and every ill, and identifying the guilty parties. Conversely, Åslund avidly ascribes all positive developments to radical market reform. As befits a moral fable, there are no impersonal forces, only the wise and the wicked. The latter are the ‘rent-seekers’, who try to manipulate state policy away from the reformist path to ensure above-market rates of return, and bear heavy responsibility for all the disappointments of post-Communism. Fortunately, they are opposed by the wise—heroic free-marketeers such as Gaidar and Poland’s Leszek Balcerowicz, both of whom provide back-cover endorsements—who may be credited with all that is good in the former Eastern Bloc. The struggle between the wise and the wicked, Åslund would have us believe, is the central story of the period since the fall of the Wall: ‘post-Communist transformation is the history of the war for and against rent-seeking’.
After statements like this, it isn’t at all surprising that Woodruff finds little to praise in the core of Aslund’s book. According to Woodruff, How Capitalism Was Built positions free-market orthodoxy and the individuals who apply it floating above society, perched on hovering clouds where they damn lesser, terrestrial beings for screwing up their well formulated theories and calculations. Blame for all the screw ups in the 1990s are not found in economic theory but in those pesky opponents and incompetents who ignored the march of History itself. What Aslund and others refuse to recognize, Woodruff asserts, is the anti-democratic nuclei in the atomic structure of their market Leninism:
In Åslund’s case, imperfections are the reason why radical market reform in Russia cannot be blamed for democratic reversals there. What this defence ignores is that an executive authority convinced that it has the single right answer to economic problems, and which demands of parliament and the legal system a rubber stamp for its every decision, has a corrosive effect on democracy. From the beginning of Russia’s shock-therapy programme it was clear that, faced with a choice between what law or parliament demanded of it and what it desired to do, the Yeltsin government would always choose the latter.
Given all this, it shouldn’t come as a surprise that Woodruff’s final conclusions are pointed and harsh:
In its fervour to celebrate radical market reform, its cavalier attitude toward the historical record—inaccuracies and contradictions alone could have filled an entire review—and its resolute refusal to consider whether there might be lessons to learn from fifteen years of post-Communism, How Capitalism Was Built is a profoundly frustrating book. One is hungrier for knowledge after reading it than before. Ultimately, the book’s significance should be sought beyond the text itself. What are the broader conditions that enable such a tendentious and unscholarly analyst to acquire such a prominent role? One factor is clearly the legacy of the Cold War. Western journalism, constrained both by Communist censorship and its own lack of imagination, found itself unable for decades to narrate a story about the Communist countries that went beyond the dualism of ‘regime versus dissidents’. In the 1980s, this mutated into Gorbachev and reforms versus Ligachev and reaction; in the 1990s, the new permutation was Yeltsin versus the rent-seekers; today it has become the siloviki versus all comers—technocrats, oligarchs or democrats.
This is an easy story to tell, and Åslund makes up in vigour and vividness what he lacks in accuracy. It may also be that such facile analysis, devoid of shades of grey, fits in easily with an age of financial booms and busts driven by vast international capital flows. Speculators do not need nuance: they need to know whether to buy, sell or hold. What is important to them is not the truth about an economy, but what everyone else is going to think is the truth. Åslund’s unabashed claims of oracular status supply what the market demands. These days, as speculative capital flees every market in the world, Åslund blames the latest Russian collapse squarely on Putin, whose attacks on business and Georgia allegedly spooked investors. Someone is always to blame; just not the free-market liberals.
It is this last sentence continues on heavy rotation even as current events point to the contrary.