By Renfrey Clarke
MOSCOW — A few days ago, my friend Rod came around unexpectedly to visit. He brought a bottle of vodka, but he wasn't feeling festive. Quite the reverse.
An Englishman who has spent much of the 1990s in Moscow, Rod had just lost his job teaching English to adults in a private language school. "Back in the middle of August", he related, "I had five or six students in one class, seven in the other. Then there were about three in each. Yesterday, no-one came."
And that, Rod lamented, was in the first week after the summer holiday season, when his classes would normally have been full of freshly tanned young office workers ready to acquire the language skills needed to advance their careers.
Since August 17, when the government stopped trying to avoid a devaluation of the ruble, the good times have ended for Russia's small middle class, including Rod's pupils.
"The students were earning roubles, and the foreign teachers were getting dollars", he explained. "So when the price of the dollar tripled in less than three weeks, the students just couldn't afford it any more."
None of Rod's students were really well-off. If they had been, they would have paid for individual tuition, or studied abroad. But they were prosperous by Russian standards. Most of them, Rod guessed, had been taking home the equivalent of around US$500 a month earlier in the summer, when the average wage was worth about US$180.
The students had described their lives in writing exercises. Most of them worked for commercial organisations, often banks. Their housing was still in cramped flats built in Soviet times, but many had been able to buy cars. Most had travelled abroad, usually on holiday package trips to Turkey or Cyprus.
Above all, they were optimistic about their prospects. Other Russians might face poverty and hardship, but Rod's students would get ahead; their energy and professional skills guaranteed it.
That, however, was weeks ago. Today, Russia's "middle layers" are learning that when capitalism goes into crisis, junior professionals and mid-level office staff are not exempt.
The odds are high that among the people who were in Rod's classes, quite a few are no longer working for anyone. A Moscow-based foreign economic consultant told me soon after the crisis hit that he expected the crash of the banking industry to wipe out half the jobs in the industry. Early in September it was reported that Alfa-Bank, one of Russia's largest, had laid off 40% of its employees.
Even those members of the new middle class who keep their jobs will find the gloss has gone from their lives. Of the marks of prosperity that define the middle class, few originate in Russia. From Western-style apartment renovations to foreign airline tickets, almost all require that someone, at some point, buy and hand over foreign currency.
Sales of cheap Mediterranean holidays are reportedly down by as much as half. With the "September rouble" edging down to US4 cents, compared to the "mid-August rouble" of 15 cents, the money which Rod's ex-students command is now hopelessly inadequate to finance the modest luxuries they once enjoyed.
It is not only the prices of luxuries that have exploded. The cost of many staples has doubled. In part, this stems from merchants taking advantage of panic buying and raising their prices.
But most of the consumer goods sold in Russia are now either imported entirely, or depend on a hefty shot of suddenly expensive foreign inputs. As a result, devaluation has flowed directly into hyperinflation and drastic cuts to living standards.
The paradox is that millions of people have not taken to the streets in protest. It is a grim testament to the effectiveness of Soviet-era repression that most Russian workers, however bitter at recent developments, remain depoliticised, without experience of self-organisation, and deeply sceptical that any initiative they might take would achieve anything except get them into trouble.
By contrast, Rod's ex-students are undoubtedly self-starters. But before they rise in revolt against capitalism, there is a good deal of ideological debris they will need to jettison.
Mercifully, the collapse of Russia's currency will not kill off the economy entirely. The reasons, ironically, derive from the government's failures rather than its successes.
For years, Russian finance ministers kept roubles in short supply as a way of limiting inflation; as a result, people found ways of doing without them. These mechanisms remain in place and are allowing many commercial operations to continue, even though the rouble is scarcely worth picking up off the pavement.
Justifiably, most Russians have always considered the post- Soviet rouble suspect as a store of value. As a result, savings are usually kept in the form of dollar notes stuffed in hard-to-guess corners of people's homes.
Estimated at US$20 billion — roughly twice the state's official foreign currency reserves — these hoards will survive the crash of both the rouble and of the banks, and are likely to provide a buffer against complete economic paralysis. In coming weeks, more and more dollars can be expected to emerge from beneath the mattresses.
Increasingly, the dollar will become the mechanism not just of saving, but also (and although this is illegal) of everyday exchange.
Another godsend for Russia's rulers is barter. Said to account for as much as 70% of the value of transactions between enterprises, this is the main reason why production in wide areas of the economy did not come to a total halt long ago. Barter deals have not needed roubles in the past, and do not need them now.
A dollarised, barterised Russian economy might keep ticking over for years, at abysmal levels of efficiency. But there are countless functions required by modern industrial society — starting with the regular payment of wages and pensions — that such an economy cannot perform.
Even if barter could be phased out, a dollarised Russian economy, in which the government had few meaningful levers of financial regulation, would still be incompatible with the task of rebuilding the country's social infrastructure and productive plant.
Nevertheless, this is the choice which Russia's elites now seem determined to adopt — in the form of a "currency board". Under this system, the government would be legally bound to keep the number of roubles in circulation in a fixed proportion to the country's reserves of US dollars.
A simpler variant of this system would be the one used for many years in Panama — not to bother printing the national currency, but to use dollar bills instead. At least the Panamanians are frank about their semi-colonial status.
The relations that Russia has with international economic forces are a matter for very careful, discriminating choice. Wholesale surrender will only worsen the country's dilemma. But at the same time, Russia cannot develop in isolation from the world economy.
This implies that neither market-worshipping neo-liberals, nor economic xenophobes from Russia's Stalinist-chauvinist "left" can contribute to saving Russia from economic decay and political dismemberment.
The need is for radical new ideas and activism from social layers that have not so far made much of an impact on the country's politics. And this is where Rod's ex-students, or people like them, may have a role to play.
In capitalist society, middle classes ruined by economic depression are a notorious breeding-ground for fascism. But where the people involved are educated and well-travelled, their disillusionment with the system is more likely to thrust them toward the left than the right.
The educated young Russians who now to find their career hopes shattered will not finish up more disgusted with capitalism than millions of the country's wage workers are already. But they will differ from the mass of the work force in a key respect. They will not have had beaten into them, year upon year, the conviction of their powerlessness and unfitness to influence the circumstances under which they live.
The coming radicalisation of Russia's "middle layers", it follows, has real potential to create forces with the program, energy and organisation to achieve what today's opposition has never looked like doing — to crack the ice of popular passivity and lead much broader social layers in the active defence of mass interests.