Material World: Gangsterism rules OK (2026)

The Material World column from the May 2026 issue of the Socialist Standard

Whether you believe the stories about US officials issuing veiled threats by reminding Vatican diplomats of the Avignon Popes (when the French Crown asserted secular power over the church and moved the seat of the Bishop of Rome to France), that they are circulating at all is a sign of the widely held sense of American lawlessness. An American official, according to the gossip, opined that the US has the power to do what it likes in the world, and the Catholic Church should take sides. Some have seen this as a threat to the Pope.

It has been doing what it likes for decades. In 2001 the US Congress passed a resolution, Authorization for Use of Military Force of 2001, which stated:

‘That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.’

In justification, it noted:

‘the President has authority under the Constitution to take action to deter and prevent acts of international terrorism against the United States.’

This became the basis for the campaign of targeted killing by executive order, as part of the so-called War on Terror. It was a carte blanche, and, as with any executive authority, the office holders since that date have sought to strengthen and extend the scope of authority for actions taken under this resolution. It extended from the battlefields of Afghanistan to become a universal reach, justifying strikes in Libya, Somalia, Oman and even, under the present administration, to the strikes against alleged narcotrafficking boats in Venezuelan waters.

In 2011 even Obama took the step of killing an American citizen, Anwar al-Awlaki, in an overseas strike.

Although there are no exact figures available, the estimate is that in over 14,000 strikes, over 10,000 people were killed and wounded, of whom around 15 percent were civilians, including hundreds of children.

The laws of war

The ‘rules of war’ permit civilian casualties in proportion to the value of the military objective to be achieved: that is, the decision to adopt the targeted killing policy was a decision in advance to kill entirely innocent civilians.

The argument of presidents and their hangers-on is that such death tolls save more lives and stretch the limits of liberty and legality less than alternatives. But it does, in the end, put the President in the same place as a gangster, killing anyone who might get in his way (and threatening anyone thinking of doing the same). It turns the end sequence of the first Godfather film, where Michael Corleone orchestrates a string of murders of rival bosses, from a fictional scene into real government policy.

Of course Trump, who most likely will have encountered the real-world mafia in his career as New York real estate developer and casino owner, has extended this policy even further. His strikes on Iran this year included the direct slaying of the Iranian head of state, as well as top government officials. This is close to saying all bets are off.

The laws of war, such as they are, were developed by professional militaries and soldiers to make a life of warfare possible. They limit the actions either side can make to prevent a cycle of violence so destructive that the entire game of war grinds to an exhausted halt. It was always a hypocritical gloss on the murderous business, but it did offer some respite and protection.

The chief victims of Trump’s extension of the remote murder strategy are likely to be members of other governments. The US position is that it will retaliate with untold ferocity should someone dare to slay its head of state: but other governments may not have that luxury. And, as Iran has demonstrated, the technology for a sudden and surgical missile strike is within the reach of many countries.

Iran, for its part, has come out swinging: its retaliation against US bases and the countries that host US bases has been to try and impose costs on any US attempt to repeat the Iraq adventure of siege and invasion. They aim to pressure the US to back off by causing pain to US allies.

Whilst the fog of war still prevails, it’s clear that deaths have been many and widespread: at the time of writing over 2,000 Iranians have been killed, with over 20,000 injured. Around 15,000 have been injured in US-allied states (with around half of those in Israel), and about 200 dead (including 15 Americans).

Given the interconnected worldwide system we all rely on, the direct casualties in modern wars are very likely dwarfed by the number of deaths later incurred due to damage to infrastructure. Both sides in this war have threatened desalination plants essential for life in the region, as well as power plants (including nuclear installations).

Iran’s blockade of the Strait of Hormuz will lead to disruption around the world, as we see fuel prices rise dramatically (already there are serious fuel protests in Ireland).

With Trump threatening to counter-blockade the strait (which will bring the US navy within range of Iranian missiles), the prospect of damaging the world economy in the medium term is real.

Leaving simple morality to one side, war makes us all poorer. Every death is the loss of a mind that might have come up with brilliant insights in the future. Houses, roads, bridges all get destroyed and inhibit economic activity in a wide area (the same has already happened in the war between Russia’s and Ukraine).

Universal gangsterism over trade routes and resources means everyone has a stake in ending war, and the only means to do that is the common ownership of the world.

Pik Smeet

Voice From The Back: End of a dream (2009)

The Voice From The Back Column from the December 2009 issue of the Socialist Standard

End of a dream 

Ever since the publication of his Unsafe at Any Speed in 1965 Ralph Nader has been the darling of radical circles in the USA. Here was a man who dared to question the power of such capitalist concerns as General Motors. He went on to found scores of progressive non-profit organisations. He even ran as a Green Party and later an Independent candidate for the President of the USA. On one occasion he even polled almost 3 million votes. Capitalism however is a resilient social system and his attempt at reforming capitalism has ended up with him looking to the capitalists to solve the problems. He is on tour at present to promote his first fictional book entitled Only the Super-Rich Can Save Us. This has led some of his former supporters to doubt his reasoning. “There is a poignance in listening to Ralph Nader these days. Here is a man who, for the last 45 years, has hurled his body at the engine of corporate power. He’s dented it more than anyone else in America. But he knows it’s still chugging, even more strongly than ever. Nader understands that he’s losing. He understands that we’re losing—we who believe in democracy, we who care about justice. But if our only hope is with a handful of billionaires, we’re in a lot worse shape than I thought.” (The Progressive, 28 September)

How about socialism? 

As the social problems of capitalism mount up its administrators have to be seen to be doing something. The usual drill in the past has been for world leaders to meet together usually in some splendid hotel or other, make pious noises about “something has to be done”, pat each other on the back and fly home first class in a glow of self-satisfaction. The most recent crisis of world hunger has occasioned another useless backscratching summit. “With food prices remaining high in developing countries, the United Nations estimates that the number of hungry people around the world could increase by 100 million in 2009 and pass the one billion mark. A summit of world leaders in Rome scheduled for November will set an agenda for ways to reduce hunger and increase investment in agriculture development in poor countries. What will drive the next Green Revolution? Is genetically modified food an answer to world hunger? Are there other factors that will make a difference in food production?” (New York Times, 26 October) The one factor that they have not taken in to consideration is not yet another summit at a higher and higher level, but a sump level meeting of the world’s working class. Only by such a movement as the World Socialist Movement can men and women abolish for ever the madness of millions starving to keep a system of robbery and exploitation intact. The journalist asks the question “Are there other factors that will make a difference in food production?” Yes there is – world socialism and production solely for use! That is one issue that wont be discussed in Rome.

Capitalism is gangsterism 

Politicians and clergymen and even well-paid TV personalities will claim that the Middle East conflict has something to do with morality and justice and that it has nothing to do with crass consideration such as “making a couple of bucks” as Al Capone once famously said. “The British oil giant BP will today take control of Iraq’s biggest oilfield in the first important energy deal since the 2003 invasion. The move has created uproar among local politicians invoking resentful memories of their nation’s colonial past. The agreement to develop the Rumaila field, near the southern city of Basra, will potentially put Iraq on the path to rivalling the riches of Saudi Arabia within a decade — if the Government can fend off corrupt officials, continuing terrorist attacks on pipelines and political uncertainty.” (Times, 3 November) Hey, Iraq workers may continue to live in poverty, so what, we can make a couple of bucks. That is how capitalism works, isn’t it Al Capone?

The new gangsters 

It used to be popular for supporters of the so-called Communist Party to decry Imperialism. They would point out how Britain had exploited Africa and India during their colonial conquests. Later on they would concentrate on the role of the USA in Central and South America. Changed days now with China investing heavily in all sorts of corrupt regimes throughout Asia and Africa. “Barely a fortnight after soldiers loyal to Guinea’s military junta butchered at least 150 demonstrators calling for civilian rule, a deal for oil and mineral rights worth about $7 billion has been struck between China and Guinea. … It seems that China’s commercial march across Africa will continue unabated, however vile the human-rights record of the government it seeks to befriend.” (Economist, 17 October)

Russian billionaire won, workers nil (2003)

A couple of arseholes.

From the September 2003 issue of the Socialist Standard

The sale of Chelsea Football Club to the second richest man in Russia made a good story for the tabloids – and even the broadsheets. “From Russia with £3.4bn” and “Tycoon buys club with loose change” were typical headlines.

There were some spicy elements in the story. The price of Chelsea FC – a mere £140m – would have enabled Roman Abramovich easily to buy also Manchester Utd, Real Madrid and Juventus. The buyer is a youthful 36; his casual dress and unshaven appearance is not that of your archetypal billionaire. On top of that he is a foreigner, mysterious, somewhat reclusive and therefore of dubious character. Also a bit of a paradox: MP for a remote and poverty-stricken area in Siberia, spending one week a month there, the rest of his time on a vast estate in a heavily guarded area strictly off limits to the Russian public because the new wealthy live there.

Abramovich is interesting not so much for his foray into football, but as an exemplar of changes in Russia in the last few years which have made that country a leading player on the stage of world capitalism. In August 1998 there was a financial crash, the rouble was devalued, and international credit dried up after some defaults in payments. In the Yeltsin era businesses had been privatised in opaque deals which (according to the Guardian of 3 July) “make Britain’s privatisation fat cats look like lean models of self-denial by comparison.”

Astute businessmen like Abramovich were able to become extremely rich extremely fast by exploiting the laws which allowed companies to trade on the huge difference between Russian and western prices for raw materials. Abramovich’s businesses, which included oil, television and aluminium companies, grew in number and complexity. His companies are nested within companies within other companies, many of them outside Russia. His British interests are controlled by a holding company, Millhouse.

More can be learned about contemporary Russian capitalism from the 5 July 2000 issue of Worldlink, the magazine of the World Economic Forum. This magazine enables workers employed to help run capitalism in the interests of one set of exploiters to talk to workers employed to help run the same system in the interests of other exploiters. Apparently, things are looking up for Russian capitalists, especially those with political connections (Abramovich is said to be a close friend of President Putin). Earlier Russia had “poor” banking and tax systems. Now “liberal currency regulation allows enterprises and individuals to keep their money in good international banks instead.”

What do the Russian workers think of this new system compared with old-style “communism” (state capitalism)? Many of them are worse off and certainly not sharing in the prosperity of the privileged few. Insofar as there is a political opposition in Russia, it is centred on the old Communist Party beliefs. But, as Worldlink is happy to report: “The communists now only insist on more state enterprises and more state financing . . . Both the right and the left have come to their senses and settled for a normal market economy.”

No wonder Blair and Putin shake hands when they meet, no doubt congratulating each other on the success of the system – for themselves and their cronies. The workers have yet to realise that there is an alternative and to act together to bring it about.

Stan Parker

Cooking the Books: Ill-gotten gains (2022)

The Cooking the Books column from the April 2022 issue of the Socialist Standard

In his State of the Union message on 1 March President Biden told the Russian oligarchs: ‘We are coming for your ill-begotten gains’, ‘your yachts, your luxury apartments, your private jets’. The audience, including billionaire senators, rose to their feet in a standing ovation. Watch them at: tinyurl.com/2bbd5683. This side of the Atlantic, Sky News (28 February) reported that ‘Boris Johnson says Russian oligarchs will no longer be able to hide “ill-gotten gains” in UK’ and Liz Truss, the very undiplomatic Foreign Secretary, had said:

‘There are over 100 billionaires in Russia. We have compiled a hit list of oligarchs. We are working through and putting the cases together, and every few weeks we will sanction new oligarchs. We will be targeting oligarchs’ private jets, we will be targeting their properties, we will be targeting other possessions that they have and there will be nowhere to hide.’

In the House of Commons, a Tory MP, Bob Seeley, referred to the Russian capitalists as ‘kleptocrats’ (Times, 2 March).

The present Russian capitalist class amassed their wealth in the first instance when after the collapse of the USSR the new Russian government, as advised by free-market ideologues from the US, decided to sell off the state-owned industries. A small group, mainly members of the ruling nomenklatura but also dodgy businessmen who had flourished on the margins of soviet state capitalism — such as Roman Abramovich — were able to acquire these assets on the cheap, often via bribery and gangsterism (incidentally, the same happened in Ukraine). But this was just the ‘primitive accumulation’ of their capital, akin to what happened in England when capital was originally accumulated through overseas plunder and the slave trade.

Once accumulated in this sort of way, capital becomes respectable and is invested and used up but is then renewed and expanded through the productive activity of wage-workers, with by far the greater part of what they produce being appropriated by the capitalists as surplus value, the source of profits, and of the dividends and bloated ‘salaries’ that afford them a luxurious lifestyle. This taking of the unpaid labour of the producers is the source of the wealth of the Russian capitalists. That’s how they ‘got’ their ‘gains’. But this is no different from how billionaires everywhere get theirs, including in Britain and America. Their wealth, too, is ‘ill-gotten’, being legally stolen from the producers.

Anyway, what is an ‘oligarch’? What is a ‘kleptocrat’? In what way, if any, do they differ from a Western capitalist or billionaire?

According to the dictionaries, oligarchy is rule by a few (from the Greek word for few ‘oligos’) and ‘kleptocracy’ is power in the hands of thieves (from the Greek word for thief). Socialists used to call capitalists ‘plutocrats’ (as in Clause 6 of our Declaration of Principles), with power in the hands of the rich (from the Greek ‘ploutos’). All three terms are equally apt, alternative descriptions of the ‘1 percent’. They are rich. They are few. And they are thieves.

The Western billionaires cheering on the expropriation of the wealth of their Russian cousins should be wary. It might set a precedent and the day come when a delegate of the socialist majority will mount the rostrum to tell them: ‘We are coming for your ill-gotten gains, not just your yachts, your luxury apartments and your private jets, but your land, your factories, your means of transport and communications, all the means for producing wealth that you have appropriated. And you will have nowhere to hide.’

Siberian capitalism (2004)

From the August 2004 issue of the Socialist Standard

In the January 2000 issue of this journal, under the title “Sent to Siberia” we described the development of the Norilsk Metallurgical Combine and the emergence of the city of Norilsk. It has been, and is still called, the Frozen Hell. Before 1935, there was nothing there except a few reindeer and reindeer-hunters. But shortly after, nickel and other metal deposits were discovered.

The then Soviet rulers were only able to develop the area by shipping in hundreds of thousands of dispossessed kulaks, and other peasants and workers, as forced labourers in what we described as Russia’s era of the “primitive accumulation of capital”. At that time all such projects, and all the major means of production, were developed and subsequently owned by the state, which was controlled by a minority of “communist” apparatchiks, of whom many ultimately evolved into a privileged and increasingly prosperous nomenklatura or state-capitalist class.

Following the collapse and disintegration of the Soviet Union many large enterprises and combines were privatised, and the workers were no longer exploited by the state. The Norilsk Metallurgical Combine was one such enterprise. Vladimir Potantin, already a privileged apparatchik, was able like many other former Soviet bosses to take advantage of the new privatisation laws and, as a business partner of George Soros, acquire the Combine in 1995 for a fraction of its actual value. He soon became one of Russia’s richest industrialists. He and not the state then exploited the workers. And the Combine is now called a Mining Company.

But what of the workers who have created his riches? And what kind of place has the city of Norilsk become?

Pollution and poverty

Since November 2001, Norilsk has, as in Soviet times, been largely closed to foreigners. But after considerable trouble, Nick Walsh managed to get permission to visit the city in 2003. He described the situation and the condition of the workers in the Guardian (l8 April 2003). In the winter the temperature dropped to –62oC which, due to global warming, was about 10oC milder than ten years previously. In the summer, the temperature can reach 23oC, but only for two weeks. Every day the soot from the Mining Company turns the snow black, and the mine sends 5,000 tonnes of sulphur dioxide into the atmosphere, which makes the air taste sour.

Indeed, the Norilsk Mining Company produces one seventh of all factory pollution in Russia. Every year, it churns out two million tonnes of waste gas, and 85 million cubic metres of dirty water. Its impact, say ecologists, is felt as far away as Canada and Norway, and it is killing the forests for hundreds of miles.

   

Walsh comments: “In Russia, big business runs much of the country, so few even raised a quizzical eyebrow when, last year, the co-chairman of Norilsk Nickel, Alexander Khloponin, was elected governor of the local Krasnoyask region. Last year, he declared his income to be £1m a month, but reportedly earned £30m in share dividends alone.”

A Norilsk Nickel Company spokeswoman accepted that only four percent of all adults in the city were healthy. The hardest working 12 percent of the Company’s workers may retire at 45, but one worker told Walsh that “you pay all your life towards a pension you don’t live to collect”. Most workers cannot afford to leave Norilsk, as they do not earn enough to buy a house elsewhere. They average between £200 and £500 a month. Says Welsh: “They live, work and reproduce for the Company. The money goes round, and eventually people pass away. The city’s isolation means that they pour their wages into Company-owned shops and facilities.”

A market economy

Krasnoyarsk, a city of 900,000 inhabitants almost 1,000 miles south of Norilsk, is the administrative centre of the Central Siberian area. Like Norilsk, it has been depressed and is probably in terminal decay. But it is the home of the giant Krasnoyarsk Aluminium Company, owned by the oligarch Oleg Deripaska’s Rusal Group. The smelting plant is the second biggest of its kind in the world, producing more than 930,000 tonnes of aluminium a year.

In Soviet times, says Terry Macalister, writing this year in the Guardian (23 June) from Krasnoyarsk, the plant produced aluminium pots and pans for domestic kitchens, but now produces aluminium ingots, which are shipped all over the world, including to Britain, where Oleg Deripaska has a stake in the Anglo-Dutch steel company Corus. Jobs at the aluminium smelter, which originally employed 10,000 in Soviet times, have been cut in the last twelve months to 6,700. Duncan Hedditch, who is the tough new Australian boss of the plant, says that he hopes to reduce the number of workers to below 5,000 within three to four years. Yet at the same time, Deripaska is expanding productivity and, therefore, increasing the exploitation of the remaining workers, and investing $270m in modernising the plant.

The Krasnoyarsk aluminium plant produces three percent of the world’s aluminium, and consumes half a million tonnes of carbon every year. Some of the workers earn quite high wages by Russian standards: $800 a month, compared with an average of $250. But the going is tough. And, like the miners of Norilsk, the workers of the Krasnoyarsk Aluminium Company generally do not live to old age.

Workers of Norilsk and of Krasnoyarsk, like workers the world over, cannot win under capitalism, state or private. Many of their problems, however, would be solved by establishing socialism, although others such as pollution and the effects of ill-health, would take longer to eliminate. But, at least, a start could be made.

Peter E. Newell

Rouble-makers - Part 1 (2011)

From the December 2011 issue of the Socialist Standard

  The court case pitting two Russian oligarchs against each other throws some light on how some capitalists originally accumulated their capital

In any private-property society, there is always a boundary (which can be, and often is, changed from time to time) between those parts of the means of production (factories, farms, mines, transport) owned by individual members of the upper class, and those parts owned by the state itself – which is, of course, the executive committee of the upper class. From time to time, and for varying reasons, the state authorities may decide to unload part of the state’s holdings of these valuable assets. For example, in England in the 1530s, King Henry VIII took advantage of the jealous greed of the English upper class as they looked at the vast properties of the Catholic Church – perhaps amounting to a third of the land of England – and (since he was annoyed with the Pope for refusing to let him get rid of his Queen and marry a much younger woman who he hoped would give him a male heir) he declared himself to be the head of the English Church, and therefore owner of all the Church’s property. Being continually short of funds, he then sold or even gave away the church lands to favourites. So, anyone who had wormed himself into a position at court and could please the king through services more or less disreputable could get nice big estates very cheap or even free. Anyone who laughed the longest when the king made a joke or thought up the most obsequious flattery or was unscrupulous enough to do the king’s dirty work for him was in line for a big chunk of the former church lands. The reason so many of England’s old aristocratic families live in houses called something Abbey or something Priory is that they have estates which were pinched from the Church by Henry VIII and then handed on to some devious ancestor.

What happened then has happened again much more recently – different country, different century, but basically the same process at work. For England in the 1530s read Russia in the 1990s. The old state capitalist system, established by the Bolsheviks after the 1917 revolution, was breaking up. Those in power in the Russian Empire, the old U.S.S.R., were more and more coming to the conclusion that the modern world demanded less economic power in the hands of the state, and more economic power in the hands of individuals. Under Gorbachev, who was the top man from 1985 to 1991, permission was given for small businesses to start up outside state control. Under Boris Yeltsin, who was in power from 1991 to 1999, this trickle became a flood. It was help-yourself time. Anyone in the small circle of Yeltsin’s advisers and friends – or anyone who could chum up with anyone in that small circle – could get his hands on enormously valuable slabs of state property at knock-down prices. In 1990, Russia’s industries belonged to the state. By 2000, only a decade later, Russia’s industries belonged to a small group of men, who became known as the “oligarchs”.

This process was not risk-free, of course. To amass a multi-million pound fortune, and then to build it into a multi-billion pound bank balance, and to stop others grabbing your share, strong-arm methods were necessary. Gangsterism was rife. Rivals would be found dead and the police could never work out who had done the deed, particularly after they got their pay-off. Each oligarch, or would-be oligarch, had a squad of bodyguards, both to “deal with” (so to speak) anyone who stood in his way and to make sure rivals did not “deal with” him. These strong-arm men were, quite rightly, feared. One oligarch, Boris Berezovsky, ran a television company in Moscow; the man in charge of security at the television station was Andrei Lugovoy. He was a former KGB officer who worked for Berezovsky for nearly ten years. Then he apparently moved on to work for Mr Putin. Another former KGB officer, Alexander Litvinenko, alleged there was widespread corruption in the Russian government, and had to flee to Britain in 2000; there, he continued to attack Putin. On 1 November, 2006, Lugovoy came to see him; the same day he fell ill, suffering from poisoning by the radioactive substance, polonium-210. Traces of this material were found everywhere Lugovoy had stayed while visiting London – three hotels, a restaurant, two aircraft. Litvinenko wasted away, and died three weeks later; Russia refused to extradite Lugovoy, and soon after he was triumphantly elected to the Duma, Russia’s parliament. However rich you were, you wouldn’t want to annoy the employers of men like Lugovoy.

It was also essential to work out which way to jump when power changed hands at the top. Some people who were well in with Yeltsin were caught on the hop when Yeltsin finally retired to spend more time with his vodka, and Putin succeeded him. If you transferred your allegiance too soon, you would get nothing more from Yeltsin; if too late, you wouldn’t get anything from Putin. Boris Berezovsky’s television company dared to criticize Putin over the Kursk submarine tragedy. (In August 2000 the Kursk sank with the loss of all the crew, 118 men; 24 hours later Putin was filmed enjoying a barbecue at his holiday villa on the Black Sea.) Putin froze all Berezovsky’s Russian bank accounts, and Berezovsky fled to Western Europe – the poor man claimed he was down to his last million dollars (Times, 5 November). Now he dare not go back to Russia. (Even so, he is reportedly worth five hundred million pounds, no doubt the value of properties he was able to squirrel away abroad while he was still a big cheese in Russia.)

Table of journalist deaths under Presidents Yeltsin, Putin and Medvedev

Mikhail Khodorkovsky, once Russia’s richest man, thought he was powerful enough to start arguing with Putin, and bankrolling opposition groups; he now languishes in a jail near the Chinese border “for tax offences”, and the chances are that is where he will stay for the foreseeable future. The same happened to another oligarch, Platon Lebedev, who is also now in one of Putin’s jails. So, certainly, skill of a kind was needed, not only to seize your share of the goodies, but also to keep it.

Putin, of course, poses before the world as a true democrat. In fact, he is more or less a dictator, just like his predecessors who ran Bolshevik Russia. It is significant that Putin keeps in his office a statuette of Felix Dzerzhinsky, the founder of the Cheka, the Russian security police, forerunner of the KGB. Like all the figures that run Russia today, Putin (who made a name for himself as a KGB spy in East Germany) began, and continued, and reached high office, as a loyal member of what was called the “Communist” Party of the Soviet Union – the party which claimed that Russia was “communist” and “democratic”. Since Russia abandoned state capitalism, there must have been a million newspaper articles, television programmes, and radio broadcasts, celebrating the downfall of “communism”; to our knowledge there has not been a single article, programme or broadcast, celebrating the downfall of “democracy”. In other words, the opinion-formers round the world unanimously believe that when the rulers of the former USSR claimed to be “democratic”, they were the world’s biggest liars: but when the very same people claimed to be “communist”, they were completely truthful, and could be trusted to the hilt.

Not surprisingly, with billions of pounds at stake, disagreements often broke out among the oligarchs. Several court cases among Russian oligarchs are now, or soon will be, before British judges. Any court case in Russia would be decided quickly enough, of course: the litigant most favoured by Putin would win. But like all very rich men, the Russian oligarchs never bothered much with national boundaries – which are there mainly to keep the lower class in order (by reminding them which state they belong to, and are expected to fight for when business disagreements become open warfare). The oligarchs soon owned much property in many other countries, for example, in Britain. “In 2006, a fifth of all houses in the UK that sold for more than £8 million went to Russians” (Mail online). Unexplained fatalities are also exported. In 2004, a British lawyer, Stephen Curtis, had become very rich representing Russian oligarchs. He had a very good memory and could remember a lot of detail without having to commit too much to paper, which was an ideal way of doing business for many oligarchs. Curtis had a £4 million penthouse in London as well as a castle in Dorset and once spent £20,000 on a night out at Stringfellows. He had contacted the National Crime Intelligence Service with an offer to pass on information about his clients. Then he began to get threatening messages on his mobile phone from people with Russian accents. In March 2004 he told a friend, “if anything happens to me in the next few weeks, it won’t be an accident”. A week later he travelled down to Dorset in a brand new helicopter, with a very experienced pilot, and in reasonable weather conditions. People on the ground heard a bang, the helicopter crashed, and Curtis and the pilot were dead. There was not too much investigation of this surprising occurrence, and it was accepted as an unfortunate accident.

One case arising out of disagreements among the oligarchs is now being heard in London – Boris Berezovsky versus Roman Abramovich. The accounts in the press of the evidence in the case are fascinating. The British courts, naturally, are happy to hear disputes between such fantastically rich people as the Russian magnates – lawyers obtain fat fees acting for tycoons. Jonathan Sumption, QC, was announced last May as a coming judge of the Supreme Court – the old Law Lords – with the pleasant addition of a life peerage: when, that is, he chooses to take his promotion. He has postponed it for the time being in order to assist the interests of justice by representing Abramovich in the current case. In a letter to the Guardian in 2001, Sumption bemoaned being able to earn only a “puny 1.6 million a year”, but his probable fees in the Berezovsky case have been estimated at between three and ten million, so he will find it well worth while delaying his accession to the Supreme Court.

Alwyn Edgar

(Conclusion next month)

Link to Part 2

Rouble-makers - Part 2 (2012)

From the January 2012 issue of the Socialist Standard

Link to Part 1

The concluding part of our article on how some capitalists originally accumulated their capital.

Roman Abramovich grew up poor: both his parents died when he was young, and he was brought up by an uncle. He was nothing out of the ordinary at school or in the army where, after two years, he was still a private; though as a soldier he is said to have sold contraband petrol to the officers of his unit. He married young and “married well” as the phrase is, because his wife’s parents gave the newlyweds a wedding present of 2000 roubles, worth at the time about £1000 (which was more valuable then than now). With this starting capital he set himself up as a street trader, selling plastic ducks. Abramovich’s present fortune is about ten thousand million pounds, so one’s first thought is that he must have sold a lot of them. Reports suggest that the ducks (which could be relied on not to quack) were smuggled in, thus avoiding the due taxes and increasing the resulting profits. (All this private buying and selling was then illegal, of course.)

Abramovich then went into trading automobile parts, retreaded tyres, other plastic toys and commodities generally. But the significant fact is that Abramovich was twenty when Gorbachev came to power, and small private businesses became tolerated. So Abramovich began making plastic dolls.  This, in our society, means that he was able to organize other people into making plastic dolls which he then sold, keeping the surplus value. Soon Abramovich was forming and liquidating numerous companies: he was into bodyguard recruitment, pig farms, and trading in oil and oil products. As one of the first out of the starting gates into private merchandising he was now making a lot of money – though some press reports claim it was not always along completely legal channels. There were occasional setbacks. In 1992 a goods train arrived in Moscow carrying diesel worth 3.8 million roubles. Abramovich met it and gave instructions for a different destination. He was arrested, charged with stealing state property and held in prison. But the people who got the oil duly paid for it, so Abramovich got out of jail and it was all forgotten.

Abramovich got to know Pyotr Aven, businessman and politician, who was in 1992 the Minister for External Economic Relations and, in 1994, the President of the Alfa Bank, one of Russia’s largest. On Aven’s yacht Abramovich met an even greater personage, Boris Berezovsky, who was in Yeltsin’s inner circle.

Abramovich made sure he became close to Berezovsky: their families even holidayed together. Berezovsky provided Abramovich with what is known in Russia as “krysha”, literally meaning roof: that is, with contacts, with political protection and, indeed, with a connection to the very centre of Russia’s government – to Yeltsin and Yeltsin’s friends. Berezovsky became Abramovich’s “godfather”.

Abramovich paid for this personal line to the centre of power with vast amounts of money: according to Abramovich on the witness stand in the current case, he paid Berezovsky during the 1990s no less than 2.5 billion dollars – well over a billion pounds (Times, 11 November). It was money well spent, since the 1990s was the decade when Yeltsin was disposing of Russia’s state industries. After cosying up to Berezovsky, Abramovich now cosied up to Yeltsin and his entourage, including his daughter Tatyana Dyachenko and his security chief Alexander Korzhakov. Soon he had an apartment in the Kremlin and was proving the truth of the old saying – it’s who you know that counts.

Yeltsin had come to power in 1991 when, like many other politicians, he was going to make everything fine for everybody. A year or two later (like many other politicians) he was despised as a failure. In 1996 he had to stand for re-election. He desperately needed money to finance a political come-back. Various auctions were held of state assets. Abramovich wanted to get hold of Russia’s oil industry – refineries, exploration enterprises, marketing company, everything – in a new entity called Sibneft. Abramovich’s witness statement to the court says, “Mr Berezovsky helped him acquire Sibneft in one of several rigged government auctions. These privatizations . . . allowed a group of oligarchs to gain control of vast state assets relatively cheaply in return for supporting Boris Yeltsin’s re-election campaign” (Times, 29 October). These are Abramovich’s own words, very carefully considered – telling untruths in a court case would rank as perjury, so he must have felt sure of what he wrote down. Since another Russian company, Gazprom, bought 73% of Sibneft in 2005 for 13.1 billion dollars, which would value the whole of Sibneft at 17.9 billion dollars, or at least a hundred times as much as Abramovich paid for it, one can agree that it was bought “relatively cheaply” and that the government auction must indeed, to use Abramovich’s word, have been “rigged”. In court, Berezovsky’s lawyer said that “an oil refinery manager who had opposed the deal that underpinned Mr Abramovich’s initial fortune had ‘died in difficult circumstances . . . he drowned’. Tantalizingly, no further detail was given” (Times, 2 November).

Abramovich moved on to consider the Russian aluminium industry. He said in his witness statement: “Prior to 2000, the Russian aluminium industry was disorganized, its assets were split between a number of different owners, and some of the players in the industry resorted to forceful methods and violence to protect their interests.” So he “was not keen to get involved in the industry, given its violent and unstable history. Criminal groups were fighting fierce battles for control of the profits generated . . . and dozens of businessmen had been killed in this struggle for control.” In fact, “someone was murdered ‘every three days’ at that time”. This period became known as “the aluminium wars.” However, another oligarch, Badri Patarkatsishvili, persuaded Abramovich to go for it, in return for the small consideration of half a billion dollars for his help as an intermediary. (Patarkatsishvili unfortunately died suddenly at his Surrey mansion in 2008, aged only 52, the very day after sending an urgent message to Abramovich saying, “he had something very alarming to tell me, and asking me to meet him urgently.” They decided it must have been a heart attack.) Abramovich, in alliance with another oligarch, Oleg Deripaska, successfully acquired Russia’s aluminium industry. Subsequently he extended his holdings in other Russian industries.

Deripaska, of course, was the man who hosted a holiday party on his luxury yacht in the eastern Mediterranean in 2008. The guests included Nathaniel Rothschild, George Osborne and Peter Mandelson. Mandelson was then the EU Trade Commissioner, and the EU had reduced aluminium tariffs, thus benefiting Deripaska. Some commentators alleged that it was inappropriate for Mandelson to accept Deripaska’s hospitality, but probably they were annoyed at not having been invited to sunbathe on the yacht. Others claimed that Osborne tried to get Deripaska to contribute to Conservative Party funds, but no doubt it was all a misunderstanding.

Abramovich insists he has earned his success. His wealth, he said, he had “generated through hard work and by taking risks associated with doing business in Russia”. It is true that some of those hopefuls who started out like Abramovich with the same aim of taking over some of Russia’s state industries have now retired to the nearest cemetery. Some of the men who took “the risks associated with doing business in Russia” are no longer with us; they have died of “lead poisoning”, to use the old euphemism, unless it was suspected that more exotic means of settling business disputes had been employed. And it is certainly true that all wealth is generated through “hard work”; it is only necessary to add that the person doing the hard work and the person getting the wealth are not always identical.

Abramovich’s evidence is currently causing raised eyebrows in London’s High Court, as he explains that he often gave out inaccurate information to the public and to potential shareholders, about who really owned his companies (“mainly for reasons of security”), that he signed important business documents which carried an intentionally incorrect date and that some people who signed documents as acquiring shares were not in fact acquiring shares at all – all of which would be offences under English company law. “If backdating documents is something that is not very ethical, then perhaps we can be accused of that. This practice existed in Russia and for sure we have done it,” said Abramovich. “If backdating this agreement is a sham, then so be it,” he told the court. “This is a uniquely Russian story,” Abramovich asserted. Other documents recording purchases, Abramovich told the court, contained the names of people who were supposedly purchasers and recipients of shares but in fact were nothing of the kind. “It is a Russian tradition”, Abramovich told the (somewhat surprised) court. Indeed, some of the state companies apparently were kind enough to give important assistance to the oligarchs who were bidding to take them over. Private Eye (11 November) said: “the puzzled judge did try but failed to get Abramovich to explain exactly why state-owned companies would assist in their own purchase without any written agreement. Another ‘uniquely Russian story’.”

Abramovich is now very close to Putin. He apparently interviewed politicians to see if they were suitable candidates for Putin’s cabinet. Abramovich has become enormously rich and, not surprisingly, has a squad of forty security officers to look after his personal safety. According to the Daily Mail earlier this year, he has four homes in Russia, two in the U.S., and three in France. In England he has six flats in Knightsbridge, and the Fyning Hall estate in West Sussex (not to mention a Premier League football team). He also owns the Eclipse, a luxury yacht 560 feet long, which has two swimming pools, two helicopter landing pads, several subsidiary boats or tenders and a submarine. According to reports in the papers, he has several other luxury yachts. He also has a Boeing 767, an Airbus 340, several helicopters, and ten luxury cars – a Porsche, a Rolls, a Ferrari and so on. However, he told the court that he had been “astonished by Mr Berezovsky’s spending habits when they met in 1994, and that he did not want a similar ‘extravagant lifestyle’” (Times, 2 November). So Berezovsky must have been living it up.

In the 2011 Forbes list of the world’s richest men, Abramovich was only the ninth richest man in Russia (where there are now no fewer than 114 dollar billionaires). So there are eight Russians who probably wonder how Abramovich can make do with so few houses, cars, luxury yachts and so on.

In the present clash of the tycoons, Berezovsky claims that the vast amounts of money Abramovich paid him were dividends from Berezovsky’s share of the companies acquired from the state in the 1990s, while Abramovich says they were nothing more than payments for Berezovsky’s services in keeping Abramovich’s name before Yeltsin as an appropriate man when Yeltsin wanted to make more money out of state assets. These matters will not be easy to decide when whole industries changed hands with little more than a nod and a wink, or in transactions recorded at best in documents which were unfortunately false as to date, and as to personnel, and as to share-holdings. (“It is a Russian tradition.”)

Several other cases involving the Russian oligarchs are down for early hearings in London. But surely any unbiased person who reads the reports of the current case must, on the facts revealed there alone, abandon any support of capitalism. The courts and the judges and the lawyers can argue till the cows come home about whether one oligarch has done the dirty on another, or whether one oligarch ought to have a few billion more and another oligarch a few billion less. It all misses the essential point completely. What these two oligarchs are arguing about is not about creating industry: the Russian oil industry existed and still exists; the Russian aluminium industry existed and still exists. Nothing in all these nefarious dealings in Moscow altered the basic facts of those industries. All this laborious and expensive squabbling in London is concerned with one thing only: which extremely rich person shall have more of the surplus value produced by these industries, and which shall have less. As Abramovich himself said in the courtroom about the Russian aluminium industry, “criminal groups were fighting fierce battles for control of the profits generated”. Not a single voice has been heard, either in the courtroom or in the lengthy reports of the proceedings in the papers, asking the essential question: why should the Russian oil-workers and the Russian aluminium-workers go to their work every day and produce oil and aluminium, and have so much of their hard work creamed off to in order to provide disgustingly extravagant luxury for people who probably couldn’t even explain what it is the oil-workers and the aluminium-workers do.

But then, that is what capitalism, whether the state variety or the private variety, is all about.

Alwyn Edgar

INLA feud—gangsters big and small (1988)

From the January 1988 issue of the Socialist Standard

A feud between the factions of the Irish National Liberation Army (INLA) has ended in death for many and will undoubtedly see the same end for many more. To the bystander, the whole episode seems a bit confusing as it is difficult to understand why those with apparently the same political objectives devote their time to murdering each other. The fact is that this feud has nothing to do with politics. This is not a disagreement over differing political principles or tactics; this is a gangland feud about control over the spoils of protection rackets and other gangland activities.

There has never been any doubt that paramilitary organisations have been up to their necks in racketeering since they became powerful and intimidating forces in their communities. They act as a self-appointed police force, dishing out punishments like kneecapping to young people considered by them to be involved in anti-social behaviour. The IRA and UVF are not strangers to the back entry courtroom where the "soldiers of liberation" become jury, judge and executioner over some young fellow who broke into a shop without their permission. In contrast, they ensure that where racketeering does take place, it is done under their control and with the organisation creaming off the benefits.

The INLA had simply brought this to its natural conclusion and had become much more a Mafiosa than a so-called political army. Of course they are content in the notion that their robbing and protection racketeering is for the needs of the movement, an illusion which the leadership is happy to perpetuate. It was only when the division of the spoils became a problem, that they started to blow each other's heads off, each in an attempt to intimidate the other faction. Their style of execution is similar to that of a wild west film where the gunfighter walks into a bar, shoots the victim in the head and cooly walks out again. Men who shared cells together in person are now on opposing sides, both with loaded guns and both intent on killing the other.

To add insult to injury these sad people have the gall to call themselves socialists. There is no need to waste space in this journal explaining to our readers that these anti-working class "heroes" are simply Irish nationalists, bent on "convincing" any opposition through the barrel of a gun. They have nothing to do with the principles of democratic socialism.

One important observation must be made about this feud. It's easy enough to dismiss it as a crowd of self-interested gangsters going around murdering each other, but what is the difference in what they are doing and what the forces of the State do? When governments "fall out" over trade routes or areas of strategic interest they are simply arguing over who is going to administer the robbery of the working class in a particular area — through the swindling economics of capitalism. The fact that the conflicting sides in these feuds wear nicely tailored uniforms and fly expensive war planes does not make it any less a feud. Dropping a bomb on a city, killing thousands of innocent people only differs from the INLA feud in that it is done on a bigger scale. 

The INLA are only amateur copycats of the lessons taught by Big Brother — the State. When the factions of the INLA disagree as to who is going to put the screws on a couple of shop-keepers, they shoot each other until one side wins. When the government of one country falls into irreconcilable dispute with the government of another country over who is going to put the "screws" on the workers, then they send in their armies, gullible workers, trained and paid to kill, to slaughter each other until one side wins.

(Reprinted from Socialist View — World Socialist Party of Ireland)

Guns and protection (2009)

Book Review from the June 2009 issue of the Socialist Standard

David Lane: Into the Heart of the Mafia. Profile

I didn’t expect a book on the Mafia to be all that interesting or relevant, but in fact Lane’s investigation can be interpreted as shedding some light on the operations of capitalism.

Italy became a unified state fairly late on, in 1861, and the south of the country was for a long time isolated and barely under the control of the central government in Rome. As a result, a sort of private police force filled the vacuum and administered its own kind of ‘justice’. Basically, a set of thugs and gangsters, they evolved into the Mafia, a term which covers at least the Cosa Nostra in Sicily, the Camorra in Campania and the ’Ndrangheta in Calabria.

Their activities now include robbery and murder, loan sharking, extortion and protection money. Anything that involves money-making attracts them, such as the university in Messina on Sicily, which is the town’s biggest business. The construction industry, and public works in general, is another area where the Mafia can extract money. It’s estimated that about half of the £24 billion paid for reconstruction after an earthquake near Naples in 1980 ended up in the hands of the Camorra. Burying toxic waste with no regard for the environmental consequences also brings in big profits. All this goes on with the connivance of many in business, government and the Catholic church.

The south of Italy still represents a relatively unattractive place for companies to invest in, since a return on investment requires a level of security that is mostly lacking. Capitalism, then, needs its version of law and order, and the Mafia-controlled regions are a clear demonstration of what can happen when this does not exist.

For the working class, the consequence of Mafia rule are dire, with very high levels of unemployment and high drop-out rates from school. With legal jobs hard to come by, many are attracted to work for the Mafia. Someone who then wishes to break free may be killed as a warning to others. At the same time, though, members of agricultural cooperatives farming ex-Mafia land show a great deal of courage in resisting sabotage and intimidation.

As one of Woody Guthrie’s songs says, ‘Some will rob you with a six gun and some with a fountain pen’. There is more than one way for workers to be exploited and oppressed, and the Mafia are the way of the six gun.

Paul Bennett