In a world in which power lies in the control of brands, Putin seeks power through the acquisition of lands
Is there a connection between Russia’s unprovoked war of aggression against Ukraine and the emerging new world order of cultural production? Yes there is, and it has to do with the fact that Russia is the biggest loser of the second wave of globalization. Part of what we are seeing now is Russia lashing out based on a faulty 19th century theory of geopolitics which sees land as the main source of power, rather than brands and the control of global value chains.
By Vinzenz Hediger
The above tweet on a video showing a Russian father hammering an iPad to pieces in company of his son in protest of apple’s decision no longer to sell to and service Russian customers points to an important dimension of Putin’s attack on Ukaine, and to one of the sources of his nostalgic/melancholic hunger for territorial expansion more generally. In 1991, Russia, which had been at the center and at the commands of the USSR, did not just loose an empire. It set itself on a path to becoming the biggest loser of the second wave of globalization.
In 1984, when he first ran for president of the United States, Jesse Jackson asked the audience at a debate who of them owned a Japanese VCR. Many hands were raised. Then he asked who owned an American cruise missile. The point was clear: The American industrial base was geared towards Cold-War military technology and global military hegemony. Japanese consumer electronics, on the other hand, represented what customers wanted, and where the economy would go. After the end of the Cold War the US caught up and, partly by repurposing technology developed in the arms race, became the world leader in IT, software, and later platform economy consumer brands, from Microsoft to apple, amazon and netflix.
The second great wave of globalization, which started around 1990, was a big part of this development. It created an integrated system of the global economy with low thresholds to trade. Global value chains, in which production was outsourced to low-income countries while the design and sale of products remained concentrated on high-income countries, quickly replaced the factory-in-one-place-near-resources-or-markets model of the classical industrial order. The distribution of value creation along global value chains represents a U-shaped curve: Most value is created at the point of design and development, i.e. for the owners of patents and brands, comparatively little is created in manufacturing, and again a lot at the point of sale. What matters in the new globalized economy, then, is to develop and control global consumer brands. In this new system, China rose to economic world power status by emulating the model of South Korea, i.e. by first positioning itself as the world’s manufacturer, only to quickly move to develop global consumer brands like Huawei (or, to cite one of the Korean equivalents, Samsung). So China understood that it should move from the nadir of the U curve to the design/sale ends, and managed to do so in many areas in the space of thirty years.
As for Russia, nothing even remotely comparable happened. Russia did not even gain its share of world manufacturing, which partly has to do with geography: global value chains rely on container shipping, and Russia suffers from a notable lack of permanently ice-free ports in proximity to possible centers of manufacturing. On-land transport in Russia is arduous and costly because of the huge distances and poor infrastructure, thus annihilating any cost advantage potentially accruing from lower salaries. Instead, Russia became one of the world’s gas stations. But rather than spreading the wealth and investing in technology and other areas with development potential, the new owners of the country, the oligarchs, invested in high-end consumer items: Football clubs, yachts, luxury real estate in London, the Mediterranean, Dubai, New York and Miami. To the extent that they could, the population of Russia emulated their example. Russia got stuck in the structural hell of a resource economy/import consumer economy, in which access to consumer goods covered up the simple fact that Russia itself produced nothing that the world wanted to buy – just a few things, like fuel, that the world needed to buy. Russian fiscal policy further sealed the trap. As Adam Tooze puts it, “the price for the smooth insertion of Putin’s regime into the regime of globalization – despite its aggressive diplomatic and military challenge to US hegemony – was Russia’s peerless orthodoxy in monetary and fiscal policy.” State investment in research and development on a scale which had kept the Soviet Union competitive in the arms race were thus out of the question.
Inheriting the nuclear stockpile further made, or kept Russia stupid. The ability to annihilate humankind several times over may appeal to gangsters and petty secret police used to governance by physical threat, but it is not conducive to an extended reflection on the soft power of global brands (not that the world of global value chains is free of gangsterism, of course: Container shipping is dominated by four European companies which account for more than 50% of the world market – Maersk of Denmark, MSC, incoporporated for tax reasons in Swizerland, CMA-CGM of France, and Happag-Lloyd of Germany; also among the top six are the PRC’s Cosco and Taiwan’s Evergreen, of Ever Given Suez Debacle fame; South Korea with Hyundai and Japan are also in the top ten; currently exempt from the EU’s cartel regulations because of the pandemic, these companies used that loophole to increase shipping fees tenfold over the last year, citing “supply chain issues”, which is a big part of the current inflation).
It is not insignificant that the current regime of sanctions against Russia does not include boycotts of consumer goods, simply because there are none coming out of Russia to boycott. In the 1980s, as a conscientious consumer in Europe you could (or thought you could) fight Apartheid by refusing to buy Granny Smith apples (I still hesitate when I see them in the supermarket). For all that it is worth Russia is not even the world market leader in Vodka (Sweden is). How dependent Russia is on imported technology and services can be seen from the fact that apple can grind large swathes of daily life to a halt by simply turning off apple pay, which stands in for a domestically controlled infrastructure much in the same way that whatsapp is now the most reliable public utility in Nigeria.
Another good example is the aviation industry. Aviation, and civil aviation in particular, is an “apex predator technology”, a technology which requires the highest levels of technological and organizational sophistication. Those who can set up, control and maintain civil aviation systems and in particular build and maintain planes without input from third parties control a key part of the technology required to keep the globalized economy going. At this point, only Airbus and Boeing, and only Europe and the United States are in that position. Brazil has a significant small aircraft industry, and China is struggling to build one, but remains dependent on technology provided by European and American partners. As for airlines, the Gulf states anticipated the demise of fossile fules by heavily investing in airlines, taking advantage of the fact that 60% of the world population live within an eight-hour flight radius around the Gulf of Persia. The Soviet Union had a full-fledged civil aviation industry as well as a military avivation industry. They even built a super-sonic jet to match the Concorde, the Tupolew 144 (even though it had safety issues which became apparent ealier than those of the Concorde). Now they are down to one type Sukhoi passenger jet, which uses British and French engines. This is also why Airbus’ and Boeing’s decision to pull out of their maintenance contracts with Aerflot means that domestic aviation in Russia will completely collapse in about two weeks.
Arts, culture, and media, too, are stuck in non-scalable 19th century formats with limited export potential: the Bolshoi, but no Squid Game, no tiktok, no Nollywood. Much like in Soviet times film production in Russia is closely aligned with state propaganda, minus the originality of an Eisenstein, Vertov or Shub. The main output of media is state propaganda, with reactive, aggressively anti-western identity politics in lieu of the aspirational folk internationalism of 1920s Soviet propaganda. Exclusionary by design and derivative by default, such content may help to keep Putin in power, but it won’t play in Peoria (to cite the old Hollywood benchmark for marketability). As things currently stand Russia’s most significant culture export of the post-Cold War period are twitter troll bots which, once again, feed on US technology.
Which brings us back to Putin. In a world in which power lies in the control of brands, he seeks power through the acquisition of lands – a 19th century imperialist stuck in the mindset of Halford Mackinder’s concept of geopolitics, which suggests that control of the Eurasian landmass will be the source of future world power, and which so impressed Putin’s chief ideologist Alexander Dugin. Russia has always been a colonial power on its own territory, and the aggression against Ukraine is yet another in a long series of extensions beyond the country’s borders of what Alexander Etkind calls “internal colonization”. But the geopolitics of the 21st century are not the geopolitics of land. They are the geopolitics of brands. Mackinder’s American counterpart Alfred Thayer Mahan developed a concept of geopolitics based on naval power and domination of the seas in his 1890 book The Influence of Sea Power upon History, which laid the groundwork for US naval doctrine. It aligned well with America’s trade policy of open global markets for US goods, which has been a bi-partisan consensus since the McKinley administration and the 1890s. It continues to align with US naval policy, which focuses on keeping the seas safe for trade, i.e. for the container ships largely run by companies from European and Asian allied countries, notably Taiwan, Japan and South Korea. The PRC’s belt-and-road initiative is an attempt to develop land trade routes across Eurasia and along the old silk route to reduce dependence on the naval trade system controlled by the US and its allies. But Putin’s problem is that even with access to the new silk route he has nothing to sell that the world wants, unless you are a fellow tyrant like Assad looking for someone to incompetently and indiscriminately administer organized violence to your people for you. This is why the father smashing an iPad with a hammer to teach his son and the world a lesson but needing an iPhone and twitter to get his point across is the perfect image of Putin and the Russia he built, and the Russia we see in action now in Ukraine.
Photo source: Twitter / screenshot Vinzenz Hediger
