Available online 30 April 2015
Open Access
Post-crisis Belarus: Marxism and the lender of last resort
- Open Access funded by Hanyang University
- Under a Creative Commons license
Abstract
Existing
literature has examined the predictions and proscriptions of Karl Marx
in response to the 2008 global financial crisis. However, the
suggestions put forth by the Marxist-leaning literature never took hold
and state-level banking and finance policies have remained largely
unchanged. While many criticisms of Marxism exist, this paper examines
Belarus, a ‘neo-communist’ or ‘market-socialist’ state, to provide a new
perspective on the continuation of capitalism in the United States and
Europe, nearly unchanged, following the financial crisis. In the case of
Belarus, the International Monetary Fund and the Eurasian Economic
Community's Anti-Crisis Fund provided both the critical liquidity needed
to temporarily quell the effects of the financial crisis. Their demands
meant that Belarus agreed to speed its move away from the Soviet-era
finance and banking policies and more towards its western capitalist
neighbors. Its failure to implement these policies further hurt its
recovery. Examining Belarus' path to and out of its financial crisis
makes apparent that the role of the international lender of last resort
(LOLR). The LOLR acts as a key element in protecting states embroiled in
the financial crisis from facing the possibility of making the
difficult policy changes put forth by the Marxist literature. By
ignoring its promises under the loan conditions from its LOLRs, Belarus
moved further from the recovery promised by the Marxist suggestions.
Keywords
- Marxism;
- Belarus;
- International monetary fund;
- Lender of last resort
1. Introduction
Following
the start of the 2008 financial crisis, the literature began to discuss
the predictions of Karl Marx, drawing parallels to Marx's predictions
of the global financialization of capital and the subsequent weakening
in power of workers to negotiate (Carver, 2009, Shulman, 2012, Sklansky, 2012, Sustar, 2013, Tabb, 2010a and Tabb, 2010b). Interestingly, Sustar (2013)
claimed that even the Tea Party represented Marx's analysis of the
middle class with its “angry and resentful” attitude toward big business
while remaining procaptialist and conservative. Some more extreme
papers pondered the implosion of capitalism and a new, left-leaning
system taking its place. Hobsbawm and Rutherford (2011,
p. 140) stated that “the most promising road forward for the left is to
attack the failure of our economies to understand the depth of the
crisis of capitalism since 2008 – a crisis which, as is increasingly
evident, is far from overcome in the Atlantic countries and Europe.” The
ways in which Marx's crises theory addressed financial overextension (Tabb, 2010a and Tabb, 2010b) and called for reform (Buiter, 2008)
were discussed as news outlets highlighted the increased attention paid
to Marx, played out to some respect via “Occupy” movements across the
United States and Europe.
However,
United States and European policy has not reacted to the financial
crisis by meaningful left-leaning reforms. Outside the long-standing
criticisms of Marxism, it is useful to examine Belarus, a European
former Soviet state that did not transition or westernize its economy to
the same extent as its neighbors and maintained some socialist
policies, to show why the recommendations of the Marxist literature have
remained largely ignored. The path Belarus followed towards capitalism
has been unlike that of its Eastern European neighbors, making it an
example of how a less-capitalist European, market socialist state
embroiled in the global financial crisis responds. In the height of the
financial crisis, it turned to western, market-oriented mechanisms and
accepted aid from international lenders of last resort (LOLR), agreeing
to change its internal policies in order to do so. It used these
mechanisms but ignored its reform promises, further hurting its
recovery. By examining Belarus' financial crisis, it can be shown that
the philosophies and recommendations espoused in by Marxist-leaning
literature fail to inspire policy change because they fail to adequately
address the role of the modern international LOLRs. Furthermore, the
recommendations fall flat when observing how, by Belarus failed to speed
its path towards a more open market-based economy, its recovery has
been hampered.
