45 Part 2: National Differences Individualism was reborn as an inuential political philosophy in the Protestant trading nations of England and the Netherlands during the sixteenth century. The philosophy was rened in the work of a number of British philosophers, including David Hume ( l'r'l 1- 17'76}, Adam Smith (1723*1790], and John Stuart Mill (18061873). Individualism exercised a profound influence on those in the American colonies that sought independence from Great Britain. Indeed, the concept underlies the ideas expressed in the Declaration of Independence. In the twentieth century, several Nobel Fries-winning economistsincluding Milton Friedman, Friedrich von Hayek, and James Buchananchampioned the philosophy. Individualism is built on two central tenets. The rst is an emphasis on the importance of guar- anteeing individual freedom and self-expression. The second tenet of individualism is that the welfare of society is best served by letting people pursue their own economic self-mterest, as opposed to some collective body (such as government) dictating what is in society's best inter- est. Or. as Adam Smith put it in a famous passage from The Wham: ofNorfons, \"an individual who intends his own gain is led by an invisible hand to promote an end that was no part of his intention. Nor is it always worse for the society that it was no part of it. By pursuing his own interest, he frequently promotes that of' the society more effectually than when he really intends to promote it. This author has never known much good done by those who effect to trade for the public good.\"4 The central message of individualism. therefore, is that individual economic and political free- doms are the ground rules on which a society should be based. This puts individualism in con- ict with collectivism. Collectivism asserts the primacy of the collective over the individual; indi- vidualism asserts the opposite. This underlying ideological conict shaped much of the recent history of the world. The Cold War, for example, was in many respects a war between collec- tivism, championed by the former Soviet Union, and individualism, championed by the United States. From the late 1980s until about 2005, the waning of collectivisrn was matched by the ascendancy of individualism. Democratic ideals and market economics replaced socialism and communism in many states. Since 2005. there have been some signs of a swing back toward left-leaning socialist ideas in several countries, including several Latin America nations such as Venezuela, Bolivia, and Paraguay, along with Russia {see the Country Focus for details). Also. the global nancial crisis of 2008-2009 caused some reevaluation of the trends toward individ uaiism, and it remains possible that the pendulum might tilt back the other way. 9 ' marketbased economic system. On the positive side, the Fun\" S RUSSIS economy grew at a healthy clip durlng the early 20005. The modern Russian state was born In 1991 alter me dra helped in large part by high prices for on and gas. Russia's matic collapse of the Soviet Union. Early in the postSoviet largest exports ll" 203- 0\" and 935 accounted for 75 era. Russia embraced ambitious policies designed to Percent \"fa\" RUSSlan EXPO'TSJA Balm-'9" 200 and 2013. transform a communist dictatorship with a centrally Russia's 9'055 domestic 003":lel (GDP) per capita more planned economy into a democratic state wlth a market than doubled When measured by PUVChaSlng POWF-'F parity. based economic system. The policies, however, were Today the country boasts the world's 12th-largest econ- imperfectly implemented. Polltlcal reform left Russia with omvdust behind that Of South Korea and ahead of Spain a strong presidency thatIn hindsighthad the ability to Thanks to government oil revenues. public debt is also subvert the democratic process. On the economic front. low by international standardsat just 12.5 percent of the privatization of many state-owned enterprises was GDP In 2019 (in The United States. by comparison. public done in such a Way as to leave large shareholdings in debt amounts to 80 percent of GDP]. indeed, Russla has the hands of the politically connected, many of whom run a healthy trade surplus on the back of strong oil and were party ofcials and factory managers under the old 935 EXPOWS for the \"55' decade. 50\"\" system. Corruption was 315 endemic- and "95" However, the Russian economy is overly dependent on nlzed crime was able to seize control of some newly pri- commodities, particularly oil and 965 This was exposed vatized enterprises. In 1998. the poorly managed Russian in odd-2014 when the price of oil started to tumble as a economy went through a financial crisis that nearly bought result of rapidly increaslng supply from the United States. the country to its knees. Between mid-2014 and early 2016, the price of oil fell from Fast_foma[d to 2020. and Russia still is a long way from $110 a barrel to a low of around $2? before rebounding being a modern democracy with a functioning free to $50. This drove a freight train through Russra's public CHAPTER 2: National Differences in Political, Economic, and Legal Systems 46 finances. Much of Russia's oil and gas production remains 2013, Russia's parliament, which is dominated by Putin n the hands of enterprises in which the state still has a supporters, gave the president more power to appoint significant ownership stake. The government has a con- and fire prosecutors, thereby diminishing the indepen trolling ownership position in Gazprom and Rosneft, two dence of the legal system. of the country's largest oil and gas companies. The gov- ernment used the rise in oil and gas revenues between Freedom House, which produces an annual ranking track- 2004 and 2014 to increase public spending through state- ing freedom in the world, classifies Russia as "not free" led investment projects and increases in wages and pen- and gives it very low scores for political and civil liberties. sions for government workers. While this boosted private Freedom House notes that in the March 2012 presidential consumption, there has been a dearth of private invest- elections, Putin benefited from preferential treatment by ment, and productivity growth remains low. This is par- state-owned media, numerous abuses of incumbency, ticularly true among many state-owned enterprises that and procedural "irregularities" during the vote count. Putin collectively still account for about half of the Russian econ- won 63.6 percent of the vote against a field of weak, omy. Now with lower oil prices, Russia is having to issue hand-chosen opponents, led by Communist Party leader more debt to finance public spending. Gennadiy Zyuganove, with 17.2 percent of the vote. Under a Putin-inspired 2008 constitutional amendment, the term Russian private enterprises are also hamstrung by bureau- of the presidency was expanded from four years to six. cratic red tape and endemic corruption. Transparency Putin was elected to another six-year term in 2018 in an International, which ranks countries by the extent of cor- election that many observers thought was a sham. ruption, ranked Russia 137 out of 180 nations in 2019. The state and state-owned enterprises are famous for push- In 2014, Putin burnished his growing reputation for author- ing work to private enterprises that are owned by political itarianism when he took advantage of unrest in the neigh- allies, which further subverts market-based processes. boring country of Ukraine to annex the Crimea region and to support armed revolt by Russian-speaking sepa- On the political front, Russia is becoming less democratic ratists in eastern Ukraine. Western powers responded to with every passing year. Since 1999, Vladimir Putin has this aggression by imposing economic sanctions on Rus- exerted increasingly tight control over Russian politics, sia. Taken together with the rapid fall in oil prices, this either as president or as prime minister. Under Putin, pushed the once-booming Russian economy into a reces- potential opponents have been sidelined, civil liberties sion. Despite economic weaknesses, there is no sign that have been progressively reduced, and the freedom of Putin's hold on power has been diminished; in fact, quite the press has been diminished. For example, in response the opposite seems to have occurred. to opposition protests in 2011 and 2012, the Russian Sources: "Putin's Russia: Sochi or Bust," The Economist, Febru- government passed laws increasing its control over the ary 1, 2014; "Russia's Economy: The S Word," The Economist, Internet, dramatically raising fines for participating in November 9, 2013; Freedom House, "Freedom in the World "unsanctioned" street protests, and expanded the defini- 2019: Russia," www.freedomhouse.org; K. Hille, "Putin Tightens tion of treason to further limit opposition activities. Vocal Grip on Legal System," Financial Times, November 27, 2013; "A opponents of the regime-from business executives who Fourth Term for Russia's Perpetual President," The Economist, do not toe the state line to protest groups such as the March 19, 2018. punk rock protest band Pussy Riot-have found them- selves jailed on dubious charges. To make matters worse, Putin has tightened his grip on the legal system. In late DEMOCRACY AND TOTALITARIANISM Democracy and totalitarianism are at different ends of a political dimension. Democracy democracy refers to a political system in which government is by the people, exercised either directly or Political system in which through elected representatives. Totalitarianism is a form of government in which one person or government is by the peo- political party exercises absolute control over all spheres of human life and prohibits opposing ple, exercised either directly political parties. The democratic-totalitarian dimension is not independent of the or through elected represen- individualism-collectivism dimension. Democracy and individualism go hand in hand, as do tatives. the communist version of collectivism and totalitarianism. However, gray areas exist; it is possi- totalitarianism ble to have a democratic state in which collective values predominate, and it is possible to have Form of government in a totalitarian state that is hostile to collectivism and in which some degree of individualism-par- which one person or politi- ticularly in the economic sphere-is encouraged. For example, China and Vietnam have seen a cal party exercises absolute move toward greater individual freedom in the economic sphere, but those countries are stilled control over all spheres of ruled by parties that have a monopoly on political power and constrain political freedom. human life and opposing political parties are prohib ited