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Ukraine and the Empire of Capital: From Marketisation to Armed Conflict
By Yuliya Yurchenko
Pluto Press, 2018

In 1991, the Soviet Union was dissolved and Ukraine became independent. Yuliya Yurchenko’s book, Ukraine and the Empire of Capital, published in 2018, traces Ukraine’s evolution since then.

Yurchenko argues that the policy of marketisation created the conditions for the onset of armed conflict in 2014. She writes: “In this book, I show how the problematic integration of Ukraine into the global capitalist system has fertilised internal political destabilisation, while simultaneously fuelling geopolitical tensions in the region, thus making the civil and armed conflict possible.”

Yurchenko further argues that Russia, which is now a capitalist country, is engaged in a struggle with the United States for control over the other former Soviet states, such as Ukraine: “The expansion of the global capitalist system to the post-Soviet space since the early 1990s has created a pronounced intensification of trans-national class struggles and East-West geopolitical tensions — primarily between the USA and Russia ... Since the late 1990s, the Kremlin’s aim has been to beat the USA at their own game, the capitalist competition/world dominance game; that has included, among other aspects, economic, political and military control over the post-Soviet states, which were slipping away from Moscow's gravitational pull one after another.”

Neoliberal policies contributed to the rise of ethnic conflict in Ukraine, writes Yurchenko: “Unified in its current borders by the Soviets in mid-twentieth century, the multi-ethnic, multi-religious, multi-lingual nation needed a strong cosmopolitan foundation myth to bring it into existence ... However, marketisation and geopolitical games in the post-Soviet space were in contradiction with the potential construction of a cosmopolitan, egalitarian society and thus, different, divisive myths were used to shape the public imagination. A regime of neoliberal kleptocracy, where typical neoliberal features are exacerbated by omnipresent corruption and institutionalised state asset embezzlement, emerged.”

The kleptocrats promoted divisions amongst the people, aiming to prevent the emergence of a unified opposition to their rule, argues Yuchenko: “The effective dispossession of the masses and the manipulative divisive political myths used to manufacture consent to the regime of dispossession have continuously eroded social cohesion since the early 1990s.”

Relations amongst the different oligarchs were a mixture of rivalry and cooperation or compromise. Their rivalries contributed to creating divisions amongst the population. For example, the electoral contest between Viktor Yanukovych and Viktor Yushchenko in the 2004 presidential election was a “defining moment” in creating the perception of “two Ukraines”.

The Maidan rebellion of 2013‒14 began as a protest against the decision of the Yanukovych government not to sign an agreement with the European Union. But it really took off in response to police repression. It became an “insurrection” reflecting the widespread discontent with a corrupt regime, writes Yurchenko. The movement was “amorphous”, with no clear ideology. But Yurchenko viewed it as potentially progressive.

Yanukovych was forced to flee, but “the regime of neoliberal kleptocracy survived”. Petro Poroshenko, another oligarch, was elected president.

Yurchenko argues that the survival of oligarchic rule was due to the Russian intervention in Crimea and the conflict in eastern Ukraine. Russian intervention caused most Ukrainians to unite in support of the Poroshenko government. The conflict in the east “serves as a convenient excuse for the lack of socially oriented reform, the deterioration of socio-economic conditions ... and the failures to address corruption”.

Yurchenko explains how the oligarchy emerged from the breakdown of the Soviet Union: “The system was over-bureaucratised, corrupt and inefficient, and by the mid-1980s, the USSR was ridden by a shadow economy that compensated for [the lack of] state consumer goods.”

Gorbachev tried to solve the problem through market reforms, but this enabled party officials and enterprise managers, as well as criminals, to begin acquiring property in a seemingly legal way.

“This class formation process was the product of a long relationship between the ruling, managing and criminal social elements of the USSR that can be traced back to the early 1960s. After that point, a criminal-political nexus formed where gangsters serviced the shadow economy under the patronage of the Party officials, or nomenklatura, of various ranks...

“Since 1991, that heterogeneous bloc of forces ... have utilised political and economic marketisation reforms, as well as crime, to institutionalise themselves as the ruling and capitalist class of present-day Ukraine.” 

Western advisers sent to Ukraine by the International Monetary Fund and World Bank advocated “shock therapy” — a rapid transition to a “free market” economy. The privatisation wave resulted in most large formerly state-owned enterprises being concentrated in the hands of four industrial groups controlled by oligarchs.

The result of shock therapy was that Ukraine's economy went into a deep depression. Output declined by 50% while inflation reached 10,000% in 1993, and “the decline in wages was more than 60 per cent in real terms”.

Crime increased dramatically. Some of the unemployed became hired killers for the oligarchs.

Declining living standards caused rising discontent, but this was often channelled into ethnic and regional conflict.

The protests in Kyiv’s Maidan square, and similar protests in other towns of central and western Ukraine, reflected this discontent.

The Donbas region of eastern Ukraine had a history of rebellion. But many people in eastern Ukraine were hostile to the Maidan protests, and the Donbas rebellion against the new post-Maidan government in Kyiv is sometimes called the “anti-Maidan”.

Some leftists claim that the Maidan rebellion was a fascist coup. Yurchenko denies this, saying: “Right-wing forces were present at the Maidans — and anti-Maidans for that matter — yet they were not proportionately dominant. They did not take power in the country in the immediate aftermath of Yanukovich fleeing, nor in the following elections where neither Svoboda nor the Right Sector won the necessary 5 per cent of votes required to sit in parliament.”

Yurchenko argues that the Maidan and anti-Maidan movements were both highly complex phenomena with no clear political ideology. Both movements combined progressive and reactionary elements, but in both cases the outcome was non-progressive: “The Maidans were hijacked by the oligarchy, the Anti-Maidans by Russian separatists.”

The book finishes on a cautiously optimistic note, saying that the Maidan rebellion was “only the beginning, not the end, of the dispossessed fighting back”.

Since then, Russia has carried out a full-scale invasion of Ukraine, creating a new obstacle for the struggle of the dispossessed.