Available online 30 April 2015
Post-crisis Belarus: Marxism and the lender of last resort
- Open Access funded by Hanyang University
- Under a Creative Commons license
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.
- International monetary fund;
- Lender of last resort
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.