So, is Russia a Communist country? The media has been filled with stories about Russian spies, the oligarchs that back Putin, and how the economy functions. There are many misconceptions out there about whether Russia is capitalist or communist. So let’s take a closer look at the details. If you listen to the media, you would think that Russia is a virtual copy of Communist China: an authoritarian state that suppresses freedom of speech and assembly while imprisoning its political opponents. But in reality, Russia is almost nothing like China — or any other country we commonly think of as “communist”.
Is Russia a communist economy?
No, Russia is definitely not a communist economy. It is making progress in the right direction by embracing capitalism. 20 years ago, it was a very poor country that was heavily dependent on foreign aid. Now it is a rich country with abundant natural resources and a growing middle class that is truly independent of foreign aid. The main problem is its currency, the Ruble, which suffers from heavy inflation due to its excessive issuance and the instability of its domestic economy.
What Are The Differences Between Communist And Capitalist Economies?
1) In a capitalist economy, the state does not own the means of production. Instead, the means of production are controlled by private individuals or corporations. In other words, capitalists are in charge and determine how resources should be used to create wealth.
2) In a communist economy, the state owns the means of production and directs its use to provide goods and services to society as a whole. The people are not allowed to invest their own money in these resources unless it is approved by the government because they are considered to be “the property of all”.
3) In a capitalist economy, there is an emphasis on individual rights and freedom. Government policies are designed to safeguard those rights such as property rights and freedom of speech. The government does not intervene in the economy except when it is absolutely necessary (like during emergencies). If you run your business according to these policies, then you will have a high level of freedom and security in your business operations. The government will protect you from outside forces that would want to take away your rights such as competition from other companies or organized crime that would try to corrupt your business by kidnapping or killing your employees for their money or valuables.
4) In a communist economy, there is an emphasis on group rights and freedom with social welfare policies designed to guarantee economic security for all members of society including jobs for all who can work, free education for all who can learn, free healthcare for all who need it, etc. These rights are guaranteed to all citizens. The government will protect you from outside forces that would want to take away your rights such as competition from other companies or organized crime that would try to corrupt your business by kidnapping or killing your employees for their money or valuables.
5) In a communist economy, the government controls the free market and intervenes in it whenever it deems necessary. If you run your business according to these policies, then you will have a high level of freedom and security in your business operations. The government will protect you from outside forces that would want to take away your rights such as competition from other companies or organized crime that would try to corrupt your business by kidnapping or killing your employees for their money or valuables.
6) In a capitalist economy, the government does not interfere in the free market except when it is absolutely necessary (like during emergencies). If you run your business according to these policies, then you will have a high level of freedom and security in your business operations. The government will protect you from outside forces that would want to take away your rights such as competition from other companies or organized crime that would try to corrupt your business by kidnapping or killing your employees for their money or valuables.
How Does Russia’s Economy Work?
Know What’s Important in Russia and Why
Russia is a resource-driven economy: oil and gas account for a large percentage of GDP, and the country exports these natural resources to the rest of the world. It is also significantly agricultural: Russia has the world’s largest grain harvest and farms a variety of crops, including barley, rye, potatoes, and wheat. Another major industrial sector is mining: Russia is the world’s largest producer of diamonds and is also known for its abundance of gold, silver, iron, and nickel.
Understand the Role of the State in Russia’s Economy
The Russian economy is one that puts significant emphasis on the role of the state. Though there is significant private ownership of industry, the government plays a large role in the economy, especially in important industries like energy, defense, and finance. The government has a heavy hand in the trading of commodities and natural resources, particularly oil and gas. This is due to the fact that Russia has only a small number of significant trading partners. The country has significantly strained relations with the European Union, a large trading partner, over issues like Ukraine and election meddling. This has led to a significant amount of trade being conducted with Asian countries, particularly China. In an attempt to halt the increasing influence of the Chinese government over its economy, Russia has adopted a wide range of regulations and laws that restrict the movement of capital. This has made it difficult for companies outside of Russia to invest in the economy and do business there.
Know How Corruption Works in Russia
Corruption is high in Russia, and it doesn’t follow the typical “bribe-based” model we see in many other countries. Russian corruption often takes the form of extortion – for example, a government official may ask for money in exchange for a contract or a favorable decision in business. This type of corruption is difficult to measure, which means the threat it poses to foreign businesses is difficult to quantify. There are examples of this type of corruption in Russia’s recent past: in 2008, when the government attempted to nationalize the country’s largest oil company, Yukos after its CEO had refused to pay millions of dollars in bribes.
Be Aware of Russian Cultural Concepts That Influence Business Negotiations
In general, Russians are not direct communicators and don’t like to confront conflict head-on. Rather than address problems directly, they prefer to “smoke out” problems, allowing them to work themselves out on their own, with minimal input from others. Russians are also uncomfortable with confrontation and deeply value collectivism, so they prefer to work in teams, rather than with individuals when solving problems. All of these factors contribute to the fact that Russian business negotiations can be quite lengthy and drawn-out, and often don’t result in a clear decision or conclusion.
Learn the Basics of Currency Exchange in Russia
Russia uses the Rouble as its official currency. The Rouble is not a member of the “Classical Monetary Union,” so it functions outside the Eurozone. This means that it’s not tied to the Euro, and the Russian Central Bank can set monetary policy without consideration for other Eurozone nations. The Rouble is freely convertible and there are no restrictions on the export or import of currency.
Be Familiar with Key Industries in Russia, and Where They Are Headed
As mentioned above, oil and gas are a major part of the Russian economy. There is a significant investment in the exploration and production of oil and gas, and new technologies are likely to produce a significant amount of new production. Russia is also investing in the development of renewable energy sources, though these currently make up a very small percentage of the country’s energy production. Agriculture is another important industry, particularly grains. Russia is the world’s largest producer of wheat, and it is the second-largest exporter of wheat. It is also a significant producer of other grains, including barley, rye, and oats.
Understand Where the Opportunity for Investment Comes From
The opportunity for investment in Russia is tied primarily to commodities, particularly oil and gas, and metals, such as aluminum, palladium, and nickel. The country has significant untapped reserves of hydrocarbons, particularly natural gas, and a great deal of potential for the development of other energy sources, such as solar and wind. The Russian economy also has significant potential for growth in the agricultural sector, primarily in the production of grains.
Bottom Line
Russia is not a communist country, although it is sometimes called such. Russia is a capitalist economy with some elements of state-owned industries. Russia’s most important industries are oil and natural gas, which are crucial to funding the Russian government’s operations.