The old securities went long ago, now come the costs of insecurity

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They used to call the countries of Eastern Europe "the Second World". It was always a queasy term. It meant societies as highly educated and industrialised as the "First World" of Western Europe and North America but where the level of poverty and chaos often approached that of parts of Africa or Latin America.

Now there is a new term. These are "transitional" societies. They are supposed to be making the journey from Communism to capitalism, from command economies to the free market. They have been on this journey for some eight years now. And this "rapid transit" between worlds is anything but comfortable.

I asked my Ukrainian friend how she survived, on starvation wages and German prices. "It's a bit like being on your London Tube in a rush hour," she said. "It doesn't matter that you are small and perhaps want to go in a different direction. You just get swept off your feet and somehow carried along by the struggling crowd. Of course, there are always people who can't keep their balance and get trampled under foot."

Today, Tony Blair flies to Moscow to meet President Boris Yeltsin. He is there to sign agreements already fixed up by Robin Cook: in particular, a treaty for joint action against international crime, terrorism and the drugs trade. But he will also have the chance to study a huge "transitional society". This should interest Mr Blair. After all, he is in the rapid- transit business himself.

From where to where? His speech to the Labour Party conference last week was a rousing sermon about his aims for Britain. Its language wasn't up to much - polystyrene rather than gold. But as a proposal about the future, it was one of the few political declarations of the post-war period worth cutting out and keeping.

The destination has changed since the election campaign. There is, mercifully, a lot less about "New Britain, Young Nation", and less windy stuff about restoring Greatness. Instead there is this engaging idea of "Britain as beacon", a place admired by the world not so much for its power or competitive prowess as for its wisdom, skill and social justice - not the biggest or mightiest but "the best place to live, to bring up children, to lead a fulfilled life, to grow old".

And the point of departure - the condition we must leave to travel towards this "best place"? It's away from "the chains of mediocrity ... the tired days". It isn't so much the Tory cult of free-market greed as that old "social-democratic consensus" from which Mr Blair wants to escape, much as the Thatcherites did. His route is very different; he believes in "society", which Margaret Thatcher did not, and hopes to reunite it by, somehow, helping the family to re-establish its authority. But the secure, rather unambitious Britain which lasted from 1945 to 1979 - and longer in the moral assumptions of millions - is the "mediocre, tired" place that must be left behind.

In Russia he will see transition at its most terrifying. There "mediocrity and tiredness" are represented by the later Soviet period, the "era of stagnation" under Leonid Brezhnev. Most Russians look back at its low- level security with bitter nostalgia, although they know that it can never be restored. Russia is already well down the free-enterprise track, but nobody dares to predict where it will get to. Moscow and many other cities are gaudy building sites choked with traffic and noisy with new businesses. Meanwhile the welfare state has collapsed, wages and pensions go unpaid for months, and most Russians feel abandoned, confused and angry.

Writing in the Prague-based magazine Transitions, the sociologist Vladimir Shlapentokh says that modern Russia has four facets: oligarchic, criminal, authoritarian and liberal. The oligarchs battle to carve monopolies and fortunes out of the privatised economy. The criminals impose protection for a price, and run a shadow economy that generates more than 30 per cent of Russia's gross national product. The authoritarian bureaucracy has degenerated into a corrupt network distributing economic privilege to the oligarchs. The liberal facet, the weakest, believes in democratic principles (as do most Russians now) but is ruthlessly oppressed by the other three. Opinion polls suggest that between 60 and 70 per cent of Russians expect catastrophe - economic, ecological, political - in the near future.

When he hears about all this Mr Blair will probably conclude that this nightmarish transition has nothing to do with his own plans. He will be reassured by vigorous young men such as Boris Nemtsov, in charge of economic reform; Nemtsov's dream is to graft a sprig of Blairism on to Russia. All the same, there is something for "radical centre-left Britain" to learn from Russia's turmoil.

It's about inequality, and about "exclusion" - the state's abandonment of millions of people whose labour is no longer required by the market. Russia has a stubborn, old-fashioned ethic of equality, which regards anyone who acquires wealth or power as shameless and probably crooked. A population that has been cast adrift by a bankrupt state watches the "New Russians", the super-rich minority, as they buy BMWs, build country houses and launder billions through Western banks. What's in it for Old Russians? And is this a transition towards a system that actually needs the majority to be out of the game, so that the minority can gorge themselves without interruption?

This certainly isn't what Mr Blair means. He has said repeatedly that "exclusion" is a danger to his plans. Concrete camps of the workless and hopeless threaten his vision of a "personal moral order" in which individuals, families and communities learn to save and shop for their own welfare. But is the campaign against social exclusion a stark necessity for economic success, or an idealistic gesture? And is New Labour's campaign using the right instruments?

Free-market policy in the 1980s, followed by the new "managerial barbarism" of the 1990s, needed to drive large numbers of men, women and children out of the economy. The basic tool for inflation control was mass unemployment. The condition for bribing shareholders - the idiocy that now obsesses and distorts British business - was "freeing up the labour market", the euphemism for deskilling staffs and abolishing the notion of the secure job. The atomised, demoralised mass that resulted was insolently dubbed an "underclass", walled off in periurban ghettos where few buses venture so that it robbed and mugged only itself and spared nice neighbourhoods.

These processes are at work in Russia, too. One difference is that violent crime there is mostly committed by the rich. The other is that the Russian family is putting up a stouter resistance to the brutalising effects of exclusion than the British.

Two things follow. One is that "work for welfare" schemes are not enough. The inflow of victims has to be reduced, too; the frantic war of British employers against their own workforces has to be brought under control. Capitalism has to be restructured, so that the downsizing of companies to placate corporate shareholders is no longer a boardroom's only thought. All over the developed world this suicidal process is leading to a towering excess of production over consumption that will end in global disaster if it is not checked soon.

And the other conclusion is that Labour cannot avoid the taxing option for ever. Never mind the rhetoric about dependency. Benefits are now so low that the poor cannot take proper advantage of all the fine plans for education, training and self-improvement which they are being offered. There has to be more tax; there has to be more spend; there has to be a redistribution of wealth. Otherwise Mr Blair's rapid transit will get no further than Desolation Row.

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