Fel'dman Model and the “Kalashnikov Economy”: Resilience and Limits of Russia’s War in Ukraine

Abstract

Introduction

Contrary to Western projections anticipating an immediate collapse of the Russian economy due to international sanctions, it has demonstrated remarkable short-term resilience. Defense spending has acted as a temporary driving factor through the so-called "Kalashnikov Economy," characterized by standardized, mass manufacturing at low costs within an environment of macroeconomic stability.

Objective

To analyze the productive resilience and long-term structural limits of the Russian Federation's war effort in the context of the conflict in Ukraine.

Methodology

A heterodox approach is adopted, adapting Fel’dman’s two-sector growth model to a war economy. Through this framework, the interaction between Sector I (military capital goods) and Sector II (combat platforms) is evaluated, complemented by model simulations and Marx's theory of expanded reproduction.

Results

The findings indicate that industrial capacity, partly inherited from the Soviet era, mitigates sanctions by enabling import substitution and serial production. Nonetheless, a lack of sophisticated innovation and labor shortages impose inflationary pressures.

Conclusions

The stimulus derived from "wartime Keynesianism" offers a strictly transitory dynamism. In the long run, military production constitutes unproductive consumption. Consequently, diverting resources toward warfare interrupts expanded reproduction and undermines the foundations of capital accumulation, rendering the strategy unsustainable over time.