The More Things Change, the More They Stay the Same: Institutional Transfers Seen through the Lens of Reforms in Russia

By Oleinik, Anton | Journal of Economic Issues, December 2006 | Go to article overview

The More Things Change, the More They Stay the Same: Institutional Transfers Seen through the Lens of Reforms in Russia


Oleinik, Anton, Journal of Economic Issues


Reforms in most post-Soviet countries did not lead, contrary to widely cherished expectations, to the emergence of democracy and a full-fledged market. On the contrary, the elements of democracy, however weak and imperfect they have been since the start of the 1990s, are progressively disappearing and leaving only the facade, if that, of formally free elections. The idea of "strengthening the vertical of power" (i.e., all important political decisions are to be made only at the highest levels of the state's hierarchy), to use an expression that is popular in contemporary Russia, contradicts the principles of diversification and delegation of powers. Instead of market capitalism based on competition and private initiative, political capitalism emerges. "Profit is made through the state, via contacts with the state or under physical protection of the state" (Swedberg 2003, 60). The case of Yukos illustrates this. Once the major Russian oil company, its owners were prosecuted for fraud and tax evasion as soon as they lost their privileged relationships with state officials.

There are two perspectives from which the unexpected outcomes of post-Soviet transformations can be viewed. First, they can be seen as country-specific phenomena resulting from the particularities of political traditions, the heritage of the communist past and national culture. Second, one can put post-Soviet transformations into the context of universal problems observed recently in many other countries and emphasize their common features. Both strategies have their advantages and disadvantages. The first strategy appears more cautious than the second: any attempt to generalize and "universalize" the results of research in the social sciences raises doubts as to the validity of the conclusions (Giddens 1984, xxxii). Another advantage of the "particularistic" approach consists in a high probability of arriving at conclusions convenient for most Western scholars and observers. The failure of reforms is principally due to the heritage of the past; there is no point in comparing the post-Soviet case with the problems existing among many other countries, including Iraq and the former Yugoslavia.

On the other hand, the strategy of considering the problems of post-Soviet transformations separately from the global context deprives the analysis (and corresponding policy implications) of an important dimension. The missing elements are related to the processes of globalization. Post-Soviet transformations cannot be excluded from the global context since, during the 1990s, the Russian government depended on the financial resources provided by international organizations such as the International Monetary Fund and the World Bank (at that time Russia became one of the world's largest borrowers with about US$123 billion of debt, as of early 2003). By the end of the 1990s, Russia stopped borrowing on the world financial market and started to pay off the foreign debt. It is estimated that Russia's oil and natural gas revenues (influenced by the situation on the world market of hydrocarbons) provide as much as 40 percent of the national government's budget and 55 percent of export earnings (U.S. Department of Energy 2004).

This article represents an attempt to overcome the opposition between the studies of the universal and country-specific problems related to the policies of modernization, by focusing on bureaucracy and the institutional constraints within which state officials act. The author explores the "third" path, which differs from both the claim to universal validity of neo-liberal models and the opposite belief in the uniqueness of the Russian experience. The proposed approach links the unexpected (and unexplained) outcomes of reforms to particularities of the institutional environment to a model of power relationships existing in many countries on the way to modernization. The model specifies on which grounds an individual acquires the right to control the actions of other individuals and to "carry out his own will despite resistance" (Weber 1968, 53). …

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