Chaos in Russian Budgeting as a Product of Institutional Design: The Failure of Unlinked Dual-Channel Institutions

By Ostrow, Joel M. | Journal of Public Budgeting, Accounting & Financial Management, Winter 2001 | Go to article overview

Chaos in Russian Budgeting as a Product of Institutional Design: The Failure of Unlinked Dual-Channel Institutions


Ostrow, Joel M., Journal of Public Budgeting, Accounting & Financial Management


ABSTRACT. Chaos in the Russian federal budget process is largely a product of institutional design. Both the Russian State Duma, and the Russian executive branch are unlinked dual-channel institutions. Such institutions are particularly ill-designed for the task of creating, adopting and implementing consistent policy, most notably on the budget. The strange design of Russia's legislative and executive institutions impedes conflict management and consensus building. Ultimately, it impeded the consolidation of democracy. This article elaborates the pitfalls of Russia's institutions for the budget process and suggests simple design changes that could substantially alleviate those problems.

INTRODUCTION

In its struggle to rebuild after the collapse of communism, Russia suffers from a chronic inability to devise and sustain consistent budget and fiscal policy. Indeed, policy irrationality and inconsistency are chronic across issue areas in post-communist Russia. Poor leadership at the top (Cohen, 1998; Lieven, 1998; Rutland, 1997), entrenched and resistant bureaucracy in the middle (Bekker, 1995), unprepared and uncommitted society from below (Goble, 1998a, 1998b; Tismaneanu and Bova, 1996), and inappropriate pressure and advice from the outside (Helmer, 1998; Kagarlitsky, 1998) are all commonly and correctly cited as major factors impeding rational budgeting in Russia. But such factors cannot offer a complete explanation of why Russia has failed where others have fared better. Poland, Hungary, Estonia, and the Czech Republic all faced these same barriers to varying degree, yet all have been more successful than Russia. What, then, explains Russia's continuing difficulties? What solutions could help Russia overcome these difficulties?

One thing that distinguishes Russia from those states that have had more success at post-Communist reform is the design of its political institutions. Russia has created political institutions that are particularly ill-- designed for the task of creating, adopting, and implementing consistent policy, most notably on the budget. The strange design of Russia's executive and legislative institutions impedes conflict management and consensus building. The first two sections of this paper explain how the design of Russia's institutions impedes the budget process. The final section explores some rather straightforward institutional changes which, if adopted, would help mitigate many of those problems.

RUSSIA'S UNLINKED, DUAL-CHANNEL INSTITUTIONS

The Russian executive branch and Russian State Dumal are both unlinked, dual-channel institutional designs. Each branch is composed of two parallel, autonomous, organizational channels that lack institutionally-- based links between them.2 In the Duma, the channels are the partisan factions and the legislative committees; in the executive branch the two channels are the presidency with its associated presidential administration, and the government headed by the prime minister. In both the executive and the legislature, the two channels exist and function as separate organizational hierarchies, largely independent and autonomous of each other. Such a design proliferates what Huskey terms "institutional redundancy," a system of overlapping power centers within each branch, each of which becomes an "autonomous force" in the policy-making process (Huskey, 1999).

An unlinked, dual-channel design prevents the routine conflict management and consensus building essential to any democracy, particularly a new and inherently unstable democracy such as Russia's. Democracy presupposes the existence of conflict. For a democracy to be "civilized," it needs institutions that constrain conflict, ones that provide incentives for promoting conflict management and negotiation(March & Olsen, 1995). Unlinked, dual-channel institutions, however, undermine democratic stability and the future of democratization, as they create incentives to pursue confrontation and conflict, by leaving individuals unconstrained in their exercise of political discretion. …

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