Business and State in Contemporary Russia

Business and State in Contemporary Russia

Business and State in Contemporary Russia

Business and State in Contemporary Russia


Business and the State in Contemporary Russia is the most recent volume in the John M. Olin Critical Issues series, published by Westview in conjunction with Harvard's Davis Center for Russian Research. In this latest installation, contributors discuss issues as far-ranging as the dynamics of rule in contemporary Russia, the banking elite, the politics of the Russian media business, the political economy of the Russian oil and coal industries, and the causes and consequences of the August 1998 crash.


In 1991, Russia broke with its communist past and started to construct a market economy and liberal democracy. Today it is apparent that neither the capitalism nor the democracy that have emerged in Russia operate in the traditional AngloAmerican manner. The Soviet legacy, and other cultural and geographical features, have produced a political and economic model with distinctively Russian characteristics.

Much of the research on Russia has assumed that we know the end-point toward which Russia is headed: the market and democracy. Less attention has been paid to the possibility that Russia may develop a hybrid form of political economy that does not correspond to preexisting models. The premise behind the market reform program launched in 1992 and applauded by the West was that economic decision making would be separated from the state through liberalization and privatization, while the political process would be democratized. This has not happened to the extent the reformers initially hoped. Rather, what we see is a fusion of political and economic power, the rise of a new ruling elite, and the emergence of new and complex patterns of political and economic authority. Unpacking the hybrid model of Russian capitalism cannot be accomplished simply through examining macroeconomic performance data or studying the results of periodic elections. There is a need to dig deeper and look at the actual processes of bargaining over resource allocation in specific sectors of economic life.

Even after a decade of wrenching social change, the Russian political economy is still at a critical juncture. The August 1998 financial crisis deflated many optimists who had argued that Russia was or would soon be a stable, Western-style market economy. Rising awareness of the entrenched nature of crime and corruption led to growing doubts about the real nature of political and economic power behind the facade of market and democratic institutions. There was a realization that Russia was not necessarily in transition to a more efficient and transparent political economy: that it might remain trapped in its current semi-market, semidemocratic system for years, if not decades. Still, hopes that Russia was in transition to a different, brighter future were revived by the departure of President Boris Yeltsin in December 1999. Many believed that the new president, Vladimir Putin, would put Russia back on the reform track -- still assuming that they knew where Russia was headed.

What exactly were the forces keeping that system in place and preventing more full-blooded reform'? Russian institutions were weak: Real power was usually ex-

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