Teaching Comparative Government and Politics

Friday, November 13, 2009

Problems with capitalism

About ten years ago, the joke about the Russian economy was that it took 75 years to discover that communism didn't work, but it only took 10 years to discover that capitalism didn't work. We all know that the second experiment is an ongoing project.

The transition to a market economy in Russia is filled with thousands of details. And when those administering the transition are used to doing things one way... And when those administering the transition find they can benefit from the details... You know how to end those sentences.

An Oasis Is No Match for Bulldozers and Bureaucrats

In the 1950s, the Soviet government set aside a bit of land on the Moscow River for Maria I. Gurlynina’s family and several dozen others to grow food...

“They gave us this land and told us to develop it,” Ms. Gurlynina, now 78, said. “They said we could stay here forever.”

Then, early one morning last year, the bulldozers arrived.

The municipal government had declared that the Soviet-era permits giving Ms. Gurlynina and her neighbors use of the land were invalid...

It is a predicament not uncommon in Russia. The Soviet government’s land monopoly may have ended some two decades ago, but the ability of the authorities to give and take away territory has not, real estate experts here say.

While private land ownership is not forbidden today as it was in the Soviet era, current real estate laws are vague: residents can buy homes and apartments, for instance, but not the land they stand on. In all cases people are left open to the caprice of corrupt officials and businessmen...

Government critics have accused the Moscow authorities of using ambiguous land laws and the ignorance of residents to snap up lucrative plots and resell them to private interests.

Yelena Baturina, the wife of Moscow’s powerful mayor, Yuri M. Luzhkov, is a billionaire who is one of the city’s most successful real estate developers and Russia’s richest woman. Her company, Inteko, has benefited from several major Moscow government contracts...

In the legal vacuum that followed the Soviet Union’s collapse, many of the original canal workers began passing their plots to their children or selling them, believing their lengthy stewardship of the land gave them the right to do so. The new owners have built sturdier and more luxurious homes, despite having no titles for the land...

Because laws on land ownership remain incomplete and cumbersome, it is not clear who in this case and many similar ones throughout Russia is legally in the right, said Dmitri I. Katayev, a former Moscow City Council member who helped draft the first property laws after the Soviet collapse in 1991.

Though there are bureaucratic mechanisms in place for Russians to assume ownership of former communal apartments and private homes, he said, “The government just forgot about the issue of land.”...