Teaching Comparative

Political capitalism

The old joke was that it took Russians 75 years to prove that Communism didn't work, but it only 10 years for them to prove that capitalism didn't work. So what are they trying to prove now?

The Raw Face of Capitalism, Kremlin Style

For anyone who ever hoped Russia could become a liberal, free-market democracy, the grim trial last month of Mikhail B. Khodorkovsky, the former oil tycoon who was once his country’s richest man, offered a slender solace: it was widely and loudly condemned…

What was notable about this chorus of foreign criticism was the implication that, even judged by the Kremlin’s own standards of realpolitik, the treatment of Mr. Khodorkovsky was a mistake. Moscow’s leaders want to restore Russia’s wealth and greatness: Western assertions that the Khodorkovsky trial had hurt Russia’s reputation and would discourage foreign investment suggested that the Kremlin was harming its own cause.

But some investors, economists and political analysts are drawing a different, and much starker, conclusion: The Khodorkovsky verdict was an inevitable and logical act of self-preservation by a regime that is fully and lucratively in control of Russia.

In this reading, there is nothing accidental about Mr. Khodorkovsky’s continued imprisonment. It is, instead, the clearest possible statement of the rules of Kremlin capitalism, and of Prime Minister Vladimir V. Putin’s confidence that, at least as long as Siberia has oil, there is plenty of private capital willing to play…

The message, according to Sergei Guriev, one of Russia’s leading economists and rector of the New Economic School, is this: “It is to show that Putin is fully in control. It is not a question of Khodorkovsky getting out of jail, it is a question of other businessmen not following in Khodorkovsky’s footsteps.”…

Critics of Putinism, especially Western ones, like to point to this lost value as proof that the treatment of Mr. Khodorkovsky and the authoritarian politics that his case represents are a mistake. But that analysis, according to Mr. Guriev, a liberal who laments the path Russia has taken, leaves out the essential political calculus of Putinism.

“Economic growth per se is not important to a ruler, if he is not there to enjoy it,” Mr. Guriev said. “Better to stay in control of a stagnant, but large and rich, country than to be kicked out of a growing one. Everyone wants a bigger cake, but better a small cake than none at all.”…

See also:

• Rule of Law in Russia
• Rule of law and business
• A Russian version of an Iron Triangle
• Russian oligarchs
• When business is politics
• Re-nationalization in Russia

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Labels: economics, politics, Russia

posted by Ken Wedding @ 6:11 AM