Oligarchic capitalism in one country

Something funny happened to Russia on its way from socialism to capitalism. A bunch of politically-connected "oligarchs" managed to subvert the process while making themselves hyper-rich. In a fascinating paper, Serguey Braguinsky asks " whether oligarchic capitalism represents a transition stage that will eventually lead to a true market economy and political democracy, or whether it is a blind alley that can only lead to another inefficient socioeconomic system." He is not optimistic. A major contribution of the paper is its database of almost 300 oligarchs covering a period of ten years. Among its conclusions: the newer generation of oligarchs, who had little connections to the old nomenklatura system and who could have produced a true entrepreneurial class, ended up engaging in rent-seeking and asset-stripping instead, becoming virtually indistinguishable from the old kind. UPDATE: A couple of readers have taken me to task for using the word "funny" in the opening sentence. As they correctly point out, what has happened to Russia in this respect is hardly funny. I apologize for my poor choice of words.

Comments

[CH]

One difference between the entrepreneurial class and the oligarchs is the fact that the former seeks profit while the last seek control. If the mind-set of the current elite in Russia doesn't change from wanting control to wanting profit not much will change.

[jb]

>> "Something funny happened to Russia on its way from socialism to capitalism. A bunch of politically-connected "oligarchs" managed to subvert the process while making themselves hyper-rich." <<

Taking into account that there are a mere 140 million people living in that country, of whom a significant amount faces severe poverty-related problems, the word "funny" sounds a bit misplaced.

[happyjuggler0]

This by the way is why so many people in poor countries hate capitalism. They can't see the difference between crony capitalism and competition based capitalism.

At the risk of being seen as snarky, I'd say there are several inside Washington who aren't entirely aware of the difference either. In both parties....

[Nicholas Gruen]

Reminds me of the way the energies of business in Latin America have gone into rent-seeking to great detriment of Latin American economies.

[ms]

"Something funny happened.."

"funny" is hardly an appropriate desciption of what happaned.

[Mrs. Coulter]

Come on, people. "Funny" has other meanings besides humorous. It also means odd, peculiar, unexpected, or suspicious, all of which are appropriate to the topic at hand.

Thanks for pointing out the paper--I'm looking forward to reading it.

[Hazel]

I was about to say "funny means odd" but I see someone has beaten me to it! Anecdotally, my mother always used to ask: "is that odd or haha" whenever I used funny to describe something.
Thanks for all the information - I love reading it even if a lot of it goes right over the top of my head rather than into it.

[worth]

Could it be that Russia is following the same, albeit accelerated, path that the U.S. did, and is now in the "robber baron" phase of capitalist development? The parallels seem quite obvious.

[mike]

To my mind, the only obvious solution to this "robber baron" type of oligarchy is the creation and enforcement of very powerful Fair Competition type statutes and related competition commissions to try and overcome these monopolistic intentions.

Of course, these structures may be manipulated by those politicians to which the robber barons are connected to remove the only monopolies standing in their way of becoming even richer.

[piglet]

"A bunch of politically-connected "oligarchs" managed to subvert the process while making themselves hyper-rich."

What do you mean by "subvert" in that context? Why don't you think this is exactly the effect that was inherent (and to some extent intended) in the shock therapy process imposed at the time by the West?