Acknowledging the problem a good start

Issue Number: 
24
Author: 
Gregory Feifer
Published: 
1999-09-13


On the Sept. 6 Johnson's Russia list (an e-mail news survey and forum), Oleg Petrov of the World Bank posted a message calling for the improvement of governance in Russia.

That governance, Petrov wrote, should have ethics as its foundation. It should build on the momentum created by global recognition of Russia's widespread corruption.

Although Petrov's definitions remain vague, he has struck at the heart of the obstacle to reforming Russia's political and economic systems.

During a seminar on transition economics at Harvard University in 1996-1997, Petrov was one of precious few graduate students to acknowledge the largest problem facing reform in Russia. The issue was the legacy of the Soviet past - specifically that the Soviet Union was run on principles that Westerners would define as corrupt.

Privatization - one of the trumpeted cures for Russia's ills - simply legalized de facto ownership of many of Russia's enterprises by managers who did not in essence change their behavior.

Rather than work toward maximizing efficiency of enterprises they now owned by producing the best goods possible to sell at the highest prices possible, managers essentially continued to do the opposite. They produced the shoddiest goods possible for sale at the lowest prices so that they could continue to reap subsidies and get soft credits to line their own pockets.

In 1996, that realization was just sinking into the halls housing Harvard's economists and political scientists. But such vague notions as "corruption," "culture" and "behavior" still had no place among the models supporting so-called transition theory.

Those schemes plotted in visionary fashion Russia's inevitable journey toward a point that observers hoped the country would approach. That those models changed monthly, each new one discrediting the previous one, signified little to their authors and supporters.

During a similar seminar the following year, most laughed at the mention of "corruption" and the notion that certain behavior had carried on not only from the Soviet era, but through hundreds of years of Russian history. That was called "Billingtonian mush" - referring to the sweeping cultural survey "The Icon and the Axe," written by James Billington.

But it is no accident that The Economist now writes about Russia as the world's greatest "kleptocracy" for the sole reason that Russians have been doing things along more-or-less the same lines for centuries.

As another Harvard professor, Edward Keenan, writes, Russia has more often than not been run by a group of political oligarchs who did things in a conspiratorial, collegial fashion.

Decisions were always made behind closed doors; outsiders were kept in the dark. The chief goal of the system was political stability - a goal achieved with considerable success.

During the Brezhnev era, the stability of the cadres was the political system's chief goal, not producing good products efficiently or striving to improve the quality of Soviet citizens' lives. It was also during the Brezhnev era that managers of Soviet enterprises came to de facto own what they were given to run.

The chief mistake of Russia's reformers and their Western advisers this decade was not what they did - the country would probably have ended up where it is now regardless of the speed and scope of reforms - but that they saw Russia as a ruin upon which to build a new capitalism. In calling Russians economic people capable of functioning in a market economy, they assumed that Russians had no previously existing economic system.

We should laud the reformers for having the will and vision to carry out massive changes. But we should not be surprised that Russia is indeed a kleptocracy - as it has been for decades. The chief difference now is that Soviet kleptocracy was institutionalized, whereas today's runs along informal networks and rules, which the state claims to battle.

What Russia needs most now is change working toward transforming the critical mass of its fundamental system. For whereas Russian political culture (which governs its economy) has been run in Mafia-style for hundreds of years - from the boyars to the Soviet Politburo to the so-called financial and industrial "oligarchs" - that does not mean the system cannot change.

Petrov's call to strive toward an understanding of ethics (the definition of which one assumes to run along the lines of a Rousseauian notion of a social contract) in governance is especially timely amid the din of accusations that the country is massively corrupt.

The Western press has indeed done a service to Russia by bringing the extent of the decay in the country's moral fiber to global attention. Some astute Russia observers - certainly few in Western academia's halls - have known that for many years. All the more reason for them to call for rallying to attempt sober and painful reform in Russia.

A new party of the nomenklatura, represented chiefly by Moscow Mayor Yury Luzhkov and former Prime Minister Yevgeny Primakov, seems likely to take power after presidential elections next year. Now would be a good time for those concerned with Russia's corruption to give support to reformers such as Sergei Kiriyenko, who seems genuinely interested in creating openness in Russia's conspiratorial way of doing things. The task may be Herculean, but it must begin somewhere.

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