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Can Russia Modernise? An economist’s perspective

By Blog Admin, on 20 March 2014

ICan Russia Modernise Thumbnailn her 2013 book Can Russia Modernise? Alena Ledeneva picked out key types of networks that make up Sistema:  Russia’s complex, ambiguous and sometimes surprisingly effective systems of informal governance. In the last contribution to a ‘mini-symposium’  Theocharis Grigoriadis assesses the book’s arguments from an economist’s perspective, suggesting that Ledeneva understands the durability of sistema as a series of trade-offs that reduce collective welfare. 

In her seminal book on informal politics and governance in post-Soviet Russia, Can Russia Modernise? Sistema, Power Networks, and Informal Governance , Alena Ledeneva puts forward a theory of networked governance that relativises the significance of formalised vertical structures and hierarchical decision-making for understanding Russian politics.

 Ledeneva’s theory makes a unique contribution to political science and sociology and deals with following themes in relation to Russian politics and society:

  1. Continuities of power networks under central planning and capitalism;
  2. Sistema as a form of networked governance in authoritarian regimes;
  3. The transformation of the St. Petersburg circle into the inner sistema of Russian politics;
  4. The prospects for societal modernisation under Putin.

 While blat networks in socialism facilitated the provision of consumer goods circumventing the formal absence of marketplaces, power networks in post-socialism involved the provision of public goods such as security, justice, and healthcare. The author suggests that market transitions in the former Soviet Union preserved more elements from the economic organization of central planning than we might want to admit, both in terms of people in power and economic practices.

 As Ledeneva argues, the analysis of informal networks matters, because it is essential to trace the effects of friendships and close relationships on ministerial appointments, judicial decisions and corporate deals. The identification of their existence per se has major theoretical significance, but does not explain current developments in Russian politics. Ledeneva suggests that while continuities in networked governance between socialism and post-socialism exist, what differentiates Putin’s Russia is the even wider spread of informal rules and even higher informational asymmetry between those insider and those outsider a power network. In this sense, Putin’s sistema is at least partially – if not fully – a reversion to the Soviet status quo ante.

 The Russian sistema is a set of public and private networks that manages public wealth and delivers public goods, thus determining the magnitude of its members’ rent-seeking strategies. While the sistema combines both public and private elements in its enforcement strategies, the hierarchical predominance of public over private interests and institutions is indisputable.

This is how, according to Ledeneva, Putin’s sistema has redefined the Russian public domain. (more…)

Can Russia Modernise? The author’s perspective

By Blog Admin, on 19 March 2014

Can Russia Modernise ThumbnailIn her 2013 book Can Russia Modernise? Alena Ledeneva picked out key types of networks that make up Sistema:  Russia’s complex, ambiguous and sometimes surprisingly effective system of informal governance. In the final part of a three-part ‘mini-symposium’ the author reflects on and responds to critical assessments of the book.

The criticisms made by Katharina Bluhm and by Geoffrey Hosking are both valid and valuable. In my response I will attempt to clarify my arguments, where I can, and call for further research, where I cannot.

 How do we define sistema? Sistema stands for the network-based informal governance system backing up the formal facades of power. I agree with my critics’ point that sistema is a runaway target. My method was to rely on respondents’ perceptions of it. But they often varied a lot, as in the fable about the elephant and the seven blind men.  There are a range of definitions in the glossary of the book. I pieced together a detailed ethnography of sistema, but conceptualising sistema proved elusive.

 The Soviet writer Fazil Iskander has described the pressure of sistema as follows

 Imagine that you had to share a room with an aggressive madman all your life. Moreover, you also had to play chess with him. One the one hand, you had to play so that you would not win and anger him with your victory; on the other, you had to play so subtly that he would not suspect that you allowed him to beat you.

 When the ‘madman’ disappears this precious skill and the life-long experience of survival with a madman turns out to be redundant. Sistema reveals its features mostly to those who feel pressurised or victimised by it, rather than to its beneficiaries (President Putin is one of latter at the moment, but his memoirs will be an invaluable source on sistema one day, just as President Gorbachev’s ones are now).

 So I interviewed people who in some sense had exited sistema, distanced themselves or had time for reflection (I describe this ‘slow cooking’ methodology in a recent SSEES working paper. Distance from sistema enhanced their ability to articulate – as happened with understanding of the Soviet system after its collapse – and provided a useful point of comparison (especially if people had a chance to live elsewhere). (more…)

Can Russia Modernise? A historian’s perspective

By Blog Admin, on 18 March 2014

Can Russia Modernise ThumbnailIn her 2013 book Can Russia Modernise? Alena Ledeneva picked out key types of networks that make up Sistema:  Russia’s complex, ambiguous and sometimes surprisingly effective systems of informal governance. In the second part of a three-part ‘mini-symposium’ Geoffrey Hosking assesses the book and its arguments from a historian’s perspective.

 This is a very good book, but it shares some of the characteristics of the system it describes.  One thinks one has grasped an important point, but then on the next page it turns out that point is not always valid, its operation is subtly influenced by other aspects of the system.

I would see sistema as ‘the way to get things done’, the allocation of power and resources in order to get things done.  It is a system of personal relationships, accepted practices and codes of behaviour (poniatiia), not formulated or laid down explicitly but generally understood.  It centres on Putin as President (and did even when he was Prime Minister:  persons are more important than institutions), but his actual power within it is not unlimited.  He is locked into it and his freedom of action is constantly circumscribed by it.

 In this sense it confirms Foucault’s dictum about power operating along several vectors:  downwards, but also upwards and sideways.  Its operation is intangible:  there is often no need for direct instructions or commands, because people know how they are expected to behave.  Much depends on loyalty and trust, but trust which is limited and instrumental.  A trusts B for certain purposes, but not more than that: I trust him because I know him well, his strengths and weaknesses, and what he is good at doing; perhaps I also have some kompromat on him.  This is also forced trust, because there is no real alternative.

Alena Ledeneva identifies distinct networks around Putin: 1. an inner circle, which is  agenda setting where there  is daily or regular, frequent contact; 2. core contacts for the implementation of policy –  people who are well known from institutional contact, and trusted to get things done without frequent contact.  3.  useful friends who are similar, but with emphasis on relationships formed in youth, who are useful to get things done or trouble-shoot problems, but who will expect in return to be offered opportunities to make money; and  4. mediated contacts used for getting things done locally or at a lower institutional level.  Essentially these are patron-client networks of various types.  However, it should be noted, that patron-client networks differ from authoritarian ones in that clients need to get something out of them.  (more…)

Can Russia Modernize? A sociologist’s perspective

By Blog Admin, on 17 March 2014

Can Russia Modernise ThumbnailIn her 2013 book Can Russia Modernise? Alena Ledeneva picked out key types of networks that make up sistema:  Russia’s complex, ambiguous and sometimes surprisingly effective system of informal governance. In the first part of a three-part ‘mini-symposium’,  Katharina Bluhm assesses the book and its arguments from a sociologist‘s perspective.

Alena Ledeneva is the author of several books all of which centre on informal economic and governance practices in Russia. Her three monographs Russia’s Economy of Favours (1998), How Russia Really Works (2006), and Can Russia Modernise? (2013), can be read as a trilogy. In Russia’s Economy of Favours the centre of attention was the everyday exchange systems of normal people, while in How Russia Really Works Ledeneva’s focus shifts towards business and the asset stripping that takes place through complex inter-firm relationships. Her newest book explores Russia’s power networks and systems of informal governance or sistema.

The 2006 and 2013 books share one particularly important question: Can Russia modernize? In How Russia Really Works Ledeneva asks how Russia’s unwritten rules can be changed, or whether in fact they can. Her answer is laced with scepticism. She points to the fact that over the past decade, actors have fought bitterly over the rules of the game: for example the support for shock-therapy of Western aid programmes and advisers aimed at the rapid installation of a new market economy, or the foreign investors who have tried to introduce Western business practices being studied in Russian business schools today. Small entrepreneurs have called for more transparency in the way business is done.

Russia is now a member of the World Trade Organisation, and Putin once called for a ‘dictatorship of law’ and – at least according to some observers – Medvedev really was interested in changing the rules of the game, but just did not get very far in his efforts. Ledeneva concludes that in order to overcome the informal rules it is ‘simply not enough to transform the formal rules and the way they are enforced. (more…)

Alexei Navalny: Could a politically self-made man make it to the Kremlin?

By Blog Admin, on 7 October 2013

Alexey Navalny

Photo: MItya Aleshkovskiy [CC BY-SA-3.0]

The leading anti-Putin blogger and activist Alexei Navalny was recently handed a five-year jail sentence following a widely criticised trial. But his mix of hard-headed anti-corruption politics and internet-based mobilisation may yet pose a challenge to the Kremlin, writes Ekaterina Besedina

On 8 September 2013 Alexei Navalny officially received 27.2% in the Moscow mayoral election, while the incumbent Sergei Sobyanian – one of President Putin’s closest allies – gained 51.2%. This narrow absolute majority meant that the second round run off expected by Navalny supporters was avoided. The Moscow Electoral Commission subsequently declared Sobyanin mayor. Navalny is still trying to challenge the vote in the courts with evidence of voter fraud and ballot stuffing.

The Kremlin had to demonstrate its power and majority support in Russia. This was one of the reasons why the run off did not happen. But Navalny managed to get on the ballot, win a large percentage of votes, and challenge Sobyanin. Despite the a fraud trial still threatening Navalny with five years jail, he has built up a substantial base of support, proving it possible to build a large scale political campaign without access to federal TV channels.

Navalny, a lawyer and high-profile blogger, is the first Russian politician to be created by the internet. His mayoral campaign was based on the internet, social networks and the enthusiasm of supporters. He started gaining popularity two years ago during major opposition protests, becoming a key figure in a growing movement for change that has a potential to challenge the Kremlin and Russia’s president, Vladimir Putin. (more…)

Boris Berezovsky: An unwanted ‘wanted man’

By Blog Admin, on 25 March 2013

Boris Berezovsky

Photo: AJC1 via Flickr License CC BY-SA 2.0

Alena Ledeneva looks back on the career of the controversial Russian oligarch.

Boris Abramovich Berezovsky was born on 23 January 1946 and died on 23 March 2013.  Although hated by many Russians, Berezovsky was also one of the most politically important, exposed and most widely written about figures in Russia of the 1990s. For many he was a symbol of that era.

 Berezovsky’s rise to become one of Russia’s richest men has been chronicled in both journalistic and fictionalised accounts. Godfather of the Kremlin by Paul Klebnikov, the Forbes journalist murdered in Moscow in 2004, Bol’shaya paika (‘The Big Slice’) a novel by Yuli Dubov, Berezovsky’s business partner and friend – who like him received political asylum in the United Kingdom – are among the most interesting.  The film Oligarkh (Tycoon) also features a main character very like Berezovsky.

 After graduating in 1968, Berezovsky worked at various research institutes to become a senior fellow and a head of department at the Institute of Management of the Russian Academy of Sciences. His energy, creative spirit and talent for working through the Soviet system served him well and helped shape his success in the post-communist era.

 In 1989, Berezovsky and Samat Zhaboev organized a joint stock company LogoVaz, which specialised in selling and servicing cars. In four years Logovaz became one of the leading Russian private businesses with a turnover of US$250 million in 1993. Berezovsky became  the chairman of the LogoVaz Board in 1994.

Despite the dangers of Russia’s post-communist business environment – he survived an assassination attempt in June 1994 in which his driver died – Berezovsky moved on to acquire media and oil interests.  In January 1995 he participated in setting up the ORT television channel joining its board of directors and in September 1996 he was elected to board of the Siberian oil company Sibneft. Berezovsky’s financial schemes – of the kind I examine in more detail in How Russia Really Works  – were also the inspiration for a post-communist genre of literature often known as ‘economic thrillers’. (more…)

‘Sistema’: How Putin’s Russia is governed

By Blog Admin, on 11 March 2013

Another day of Moscow (3067405533)

Photo: Andrew Kuznetsov via WikiMedia Commons

 The power of informal networks and the weakness of formal institutions in Russia have been widely noted. But the nature of the informal deals and personalised loyalties that Russian leaders use to mobilise support and maintain control has proved harder to grasp.  

In her new book Alena Ledeneva picks out four key types of networks that make up Vladimir Putin’s system of governance – what she terms sistema. Putin’s sistema is a complex, ambiguous and sometimes surprisingly effective. However, in the long-term it impedes Russia’s  modernisation.

Sistema in contemporary Russia is a shorthand term for a ‘system of governance’ that usually refers to open secrets or governance matters not-to-be-named. The term itself is elusive. Outsiders find it too general to mean anything in particular. Insiders are not ordinarily bothered with definitions of sistema – they intuitively know it when they experience the ‘system made me to it’ pressure. One of them explains the unarticulated nature of sistema by the lack of distance of insiders from it:

This is not a system that you can choose to join or not – you fall into it from the moment you are born. There are of course also mechanisms to recruit, to discipline and to help reproduce it. In the Soviet Union there was more or less a consolidated state, whereas now it is impossible to disentangle the state from a network of private interests. Modern clans are complex. It is not always clear who is behind which interests.

It is these non-transparent interests and non-hierarchical, network-based aspects of governance that are missing in the most conceptions of Russia’s systems of governance. Even when informal influence, connections, clans, cliques, clusters and other types of informal alliances within the elites are identified, the social networks that generate ‘informal power’ are not seen as intrinsic to the concept of governance.

 Moreover, it is often assumed that power networks shadow formal positions of power so that a ‘map’ of a pyramid of informal ties and influences can be produced. This is not how informal power operates. There is not much regularity about it. Besides, networks that channel informal influence function in an ambivalent fashion – they both support and subvert the existing governance model.

Personalised power networks enable leaders at all levels to mobilise and to control, yet they also lock politicians, bureaucrats and businessmen into informal deals, mediated interests and personalised loyalties. This is the ‘modernisation trap of informality’: one cannot use the potential of informal networks without triggering their negative long-term consequences for institutional development. (more…)