The evolution of business – state interaction in Russia: From state capture to business capture?

This article discusses two basic strategies of Russian companies—isolation from, and close cooperation with the state. The author analyses several ways in which companies realise these strategies, drawing analogies with the ‘exit’ and ‘voice’ strategies suggested by A. Hirschman. It is shown that under the conditions of a weak state these strategies lead either to an expansion of the shadow economy or to ‘state capture’. Both the privatisation of the state and the lack of its privatisation result in budget crises as well as drastic social and political shocks, leading to calls for a ‘strong hand’ in the business community itself. However, as there is little political competition and the mechanisms of democratic control are weak, state consolidation takes place as a bureaucratic consolidation accompanied by new opportunities for informal ‘business capture’ by the authorities. Nevertheless, the high degree of openness of the economy and the remaining heterogeneity of political actors provide business with a wide range of possible strategies of interaction with the state. This article explores how these strategies are becoming more formal and public compared to the 1990s. Strategies of isolation from the state now take place as legal strategies of internationalisation. Cooperation strategies, on the other hand, currently seem to be more efficient when switching from the traditional lobbying of private interests to more rational and collective actions aimed at providing the necessary conditions for sustainable economic development.     

“Bad enough governance”: state capacity and quality of institutions in post-Soviet autocracies

This article contributes to current discussions on state capacity, quality of institutions, and political regimes. Our analysis demonstrates that the J-curve argument (“good institutions” in autocracies as compared to hybrid and transitional regimes) may not be generic and is not well supported by empirical evidence from the sample of post-Soviet countries. An explanatory model of the “King of the Mountain” is instead provided. Its focus is on the monopoly of political rent as a precondition for extraction of economic rent. It demonstrates an inverse correlation between the quality of institutions and the extraction of political and economic rent, and explains why an autocrat may not have an incentive to improve institutions that may make his/her monopoly vulnerable, and rather would prefer to preserve a low quality of institutions and “bad enough governance.” An analysis of a variety of external and domestic factors that may endanger this monopoly is provided. Finally, the autocrat's alternative strategic choices are analyzed. It is argued that better payoffs for the autocrat – paradoxically – may result from partial reforms and improvement of the quality of institutions. However, for various reasons, this is not occurring in post-Soviet autocracies.     

Electoral coordination in India: The role of costly campaign communication

This article views electoral campaigns as a means of communication in the process of electoral coordination. Well-manned and well-funded district campaigns facilitate voters’ learning about the policies of competing parties; if the funds and the activist support are supplied by local constituencies, campaigning also informs voters about the relative support of competing parties in the district. Using district-level data from the 2009 general election in India, as well as the measures of the affluence of district residents obtained from the Indian Human Development Survey, 2005, an estimation was made of the effect of the affluence of electoral constituencies on the intra-district coordination. The analysis also includes the known determinants of strategic voting as control variables.     

"King of the Mountain," or Why Postcommunist Autocracies Have Bad Institutions

The authors analyze levels of democracy and state capacity (including quality of institutions) in the postcommunist countries over the past two decades and consider the theoretical implications of the relationship between these variables. In particular, they cast serious doubt on the general validity of the J-curve hypothesis. They present their own informal "king of the mountain" model.     

The securitization of democracy: Freedom House ratings of Russia

This article explores the claims of Russian officials that US assessments of economic and political developments in Russia, particularly those of Freedom House (FH), are excessively critical and often used to justify global dominance. To assess the validity of such claims, three different influences are considered: culture, power, and special interests. The article finds that all three, each with roots in the cold war, play a role in shaping assessments of Russia and help to explain why FH's analysis of Russia is more critical than the analysis of other organizations. The politics of special interests is found to be particularly influential and reflects the interests of US national security policies and priorities. Such priorities are also linked to a politics of memory derived from the cold war, which often influences perceptions of Russia as a threat rather than as a potential partner.     

The price of everything and the value of nothing? Unravelling the workings of Russia's ‘virtual economy’

The unprecedented reliance on non-monetary exchange (NME) in transactions among industrial enterprises is one of the most remarkable features of Russia's post-Soviet economic transformation. This paper argues that firms engage in NME in order to discount nominal prices which remain well above market-clearing levels. The mechanisms which prevent a convergence between formal and actual transaction values include asset valuation rules, depreciation schedules, tax regulations and an inadequate bankruptcy mechanism. These distortions to the price-formation mechanism effectively operate to sustain a subsidy regime which has hitherto shielded much of Russian industry from the rigours of the market. The analysis concludes with an examination of the 1998 financial collapse, arguing that the crash was rooted in the breakdown of the subsidy system just described, a process which was strikingly similar to the breakdown of the Soviet economic system a decade earlier.