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"Crony Capitalism"


The intimate and cozy relationship that developed between big business and officialdom – “crony capitalism,” as it is sometimes called – posed a threat not just to the development of free competition but also to Russia’s nascent democracy itself. 

Boris Berezovsky

Some of the leading oligarchs claimed that Russia developed not along Western but Asian lines and that it should therefore be run by powerful financial-industrial groups rather than a democratically elected government. Anatoly Chubais quotes Boris Berezovsky as saying that “business should appoint the government.”

Berezovsky himself boasted on more than one occasion that he was the real “kingmaker” behind the high turnover of prime ministers during Yeltsin’s occupancy. Whether his claims were true or not, one thing is certain: the mighty tycoons sought to spread their rights of ownership to the entire country and to elevate themselves above government ministers appointed by the elected president, and above elected officials, such as Duma deputies and local administrators.

With all the internal tensions and rivalry between the oligarchs themselves, they were united as one in their attempts to monopolize all property relations and to close access to other groups and classes of the population to the division or exploitation of privatized spoils. In short, the oligarchs became the enemies of genuine privatization as they strove to ensure that the market and private property should remain under their undivided monopolistic control.

Russia’s crony capitalism and oligarchic corporatism obstructed the development of a more broadly based private ownership, making a joke of all the talk, so popular in the Russian media, about the desirability of building a “people’s capitalism,” achieving a wide dispersion of property ownership, expanding the ranks of shareowners, and raising a large middle class.

It remains to be seen whether Russia’s current president, Vladimir Putin, who seems determined to break up the exclusive companionship that has been established between big business and corrupt officials, will be able to encourage the emergence of a more civilized form of capitalism.

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