• Nem Talált Eredményt

Oligarchs: the past or the future of Russian capitalism?


Academic year: 2023

Ossza meg "Oligarchs: the past or the future of Russian capitalism?"


Teljes szövegt

2 This is completely in accordance with the original meaning of the term introduced by Plato in "The Republic" and Aristotle in Russian elites' thinking about oligarchs was also influenced by Jack London's "The Iron Heel" anti-utopia on the rise of robber baron oligarchy widely publicized in Soviet times. Sectors are narrowly defined (usually referring to a specific product market) and are drawn from industry, construction and market services.5 The sectors were.

Table 1. Russian oligarchs. Source: Worldbank (2004) and Guriev and Rachinsky (2004).
Table 1. Russian oligarchs. Source: Worldbank (2004) and Guriev and Rachinsky (2004).

Oligarchs and market power

The table suggests that oligarchs dominate the largest industrial sectors, particularly natural resources and automobiles. While we do not have data on value added at the firm level, the Worldbank (2004) estimated value added by sector and concluded that the sectors controlled by oligarchs are precisely those that add the most value added per unit of output. The fact that oligarchs control 39% of sales probably means they control an even higher share of value added.

The only major sectors not controlled by the oligarchs are natural gas, energy and machinery manufacturing. The gas and energy sector is dominated by the federally owned monopolies Gazprom and RAO UES; machinery manufacturing is a diverse sector consisting of defense manufacturing (controlled by the federal government), oligarchic firms, and smaller firms controlled by private domestic owners who are not oligarchs. The table shows the share of sales controlled by oligarchs in 32 industrial sectors, sorted by size.

Some oligarchs are major global players in their industries (especially in the oil and metals sectors), but none are market leaders. Competition policy should ensure a level playing field for all owners, regardless of their size and political influence – 'political antitrust' (Rajan and Zingales, 2003).

Table 3. Oligarchs control largest industrial sectors except for natural gas and energy
Table 3. Oligarchs control largest industrial sectors except for natural gas and energy


This is not surprising since these industries are those with large economies of scale.7 Therefore, Russia does not need antitrust policies aimed at destroying oligarchs' companies. We have compared the degree of control by the largest owner in companies controlled by oligarchs and private non-oligarch owners. Another source of relative superior performance of oligarchs may be economies of scale due to Russia's institutional environment.

Expensive access to finance actually serves as a barrier to entry for smaller businesses; this in turn increases the profits of the oligarchs (Acemoglu, 2003). Boon and Rodionov's argument is based on the logic of the "conglomerate discount" literature, which compared the stock market valuation of firms inside and outside diversified conglomerates (Lang and Stulz, 1994). In Guriev and Rachinsky (2004) and the World Bank (2004), we use firm-level data on 1,200 industrial enterprises from the Russian Register of Industrial Enterprises—the official census of Russian industrial enterprises.

We also checked for the effect of the degree of control, but also turned out to be insignificant; apparently there is too little variation in the degree of control in our sample. The regression results are presented in Table 4.9. In 2002, the oligarchs outperformed other private Russian owners by about 9% in terms of TFP growth. This may reflect the fact that oligarchs' firms initially lagged behind their peers, but oligarchs successfully restructured them.

However, this is not a problem as long as the degree of transfer pricing would differ across ownership categories given the industry and region (and company size).

Table 4. Oligarchs outperform other Russian owners in terms of productivity growth.
Table 4. Oligarchs outperform other Russian owners in terms of productivity growth.

Privatization, ownership concentration and property rights

Is ownership concentration in Russia too high by international standards?

Thus, ownership concentration in modern Russia is probably the highest in the world, at least among countries with available data.

Emergence of concentrated ownership and legitimacy of property rights

In Russia, the largest groups have majority and supermajority shares of control and cash flow rights (Guriev and Rachinsky, 2004, Boone and Rodionov, 2002). In an August 2001 VCIOM poll, 68% of Russians said privatization had caused them a net loss, while only 5% said they had gained. Unfortunately, owners only have incentives to invest if the public recognizes their property rights.

This threat was essential to enforce a pact between Putin and the oligarchs (supposedly agreed at a meeting on July 28, 2000), in which Putin promised not to reconsider privatization if the oligarchs supported his efforts to consolidate political power and pay taxes . Because Mikhail Khodorkovsky withdrew from the pact by openly criticizing corruption in the Putin administration, supporting opposition parties and independent media, he and his partners were arrested or forced into exile. 15. Again, the lack of institutions led to collusion at auctions, as well as financial constraints on buyers.

Although most oligarchs had a pro-Western orientation, they benefited from the lack of foreign competition. 37% believed Putin would keep the pact (vs. 30% who did not), and 71% believed that oligarchs would not keep their promises (vs. 10% who thought they would).

Oligarchs’ futures

The public has no political weight, but its interests can be represented by the president who is accountable to the average voter. Acemoglu highlights the trade-off between oligarchy, where the rule of the wealthy elite results in low taxes but high entry barriers, and a populist democracy where the average voter increases redistributive taxes but also keeps entry barriers low; Acemoglu discusses, but exogenously excludes, the outcome in which the bureaucracy is in control (predatory state).

In what follows, the political regime is a convex combination of three extreme outcomes: oligarchy, predatory state, and populist democracy with relative weights determined by the policies pursued.

Status quo

General Park came to power in 1960 after the Korean public was deeply disappointed in the corrupt regime of Syngman Rhee, the first president of independent Korea. He even made them promise to donate large portions of their wealth to charity or return it to the state. Korea's richest person, Lee Byung-chol of Samsung (who is thought to have held 19% of all national wealth, Graham, 2003) was in opposition to Park and eventually had to pay fines to the government in 1963.

No chaebol leader was prosecuted, although Park's new laws certainly allowed it, and twenty-four arrests were initially made to establish credibility. In Park's later years, the chaebols received substantial support from the state in the form of subsidized loans. Apparently, the Park administration was happy with the chaebols as long as they led Korea's industrialization and economic growth.

The second problem is that part of Korea's success was a smart choice of winner by Park. It is difficult to reproduce this strategy now that Russia is no longer in it.


The Russian public will know that they bought the assets for a fraction of their value. It is also not clear whether the government will be able to ensure that the auctions are fair. Manipulating the auctions will further reduce the price and therefore the legitimacy of subsequent property rights.

In fact, the zaibatsu owners were expropriated and their individual companies were mostly bought by the incumbent management. Therefore, if the empires of oligarchs are broken up and sold piecemeal, they are likely to re-emerge as unified groups, albeit controlled by new owners. In a July 2003 poll conducted by VCIOM, only 10% of respondents believed that confiscated assets will benefit the public, the most popular responses being that the assets will be appropriated by other oligarchs (31%), state (24%), bureaucrats ( 23%) and organized crime (18%).

Foreclosure can only work if the property is sold at fair auctions open to foreigners. The ruling bureaucracy will certainly try to prevent this, as it will lose control over assets and cash flows.


To do this, a predatory state will masquerade as a populist democracy and appeal to the nationalist sentiment of the average voter. From a macroeconomic point of view, the oligarchs could simply buy back some of Russia's national debt. However, in this case, the payment will not reach the average voter; instead, this arrangement will ease government budget constraints by allowing new debt issuances; and more government spending is not necessarily good for the average Russian.

There should be a fund that would finance annuity payments or one-off payments to the oldest retirees. The deal could also come with a pension tax cut to distribute some of the benefits to the working population. It is much less clear what the oligarchs would get in return for the payment.

Although the statute of limitations on privatization can be enforced, it is difficult to refrain from prosecuting oligarchs on charges of tax fraud or other misconduct. In exchange for higher income taxes (and previously introduced labor laws and regulations), Swedish tycoons received very generous tax breaks on investments, giving large companies a serious advantage over newcomers (Hogfeldt, 2004).

Competition and financial development

Indeed, the total oligarch wealth is in the range of $80 billion (Forbes, 2004) and there are approximately 40 million pensioners in Russia, so using Deripaska's 75% tax, we arrive at a total of $1,500 per person . However, there are also examples of success, the most important – the American experience in the 20th century. The initial conditions in the US were no better than those in modern Russia.

While building their business empires from scratch, they also received substantial resources from public coffers in the form of land grants (Aslund, 2004) or direct subsidies (De Long, 1998). Collis Huntington and Leland Stanford were supposed to receive government subsidies for building transcontinental railroads at a rate of USD 16,000 per mile of track in the flat terrain, but 32,000 in foothills and 48,000 in the mountains; they succeeded in claiming mountain and foothills in flat areas (Stone, 1956). Also, in the beginning of the 20th century, the USA lagged behind other Western countries in terms of financial development (Rajan and Zingales, 2003); the level of financial development in the USA in 1913 was similar to that of modern Russia.

Yet the US has managed to rein in the “thugs of great wealth” (as Theodore Roosevelt called the magnates) and build a competitive economy and a highly advanced financial system. Antitrust policies, higher taxes to finance war and the emerging welfare state, and the Glass Steagall Act have significantly reduced their relative roles in American economics and politics (De Long, 1998).


Hindringer for fremkomsten af ​​retsstaten i postkommunistiske samfund”, American Economic Review, kommende. From State to Market: A Survey of Empirical Studies on Privatization” Journal of Economic Literature XXXIX, s. Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity, NY: Crown Business.

The Dark Side of Domestic Capital Markets: Dividend Rent-Seeking and Inefficient Investment', Journal of Finance. Popular Attitudes Toward Free Markets: The Soviet Union and the United States Compared” American Economic Review. Slinko, Irina, Evgeny Yakovlev and Ekaterina Zhuravskaya 2003, Laws for sale: Evidence from Russian regions, mimeo, CEFIR, Moscow.


Table 1. Russian oligarchs. Source: Worldbank (2004) and Guriev and Rachinsky (2004).
Table 2 presents the breakdown of ownership by categories. Indeed, oligarchs control about 40% of  our sample
Table 3. Oligarchs control largest industrial sectors except for natural gas and energy
Table 4. Oligarchs outperform other Russian owners in terms of productivity growth.



András magyar király okleveleinek méltóságsorában a Bankó (Banco) névalak gyakrabban volt használatban, mint a Bánk, bár a Bánk vagy inkább a Bánk bán név használata

(a közoktatás központi értékelési rendszere, a központi mérésekkel kapcsolatos intézményi szervezési, szakmai feladatok, a mérési eredmények beépítése a

A kérdőíves megkeresésekkel kivitelezett kutatással, a hazánkban tanuló nemzetközi hallgatók magyarországi turisztikai szokásaira vonatkozó kérdéseken keresztül

A súlyosan-halmozottan fogyatékos tanulók iskolai neveléséhez, oktatásához nem áll rendelkezésre központi kerettanterv Nincsenek előre megadott tan- tárgyak, azokhoz

A konferencia szomorú utóélete, hogy a fiatal kortárs zene- szerző, akinek munkásságát az egyik tanulmány is ismertette és aki a zene- hallgatóvá neveléshez több

The same pattern as for the fresh TG was seen in the vehicle-treated animals (Fig. 5g-i) treated rats, CGRP immunoreactivity was observed in the neurons and nerve fibres at all

We implemented the three protocols described above: the optimal algorithm, the modular protocol that is based on the averaging protocol and NEWSCAST and the basic protocol that has

The privatization contract of another company stipulates, that besides reporting annually to the Privatization Agency, to verify the fulfillment of the investment program and

A trifluralinspecifikus ELISA rendszer keresztreaktivitási kísérleteiben, a standard trifluralin gátlási görbe mellett számos dinitroanilin herbicid (etalfluralin,