Russia’s Neo-Feudal Capitalism
Vladimir Putin's model of crony capitalism seems to be a deliberate effort to emulate the success of Russia’s old feudal system – a system that, after all, lasted for centuries. But in today’s world, such a system not only seems outdated; it also poses a genuine threat to social and political stability.
WASHINGTON, DC – Vladimir Putin’s Russia is looking more and more like the sclerotic and stagnant Soviet Union of the Leonid Brezhnev era. But in one area, Putin’s regime remains an innovator: corruption. Indeed, in this, the 18th year of Putin’s rule, a new form of crony capitalism has been taking hold.
Over the last decade, Putin has overseen a major renationalization of the Russian economy. The state sector expanded from 35% of GDP in 2005 to 70% in 2015. It would seem that, in Lenin’s words, the state had regained control of the “commanding heights” of the economy.
And yet it would also seem that state-owned firms like the energy giants Gazprom and Rosneft operate like modern businesses. After all, they have corporate-governance rules and policies, supervisory and management boards, and annual shareholders’ meetings. They undergo independent international audits, publish annual reports, and maintain boards with independent directors.