Photo: from personal archive

To control a business in Russia, it is not at all necessary to own it. It is enough to regulate the entry and exit of capital in key markets.

Patrimonial state?

The documentary "Putin's Secret Riches" broadcast by the BBC last week seemed to many to be an element of an information war and caused a violent reaction from the Russian authorities. It poses a question, the answer to which is required regardless of whether the viewer shares the opinion of the filmmakers about personal involvement in the corruption schemes of the top leadership of Russia or not.

This question concerns the system of power in modern Russia, namely the specifics of the relationship between government and business. The film contains the following phrase: “The President can demand from business whatever he deems necessary. How does he manage to ensure that business representatives unquestioningly fulfill their demands?”

The answer proposed by the creators of the documentary comes down to the thesis about the patrimonial nature of power in Russia. The president, according to sources cited in the film, mostly fugitive Russian oligarchs and disgraced political technologists, behaves like a tsar. All fortunes in modern Russia are created with the blessing of the holder of political power and are maintained as long as business recognizes the absolute supremacy of the holder of political power and works in his interests. In other words, the secret of business subordination is to turn any property into conditional property, transferred to the business for temporary use in exchange for agreement to serve.

The assumption about the patrimonial nature of power in Russia is not new. Actually, the author of the theory of patrimonial power, Max Weber, saw one of the most striking examples in pre-revolutionary Russia (Weber M. Economy and Society: An Outline of Interpretative Scoiology). The rank, the title of nobility and the wealth attached to them were received for service to the king. Patrimonial property is not absolute, but is conditioned by service to the holder of political power. Subsequently, in Russia, including post-Soviet Russia, many saw an example of the embodiment of patrimonial power. For example, the famous American Sovietologist Richard Pipes speaks directly about the predominance of patrimonial power throughout Russian history (Pipes R. Property and Freedom).

Who is the owner?

The weak link in the theory of patrimonial power is the need to prove the role of the political leader as the “owner of last resort”, just as the Central Bank acts as the lender of last resort.

The creators of “Putin’s Secret Riches” tried to do this. Some of the people quoted in the film say that the top person of the Russian state has a stake in many highly profitable businesses. But the creators of the film admit that any talk about an accurate assessment of the resources under the control of the Russian president is meaningless. This could be the figure they mentioned of $40 billion, or any other, up to the size of Russian GDP.

But even a good journalistic investigation is unlikely to be able to find documentary evidence of the facts of personal participation of Russian officials - holders of political power in the ownership of the largest companies. As the scandals that periodically flare up around undeclared property show, any formal ownership of shares by officials can sooner or later become public knowledge. The size of the scandals, even taking into account the understandable secrecy and attempts to limit any information leaks, is not comparable with the hypothesis about the connection between Russian business and bureaucracy primarily through property rights at all levels - federal, regional and local.

The salvation for the theory of patrimonial power may be the assumption of indirect participation of officials in property through dummies. Family members here become a good help or “shadow guys” (to quote one of the characters in the documentary), representing the interests of a political figure on the boards of directors of key companies.

The increase in the number of intermediaries between political power and business makes the system unstable and vulnerable. Where can we get enough “shadow guys” to directly control everything and everyone in the Russian economy? Even the State Planning Committee of the USSR found such a task beyond its ability.

Perhaps the key to the “secret materials” about the nature of government and business in Russia should be looked elsewhere - for example, by abandoning the assumption of exclusively direct (through property) control of government over business?

entrance and exit

Can indirect control, which does not necessarily involve ownership, be effective and ensure the subordination of business to political will? Probably, in Russian conditions it is indirect control that often turns out to be the most effective. It is carried out by government officials not as owners of last resort, but as guards at the entrance to Russian markets.

First, the title of property in a country with weak traditions of respect for the law and other formal things in itself means little. To guarantee formally recorded rights, what is needed is not a piece of paper, but control over the court and the executive branch.

Secondly, instead of assigning an observer to every significant business (the owner himself, a member of his family or a “shadow guy”), wouldn’t it be better to create a system in which the business will work for the politician of its own free will and even with a twinkle?

Boris Berezovsky dreamed of creating a system that would encourage people to work for a specific person. However, other people - the political elite of today's Russia - managed to make the dream come true. In the system they created, entering the market requires purchasing an “entry ticket” from an official who plays the role of security guard at the entrance. Those who have not paid for the ticket simply do not enter the market or, having accidentally entered, are forced out of it through the efforts of various inspections. Therefore, the lucky ones who find themselves in the market operate in conditions of limited competition and receive excess profits. It is in their vested interests to preserve such a system, the guarantor of which is the power of the official not as an owner, but as a guard. In this situation, the business itself will provide money to officials for both personal whims and socially significant projects.

The need for other methods of coercion arises only when the business persists in its refusal to accept a subordinate position. Everything is possible here - from the deprivation of property rights, which supporters of the hypothesis of patrimonial power talk about, to brute force - the deprivation of freedom or even the life of those who are especially unyielding.

The system worked as long as the business was interested in entering Russian markets. With the introduction of sanctions by Western countries against Russia and especially with the steadily declining price of energy resources, the main source of income in the Russian economy, the system began to fail. In the absence of those wishing to enter the market and, conversely, the growing number of those wishing to leave it, entry control lost its meaning, and exit control (the movement of people and capital across the border), on the contrary, became relevant.

As a result, it turns out that in order to uncover the actual corruption mechanisms widespread in Russia, the creators of “Putin’s Secret Riches” did not choose the most correct approach. In the end, they did not and could not provide convincing evidence of the patrimonial ownership of the Russian political class.

What if we look for documentary evidence of government control over business in Russia through control of entry and exit from Russian markets? Evidence of corruption of the guards at the entrance would probably satisfy not only the discerning viewer, but also the courts, both foreign and - never say "never" - Russian.

The point of view of the authors whose articles are published in the “Opinions” section may not coincide with the opinion of the editors.

Where to look for evidence of corruption in Russia?