CORRUPTION Syndromes of Corruption

Oligarchs and Clans 131
The Soviet era: order without markets
It is tempting to think of oligarchs, organized crime, and corruption
generally as something new, or as outgrowths of post-communist problems
and events. But while the post-1991 climate of immense opportunities
and weak institutions has helped make corruption particularly
disruptive, many of the underlying problems, and some of the key figures
involved, have roots in the old Soviet order. A full discussion of Soviet
corruption is beyond the scope of this chapter (see Kramer, 1977, 1998;
Schwartz, 1979; Simis, 1982; Vaksberg, 1992), but some points are
essential to what came next. During that era a bureaucratized, centrally
planned economy lacking a price system was ruled by a one-party dictatorship
answerable to no one. Bureaucratic corruption was the norm, not
the exception, as officials and enterprise managers not only took advantage
of illicit opportunities but struggled to keep up the appearance of
meeting quotas. A parallel system of corruption for personal gain
(Kramer, 1977) helped individuals cope with shortages, obtain better
housing, health care, and education, angle for better job assignments,
and generally cushion the impact of harsh and arbitrary state policy
(DiFranceisco and Gitelman, 1984; Ledeneva, 1998). At the top of the
political structure – and occasionally, at key points in the economy –
corrupt gains could be spectacular (Simis, 1982). Corruption was no
secret during those days, but official acknowledgment of the problem
was sporadic and usually served political ends. When a top official was
publicly labeled corrupt, that often meant that he or she had come out on
the losing side of a factional struggle.
Bureaucratic corruption helped the system survive in a distorted and
inefficient form by easing bottlenecks and creating a crude sort of
exchange system. By the last decades of the Soviet era it was far less
risky for the regime to wink at corruption than to undertake fundamental
reform. Corruption was hardly beneficial, but alternatives were few and
had huge potential costs. Long-term damage came in the form of lost
opportunities to change and adapt, and in a pervasive cynicism about
official statements and policies. The result was a system that in the end
could not bend, but rather broke.
For our purposes four aspects of the Soviet era are of particular importance.
First, the party-state apparatus was large and monopolistic, but in
many ways ineffective. The state bureaucracy was slow-moving and
deeply politicized; the party ruthlessly punished opponents and offered
no legitimate way to influence policy from below. Even had it been spared
the worst of the dislocations and dubious policy advice (Stiglitz, 2002)
that accompanied the fall of the Soviet order, a state that had ruled by