Political scientist Vladimir Gel’man on why the idea of modernization in Russia isn’t working.
What is “bad governance” and where did it come from in Russia? Why don’t institutions work in the country, and reforms usually only make things worse? Can we change this? European University at St. Petersburg and University of Helsinki professor Vladimir Gel’man tried to answer these questions and others in the course of a lecture organized by the Yegor Gaidar Foundation and the Sakharov Center. “Lenta.ru” took down the main points of his presentation.
What is bad governance?
In the new annual report by Transparency International on the perception of corruption in various countries around the world, Russia got some good and bad news. On the one hand, in comparison to the previous year, the country moved up 17 places. But nonetheless, with 28 points out of a possible 100, it ranked 119th, alongside countries like Sierra Leone and Guyana. These countries are quite poor and have a low level of social development; against this backdrop one would expect Russia to finish in a higher position.
Even if you go by some other indicators (indexes of property rights, the rule of law and so on), our nation still won’t look much better. In this case the term “bad governance” is not just governance of poor quality, but is precisely bad from the point of view that the country should not be managed as such according to any objective criteria.
It’s paradoxical, but quite often we see how attempts by the authorities to remedy a bad situation leads to the situation getting worse. Why? I argue that there are political institutions, installed and rooted by Russian ruling groups, which obstruct the possibility for fundamental improvement in the quality of governance and block the possibility of qualitatively improving socio-economic development. In these conditions, attempts to create good rules lead to the opposite result, and a vicious cycle occurs.
If we look at many examples of management by these or other industries or territories, they’re managed by roughly the same scheme. This isn’t some kind of accidental management generated by some erroneously appointed person. At the basis of this “bad governance” at any level, lies a political and economic order that is a consequence of purposeful institution building. Attempts to improve something in part without changing the order as a whole produce the effects that were observed, for example, in the results of reforms to the Russian railway system. In other words, circumventing this political-economic order is simply impossible.
Where does bad governance come from?
In the literature there are two popular points of view in this regard. The first: bad governance is stipulated by the character of preceding historical development. The whole historiography of Russia, beginning with Richard Pipes’ famous book “Russia Under The Old Regime,” is devoted to how in different eras the country was poorly governed due to the fact that there were no guarantees of political and economic freedoms or property rights. From the point of view of Pipes and many of his followers, there simply occurs a kind of reproduction of the previous order of governance at every historical turn in the country’s development.
From here the conclusion follows that if some country or person cannot be corrected, then the logical consequence is their destruction (as in the case of hereditary chronic diseases that are passed from generation to generation). This is an extremely pessimistic point of view, but nevertheless it remains extremely popular in both foreign and domestic literature. Empirical research, however, sometimes not only doesn’t support it, but also directly contradicts it.
Another point of view states that countries that are so poorly governed aren’t bad themselves, but at some point in time they endured some very serious trauma associated with a particular breakdown of historical development. In reference to African nations, for example, many say that attempts to overcome the underdevelopment stuck down during colonialism is met with failure due to modernization. Hence a reaction arises in the form of a search for the means for surviving in such an order of governance, which had characterized the country for decades and even centuries before.
If we’re speaking about post-Soviet states, then the collapse of the Soviet Union and the associated problems of nation building plus simultaneous economic and political reforms left such deep traumas that they cannot be overcome quickly. They will require very long-term therapy in the form of a lengthy period of economic growth, which will eventually get rid of the vestiges of bad governance and lead out toward the correct trajectory.
But if you look at specific examples, then the cause—at least of the Russian illnesses related to bad governance—is not heredity and not the karma of the Soviet Union’s collapse. In medicine, it would be called poisoning.
The Russian railways, for example, were for many years a kind of personal fiefdom of Yakunin as the result of a perfectly rational action in the division of rents between the participants of the “winning coalition.” Under these conditions, attempts to improve management and carry out some socio-economic reforms only facilitate the realization of interests related to the receipt of revenue.
It can be said that everyone everywhere is interested in extracting revenues. But in certain countries that are against rent seeking there is a quite successful antidote; in the Russian case, however, for reasons that are primarily political, it simply remains unclaimed.
Since the main purpose of the content and management by a state with bad governance is precisely the seeking of rent, then it follows that the entire mechanism is locked up in this, presented in the form of a single pyramid of power. This hierarchy applies not only to the governance of the country. All political and economic agents can have some autonomy in relation to the center of power, but it is conditional.
It can be cancelled at any time. For example, an organization can be closed after a surprise inspection. Important here are not the facts associated with the use of that or other steps of power, but rather with the expectation that they are possible. All formal rules, laws, regulations, and certificates of ownership are no more than the by-product of distributing power within the framework of the power vertical. They act only when they don’t inhibit profit.
But the power vertical is not uniform and contains many branches. Accordingly, the management apparatus is distributed between various groups competing for access to revenue. There may be more of these principles, and they all make up the core of the political and economic order of bad governance.
Formal institutions are a shell, the exterior of which resembles the attributes of developed modern nations. But they work only when they serve the interests of rent seekers. Hence at the political level we observe an authoritarian regime—in the framework of capitalism, this is so-called nepotism. The paradox lies in the fact that although this kind of political and economic order is extremely ineffective and widely criticized, it is quite stable.
In Africa, the result of such an ineffective and unstable equilibrium is stagnation. For example, Zaire was called the dictatorship of stagnation during the reign of Mobuto, who ruled the country for 32 years and went down in history as a legendary embezzler.
Russia in 2014 saw its own kind of militaristic turn, which lead to a very large-scale redistribution of revenue flows. But before this, altogether different tendencies were observed in post-Soviet countries (and ours in particular), and economic growth and development were put forth as goals. The slogan of modernization was not the usual demagogic admission. On the contrary, in the early 2000s German Gref’s “Strategy 2010” program saw the light, and points later put forth by Medvedev became its logical continuation.
Why does Russia need reforms?
But why did Russians authorities need these strategies within the paradigm of bad governance? On the one hand, there is an understanding that the more money there is allocated to development, the more revenue you can appropriate. But beyond these pragmatic material circumstances, there was also the fact that Russia differs fairly significantly from both African countries and some of its post-Soviet neighbors. Sociologist Vadim Volkov called this the status thorn. It presupposes the existence of the notion that Russia is a great country that must do something significant, noteworthy. Hence the desire to host the Olympics, and global forums.
Of course, restricted modernization does not entail political liberalization because it may threaten to undermine the political status quo, and thus comes down only to the economic sphere. The experience of the changes that occurred during Dmitry Medvedev’s presidency clearly demonstrates this.
There is a certain demand for a quality national economy, for higher rates of economic growth. This includes the desire to ascend in the international rankings, and in this way achieve symbolic recognition. The political leadership acts as the customer of reforms. There are officials driven by career motives, and developers of reform programs and experts who often sincerely believe in—maybe not fully, but at least in part—the reasonable ideas they will implement.
How are reforms produced in this country? Some experts prepare decisions, put them on the desk of the first person, and it starts to become a reality without serious public discussion, without discussion in parliament and negotiations with stakeholder groups. But in terms of the actions of such an informal institutional core, an effect emerges that is neither deliberate corruption nor falsification, as happened in the case of the Russian railways. The railway leadership, having looked at the program of reform, implemented what was profitable, and the rest remained only on paper.
Thus the upper floors of the power vertical—senior government officials and the businessmen linked to then—extract rent. What remains on the lower floors? There they receive too few benefits and too many costs to do anything. This comes into what the American anthropologist James Scott called the high modernist movement, when the aim of reforms is the achievement of formal indicators that create the criteria for regulation parameters.
The consequence of this policy of reform is the avalanche-like growth of regulation and the tightening of its scale: since no one at the bottom will do anything, it’s necessary to do the installation and make the lower floors dependent upon achieving such indicators. Accordingly, the costs of control increase.
Whether quality improves from this is a big question. There are a few success stories, such as the tax reforms of the early 2000s. But this is more the exception that proves the rule—there are many more failures. The police reform of the early 2010s is the same story of institutional failure, of the turn from bad to worse.
Can institutions be reformed?
An article published by the heads of the Higher School of Economics in 2005 states that there are two strategies of socio-economic reform associated with the attempt to circumvent this informal institutional core. One is the borrowing of institutions, and the second is their cultivation.
But experience has shown that borrowing institutions leads to what economist Andrei Zaostrovtsev labeled “shitizatsiia” (from the English word ‘shit’). An illustrative example is the idea of creating e-government. During Dmitry Medvedev’s presidency, significant resources were allocated to this, and a special minister was appointed. Although the practice of e-government exists in many developed nations, there it serves as a parallel mechanism that complements existing democratic institutions, rather than as an institution that substitutes for them.
In the Russian case, it turned into a mechanism for electronic petitions. One can write a letter via the Internet to some big chief official, and they must answer you. But as soon as you begin to talk about something more serious, the barriers go up.
Moreover, borrowed institutions are also easily adapted to special interests (we’ll say, the transfer of state functions to the highest bidder). A vivid example is of the “Platon” system. In other words, the absorption of these new institutions becomes a new source of revenue.
The second method is the cultivation of institutions. This is the cultivation of new mechanisms of governance on a very limited scale under political patronage. On the one hand, the era of patronage is brief, as, for example, with the “Skolkovo” center, which was created with great fanfare and is now not experiencing the best of times. On the other hand, the dissemination of innovations beyond these “pockets of effectiveness” runs up against resistance from the side of other rent competitors. Moreover, there is a risk that it is not these oases of excellence that will rebuild the surrounding country, but on the contrary, that the surrounding country will rebuild them in its own image and likeness. Thus the vicious cycle of bad governance emerges, and the big question is whether it can be broken.
How escape bad governance
It’s clear that there are high hopes for political democratization, that a change in government will entail the collapse of bad governance, and that good governance will grow from its ruins. There are, however, more than a few arguments in favor of the fact that this condition is necessary, but by no means sufficient. Much more likely it will turn out to be the replacement of one form of bad governance by another.
If we look at the example of Ukraine in the last two years, its leadership didn’t altogether bring about any serious transformations to escape from this institutional core. We can say that some crooks and thieves replaced some other crooks and thieves.
It’s also believed that the parliamentary system has great advantages in comparison to the presidential system, in terms of preventing the monopolization of power. However, in terms of the quality of government, such a link is not, in general, fully obvious. Examples of bad governance can be found in parliamentary systems where there is more stimulus to ensure that rents are distributed among a large number of participants. Still, the monopolization and personalization of power very strongly contributes to the most noticeable pathological display of bad governance.
Another important mechanism is globalization, integration into the international division of labor, global markets, and the global economy. But globalization in and of itself isn’t something to which bad governance can’t adapt. Bad governance is quite well embedded in globalization’s processes, creating various interfaces and government agencies. There are quite a few examples of this in those very same African countries.
The sovereign status of a country is a very strong barrier to improvement in the quality of governance. Sovereignty acts as a shield for rent-seekers in relation to external influence.
A very important question arises about the possibility of external limits on sovereignty from the side of developed countries. Such limitation is rare because it is expensive. Nonetheless, I don’t exclude that thought that the current crisis may serve as an external shock that will entail both internal and external pressure, facilitating our country’s escape from this trap.
The country’s main problems lie in the transparency of political institutions. The question is how these institutions can change, and whether this is possible in general. I suspect that in Russia these changes are unlikely to occur without some major shocks.
Examples of good governance
In the modern world there aren’t too many examples of the building of good governance. If you look at the experience of countries in Southeast Asia during the period when the regimes of the four Asian tigers were formed, they generally managed to achieve a certain progress. Or, for example, the reforms that Mikhail Saakashvili carried out in Georgia, which rather strongly improved the quality of governmental administration. However, their effect was inconsistent. Moreover, after Saakashvili stopped being the leader of Georgia, some of these reforms were revised and reversed. But in comparison to what was observed in Georgia before Saakashvili, this was still a very big step forward.
There is another example—South Korea and Park Chung-hee. Paradoxically, when the country underwent democratization, the quality of governance declined. However, South Korea became a very specific example of a place where, on the one hand, there was a very good combination of internal conditions for a relatively good quality of governance, and on the other—very important external stimuli (the threat from North Korea and the support of the United States, which the South Korean leadership has used successfully).
So there are some examples, but overall there are a whole lot more instances showing that once a country has stood on the path of bad governance, it is unable to get away from it.
Recorded by Viktoriya Kuzmenko