The roulette of Russian politics

Why has transformation in Russia not been achieved? Why has government not governed? It is too simplistic to say that political reform has resulted in failure, though it is true that it has not led to democracy and that economic reform has not led to a free and fair market. Political power has been corrupted into what Yegor Gaidar has called oligarchical capitalism.

In Kapitalizm , Rose Brady tries to paint a word picture of the critical events she has observed as a reporter for Business Week in Russia since 1992. It is an easy read and will be of interest to those who want to understand the realities of political and economic change.

Key figures who were at the centre of critical events are interviewed. She saw Gaidar, for example, in May 1992 just as the first dash for radical reform was terminated by President Yeltsin. By December, Gaidar had resigned and the shock-therapy approach ended. He said at the time that there was a need for strong government but both parliament and the president gave in to lobbying.

Brady recounts the events of October 3 1993, when Yeltsin, in an expression of strong government, suspended and

attacked parliament. But this compromised Yeltsin's claim to be a democrat and led to confusion, apathy and depression among many people over what democracy means in Russia.

So what progress has been made? Brady recounts Gaidar's view that there were two choices: to destroy the elite by force or to compromise. The first risked civil war. That is why the government allowed the elite to grab the property in exchange for power.

The degree of success of economic transformation was summed up by Anatoly Chubais, the main architect of privatisation. He said: "I didn't expect this level of concentration of the national economy that we have now. For me, it's not a result I would have liked to have."

The version of democracy and markets accepted as normal in the West has not actually been tried in Russia. This book also shows how Russian strong government has failed. Brady gives an insight into what it is like to be in the middle of revolution. She quotes Alexander Minakov as saying: "All big revolutions involve some disorder ... "The real problem is that neither the Russian government, nor the international community, can get a grip on the driving forces of what must now be classed as a chronic revolution which threatens a terminal disorder."

The questions that arise from Brady's book are how much social science can tell us about managing an economic transformation and what can it say about political transformation? Can social scientists produce a route map to help governments navigate towards a stable set of effective, participative, regulatory and political arrangements?

In the light of globalisation, is there a tendency towards convergence in the political, economic or social systems found in different countries? If so, what does this mean for countries such as Russia? Could a model of institutional and political development be provided?

This might seem an overambitious, even a foolishly idealistic project, but the editors of Continuity and Change in Contemporary Capitalism set out to make a contribution to this venture. The starting point of their work was the 1984 study Order and Conflict in Contemporary Capitalism , edited by John Goldthorpe. The main finding of this research was that social-democratic governments with strong, centralised industrial-relations systems were most successful in dealing with the internal or external forces of industrial change and unrest.

The editors show how the stability of these social democracies crumbled in the 1990s. They suggest that supply-side aspects, internationalisation and other aspects of the political system such as political behaviour need to be taken into account in assessing the conditions necessary to build the foundations of stability in a society.

Their conclusion is that it is unlikely there will be significant convergence upon one set of arrangements because of the persistence of institutional divergence. They find national coordinated market economies (CMEs) such as Sweden or Norway are tending to move towards the sort of arrangements found in sectoral-based CMEs such as Germany or Belgium. At the same time the liberal market economies (LMEs) such as the US, UK and Australia are becoming more liberal, with increasing emphasis on individualism and meritocracy. Both systems show some signs of institutional failure. The editors cannot, however, identify the nature of the ultimate equilibrium solutions to the contemporary problems of policy and institutional adjustment. They find no evidence that free-market arrangements are clearly superior to more regulated and interventionist production regimes. Thus, while the Anglo-American LMEs may be a model of economic efficiency, they are not the model.

This book is a significant contribution to political economy and will be useful for students of comparative politics. There are also lessons for politicians. For countries such as Russia, the demonstration of the importance and persistence of institutions may be both positive and negative. On the negative side, the skewed institutions that have developed in Russia are not just ineffective but may be difficult to reform. On the positive side, if Russia has the political will then effective institutions can be established. There is nothing to stop politicians from learning from the experience of other countries. The task may be big; the prize is even bigger: establishing institutional effectiveness and transparent governance. This is what citizens seek and what the international community hopes to create. Strong government does not have to be bloody dictatorship or presidential decree. Building effective and stable governance structures within the rule of law remains a worthwhile vision.

Simon Booth is director of management studies, University of Reading.