Reluctant Capitalists: Russia's Journey Through Market Transition

Reluctant Capitalists Reluctant Capitalists RUSSIA’ S JOURNEY THROUGH MARKET TRANSITION LINDA M. RANDALL ROUTLEDGE NEW YOR LONDON Published in 2001 by Routledge 29 West 35th Street New York, New York 10001 Published in Great Britain by Routledge 11 New Fetter Lane London EC4P 4EE Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2002. Copyright © 2001 by Routledge All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Library of Congress Cataloging-in-Publication Data Randall, Linda M., 1956– Reluctant capitalists: Russia’s journey through market transition / Linda M. Randall. p. cm. Includes bibliographical references and index. ISBN 0–415–92824–9 (hard: alk. paper) — ISBN 0–415–92825–7 (pbk.: alk. paper) 1. Russia (Federation)—Economic policy—1991– 2. Privatization—Russia (Federation) 3. Capitalism—Russia (Federation) I. Title. HC340.12 .R36 2001 338.947'009'049—dc21 00–067374 ISBN 0-203-90320-X Master e-book ISBN ISBN 0-203-90324-2 (Glassbook Format) For Marie and Louis Randall, their unconditional love and support throughout my life made this book possible, and for Elena Shatagina, my mentor and a visionary. contents Acknowledgments ix PREFACE: A PERSONAL JOURNEY 1 1 RELUCTANT CAPITALISTS 9 2 EARLY STEPS IN THE JOURNEY: THE ORIGIN OF RUSSIAN BUSINESS TRADITIONS, 1590–1917 21 3 SCARS OF CHANGE: THE RISE AND FALL OF THE SOVIET MANAGER, 1917–1991 43 4 CORPORATE GOVERNANCE: A REQUISITE FOR SUCCESSFUL PRIVATIZATION 65 5 THE MYTH OF PRIVATIZATION 85 6 GOVERNMENT AS A SOURCE OF SUPPORT 97 vii viii CONTENTS 7 THE TRICKLE-DOWN EFFECT OF INSTITUTIONAL CHANGE 115 8 NETWORK, NOT CASH FLOW 127 9 LEGITIMACY: LITMUS TEST FOR CHANGE 141 10 TAKING CARE OF BUSINESS: FILLING THE VACUUM LEFT BY GOVERNMENT 157 11 CHANGING HEART AND MIND: THE EDUCATION OF THE RUSSIAN MANAGER 12 AT THE CROSSROADS Bibliography Index 207 199 187 173 acknowledgments My deepest gratitude to Susan Waldman, my dearest friend, who believed in this project before I did. You saw the ideas in this book germinate slowly over the last ten years. Your undying support was invaluable. Thanks to Lionel and Louis, my brothers, who constantly reminded me to keep my eyes on the prize and always provided me a loving and relaxing sanctuary in their homes. Jyl Lynn Felman, a loving friend, has been a constant source of inspiration that there are no limits and that “my voice” on these critical “revolutionary” events in Russia should be heard. Thanks to Barbara Harris. It has been an education to work with you. You are indeed a wordsmith, and your comments have been critical in the writing of this book. To Clay Sink and Chai Kim, my colleagues and mentors. Your support in helping me to develop as a scholar and grantwriter provided me the building blocks to pursue and complete this project. Thanks to Janet Borgerson and Jonathan Schroeder, who were very helpful in pushing me to put pen to paper in the very beginning. Many thanks also to Lori Coak