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8 - Comparative Oligarchy: Russia, Ukraine, and the United States

Published online by Cambridge University Press:  04 December 2009

By
Anders Åslund
Edited by
Anders Aslund  and
Marek Dabrowski
Anders Åslund
Affiliation:
Senior Fellow, Peterson Institute for International Economics; Chairman of the CASE Advisory Council
Anders Aslund
Affiliation:
Institute for International Economics, Washington, DC
Marek Dabrowski
Affiliation:
Center for Social and Economic Research, Warsaw
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Summary

Introduction

Oligarchs have become one of the big political and economic issues after communism, and one of the biggest policy questions in both Russia and Ukraine is what to do with them. Russia has seen the lawless confiscation of its biggest oil company, Yukos, through taxation, while Ukraine has flirted with widespread re-privatization. The resolution of the problem of the oligarchs will greatly influence the future of the economic systems of these countries.

To design a suitable policy for the treatment of oligarchs, we need to examine what oligarchs actually are, the economic and legal reasons for their emergence, how they act politically, and why they provoke such popular outrage. Our endeavor is to discuss oligarchs as a social phenomenon rather than a moral matter.

Economically, oligarchs have proven highly useful. They are a natural product of large economies of scale and weak legal security, and very large enterprises can hardly develop without them. A major problem is that oligarchs spend inordinate amounts to assure their property rights. The best cure would be to guarantee private property rights to all people, including the oligarchs. If not even the property of the richest is safe, how can anybody trust his or her property rights? Such a guarantee of property rights marks the crossing of the threshold to mature capitalism. Oligarchs may become more palatable politically if they are charged additional taxes or induced to undertake large-scale charitable donations. What must be avoided is the redistribution of property and legal limbo.

Type
Chapter
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Europe after Enlargement , pp. 143 - 164
Publisher: Cambridge University Press
Print publication year: 2007

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