Markets Versus Hierarchies

Markets Versus Hierarchies

A Political Economy of Russia from the 10th Century to 2008

The Locke Institute series

Ekaterina Brancato

This unique book uses a transaction cost perspective to illustrate how hierarchies influenced the structure of markets and behaviour of individual businesses and cartels in pre-revolutionary, Soviet and present-day Russia.

Chapter 11: Conclusion: The Reality of Russian Political Economy

Ekaterina Brancato

Subjects: economics and finance, political economy, politics and public policy, political economy


This book presents a description of the events in Russian political economic history since the 10th century to the present with particular attention to how hierarchies prevailed over markets in resource allocation. My goal was to provide a sensible and balanced account of how Russia has arrived at its current state. Since Russian statistics are inherently unreliable and qualitative evidence is not all-inclusive, I have used a middle-ground approach where each complements the other. It is my hope that at the very minimum this book has provided an intellectually stimulating reading and brought a greater appreciation of the importance of freedom of choice in market interactions – a freedom that many Russians even now do not possess. The wave of enthusiasm for political and economic reconstruction immediately following the collapse of the Soviet Union has subsided; it is now understood that Western values cannot produce the same result, when simply transplanted into a non-Western society. Several attempts to rebuild Russian institutions since then have failed as well. Intellectual aid, as in the case of US economists delegated to help the reconstruction of Russia failed. Support for Yeltsin in 1996 to help the country avoid the return of communism made the oligarchs even stronger. When Putin raised a mallet over the oligarchs, he was praised by the West as a righteous fighter for democratic values, but failed to be recognized as a rising autocrat. Diplomacy through media relations failed. Human rights protests failed. Dissemination of free-market values through foreign direct investment failed...

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