Markets Versus Hierarchies
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Markets Versus Hierarchies

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

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.
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Chapter 5: Status of Merchants

Ekaterina Brancato


The peculiar social and political status of merchants affected their economic power and predisposed their reliance on connections rather than on market mechanisms. The development of the informal institutions of private enterprise was at least very integrated with and, perhaps, subservient to the development of the institutions of state power. FIGURES, CIVIL AND TAX DUTIES The number of merchants was low throughout the pre-revolutionary period and civil and tax duties levied on them were quite burdensome.1 The size of the merchant class remained small because it was more advantageous for the wealthy merchants to enter a higher stratum2 and because official entry into the merchant profession was very limited for those from other classes. Moscow kuptsy – merchants – of the 14th and 15th centuries tried to buy up as much land as they could to enter the ranks of boyars.3 Trade was carried out under the auspices of the princes; consequently, the major source of material wealth for merchants did not rest on being a merchant, but on owning votchinal (patrimonial) land (Sakharov, 1959, p. 163).4 The Russian bourgeois class lacked exclusive characteristics from the start: in general, merchants differed insignificantly from boyars and the types of privileges given to landowners and to merchants were very similar. Politically, merchants behaved the same as the high-ranking boyars: they used the right to leave the service of one prince for another (ibid., p. 164), although they did not have corporate rights and did not form guilds.5 Towards the end of the 16th...

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