Government and Business Environment Case Study

Russia’s Tryst with Capitalism: Darkness at the End of the Tunnel?

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Abstract:
After the disintegration of the Union of Soviet Socialist Republics (USSR or Soviet Union) in 1991, Russia started making its transition from a socialist economy to a market economy under the leadership of Boris Yeltsin (Yeltsin). All over the world, Russia was being hailed for the journey it was taking towards capitalism. But very few expected that in the name of capitalism, country’s most valuable assets would be handed on a platter to few oligarchs- a small group of businessmen. Thus, Russia under Yeltsin, experienced crony capitalism wherein the oligarchs gave him political support and Yeltsin in turn handed them the management/ownership of choicest enterprises. Over the years, Russia's capitalism started exhibiting many darker shades that affected the lives of its citizens in a dozen of dimensions. Crime and corruption have emerged as two prominent features of contemporary capitalism in Russia. In 2000, Vladimir Putin (Putin) came into power and Russia under him started moving from oligarchic capitalism to state capitalism. Crony capitalism continues to exist under Putin, the only change being his allies have now occupied the top most positions in the state-owned enterprises (SOEs).

Pedagogical Objectives:

• To understand the transition of a socialist economy to a capitalist economy
• To analyse the dark side of capitalism in the context of Russia
• To explore the merits and demerits of ‘state capitalism’ that flourished under Putin’s regime.

Keywords : Capitalism, Socialism, Capitalism vs Socialism, Russian Capitalism, Oilgarchs, State Owned Enterprises, Oil rich Economies, USSR, Gorbochev, Boris Yelstin, Vladimir Putin, Perestroika