Abstract
This chapter departs from the literature surveyed on the context of predatory raiding in Russia, presented in the introductory chapter. It starts with the emergence of Wild-West capitalism in Russia. This chapter considers how the new social archetype—Communist cowboy capitalists—captured Russia in the course of economic reforms during the late 1980s and early 1990s. It further links the concept of social Darwinism with predatory hostile takeovers. This chapter emphasizes that the struggle for survival or competition that takes place in modern Russian business ecosystem is based on the use of noneconomic factors, including direct violence. Predatory raiders actively use corruption and violence as two dominant forms of state-society and state-business relations.
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Notes
- 1.
Gray, Rosie. (2017). Bill Browder’s Testimony to the Senate Judiciary Committee. The Atlantic, July 25, 2017. Retrieved January 6, 2018, from https://www.theatlantic.com/politics/archive/2017/07/bill-browders-testimony-to-the-senate-judiciary-committee/534864/
- 2.
Flynn, Sean. (2017). Bill Browder, Putin Enemy No. 1. GQ, November 17, 2017. Retrieved January 6, 2018, from https://www.gq.com/story/bill-browder-putin-enemy-number-1
- 3.
On the analysis of the role of Russian financial-industrial groups (FIGs) in transition, see, for instance, Johnson, Juliet E. (1997). Russia’s Emerging Financial-Industrial Groups. Post-Soviet Affairs, 13(4), pp. 333–365.
- 4.
On the analysis of the role of the Russian banking system in transition, see, for instance, Johnson, Juliet. (2000). A Fistful of Rubles: The Rise and Fall of the Russian Banking System. Ithaca, NY: Cornell University Press.
- 5.
It is during the Soviet era, in 1990, that the Party legally allowed offshore businesses, enacting a special law. The offshore scandals have been going on since then. The first legal private businesses were not cooperatives, legally allowed only in 1988, but creative centers of the Young Communist League, abbreviated as Komsomol, legally registered in 1986. The first private commercial bank in the USSR was founded as early as in 1988. On August 24, 1988, a private commercial bank was registered in a distant Kazakh city of Chimkent. Mikhail Khodorkovsky’s Menatep was registered 25th. By the end of 1988, there were 41 registered private commercial banks—one year later, over 1500. The first legal Soviet millionaire, Artem Tarasov, was a member of the Communist Party (for more, see: Stogov, Il’ya. (2007). Milliardery [Billionaires]. Moscow: Labirint. Retrieved May 6, 2017, from https://www.e-reading.club/bookreader.php/68577/Stogov_-_Milliardery.html).
- 6.
William Browder, a vivid critic of Putin’s regime and one of Russia’s declared enemies, has a strong Communist family background. Browder is the CEO and co-founder of the Hermitage Capital Management, an investment fund that moved to Russia in the 1990s and was the largest foreign portfolio investor in the country. Browder is the grandson of Earl Browder, a Communist from Kansas who moved to the Soviet Union in 1927, staying for several years and marrying a Russian. He returned with his wife to the US to lead the Communist Party, and even ran for US presidency in 1936 and 1940 (see, for instance, Levy, Clifford J. (2008)). An Investment Gets Trapped in Kremlin’s Vise. The New York Times, July 24, 2008. Retrieved May 6, 2017, from http://www.nytimes.com/2008/07/24/world/europe/24kremlin.html?hp=&pagewanted=all
Browder said, in an interview, “I had a lot of my family in me, and tried to find a way of connecting my past to my future.” (see, for instance, The Weekend Interview: The Man Who Stood Up to Putin. The Wall Street Journal. May 9, 2014. Retrieved May 6, 2017, from https://www.wsj.com/articles/the-weekend-interview-the-man-who-stood-up-to-putin-1399674165?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304885404579552120262256240.html&tesla=y).
- 7.
The social Darwinists believed that the process of natural selection acting on variations in the population would result in the survival of the best competitors and in continuing improvements to the population. Societies were viewed as organisms that evolve in this manner. The theory was used to support laissez-faire capitalism and political conservatism. Class stratification was justified on the basis of “natural” inequalities among individuals, for the control of property was said to be a correlate of superior and inherent moral attributes, such as industriousness, temperance, and frugality. Attempts to reform society through state intervention or other means would, therefore, interfere with natural processes; unrestricted competition and defense of the status quo were in accord with biological selection. The poor were the “unfit” and should not be aided; in the struggle for existence, wealth was a sign of success. Social Darwinism. Encyclopædia Britannica. Retrieved May 6, 2017, from https://www.britannica.com/topic/social-Darwinism
- 8.
Phrase “survival of the fittest” was proposed by the British philosopher and scientist Herbert Spencer. “This survival of the fittest, which I have here sought to express in mechanical terms, is that which Mr. Darwin has called ‘natural selection’, or the preservation of favoured races in the struggle for life.” Spencer, Herbert. (1864). Principles of Biology, vol. 1, p. 444, as sited in Stucke, Maurice E. (2008). Better Competition Advocacy. St. John’s Law Review. Retrieved June 5, 2017, from https://works.bepress.com/maurice_stucke/1/
- 9.
The database is assembled by the Center of Public Procedures “Business against Corruption.”
- 10.
William Pyle’s interview in July 2005 in Moscow with the Director of the Department for Cooperation with Business Associations at the Chamber of Commerce of the Russian Federation.
- 11.
The idea that Russian businessmen present the demand for law becomes more and more popular. The demand itself is said to be growing. See, for instance, Gans-Morse, Jordan. (2017). Property Rights in Post-Soviet Russia: Violence, Corruption, and the Demand for Law. New York: Cambridge University Press.
- 12.
Shleifer, Andrei. (2003). A Normal Country: Russia after Communism. Cambridge, MA: Harvard University Press.
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Osipian, A.L. (2019). Wild-West Capitalism in the East. In: Political and Economic Transition in Russia. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03831-1_2
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