1 When Capitalism and Democracy Collide

When Capitalism and Democracy Collide in Transition Russia’s “Weak” State as an Impediment to Democratic Consolidation Michael McFaul Stanford University September 1997 I. Introduction Russia appears to have made tremendous progress in becoming a democracy in recent years. In December 1995, Russian citizens voted in parliamentary elections. Then, in two rounds of voting in June and July of 1996, voters elected a president, the first time ever that Russian voters directly selected their head of state. Despite calls for delay and postponement, these two elections were held on time and under law—law drafted and approved through a democratic procedure by elected officials. Large majorities participated in both of these elections; sixty five percent of all eligible voters in 1995, and nearly seventy percent in both rounds of the presidential vote. While electoral violations tainted both elections, especially the presidential vote, all participants—winners and losers— accepted the election results. 1 After Boris Yeltsin’s inauguration, the 1 In the parliamentary elections, strong evidence of falsification was reported in Chechnya and Dagestan, but these infractions were not sufficient to warrant objection to the results by any major political actor. In the presidential elections, Yeltsin grossly 1 2 When Capitalism and Democracy Collide in Transition communist-dominated parliament approved Yeltsin’s candidate for prime minister—Viktor Chernomyrdin—by an overwhelming majority. This too was a first, as Russia’s elected parliament had never approved the executive’s choice for prime minister under the procedures outlined in a popularly ratified constitution. Finally, throughout the fall and spring of 1996, over fifty gubernatorial elections were held throughout Russia. While evidence of falsification tainted the results in some races, all major participants recognized the vast majority as free and fair. This series of democratic achievements is remarkable, especially when compared to other periods of Russia’s history—be it the confrontational and ultimately bloody politics of the first years of the new Russian state, the seventy years of totalitarian rule under the communists, or the hundreds of years of autocratic government under the tsars. Russia appears to meet Joseph Schumpeter’s minimalist definition of a democratic system—”the institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.”2 Yet no one in Russia seems impressed. On the contrary, elites, commentators, and the public at large have grown noticeably more disenchanted with their government and more pessimistic about Russia’s future since the conclusion of the presidential election in July 1996. The magnitude of the wage arrears problem, estimated by Labor Minister Melikyan to be 42 trillion rubles in unpaid wages in 1996, coupled with the government’s inability to collect taxes, and the lack of economic growth, has fueled speculation of impending social upheaval. 3 Beginning with walkouts by power workers in Primorskii Krai in August of 1996, wildcat strikes increased throughout the country in the winter and spring of 1997, culminating in a national one-day strike on March 27, 1997 in which millions of workers participated. Discontent within the military also appears to be growing as the armed forces have not been immune from the government’s inability to pay wages. In October 1996, General Boris Gromov, the former commander of Soviet armed forces in Afghanistan warned that the armed forces were on the brink of collapse. 4 violated the campaign finance limits, the media openly propagated Yeltsin’s cause, and counting irregularities again appeared in Chechnya and some other national republics but most agreed that these transgressions did not influence the outcome of the vote. 2 Joseph Schumpeter, Capitalism, Socialism, and Democracy (New York, Harper, 1947), second edition, p. 269. 3 On the wage arrears problem and taxation, see Gennady Melikyan, “Causes of Social Instability,” Executive and Legislative Newsletter, No. 45 (1996). In the first 10 months of 1996, Russia’s GDP six percent and industrial output fell by five percent compared to last year. From January through October, the volume of investment totaled 247 trillion rubles, 18 less than the same period in 1995. The number of unemployed also increased by eleven over last year. These figures come from ITAR-TASS as reported in OMRI Daily Digest, No. 222, Part I, November 15, 1996. 4 Speech by Gromov in the State Duma, reprinted in Sovetskaya Rossiya, October 31, 1996. Michael McFaul 3 Two weeks later, then–Defense Minister Igor Rodionov warned that the “extreme” economic and political instability may produce “unpredictable, catastrophic consequences” for the armed forces and the country as a whole. 5 Analysts and politicians alike, including General Alexander Lebed, have speculated that the Russian military is close to mutiny on a national scale. 6 As a sign of the level of discontent within the military, General Lev Rokhlin, the Russian commander in the Chechen war, has quit his parliamentary faction, Our Home Is Russia, and formed his own political organization dedicated to defending the interests of men in uniform. 7 Others have predicted renewed tension between the center and the subjects of the federation. The ten richest regions of Russia have expressed their unwillingness to subsidize the budgets of the other seventy oblasts, krais, and republics through the inefficient centralized system of transfer currently in place. Instead, the more outspoken leaders of these donor regions such as Moscow’s mayor, Yurii Luzhkov, have called for a “new deal” between the federation subjects that would exclude the Russian federal government altogether.8 The federal government has countered by suggesting decreases in the number of taxes collected for regional budgets while at the same time increasing the purview of presidential representatives in oblasts and republics. 9 Because governors are now elected officials, the prospect of renewed tension between the center and the regions over these issues seems to be growing. 10 More generally, public opinion polls suggest that the same electorate that supported Yeltsin overwhelmingly in July of 1996 does not believe that he and his government can deal with these crises. In November of 1996, only ten percent of the Russian population trusted Yeltsin, down from twenty nine percent in June. 11 Similarly, polls conducted by Foundation for Public Opinion show that people have become much less optimistic about the future at the end of 1996 than they were just months 5 Quoted in Segodnya, November 13, 1996. 6 Lebed, interview on the Newshour with Jim Lehrer, November 23, 1996. See also Andrei Koliev, “The Army’s Patience Is Running Out,” Prism: A Monthly on the Post-Soviet States, Vol. II, Part I, November 1996. 7 In the 1995 parliamentary election, Rokhlin was the third name on the Our Home party list after Prime Minister Viktor Chernomyrdin and actor Nikita Mikhalkov. 8 The model here is the accord signed by the leaders of Russia, Ukraine, and Belarus in December 1991 that effectively dissolved the USSR. 9 Previously, presidential representatives did not even exist in the republics. Regarding jurisdictional conflicts between governors and presidential representatives, the battles in Primorskii Krai have been most tense. See Mikhail Streblev, “I bez boya sdat’ Primorie,” Itogi, June 24, 1997, p. 27. 10 See Anna Paretskaya, “Russian Central Authorities Seek New Formula for Relations with the Regions,” OMRI Analytical Brief, 460, November 13, 1996. 11 This poll was conducted by All-Russia Opinion Research Center and reported by Associated Press, November 13, 1996. 4 When Capitalism and Democracy Collide in Transition earlier.12 When asked in November 1996 about the most optimal economic system, only 35 percent cited the market (compared to 45 percent in 1992), while 42 percent believed that a planned economy was best (compared to 27 percent in 1992).13 When asked under what regime they lived best, 60 percent cited the Brezhnev period, 13 percent said the Gorbachev regime, and only 10 percent identified the market reform years. 14 Taking into account these crises and public attitudes, many have concluded that the milestones of democracy mentioned above do not mean anything. For these analysts, Russian politics have not changed with the introduction of elections, but instead resemble the politics of old. The historical analogue of choice varies; for some, politics in Russia today look like the late Brezhnev period, for others the Stalinist period, and for still others, tsarist and pre-tsarist days. 15 But the basic premise remains the same—continuity is pronounced and change has been trivial. How can we explain this divergence between apparent achievements in the process of democratization of the Russian political system and the real perceptions of the lack of progress? The heart of the answer is located in the nature of the Russian state. The Russian rulers that occupy the Russian state have neither the will nor capacity to meet the demands of their citizens. This is because the state does not represent the interests of society as a whole, but rather is deeply penetrated by Russia’s emergent capitalist class. In a sense, the state has been privatized by this nouveau riche and thereby operates in the interests of its new owners rather than society writ large. These small, well-organized, and powerful business groups have crowded out other claimants to the state, particularly with regard to the national executive branch. Equally important, the Russian state enjoys little autonomy from these interest groups. Consequently, elections and the rituals of a democratic polity more generally have only an ephemeral influence on state outputs. Yet, even if state rulers did respond to the interests of pluralist groups rather than merely the interests of corporate groups, the state still does not have the capacity to meet these demands.

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