Russia and the trap of bad governance
July 18, 2022
Vladimir Gel’man
Professor of Russian Politics at the Aleksanteri Institute, University of Helsinki
In his new book, Vladimir Gel’man analyzes why some countries are governed worse than others, focusing on contemporary Russia. Why is it governed so much worse than one would expect based on its level of socioeconomic development?
The House of the Government of the Russian Federation, 2016. Source: Wiki Commons
Quality of governance makes a difference. It determines the developmental trajectories of states and nations, as well as the everyday lives of their citizens. In the comparative perspective, contemporary Russia represents an example of a high-capacity authoritarian state, which exhibits the main features of bad governance, such as a lack and/or perversion of the rule of law, near-universal rent-seeking, ubiquitous corruption, low-quality state regulation, widespread abuse of public funds and overall ineffective government.

These features have been demonstrated in numerous assessments of Russia in comparison with many other countries that were conducted by various reputable international agencies and endorsed by investigative journalists, policy analysts and political activists: all these sources portray a rather gloomy picture of patterns of governance in Russia. Russia performs worse not only than some of its post-Soviet neighbors and other BRICS countries, but even than poor and underdeveloped countries such as Burkina Faso. Why did bad governance emerge and persist, and to what extent can the quality of governance be improved over time by certain policies?

These issues were at the center of analysis in my new book, The Politics of Bad Governance in Contemporary Russia (University of Michigan Press with open access). This is a book about how and why Russia – highly developed, urbanized, well-educated and relatively wealthy – which had demonstrated promising potential for progress after the collapse of Communism and a series of complex post-communist transformations, became a country with a trajectory of enduring bad governance over recent decades.

I consider bad governance a distinctive politico-economic order that is based on a set of formal and informal rules, norms and practices quite different from what is usually understood as good governance. Some countries are governed badly intentionally because their political leaders establish and maintain mechanisms that serve their own self-interests. In these countries, rent extraction is the main goal and substantive purpose of governing the state at all levels of power.

Other de facto rules-in-use assume that the mechanism of governing the state tends toward a hierarchy (the “power vertical”) with only one major center of decision-making, which claims a monopoly on political power, while the autonomy of domestic political and economic actors vis-à-vis the center is conditional – it can be reduced and/or abolished at any given moment. Under these conditions, the formal regulations that provide the framework of power and governance are a by-product of the distribution of resources within the “power vertical” – they matter only to the extent to which they contribute to rent-seeking (or at least do not prevent it). To put it bluntly, Russia and some other states are governed by their rulers in order to rob their countries as much and as long as possible.
Bad governance: Why?

To what extent is bad governance in Russia country-specific and context-bound? I argue that although currently bad governance is almost universally perceived as an anomaly – at least in developed countries – human history is in fact largely a history of ineffective and corrupt governments. The rule of law and decent-quality state regulation belong to relatively modern history. Indeed, historically the experience is rather the opposite: bad governance was the norm and good governance the exception.  

This paradox is not just a reflection of the worst features of human nature. The problem is that most rulers – especially if their time horizons are short and external constraints on their behavior not too binding – tend to govern their domains in a predatory way because of the prevalence of short- versus long-term incentives. This begs the question of why some countries, despite these incentives, have established and developed good governance. 

In the past, good governance didn’t emerge naturally because of the good will of benevolent and prudent leaders but as a forced response by rulers to two interrelated challenges.
“First, fierce international rivalry led to wars and military conflicts, and those states that proved ineffective economically and militarily bore heavy losses and were conquered by their more effective adversaries."
Thus, rulers had to invest tremendous resources in building effective state machinery, which enabled them to exercise a monopoly on legitimate violence, collect necessary taxes and strengthen the power of their states for survival in a highly competitive international environment. 

Over time, these rulers also faced the need to make governance more suitable for international economic competition, which made modern good governance possible. 

Second, the ineffectiveness and corruption of governments triggered domestic political conflicts amid pressure from various political and economic actors and citizens at large. These conflicts often went beyond the rulers’ control and contributed to the spread of uncontrolled violence and civil wars, becoming major threats to the very existence of the state and undermining the social order. These conflicts lasted for decades, if not centuries, until the competing actors came to the solution of building a new order and establishing limited government, constrained by formal and informal rules, which stood the test of time.

However, in the modern world the nature of international and domestic challenges to bad governance is qualitatively different than in the past. Thus, as new authoritarian regimes arose after the end of the Cold War, their new nondemocratic leaders faced relatively short time horizons and were therefore tempted to govern badly (especially true for personalist electoral autocracies). Meanwhile, the nature of constraints on bad governance has dramatically changed. 

Before 2022, large-scale wars seemed more or less like matters of the past, while corrupt and ineffective governments seemingly no longer risked conquest by foreign nations or the loss of power through defeat in war. Sluggish economic growth, a decline in foreign investment and capital flight had negative effects for countries, but they didn’t always put the ruling groups at risk of losing power and wealth – at least, not in the short term. 
“In terms of controlling domestic conflicts and violence, one might argue that bad governance is a mechanism that functions to maintain a delicate balance among elites and preserve the political status quo."
In conditions of bad governance, the ruling groups in turn can co-opt some rent-seeking actors, making them loyal followers, while using selective coercion and repression toward other actors. Thus, domestic pressures that could disequilibrate bad governance can also be diminished. And if and when these pressures are weak enough, then bad governance, once established and entrenched, can reproduce itself over and over despite (or even thanks to) regime and leadership changes.
Zhirinovsky speaking in front of the State Duma, 2018. Source: Wiki Commons
Why is there bad governance in Russia?

In the first decades of the 21st century, Russia has demonstrated a trajectory of bad governance. After the Soviet collapse and turbulent political and socio-economic transformations of the 1990s, the country faced the challenge of building a new politico-economic order. However, the rulers of the new Russia, who managed to establish a monopoly on power, had little incentive to establish democracy and the rule of law – rather, they intentionally built up and maintained bad governance in the country, similar to poisoning. 

Russia’s rulers turned key economic assets controlled by the state into sources of rent for their cronies and themselves and used the state’s coercive apparatus to further their dominance. No wonder that state-led companies and other pillars of the “power vertical” became fiefdoms of top managers and their political patrons while often showing dubious performance. At the same time, until very recently the Russian leadership pursued a strategy of authoritarian modernization aimed at economic growth and development. Some successes were achieved, but they were rather limited in scope. Even though several policy reforms that should have improved the quality of governance were launched in the early 2000s, they were short-lived and quickly scrapped for the sake of rent-seeking.

Still, despite the gloomy picture of governance in Russia, the situation is rather complex. Competent technocrats at several state agencies, such as the Central Bank, have performed the important function of fool-proofing and kept the Russian economy from major failures. Moreover, policy entrepreneurs of various sorts launch some policy initiatives that could turn into “success stories” in the conditions of political patronage. However, these “pockets of efficiency” remain isolated islands in a sea of rent-seeking and corruption amid the “power vertical.” First, they have limited multiplicative effects, as the best practices of good governance barely spread to other state institutions. Second, the “success stories” were short-lived, as political patronage – which provides a special regulatory environment and preferential access to state resources for these initiatives – proved unsustainable. 

In the book, I trace the rise and fall of several “success stories” in Russia, including the Soviet space program and the contemporary Higher School of Economics: though they all made a difference, their transformative effect on the country’s technological and educational development was minimal.

To what extent can the trap of bad governance in Russia be overcome in the foreseeable future? The current low-level equilibrium of bad governance in Russia is also maintained by the high costs overcoming it. These costs may increase over time, especially in the wake of Russia’s aggression against Ukraine, as they tend to serve to preserve bad governance rather than transform it and improve the state. The high costs in the Russian case are related to both the complexities of possible changes in the political regime (if and when they occur) as well as the need for major elite turnover. 

In fact, the short-term beneficiaries of bad governance in Russia are numerous: they aren’t limited to top state officials and oligarchs, but also include law enforcement officials and many public-sector employees, so it’s hard to imagine that resistance to revising the politico-economic order will be easily overcome. 

Meanwhile, even small steps toward democratization are not on the agenda of Russia’s political leaders. At least until February 2022 they sought to find other recipes to maintain the status quo quality of governance.
“They can be summarized as '3D' – deregulation, digitalization and decentralization; however, they address only technical rather than substantive issues related to the quality of governance in the absence of a '4D' solution, which should put democratization at the top of the political agenda."
This is why the trap of bad governance in Russia should be considered not just a short-term side effect of the singular “poisoning” actions of Putin and his entourage. By the 2020s, the consequences of this “poisoning” have turned into a serious chronic disease that can be cured only by systematic treatment and outstanding efforts by the Russian political class and Russian society at large. The question is whether the time for this treatment will arrive too late for any improvements. This is a real threat for Russia and other countries that are vulnerable to bad governance. After a certain stage of decay, the declining quality of governance may reach a point of no return – if so, it will be impossible to improve the Russian state by any available means.
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