The Role of Oligarchs in Russian Capitalism

A relatively small number of Russian industrial tycoons, or “oligarchs,” control a substantial share of Russia’s economy. Are these oligarchs likely to be agents of economic and political change or opponents of such change? Some consider the oligarchs to be the engine of Russia’s economic recovery and institutional reform since 1999 (Boone and Rodionov, 2002; Aslund, 2004). As oligarchs are the only currently feasible counterweight to the predatory and corrupt Russian bureaucracy, they are a unique constituency that is both willing and able to lobby for development of market institutions. They are also the only Russian owners who can afford to invest and restructure Russian industries in a very hostile business environment. To others, the oligarchs have weakened Russia’s economy by stripping assets from Russian firms and sending money abroad and also by bringing the ideas of private property and corporation into disrepute. In addition, the oligarchs have also arguably weakened Russia’s democratic institutions, by causing tremendous inequality and through their capture of federal and state politics (Stiglitz, 2002; Goldman, 2004; Hoff and Stiglitz, 2004). In this paper, we seek to understand the role of oligarchs in Russia’s transition to capitalism. We use a unique data set to describe who Russia’s oligarchs are, what assets they control and how well they manage their assets. We also discuss the implications of high concentration of wealth for Russia’s reforms. To many readers, the term “oligarchs” may have a negative connotation. We do not use the term to