The Management Structure of Russian Holding Companies

Contrary to the expectations of the neo-liberal theorists of ‘shock therapy’, the collapse of the soviet system did not lead to the rapid and spontaneous development of the institutions and practices typical of a capitalist market economy. This led some critics to doubt whether Russia was in transition to capitalism at all. Michael Burawoy, for example, has characterised the developmental trajectory of the Russian economy as one of ‘involution’, akin to Weber’s ‘booty capitalism’, in which profits are extracted by banks and trading monopolies while nothing is reinvested in production, which continues to be conducted in traditional soviet ways (Burawoy, 1996, 2000). However, since the 1998 crisis there has been a marked penetration of capital into Russian industry, as an increasing number of industrial enterprises have been taken over by large Russian holding companies which purport to be the standard-bearers of capitalist management structures and practices in Russia. In this paper, I will look at the structures and practices that these holding companies put in place in their subsidiaries, but first I will outline a theoretical framework for the analysis, which is based on Karl Marx’s analysis of the development of capitalism in Europe.