• Boris Yel’tsin’s radical liberalisation in 1992 led not to a competitive market economy, but to oligarchic capitalism

• instead of dispersing ownership throughout the society, the result was a remarkable degree of concentration of ownership in the new private sector

• by 2001 the country’s 23 largest firms were estimated to account for 30% of Russia’s GDP, and these firms were effectively controlled by a mere 37 individuals

• by international standards, this is an astonishing concentration of wealth and industrial power in such a large country

• it was all the more surprising given the fact that private ownership had been outlawed for decades, and the entire economic elite did not exist as a class just 15 years earlier

• the rise of the oligarchs coincided with a wave of lawlessness, contract killings and grotesque displays of wealth

• some economists have argued that this ownership concentration is a rough and ready solution to the problem of enforcing property rights in the absence of a strong rule of law

• the oligarchs were playing a role akin to the US robber barons of the late nineteenth century

• the oligarchs pushed out communist-era bureaucrats and managers

• oligarchic capitalism was a transitional phase: it would give way to liberal capitalism after the economic system had matured

• once the oligarchs had accumulated some wealth, they would have a strong personal interest in seeing the rule of law take hold, in order to protect their wealth from the next wave of oligarchs

• the oligarchs had a vested interest in trying to preserve the status quo of partial reform, since further liberalisation would compete away their oligopolistic profits

• the oligarchs were parasitic on the Russian state. They were draining it of assets and revenues while profiteering from the high interest treasury bonds (GKOs) issued to cover the yawning budget deficit

• it was this spiralling pyramid of GKOs that was the main factor behind the 1998 crash

• the oligarchs lacked a political strategy for legitimating their rule in the eyes of the Russian public

• the oligarchs were deeply divided among themselves: they did not trust each other, and fought bitterly over successive privatisations

• the oligarchs did not have an institutional procedure for resolving their internal disputes

• they competed for the favour of the Kremlin courtiers (the ‘Family’) who controlled access to the president

• the oligarchic system stalled Russia’s evolution towards what is regarded in the West as a ‘normal’ market economy in mid-stream

• the economy had been sufficiently liberalised to enable the oligarchs to enrich themselves, but not so much as to expose them to effective competition

• this situation was inefficient and morally indefensible

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