12 February 2013, 17:47

Russia’s middle class demands result in greater publicity of corruption

Russia’s middle class demands result in greater publicity of corruption

Eight years ago I wrote a series of papers about markets and democracy in Russia. I argued that the state should take the lead in setting the national economic goals, based on the argument that the private sector in Russia is asocial and cannot become the engine of national growth. However, this state-centered approach would have no chance of success until the quality of Russian bureaucracy improved.

The realization of the latter objective depended on the creation of the middle class, because the system of governance that evolved under President Putin lacked a built-in feedback mechanism linking the state officials’ individual reward with their use (or more often misuse) of public resources. Therefore, it is greater publicity and the resulting public pressure that will impose a restraint on corruption, making it possible for Russia to move beyond the resource export-oriented model.

This analysis remains relevant in Russia eight years later. The Russian private sector shows even greater disrespect for social norms, particularly its jeunesse dorée – numerous publications bear witness to this. Russian public servants are still evaluated by their loyalty instead of their professional merits. But one thing has changed since 2005 and this development deserves critical assessment – the arrival of the middle class.

The middle class comprises people who are sufficiently well off to maintain a decent life-style independently from the state but whose wealth is not sufficient to make them free from the impediments persisting in local communities. Figuratively speaking, the middle class possesses fine cars but lacks good quality roads. Since it does not compete for political power, it avoids a showdown with the regime. On the other hand, however, it creates demand for activities designed to serve its interests. In a corrupt state such as Russia, the key demand of the middle class is greater efficiency of the state apparatus, which is infested with corruption. And as soon as there is demand, supply will not take long to appear.

As has often happened in history, President Putin’s social contract has created a class that will lead to the regime’s eventual demise. So far, the demand created by the middle class has resulted in greater publicity, which I believe is the main reason behind the more frequent corruption scandals today. The Kremlin appears to have been caught off-guard by this new Russian reality and has reverted to clumsy accusations of “foreign influence” – such as the Magnitsky Bill – being behind the patchy but effective anti-corruption campaign against every pillar of its “vertical of power”: from the power bloc to the administration of the Russian Orthodox Church.

This grassroots campaign highlights the important failures of the state system. But can it go one step further and address the social ills at the heart of corruption? Theoretically, this is possible, as numerous approaches exist on how to deal with this problem. One can refer to the Chinese merit-based approach of erecting high hurdles for aspiring public servants through lengthy examinations, which only the most able will pass. One can impose the “if and only if” limitations at the end of careers in public service – as is the case in many Western democracies – and grant generous pensions and other perks only to those civil servants who complete their careers without reproach. But these and other measures do not sit well with the current structure of public service in Russia, which requires, above all, unconditional loyalty to the leadership of the bureaucracy rather than strict observation of the law.

Vlad Ivanenko, PhD economics, Ottawa

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