(Show me a great fortune that did not begin with a little indelicacy. )
- Honore de Balzac
Balzac's comment on the grandes fortunes of the new French bourgeoisie, whose rise and manners he captured in his "Comedie Humaine", holds good for the rise of industrial capitalism everywhere. No vigorous capitalist society - including the Russian at the end of the last century and the beginning of this - could look too deeply into its roots without finding a great deal of indelicatesse: land filched, property appropriated, workers exploited, laws flouted, officials and ministers bribed, contracts broken.
Today, those of us in the Moscow community who have come from countries where capitalism has become a settled and acceptable system working within (though
not always obeying) a framework of laws and regulation can see the formation of a raw capitalism which is conforming to the behavior of all other such infant growths. Indeed, it is in some ways worse - for where capitalist development in most other places grew in countries where private property was already a secure part of the constitution, here it grows where it is still in dispute, or has recently been. Further, capital here could only legally be accumulated by the state of the party: How else could it be put to use by "private" hands except through graft?
The graft, perforce, continues. The breakdown of the central state's power over its industrial branches has given freedom to the managers and workers to take into ownership what they anyway effectively controlled - often illegally, They continue to work by bribing functionaries at every level of access to property, supplies, markets and the means of distribution, and they bribe journalists to write well of them in the press. Politicians leave office much richer than when they entered it - much as Samuel Pepys, the creator of the British Navy, found himself a rich man as his career gave him control over the awarding of building and supply contracts.
Within all the interstices of commercial life, the different mafia structures operate - groups whose money has come or still comes from drugs, extortion and control of markets, and who need to find open sources through which to clean it.
The question is no longer, can it be stamped out (since it certainly cannot, though that is no reason for not trying to keep it down). The question is, rather, can the developing business institutions ultimately launder themselves free of the crooked habits of mind and deed, and of the embrace of outright criminality, and become the regulated and only occasionally corrupt market actors of the advanced capitalist countries? Will they start paying their creditors and stop beating up their debtors? Will the state again recapture the monopoly of punishment of crime and enforcement of contract?
There is no inevitability to this laundering merely because it has happened in some other societies. It has not happened, for example, in large parts of Sicily and the Mezzogiorno; in sectors of U. S. business; in areas of Japan; in most of the market economies of South America. Where it has not, it strangles or distorts enterprise, and it cheats, most of all, the majority of those who have only their labor to sell.
Russians, like other societies, will have to live with "little indelicacies" at the root of their capitalism. It is not, however, yet certain if they can escape from them.
John Lloyd is Moscow bureau chief for The Financial Times.
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