Stuck in the U.S.S.R.

It’s a big week for Russian news with John Kerry holding talks on Syria in Moscow, longtime Kremlin ideologue Vladislav Surkov ousted, and thousands of anti-government protesters taking to the streets. A paper recently published in Economics Letters takes a look at one tricky obstacle the country is still looking to overcome.   

The authors, Alexander Libman of the Frankfurt School of Finance and Anastassia Obydenkova of Bercelona’s Universitat Pompeu Fabra, find that even twenty years after the collapse of the Soviet Union, regions that had a higher share of Communist Party members have substantially higher levels of corruption. The results are significant after controlling for factors like income, population, urbanization, and unemployment. 

So why is this?

There are three reasons to expect that in regions with high levels of CPSU membership in the past corruption ought to remain high First, these regions are likely to be associated with larger share of former CPSU members in both political elite and street-level bureaucracy in the early years of transition. As a result, the emerging political institutions and practices are likely to be associated with lower transparency, higher level of clientalism and predominance of extractive institutions. In this case the link is from the CPSU membership to bad political institutions and practices and from political institutions to corruption. The newcomers to the bureau cratic or political elites during the last decades could have been so cialized into accepting the existing practices, ensuring the survival of Communist legacies. Second, in the regionswith larger CPSU membership in the pas the former Communists could have been more widespread in the emerging business elites. Backhaus (2008) documents a similar outcome in the former German Democratic Republic. The emerging business networks could keep close informal ties to the forme CPSU members in the bureaucracy and political elite, leading to higher corruption. In this case the link is from CPSU membership to informal connections between business and politics kept by former CPSU members and from the persistence of these links to corruption.

Third, regions with a higher level of CPSUmembership could be associated with different public opinion and attitude to both politics and corruption. On the one hand, the public could be more likely to accept the attempts of the former CPSU members to hold onto power and support them during the elections (which is not necessarily linked to support of the present-day Communist Party of the Russian Federation — in many Russian regions high- ranked former CPSU members were even more likely to run from other parties, including those supported by the president). On the other hand, former CPSU members could be more inclined to a conformist attitude to the existing social reality, perceiving cor- ruption (widespread in Russia in general), as socially acceptable behavior. In this case the link is from CPSU membership to, on the one hand, higher social acceptance of corruption, and, on the other hand, stronger support of former CPSU members in power. While the CPSU members as such constitute a small minority of regional population, their norms and values could be spread through social ties (families, workplace, business ties etc.).

This effect would be a classic example of economic path dependence, but I can also imagine there’s something of a feedback loop in operation: The remnants of communist institutions and ideology — and in some cases the actual communists themselves — fuel corruption, which makes the public nostalgic for communism, which in turn makes it less likely that more effective and responsive institutions will be built. In Russia, admiration for Stalin has actually grown since the end of the Soviet Union, for instance.