SSRC Fellow Jordan Gans-Morse

Building Property Rights: Capitalists and Demand for Law in Post-Soviet Russia

Current Position: Assistant Professor, Political Science, Northwestern University

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Abstract:
Throughout the 1990s, Russia was infamous for violent business disputes, widespread mafia rackets, and unscrupulous business practices. Much of Russia’s emerging business class sought to undermine property rights in order to seize assets from competitors and the state. Yet in recent years, many Russian businesspeople dramatically shifted course, using and lobbying for institutions that protect property rights. Why, after years of destabilizing property rights, do Russian capitalists increasingly support institution building?

In investigating this question, I challenge scholarship on Russia that focuses narrowly on high-profile cases of property rights violations and violent business disputes. My in-depth interviews with Russian businesspeople, lawyers, and private security agencies and my original survey of 300 enterprises indicate that most Russian firms now rely on formal legal institutions rather than on violence or private enforcement. To explain this transformation, I offer an innovative bottom-up perspective that examines institution building from the viewpoint of firms. My research reveals the countervailing incentives that legal institutions impose on firms. On one hand, effective courts and law enforcement agencies make economic transactions more predictable and property more secure; on the other, they constrain the strategies firms can use to acquire and protect assets. I demonstrate how the evolution of this balance stimulates institutional change over time, as well as how firm-specific costs and benefits shape the extent to which different private sector actors support institution building.

The project’s findings will contribute to our understanding of the politics underlying institution building. These findings should be of interest to international and U.S. agencies facilitating growth in developing countries, as well as to Russian policymakers seeking to diversify the Russian economy.

Current interests and projects:
Op-ed: “Small Companies are Key to Putin’s Future,” The Moscow Times, October 5, 2011.