The problems facing Russia at the end of the Soviet Union were common to post-communist states. A decisive break with the communist past required the reconstruction of political power so that economic reform could be carried out and democracy consolidated.1 The role of the state in securing changes and breaking with the past was paramount. Democratic consolidation and economic reform in a post-communist state should provide what are often called ‘public goods’. A public good is something that everyone in a society enjoys the benefits of without exception. Democratic consolidation would secure such public goods as freedom from persecution and arbitrary political control, and legal rights of appeal against the infringements of civil, economic and political freedoms and rights. The public goods of economic reform were supposed to be freedom from economic uncertainty. This freedom would be provided by creating low inflation, a stable currency, greater access to consumer goods and the right to own property. Economic reform would create inequalities so that the enjoyment of these public goods would be differentiated. However, no matter what level of wealth an individual enjoyed they would still benefit from economic stability and the potential for economic growth that derived from it: no one, neither an unemployed factory worker nor a millionaire banker has an interest in economic uncertainty and potential economic collapse. Public goods, however, are not easy to provide. Whilst all members of a

society enjoy the benefits of a public good, they may lose more from the changes involved in providing a public good: the provision of a public good may harm an individual or group’s interests if they have to give up privileges they had heretofore exclusively enjoyed. Alternatively, action to secure a public good requires an effort and sacrifice for the common good that many people are not prepared to make. The delivery of a public good may bring benefit to an individual, but they may not wish to incur the shortterm costs of sacrificing their time, money, present relations with colleagues, society and elites, to secure it. This is especially the case where the eventual provision of a public good is not guaranteed: a personal sacrifice may well turn out to have been for nothing. The provision of public goods thus occasion what are called collective action problems. It is rarely in the interest of

the majority of people who would gain from the provision of public goods to take action to secure them since they would be guaranteed to suffer personal loss for an uncertain gain. It is often in the interest of a minority who would lose some privilege to act to block policies and actions to create a public good because they would lose more as individuals than they would gain as members of society enjoying a public good. In other words, people have selective incentives to resist moves to secure public goods, and selective disincentives to get involved in actions to obtain them. The problems of providing public goods in Russia meant that ‘collective

actors’ (as opposed to individual citizens) such as state institutions and the politicians empowered by society to act on their behalf bore the brunt of responsibility for taking actions to secure public goods for society. This meant that the state would be the object of protest from groups threatened by the provision of public goods. Its officials and institutions would be attacked and policy subverted by the powerful groups fearful of the loss of resources that guaranteed their position as the economic system changed and privileged new forces, and as power was vested in new democratic institutions and an independent judicial system. Ordinary citizens impoverished by the disruption of traditional patterns of economic activity would also criticize it. The challenges of both the ordinary citizens of Russia and elite groups had to be resisted if democratic consolidation and economic reform were to be secured. Political institutions, leaders and movements had to learn to represent social interests, resist them and reconcile them within the state, and using the powers of the state. Society, and in particular elite groups, had to learn that the political system was not going to produce outcomes that were uniformly in their favour, that the provision of public goods would prevail over private interest. Democracy is a matter of subjecting one’s ‘interests to uncertainty’, accepting that the outcomes of political processes may not suit your private interest and working to secure one’s interests in a way that might bring victory, but equally, and more likely, will bring partial success through compromise. Acceptance of this is particularly important by elites since they have resources that can be used to try to buy policy outcomes that they prefer and because they occupy positions of responsibility and can try to change the rules by which politics are governed and decisions made.2 In short, dealing with the problems of post-communism in a democratic fashion required that the state develop capacity (the administrative means of getting things done) so as to take reformist measures and secure public goods, some autonomy from powerful groups so as to implement reform, and that it cease to rely on despotic, coercive power to overcome opposition from political opponents. Russia under Yeltsin never managed to balance these different aspects of

democratic post-communist change to reform its economy effectively or consolidate democracy unambiguously. Part of the reason for this was economic and due to economic policy. Russia was in such a weakened condition economically at the end of communism that it was difficult for the state to accumulate resources necessary to break the power of old elites from the

nomenklatura that had appropriated state property for their own use at the end of the communist period. The economic policy adopted by the government that was designed to reform state power provoked conflict rather than assuaged it so that the Russian government found its rule and the power of the state challenged from day one of reform. These issues will be discussed in Chapter 4. Economics does not explain everything, however, although we will have to mention it on more than one occasion in this chapter because economics and politics have been inseparable in contemporary Russia. Political and institutional factors also played a major role in the failure of democratic politics under Yeltsin and these are the main subjects of this chapter. Politically, Yeltsin faced two tasks at the fall of the USSR: how to con-

solidate his hold on office and how to create an effective administrative machinery of government. Economic policy offered solutions to these tasks, but, and as we shall see in Chapter 4, it failed to deliver them. Ultimately, Yeltsin was to be successful in consolidating his hold on power because he compromised on economic policy and the construction of effective government. There were two dimensions to the compromise on creating effective government. First, Yeltsin compromised on the composition of the government, drawing powerful groups into government, dividing and ruling between them and creating new institutions in the government to make him indispensable to all but beholden (when possible) to none. Second, Yeltsin connived at the dispersal of power throughout Russia as he courted regional political elites and the support that they could give him in his struggles with, first, Russia’s parliament, and second, to get re-elected. The consequences of Yeltsin’s actions were that central administration was confused, local governments frequently acted independently of central control to pursue their own policies, and democratic procedures were subverted. Administration did not become impersonal and governed by law, but was shaped by patronage and the use of office proprietarily for personal political gain and sometimes also for personal financial advantage. In particular, policy-making came to be unduly influenced by Yeltsin’s personal interests and those of the economically powerful. Yeltsin accumulated immense powers to his office, the presidency of the Russian Federation, and secured his tenure of office, but his ability to use those powers, or command the government to work for the general good of the Russian people, was limited by the compromises he had made. The balance of powers in the Russian constitution was heavily skewed in favour of the presidency both by design and because political parties in the legislatures were unable to effectively control government. An effective constitutional and bureaucratic system thus failed to emerge during the years of Yeltsin’s rule and hopes for democratic development degenerated into popular distrust of politicians and political institutions. Ironically, the degeneration of democratic hopes had its roots in efforts to protect the first weak shoots of Russian democracy at the end of the communist period by creating a new

executive institution to lead the fledgling Russian government, the Presidency of the Russian Federation.