Economic Development in Tatarstan: Global Markets and a Russian Region (Contemporary Russia and Eastern Europe)

Economic Development in Tatarstan

Based on extensive original research in the Republic of Tatarstan, in the Central Volga region of Russia, this book examines the economic development path followed by Tatarstan since the collapse of the Soviet Union and the Russian financial crash of 1998. It argues that the roles of global capitalism and globalization are somewhat exaggerated in much contemporary academic literature. In the case of Tatarstan, a strong state role, tightly knit local elite networks, and the inheritance of the Soviet political and industrial systems are the most important socio-economic formations in explaining the region’s development. Leo McCann is Lecturer in International and Comparative Management at Manchester Business School. He completed his PhD on postsocialist development in Tatarstan while at the University of Kent, and formerly worked at Cardiff Business School. He has gone on to examine the transformation of employment relations in other societies, including the UK, Japan and the USA. He is currently working on a book on organizational change and middle managers in these three countries.

RoutledgeCurzon contemporary Russia and Eastern Europe series

1

Liberal Nationalism in Central Europe Stefan Auer

2

Civil-Military Relations in Russia and Eastern Europe David J. Betz

3

The Extreme Nationalist Threat in Russia The growing influence of Western Rightist ideas Thomas Parland

4

Economic Development in Tatarstan Global markets and a Russian region Leo McCann

Economic Development in Tatarstan Global markets and a Russian region

Leo McCann

First published 2005 by RoutledgeCurzon 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by RoutledgeCurzon 270 Madison Ave, New York, NY 10016 This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” RoutledgeCurzon is an imprint of the Taylor & Francis Group © 2005 Leo McCann All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-00936-3 Master e-book ISBN

ISBN 0-415-31480-1 (Print Edition)

For my parents, and for Kate

Contents

List of tables and charts Preface Acknowledgements 1

Globalization, post-Soviet development and a Russian region

viii ix xii

1

2

Methodology

30

3

Informal networks in Tatarstan development

42

4

Tatarstan and regionalization

76

5

Tatarstan’s future development

108

6

Conclusion: Tatarstan and globalization

143

Notes Bibliography Index

180 190 202

Tables and charts

Tables 1.1 2.1 2.2 2.3 2.4

Competing claims of globalization theorists Interview sample Complete sample by class Business subsample by size of enterprise Official/media/university subsample by sector

7–9 36–8 39 40 40

Charts 1.1 1.2

Branches of Tatarstan industrial production, 1990 Branches of Tatarstan industrial production, 1998

21 21

Preface

This book is about the particular forms of organization and action in a postSoviet region. It focuses on an important period of time, 1999–2001, the period of recovery following the Russian financial crisis of August 1998. The region in focus is the Republic of Tatarstan, an oil-rich state in the Volga Federal District of Russia. It has performed relatively successfully in recent years and the behaviour of its political and economic organizations provides Western observers with some interesting variations on the theme of ‘transition to a market economy’. The Republic has some degree of limited autonomy from the Federal government in Moscow and, at the time of writing, is widely regarded as a stable and growing economic region. However in global terms Tatarstan is a small and peripheral region. What can it tell us about the development of the Russian economy and the nature of international capitalism? The answer, I believe, lies within the traditions of economic sociology, or institutional theory. These approaches to understanding economic life draw on a body of concepts concerned with the distinctive social systems in which economic organizations are embedded. More conventional neoliberal interpretations of economic development, with their faith in supposedly ‘free’ markets as the most efficient method of allocating economic resources, remain very much the dominant frame of reference for those working in international economic and political institutions and the majority of people trained in economics (whether employed in financial institutions, government agencies or universities). However it has always been the case that the wider political and economic climate of nations and regions can have a major impact on the behaviour of local organizations and actors. The question is: how important are these national and regional differences in determining the past, present and future development paths of the organizations and actors located in their territories? Institutional theorists and economic sociologists often claim that local social structures impose very important constraints on the action of managers and officials working in supposedly ‘global’ markets. Despite the neoliberal economic climate, businesspeople and politicians regularly make similar claims when asked about their own experiences ‘on the ground’. Recently this type of thinking has undergone a substantial revival in some areas of

x

Preface

sociology, economics, political economy, and management studies. It is precisely in the microanalysis of varieties of capitalism where we can hope to uncover these patterns of restraint and enablement of economic action. The aim of this book is to highlight some of the unusual and intriguing socio-economic arrangements in a lesser-known region, in the hope of shedding some light on how economic behaviour at the micro level, and the development of a capitalist economy at the mezzo level, often take place according to localized, peculiar logics. Despite the talk of neoliberal orthodoxy, convergence, ‘McDonaldization’, and homogenization, ‘the global system’ in fact tolerates a wide range of variations on the capitalist theme. The book is based on my doctoral thesis, written at the School of Social Policy, Sociology and Social Research at the University of Kent during the years 1998–2002. Rewriting the thesis prompted me to recall some of the comments made on it by the examiners. Perhaps the most difficult question I faced went something like this: ‘You’ve painted a fairly pessimistic picture here, of no inward investment, little in the way of growth and continued isolation. But all the signs now are that Russia is on the verge of a large boom, and there is talk of major FDI returning. Have you made a fundamental mistake in your analysis?’ After a moment of panic, my response was along the lines of ‘Well, I’m not so sure we can expect such a major increase in FDI in the foreseeable future. And even if we did, if it took place in somewhere such as Tatarstan, it would have to be formed in such ways as to be compatible with certain localized forms. It would not operate as the investors might expect or want it to.’ Since the thesis was completed a large amount of literature has emerged that backs up the central argument, that there are a variety of capitalisms that have developed over time according to the logics of historical social structures. Anglo-American capitalism differs substantially from German or Japanese capitalism, for example (Dore 2000). Similar arguments have been made as regards Russia (Reddaway and Glinsky 2001, Stiglitz 2002) and indeed of Tatarstan (Bukharaev 1999, McCann 2004c). This literature suggests that the kind of internalized, politicized capitalism exemplified by the Tatar model is not some outlier or anomaly, but is actually a long-term, sustainable variation on the Western ideal type of a disembedded, highly open and internationalized economy. Although focused on economic transition, the book was written during a time of personal transition. In moving from a sociology department (at Kent) to a business school (at Cardiff) I assumed I was entering a world dominated by free-market ideologies and concepts of convergence and homogenization. I had associated sociology as a discipline with emphasizing the critical, personal and social sides of human action, and business schools with disembedded finance capital and ‘rational choice’ economistic approaches. I was mistaken. In my experience of discussions at business and management schools, the critical nature of globalization has been subjected to even more criticism than before. Scholars from China, Japan, the US, and elsewhere

Preface

xi

shared similar sentiments about the continued importance of nation states, sub-regions and differing business systems. Globalization, although a major topic of debate, is by no means a dominant narrative in management studies, contrary to my expectations. Indeed, many organizational researchers consistently paint a diverse and complex picture, which emphasizes the importance of national and regional traditions, is sceptical of any genuine convergence around ‘global’ norms or ‘world best practice’, and states that workplaces are not necessarily as engulfed in as much constant and radical change as we are taken to believe (Gamble, Morris and Wilkinson 2003, Thompson and Warhurst 1998). Nevertheless the examiner was right to ask such a question. The doctoral thesis was indeed somewhat pessimistic about the prospects for meaningful global integration for the Tatar Republic. It was written from the strongly sceptical position of the ‘first wave’ globalization literature. But scepticism about the degree of a region’s internationalization should not be equated with pessimism about its future. An economy focused heavily on local power structures might well be in a better strategic place than one dangerously reliant on foreign investment and international financial speculation. Nor does it mean that it has in some way ‘opted out’ of global capitalism. As we shall see, there are linkages between Tatarstan and the rest of the world, but perhaps not in the ways anticipated by the neoliberal interpretative framework. Unfortunately, despite some major improvements to the Russian economy since 1998, the majority of Russian citizens struggle to live and work with stability and dignity. For all the (mostly Western) talk of global networks, regional integration, digital information, and postmodern complexities, it is the struggle for workers and managers across the world to create meaningful and sustainable economic action that might contribute to the generation of wealth that is the real issue at stake. As a regular visitor to Tatarstan during the years 1997–2001, I came to know Kazan and some of its citizens well, and I very much enjoyed my time there. This affection for the region was shared by the majority of the Western businessmen who worked there whom I interviewed, despite the often immense organizational, political and structural problems they encountered. Furthermore I was continually impressed by the will of the local people in their attempts to overcome the problems of economic transformation and, while doing so, attempting to gain a semblance of control over their own destinies. Although the road to economic expansion is a long and difficult one, I was struck by the optimism of those I interviewed. Although times were hard following the 1998 ruble shock, the recovery was impressive and appears very much sustainable. The localized and highly politicized Tatar economy does indeed appear to be a stable and relatively successful variety of capitalism, and we can expect it to retain its key features for some time to come.

Acknowledgements

This book developed out of my PhD research undertaken at the School of Social Policy, Sociology and Social Research, University of Kent. I was fortunate enough to have studied under the supervision of Professor Larry Ray, whose guidance and suggestions were of enormous help. Thanks must also go to Tracey Brown, formerly the administrator of the EU Tempus grant scheme at Kent that allowed me to travel to Kazan in the first instance, and to Professor Howard Davis, now of University of Wales, Bangor, for providing me with the grant. I must also mention Professor Phil Hanson at the Centre for Russian and East European Studies, Birmingham University for inviting me to use the Alexander Baykov library. At Kazan State University, all members of the Centre for Sociology of Culture were enormously helpful, both in terms of practical help and in supporting a visiting PhD researcher. Special thanks must go in particular to Sergei Erofeev, Misha Rudenko, and Zulfiya Fatkhullina. The experience of living in Tatarstan was one I will remember with great fondness. Thanks also to Rinas Kashbrasiev (KSU Department of Economic Geography), and Irina Glebova (from the KSU Economics Faculty) for background information on Tatarstan and for providing research contacts. In Moscow, Financial Times journalists John Thornhill and Andrew Jack were most accommodating and helpful. Finally, huge thanks must go to all the managers, employees and state officials of Tatarstan who helped immeasurably by sharing their ideas, experiences and predictions for the future with me. Quite obviously, the book could not have been written without them. Leo McCann Cardiff, May 2004

1

Globalization, post-Soviet development and a Russian region

The country was so big it could drive one mad. A fictional engineer in Soviet Magnitogorsk, in Kataev, Time, Forward!

Globalization emerged during the 1990s as one of the key theories of social science. There are numerous versions of the theory. As the central component of many of the economic globalist theories, the ‘global free market’ has become the largely undisputed theoretical and ideological path prescribed for economic development. Yet throughout the world, there are numerous regions in which there is little or no empirical evidence to show that globalization is at all useful as a concept for explaining contemporary processes of economic life. Russia is one such region. Globalization as a process of economic development appears not to be at work in Russia, particularly in its numerous and diverse sub-regions.1 One of these regions is the former ‘autonomous Republic’ of Tatarstan, which is the focus of this study. By analysing the structure and action of contemporary economic life of the region, the book examines the non-globalized aspects of Russian development. Globalization theories have rarely been used with qualitative data. This is largely because global theories are highly abstract and often divorced from the empirical nature of local lived experience (Burawoy 2000). However if any theory is to be useful, no matter how abstract and ‘grand’, it ought to be able to explain and account for social action and social structures at more local levels. If there really is a new global social, cultural and economic architecture, then we should be able to detect, describe and analyse its impact on the localities. It would be unsatisfactory if the vast literature of globalization remains cut off from qualitative methods and localized data. This book is a qualitative, local study, in order to attempt to test the relevance of global theories to the experience of a lesser-known economic and social entity. Furthermore, Russian quantitative data is very unreliable. It is quite common to come across work that contains a proviso warning the reader that

2

Economic development in Tatarstan

various sources of data can conflict quite dramatically (Zamova 1998). It is also true that little is known about Russian regions other than Moscow and St Petersburg. Most academic material focuses on Moscow, and Western media are almost exclusively Moscow-centred. It is hoped that qualitative research on Tatarstan will provide a different perspective on Russian regional development in the ‘global age’, a perspective that might help to shed light on how one region of the Russian economy might fit into the globalization narrative. The main body of the book deals with the data and analysis, and the book concludes by reassessing concepts of the global in the light of the Tatar experience, and looks towards potential new avenues for socioeconomic theorizing. Let us first look at the globalization theories in some more detail.

Globality – the new discourse All of the most important elements of the social reside within the explanatory scope of globalization: economic development and inequality (Harvey 1990, Sassen 1998); the changing role of nation-states and modernity (Giddens 1998); environmental risks (Beck 1992, 2000); and many others. In offering such a wide theoretical span, globalization attempts to provide the answers to our ever more diverse and complex modern world. Sociological theories that embrace global ideas are becoming more and more abstract, as sociologists grapple with the idea that nation states, and even ‘society’, no longer exist as the correct base units of analysis. Urry (2000) talks of ‘mobilities’ as the new central paradigm for sociology, as movement, uncertainty and change are the defining concepts of our ‘new global order’. This new global order is perceived to have a ‘dark side’. It is a global order of chaos, financial insecurity, political risks, and unrestrained corporate exploitation. Whether one argues ‘for’ or ‘against’ globalization, the vast majority of contemporary analysts agree that globalization is real, and has massively important consequences for all of us: from members of the ‘new international elite class’ (Sklair 2001) to the teenage seamstresses in Nikeowned Vietnamese sweatshops (Klein 2000). However, in-depth analyses of social action at the local level often pose distinct problems for the various globalization models. It is hard to see where ideas of globalization are at all relevant to some regions in the postsocialist world. Much of the theory would suggest otherwise. ‘Democratic market transition,’ the mainstream focus through which Russia’s problems are analysed (EBRD 1999, Åslund 1994), is essentially the postsocialist branch of globalization theory. Transition assumes market expansion, and that ‘openness to global markets’ is inevitable and the right option for all regions. However, some Russian regions are almost totally excluded from the effects of globalization, good and bad. In Tatarstan there are no meaningful ‘scapes and flows’ of incoming Western capital.2 Nor is there the Western corporate greed of a Nike sweatshop.3 Instead, local institutional arrangements are more

Globalization, post-Soviet development and a Russian region

3

important than global economic linkages. Locality is the fulcrum of the Tatar economy. Local firms, the state apparatus and local people interact in social networks that reproduce local and internal action. Russian economic actors may be informed by Western culture and ideas, but do not in any meaningful way look to the West for a way out of economic hardship.4 Even though uncertainty and change are most definitely present in the Russian regions, ‘mobilities’ and global networking are almost entirely absent. Tatarstan’s only meaningful connection to the world economy comes in the form of oil, and other, smaller raw material exports (Chapters 4–5). There are no sustained inward ‘flows’ of Western capital. Globalization theories, however, are constructed in such a way that they attempt to assimilate criticisms like the one above into their overall theoretical framework. The very fact that obscure post-Soviet regions such as Tatarstan are excluded from ‘global networks and flows’ supposedly proves the globalization scenario. This is because globalization produces ‘winners and losers’ (Rodrik 1997, Sassen 1998, Bauman 1998). While correct in a very general sense there is a danger of such claims becoming unhelpful. If globalization causes greater inequality and isolation for some, then one would have to be able to prove a set of dynamics that create this structure of exclusion. It is doubtful that evidence for such a set of dynamics at the local level exists in all of the world’s regions. What is needed is research that can reveal which social structures are the most relevant for local action and social reproduction. These might not necessarily be international, or global structures. Competing definitions of globalization abound. Instead of selecting one, I will present a definition of the discourse of globalization, as it has emerged in the academic world: Globalization describes a process (or set of processes), or an end result, that aims at increased integration of nation states, regions, and subregions into a ‘worldwide economy’. Cultural and social differences are subsumed under a hybridity of ‘global’ cultural forms, via information technologies. Culture and economy are hence both implicated in the regime of ‘networks and flows’ that constitute the new social architecture of the global age.5 Accompanying the shift from national to global analysis, academic studies have taken an abstract turn, away from the material to the ideological and cultural. Structural analyses in the social sciences have become deeply unfashionable (Urry 2000). The dichotomy between individual action and overarching structures of constraint and enablement is said to be a myth (Giddens 1986, Urry 2000: 15–16, 206). Postmodernism and the ‘cultural turn’ (Ray and Sayer 1999) have helped build a climate in which the complexities of modern societies and social change are said to be too diverse and intense to allow explanation in terms of action and structure, or indeed any

4

Economic development in Tatarstan

‘metanarrative’ (Lyotard 1984). The economy has hence become ‘culturalized’ (Crook et al. 1992, Jameson 1991: 48–51). Questions of economic development have been to some extent subsumed under the banner of ‘culture’, as if cultural features, not systemic economic factors, are the reasons for regional wealth or impoverishment. ‘Such is the dominance of concerns with discourse and difference that even to mention the categories of political economy is to appear hopelessly passé’ (Ray and Sayer 1999: 1). Analysis of struggling economic regions, however, reveals that all manner of elements of the social structure constrain and shape individual action, and can retard development and international integration. Economic performance is therefore not primarily to do with culture. It is fundamentally concerned with historically inherited physical and social features, and ongoing social organizational forms that arise as a result (Hamilton and Biggart 1992, Hirst and Thompson 1999: 136, Castells 2000a: 163–4, Hall and Soskice 2001). Locally based, qualitative accounts of change and perceptions of change are essential if we wish to properly understand societies different from our own (Burawoy 2000). In fact, the postsocialist environment is a site of unpredictable change and uncertainty where qualitative research is particularly essential (Burawoy and Verdery 1999: 2–3). The historical processes whereby this uncertain situation was created also require urgent attention (Hausner et al. 1995, Gustafson 1999, Stark and Bruszt 1998). History was largely ignored by free-market ‘transition’ architects, and in has been argued (Sapir 2000, Freeland 2000) that Russia paid a heavy price for this throughout most of the 1990s. Since 1998, there has been some strong signs of recovery for the Russian economy, but it could be argued that this recovery still has little to do with ‘global flows’. Free-market reformers and Marxist political economy critics alike have largely ignored the qualitative details of how business actually operates in Russia. Has ‘globalization’ really made an impact on the economic life of regions? Qualitative research can reveal some vital features of the reality of Russian regional development. Globalization’s status as a key issue in media, academic and public policy discourses of development remains largely unchallenged. Within the discussion, however, there are several, divided camps of opinion. I have focused almost exclusively on the globalization literature emanating from the discipline of sociology. The bulk of the data in this study is sociological. Analysts of globalization with a specific focus on Russia and the former Soviet Union are also included, even if they come from the disciplines of history or political science. A notable absentee from the sociology of globalization here is Roland Robertson, on the ground that his Globalization is essentially a work of social and cultural theory, unconcerned with the empirical economic questions associated with the present study. He is more concerned with global ‘consciousness’ and how this is structured across differing societies (1992: 49–60). Ironically, much of what Robertson states is supported by the evidence of this book. Robertson is keen to emphasize the multivariate nature of globalization: ‘The point of my discussions, has . . .

Globalization, post-Soviet development and a Russian region

5

been to promote a fluid perspective’ (1992: 88). A key component of this fluidity is Robertson’s assertion that there is no real global/local distinction (165–6). This idea is relevant to Burawoy’s approach to global issues, and to my own. Much of what we perceive to be ‘a result of globalization’ is, in fact, a local action or outcome. Robertson’s ideas on global consciousness are also to a degree borne out by the facts of the commonness of the views of neoliberal ideology of globalization and transition among Tatarstan actors. However, as we shall see (Chapters 3–5), this can exist without any real translation of this ideology into meaningful economic action along neoliberal and global lines. This theoretical thread, of ideological and ‘image’ globalization without ‘really existing’ material globalization, will be developed further below. There is a very wide range of different interpretations of globalization (McCann 2004b). This is not surprising given the ubiquity of the word in academic, business, political, and media publications over the last two decades. The number of publications with ‘globalization’ in the title grew from one or two a year in 1982 to over 400 in 1996 (Busch 2000). This trend continued until the early 2000s, although globalization now appears hackneyed and unfashionable in many areas of academia. The result of this long thread of publishing is a giant literature shot through with disagreements and contradictions. There is no agreed set of concepts that constitute globalization as a unified theory (Robertson 1992: 15–31, Waters 1995: 48–64). Perhaps most problematically, it is unclear whether globalization should be conceptualized as a process or an result. However, there is a broad consensus on what globalization refers to: a growth of international economic connectivity; the compression of time and space; the loosening of geographical constraints; homogenization or hybridization of cultural forms; and the development of shared consciousness of ‘globality’. Analysts agree on what globalization refers to, but there is no agreement over how globalization takes place. Such confusion over theoretical fundamentals fails to diminish the status of the existence of globalization as a reality to the vast majority of social observers. All may disagree on what globalization causes (or how globalization is caused), but most agree that globalization exists, and is among the most fundamental issues facing all citizens of the globe, regardless of geography and economics (Bauman 1998: 1). Even the ‘sceptics’ accept that globalization does exist; they just tend to question its extent in the light of empirical evidence (Hirst and Thompson 1999). Hence the debate turns its back away from theories and evidence regarding globalization’s existence, and turns its face towards issues of the risks and opportunities afforded by globalization. Broadly speaking one is either ‘for’ or ‘against’ globalization (The Economist, 23 Sept. 2000: 19–20, Giddens 1999: 1–5, Bauman 1998: 1). As this chapter argues, this ‘pro-’ or ‘anti-’ globalization approach becomes an impediment to a real understanding of how global capital fails to function and interact with certain post-Soviet regions.

6

Economic development in Tatarstan

Table 1.1 is a summary of the approaches and contributions of several key sociological analysts to the globalization debate, and (where available) their views on how Russia relates to this issue. What emerges from Table 1.1 is the variety of theoretical understandings of the concept. The first eleven analysts (with the partial exception of Castells) are strong believers in the concept of globalization. Of course, those who take globalization to be a process (using ‘to globalize’ as a verb), would tend to be strong believers in the conception’s empirical existence. Outcome-globalists (using ‘globalization’ as a noun), are typically less certain of globalization’s existence (see the last four analysts in Table 1.1). Interestingly, although there is a relatively even split between analysts ‘for’ and ‘against’ globalization, the suggestions for the future typically point towards the ‘need for greater control’ of global capital. It is also important to note that, with the exception of Burawoy, and Hirst and Thompson, all of the above are almost completely theoretical, devoid of any empirical evidence. This body of literature will be referred to throughout the book, in an attempt to uncover the strengths and weaknesses of the globalization concept. The evidence gathered in this study appears to put the empirical status of the phenomenon itself into doubt, something few of the sociologists of globalization are willing to do with the exception of Jessop, and Hirst and Thompson. In management or organization studies, the work of Martin (1998, 1999) and Thompson (2003) provide similarly sceptical analyses of the extent of the expansion of international connectedness. When applied to Tatarstan, as an emergent, descriptive concept of some of the results of attempted market expansion, globalization makes some sense. Some elements of the cultural and ideological globalization theories are borne out. But as a theoretical concept, much less as a coherent process of change, it fails to hang together, and cannot really explain Tatarstan’s difficult developmental status. This creates major difficulties for the pro- and anti-globalization debate. How can one be ‘for’ or ‘against’ something that appears not to exist in parts of the world? Burawoy’s (2000) comments on this issue are helpful. He attacks both the radicals and sceptics. The former have no desire to look at history or grounded experience in any detail. ‘There is no historical depth. It is as if what is “now” is new.’ (339) He says that to be a sceptic about the existence of economic globalization means that a ‘schizophrenic’ attitude to ideology must be taken. A sceptic must assume that all the talk of globalization is mystification, foisted onto actors and researchers alike by the ideologues of an aggressive capitalism. Burawoy believes this to be an untenable position, and states that globalization is, in fact, also experienced ‘from below’. ‘Ideology does not circulate of its own accord. It is carried hither and yon by interested parties who weld it to economic and political institutions’ (Burawoy 2000: 342). ‘Postsocialist ruling classes have lost one ideology and need another’ (342). What Tatarstan seems to demonstrate is that the ideology and image of capitalism have partly been ‘carried in’ by the (albeit limited) influx of foreign actors and the cultural reach of international media. However these ideas are

Strong – process

Strong – outcome

Strong – process

Strong – outcome

Strong – process

Bauman

Castells

Giddens

Gray

Harvey

Crises of capital create time– space compression.

Neoliberalism is not natural but planned

Modernity is inherently global, working through a process of democratization, distanciation and disembedding.

‘Network society’ is global in its aims, but not yet in its achievements

Creation of groundless trans-national elite class

Existence- Theoretical claims type

Analyst

Extensive coverage. State socialism was unable to embrace new communication technologies. 1991 not so much ‘a result of globalization’, but highlighted USSR’s developmental failure as an adaptive option.

USSR was the embodiment of an industrial modernity that is now untenable.

Russia and Eastern Europe

A ‘new world’ has taken shape since the late 1960s. Financial capital takes on new levels of interdependence and complexity. Growing legitimacy crisis for nation states. Technological revolution will continue to dominate our lives.

Further gaps between rich and poor, and between ‘mobile’ and ‘non-mobile’ people are expected to emerge

Future

Largely against

Firmly against

Minimal coverage

‘Anarcho-capitalism’ the result of failed neoliberal ‘transition’ policies.

An opportunity is provided through instability and crises of late capitalism to create new socialist forms

Capital controls and a re-evaulation of neoliberalism are needed

Ambiguous, 1991 a result of globalization. Some economic controls are but mostly Absence of civil society in Russia needed to counter the chaos and for is preventing further development uncertainty of global economics

For new technologies, against new inequalities

Against

For or against

Table 1.1 Summary of claims and views of key globalization analysts

Strong – process

Strong – process

Strong – processes

Sklair

Waters

Urry

Extensive – 1989 a result of globalization, but the region’s future is highly uncertain, and appears to be heading towards generalized impoverishment

No coverage

Minimal coverage

Highly extensive. State socialism was inevitably destroyed by the expansion of world productive forces. Little to say about postsocialist practices or culture.

Russia and Eastern Europe

1991 a result of globalization.

Ambiguous, Political changes are a step but mostly towards political globalization for

Largely against

‘Networks and flows’ Largely for constitute the key ‘mobilities’ of the new global age.

End of geographical constraints

Trans-national practices, trans-national class, and ‘culture–ideology of consumerism’

Nation states have abdicated responsibility for managing economies. Globalization creates winners and losers.

Strong – process

Sassen

Largely against

Relativization, the process by Largely for which states and peoples compare experiences

Robertson Strong – outcome

For or against

Classical Marxist – Against globalization is the ‘expansion of world productive forces’

Existence- Theoretical claims type

Lockwood Strong – process

Analyst

Table 1.1 (cont.)

Total re-evaluation of social science is necessary, to study ‘flows’, not societies. ‘Global civil society’ coming into being

Technological change may allow greater movement in the direction of truly ‘global’ political and ecological management

Need to look towards new social movements involving feminist, socialist alternatives to global market expansion

Trans-national capital controls are needed. Nation- states must take more active roles in managing inequalities and shocks

Not applicable

Global capitalist expansion is inevitable. A socialist revolution is needed to prevent inequalities spreading

Future

Sceptical – Grounded globalization – outcome global forms are partially created by local action

Sceptical – Various, not necessarily Largely outcome related, processes in local and against international contexts

Against

Largely against

Limited coverage, as a ‘pathdependency’ analyst of Eastern Europe

Minimal coverage – Russia represents a large state currently suffering with near-zero development prospects

Highly extensive – uncertainty a key issue, local state roles and practices are crucial for stability

Scott et al. Sceptical – Disembedding is a reality, but Ambiguous, Coverage of FSU ethnic issues – outcome nation states continue to be but mostly Russian, Ukrainian, Central Asian actors on the global economy. against nation-states are still relevant as players in creating global or local outcomes

Jessop

Hirst and Sceptical – Capital not global, but based Thompson outcome on elite economic ‘clubs’ of states and TNCs. They deliberately omit consideration of culture.

Burawoy

Globalization can only ever be partial, and does not necessarily mean the expansion of disembedded systems. It even necessitates further state control and regulation.

The role of the state, as the sole owner of the major steering resources, is set to remain vital in all world regions.

States and social observers should reject the rhetoric of globalization, restate the importance of the nation-state and use it to help facilitate capital controls.

States must focus on the local, and protect local economies and social formations

10

Economic development in Tatarstan

continually reconstructed and reinterpreted by local actors from below. Much of the ‘global’ imagery around Kazan, such as advertising, is created by small SMEs employing local people. Such an image looks like obvious globalization in action. Crucial, though, to a critique of globalization is the notion that the ideology of global capitalism is often not supported by action. The nature of Tatarstan capitalism remains highly localized, and has little to do with the neoliberal ideology of global market forces. Nevertheless, this mainstream view is still very visible in some actors’ discourses and in the vast majority of the official literature. It is useful to the make the distinction between ‘material globalization’ (of actually existing, concrete economic ties binding Russia to the world economy), and ‘ideological globalization’, the phraseology of neoliberalism, and the glossy surface imagery of Western brands and logos. There is very little of the former, and a substantial amount of the latter in Tatarstan’s nascent capitalism. In the words of Burawoy, analysts of Russia (or indeed ‘the global’ in all its forms,) often ‘confuse symbols of modernity with its content’ (Burawoy 1997: 1431). I believe that evidence for or against globalization theories must include coverage of local people’s own views on the social system in which they operate. Symbolic surface imagery is not by itself evidence of globalized action or structures. With reference to Table 1.1, I will go into more detail about the theorists in question, and how we might expect their concepts and future predictions to relate to the local experience of one Russian region. If the theories are correct about the nature of globalization (or, if sceptical, the lack of it) then there will be certain forms of social action and structure that should reveal themselves in the empirical data of this study. Giddens, Urry and Waters are three of the more pro-globalist contemporary sociologists. While all three express misgivings about some aspects of global economics and culture, they are all broadly positive about what they perceive to be a more inclusive world that has come about in the latter half of the twentieth century, as part of a longer-term process of modernization that stretches back at least as far as the nineteenth century. All three believe that social practices, particularly economic ones, have become ‘disembedded’ from local societal regimes. Waters and Giddens are most concerned with the political, and Urry with the socio-cultural and conceptual aspects of the global. The three theorists tend to agree that globalization is largely inevitable, and the real questions facing the people of the world is how to make globalization ‘work’; how it can be made more democratic, more inclusive, and less prone to creating inequalities and conflicts. Giddens and Urry are both sympathetic to the notion of disembedded global flows and global risks. Similar versions of this are taken up by Beck (1992, 2000), and Gray (1998). (See below, and Chapter 6 for an analysis of Gray.) However, Giddens and Urry also believe that globalization provides us with new opportunities. Urry is particularly insistent on the point that traditional societal boundaries are becoming less relevant in the face of unstoppable economic and cultural ‘flows’. If this kind of disembedded social order is indeed coming about, one

Globalization, post-Soviet development and a Russian region 11 should be able to find evidence for it in the action and structure even of regions that are not so well developed as Western societies. Conclusions about the relation of Giddens’, Urry’s and Waters’ versions of global theory to Tatarstan can be found in Chapter 6. This generally optimistic conception of globalization is challenged by the Marxist theoreticians Harvey, Lockwood and Sklair, although they are equally certain about globalization’s speed of development and inevitability. They regard globalization as a process in the expansion of class capital across the globe. They conceptualize this in different ways, using such popular notions as ‘time–space compression’ (Harvey), or the ‘culture–ideology of consumerism’ (Sklair 1995b). The idea that globalization was a key player in the collapse of the USSR is a major component of these theories (Lockwood 2000). There is a kind of inevitability about the spread of global capital and its pernicious effects. It is not far from Marx and Engels’ original critique of capital battering down all Chinese walls (Marx and Engels 1848: 30). However I am not convinced of the logic behind these arguments. What is capital, other than a key part of a social system that depends on political, institutional, and social arrangements and power structures? Capital and capitalism do not just fly around the world causing profound social changes. They have to be created, and this means certain social structures have to be present in order for this process of capital formation to take place. If this picture of global capitalism putting the world under its spell is correct, then we should expect to see evidence of increasingly universalized forms of business organization and integration in this case study region of Tatarstan. We should expect to see a large role for foreign actors in the region. We should expect to see a local state that is doing its best to assist ‘global capital’ and the culture–ideology of consumerism. Although there is plenty of evidence for a newer, more forceful and more integrated capitalist system in the action of Western economic actors and states (Sklair 2001), we require more evidence for the existence of this system in lesser-known regions. John Gray’s highly critical book on globalization contains some similar criticisms of the impacts of global capitalism and neoliberal ideology. He talks of a string of abuses that globalism creates. Interestingly, he does not omit Russia from his analysis. His chapter on Russia is among the bleakest sections of the book. A picture is created of ungoverned neoliberalism having run wild in the former Soviet bloc, with corruption, violence, insecurity, and poverty the end result. Russia’s entry to the global system has been something of a disaster, for which Western states, advisors and firms are also to blame. However he perhaps overstates the importance of Western ideas in the end of the Soviet Union and the subsequent reform processes. There is a degree of over-generalizing, and the familiar problem of over-reliance on Moscow and high politics appears. It can be argued that the reform process was never really neoliberalism at work, and nor could it ever have been given the unique constraints on Russian economic and political life during the time (Sakwa 1996: 234–5, Kotkin 2001). If Gray’s ideas about the inherent instability of

12

Economic development in Tatarstan

global capitalism and an oncoming collapse of the financial architecture are correct, then evidence in the region of Tatarstan should confirm the chaotic, unpredictable, violent, and unstable picture of the results of globalized capital he creates in False Dawn. While there may well be evidence for some of these features, again it is necessary to uncover what are the sources and potential futures of these features. They may not necessarily be the result of ‘globalization’, but of longer-term, localized social structures. They also might not be leading Russia towards disaster, but towards a different type of capitalism. There is another strong thread running through the current globalization discourse that makes global theory so difficult to critique. Bauman, Sassen and Castells are three theorists who focus on the idea that globalization causes both world integration and world isolation. They argue, again in slightly different ways, that globalization involves the creation of a system of inclusion and exclusion. Castells has a more ‘outcome-globalist’ conception, in that the actions and structures of regions, according to the configuration and requirements of the ‘network society’ either connect to, or disconnect from, the global. Bauman and Sassen, on the other hand, tend to see globalization as a set of processes that impact on regions and people. Castells is more concerned with the creation of a ‘new social morphology’ of networks and information, as opposed to the idea of globalization per se. As such he is more sceptical of the bolder globalist claims. However he still makes the point that globalization involves connection and disconnection, wealth generation and poverty generation. All are concerned with growing global inequalities, both between and within national societies. This picture of the ‘dark side’ of globalization seems to deal with the difficulties of regions that are omitted from globalist worldviews. However we still need to find evidence that this isolation is caused by globalization (as Bauman and Sassen might argue) or that it is part of a trend of the global establishment of a knowledge-based, networked society (Castells). It appears from the research presented here that many of the isolated and unique features of Tatarstan are long-established and easily pre-date the onset of the ‘global age’. Some of the features are not so unique – in fact, many are standard post-Soviet regional features. Those parts of the Tatar social structure that have emerged since the reform processes began in Russia are also not necessarily results of global forces, nor do they necessarily have global results. Finally, there are those who are sceptical of the claims of globalization theorists. These include Burawoy, Hirst and Thompson, Jessop, and the contributors to Scott’s volume (1997). Although their anti-globalist arguments are also fairly diverse, there are a number of shared notions. The most fundamental of these is the idea that nation-states are still very important political, economic and cultural players, so much so that all parts of ‘globalization’ require the co-operation of nation states. By extension, globalization is not a free-floating set of processes, but a certain state of affairs, the

Globalization, post-Soviet development and a Russian region 13 emergence of which is contingent on many kinds of intersecting local processes. In this formulation, globalization is neither inevitable nor a selfcontained process. Disembedding is also criticized, particularly by Altvater and Mahnkopf (in Scott 1997), on grounds that state legislation is necessary to support neoliberal economics and total disembedding is an impossibility. Jessop points to the enormous complexities and conflicts in the realities of social systems that are ignored in the universalizing sweeps of global theorizing. Burawoy’s anthropological approach to Russia gives him a perspective in which the localized, historically produced features of local post-Soviet social systems are more important than any nascent global ones in shaping the regions’ economic and social architecture. If the sceptical case is to be supported, then the evidence of Tatarstan would probably point towards an important state role in steering the economy, and limited possibilities for foreign investment. Of course, just because there may be limited material globalization in Tatarstan we cannot say that it is not taking place elsewhere. In other words, we cannot abandon the idea of globalization because one particular place may have little supporting evidence for it. However, the lack of real economic integration evidenced in the region, and the continuing differences between Russian and Western models the action and structure of business, puts a significant question mark against those theories of globalization that stress inevitability, interdependency, Westernization, time–space compression, and ideologies of capitalism and consumerism being ‘tied’ to the actions of globally-linked capitalist actors (see Chapter 6). But this is anticipating the analysis of the following chapters. For the moment it is time to review the contemporary situation of Russia, as given in the Western literature.

Russia and capitalism – recent changes and future prospects It is now well over a decade since the collapse of the Berlin Wall and the beginning of the end for the Soviet socialist systems. Despite the end of the Wall’s role as the so-called ‘last barrier to globalization’ Kaldor (1999), it seems that many postsocialist societies are not really globally integrated. In 1989 to it appeared Western observers that a free marketized and democratic East Europe was on the near horizon. Some of the East European states are beginning to reveal Western-style democratic and market features.6 Optimism among Western observers about Russia’s future, although high in 1991, had almost completely dissipated towards the end of the 1990s.7 Russia, the largest of the CIS states, appeared ‘locked in’ to a path of low investment, industrial decline and demographic crisis, set against a backdrop of social and political chaos. Although Moscow now resembles a major advanced city, many parts of the regions are isolated and poor. ‘Moscow is not Russia’ (Stoner-Weiss 1998: 6). The apparently bleak future for Russian regions looked even bleaker in the immediate aftermath of financial crash of August 1998. From 1999

14

Economic development in Tatarstan

onwards, things have improved significantly, however, with Russian growth rates recovering, and Russian industry and exports suddenly given a chance to be internationally competitive. However, real economic integration of the region into the ‘world economy’ is still minimal. Cumulative net foreign direct investment (FDI) into Russia from 1994–99 stands at approximately US $10,344 million (EBRD 2000: 205). Ten billion dollars over six years is ‘less than in tiny Hungary (which if somehow picked up and dropped from above into Russia could not be found again)’ (Kotkin 2001: 139). However in recent years there have been some major new investments in Russia, bringing cumulative FDI to a total of around $20 billion. British Petroleum invested at least $4 billion in a joint venture with the Siberian oil giant TNK announced in June 2003.8 Royal Dutch/Shell Group has a 55 per cent stake in the multibillion dollar Sakhalin II programme in the Russian Far East.9 The Anglo-Dutch group had already committed over $1 billion in the Western Siberian Salym fields and is expected to spend a further $5 billion on Sakhalin. Significantly, however, the FDI portfolio of Russia is made up almost exclusively of capital entering the oil, gas and metals sectors. Unlike many other growing economies, most notably China and India, there are no major investments in technology sectors and little FDI going into consumer products. The economic transformation of post-Soviet societies is proving to be a slow, unpredictable and difficult process, prone to sudden changes in fortune. Eastern Europe is a region where application of Western social and economic concepts can be highly problematic. ‘Democratic transition’ is the latest concept to face serious problems of legitimacy given the long-standing nature of many of the difficulties facing postsocialist regions. Even the largely unchallenged idea of globalization becomes seriously contested when applied to these areas. Media and populist accounts of Russia have for some time focused on the chaotic, violent and tragic elements of Russian society since perestroika (Freeland 2000, Handelman 1994, Clark 1996, Gray 1998: 133–65) with most of the material concentrated on elite-level political action. Little is available that furthers our understanding of economic action at the level of organizational and personal action, and its interaction with the social structure. Without Western-style modern state institutions functioning in Russia, it is assumed that criminalized anarchy is the result. Although this is true to a degree, nothing is said about the ways in which people routinely go about their lives and reproduce a social system amidst all this so-called ‘anarchy’. Furthermore, few analysts have looked at differences in development between regions within Russia in any detail.10 The key argument of the book is that the difficulties and peculiarities of the Russian system are not necessarily incompatible with successful economic development and world integration. It is possible to accumulate free-market capital without making significant concessions to democratic reform, as nation-states such as the Newly Industrializing Countries, such as Malaysia and Singapore and more recently China have shown. Traditional social

Globalization, post-Soviet development and a Russian region 15 structures, particularly those associated with family structures can have a strong path-shaping role, hence developments such as the Korean chaibol or the Japanese zaibatsu (Hamilton and Biggart 1992, Castells 1996: 172–89, Whitley 1999). Soviet Russia also maintained strong structures of exchange and reciprocity in the phenomenon known as blat, which can be analysed in terms of neotraditionalist social structures that persisted despite modernization (Ledeneva 1998: 3–4). Tradition can persist despite modernization and can contribute to differentiation from Western systems.11 Soviet Russia represented its own version of development and modernity. As leader of the ‘Second World’, it was not shackled to international dependency. That is why it is essential to attempt to understand a number of questions. What was the Soviet system? Why did it collapse in such a unique way? What kind of post-Soviet development is continuing today and why it is taking on such forms? The history of the Soviet era cannot be ignored (Castells 2000: 5–67, Kotkin 2001, Lockwood 2000). The Soviet system went through numerous transformations since its violent birth following the civil war era of 1917–21. However, the economic and social system established with enormous suffering, generalized terror and self-sacrifice under Stalin, remained fundamentally unchanged until the system’s slow collapse under perestroika. Its economy was characterized by tremendous waste and inefficiency, and a tightly-controlled cultural–political sphere, but also by effective if primitive health, housing and employment programmes (often administered through enterprise labour collectives) that provided stability and safety until their rapid unravelling from the late 1980s onwards. Underneath the surface of this ‘totalitarian’ monolith was informal and illegal activity of all kinds, from the politburo to the factory floor. In the words of Alexander Yakovlev, a former Soviet diplomat: ‘To succeed in anything one had to be sly, to lie, to violate rules and laws’ (Moynahan 1997: 221). This was a very important facet of Soviet life. The informality of the system in actual lived experience has to some extent survived and adapted to post-Soviet conditions. The highly secretive scientific–technical sphere was the one area in which Soviet technology approached, and in places, exceeded Western standards of efficiency and quality. Weapons and space research were the two main successes of state socialist industry, with the rest of the economy strongly geared towards ‘Category A’ production, (heavy industry, raw materials and metallurgy). The economy of the Tatar ASSR was a microcosm of the Soviet system. Much of the heavy industry that propped up the efforts of the Second World War were relocated to Kazan (550 miles east of Moscow) to escape the Axis powers’ assault. The Tatar industrial profile still contains the Tupolev aircraft factories and the Kazan helicopter plant, alongside major oil extraction and chemical production facilities. Truck production was added in 1969 with the construction of the gigantic KamAZ plant for the building of vehicles to support the military–industrial complex across the Soviet Union and for Comecon export.

16

Economic development in Tatarstan

It is commonplace to view the ‘collapse of the Soviet Union’ as a direct result of globalization (Lockwood 2000, Giddens 1999: 14). This view, however, is rather simplistic. While there is no space to go into a major discussion of the debate, it will suffice at this stage to say that the end of the Soviet Union as a political system is not the same thing as the end of Soviet practices in the economy. As we shall see, much ‘Soviet-style’ action survives in the quasi-capitalist system that has developed since 1992. It is an exaggeration to say that the growth of the international capitalist economy killed off the state socialist alternative. The demise of the Soviet Union was largely due to internal dynamics and contradictions of the Soviet system (Kotkin 2001, Volkogonov 1999). It proved incapable of withstanding fundamental reform without putting the structures of power under intolerable stress (Ray 1996). Western analysts have often tended to ignore the realities of systemic crises in the Soviet system since the 1970s onwards. The more evidence that comes out of the regional archives in Russia, the more is revealed about just what an economic mess the place was in, and how dissatisfaction, disillusion and even outright dissent was far more widespread than Western observers believed (Volkogonov 1999, Kotkin 1996). It is too simplistic to say that globalization caused the death of state socialism. It is possible to say that the expansion and success of Western capitalism and the emergence of flexible accumulation (Harvey 1990) in the 1970s and 1980s contributed to Soviet crises. It can also be argued that globalization was a large part of the haphazard, incomplete but dramatic reform process that was intended to take apart the Soviet economy and replace it with a market system in as quick as time as possible following the death of the Soviet political system. But whichever way one looks at it, it is very difficult to conclude, in 2004, that globalization is pointing a future development path forward for the successor regions of the Soviet Union. In this situation, it is necessary to uncover more about the local, lived experience of Russia’s new capitalism. In particular, attention must be paid to the neglected provincial regions and the variety of business systems emerging there. Academic literature on Russian development has started to look at the macro-economic features of ‘capitalism Russian style’ (Gustafson 1999), or at the theoretical implications of development from a socialist historical backdrop (Stark 1995, Stark and Bruszt 1998, Arnason 1998). But there is a definite need for new qualitative data that deals with the perceptions and concepts of the people actually involved in local development processes. This is what I hope to cover in this book. Despite increasing dissatisfaction from varying perspectives with the term ‘transition’ (Burawoy and Verdery 1999: 16, Stark and Bruszt 1998, Ray 1996, Gray 1998: 135), it still remains the dominant perspective on postsocialist development (EBRD 1999). ‘Transition’ is a group of concepts that informs the policies of states and international agencies towards Russia. Transition is a goal-based analysis of Russia and the former Soviet Union states; countries are ranked on their proximity to the targets of democracy and a free-market

Globalization, post-Soviet development and a Russian region 17 economy. Neoliberal economic reform strategies traditionally divorce economic action from its social context. The implications of this ideological clash will be dealt with in later chapters. It will suffice at this stage to introduce sociology’s counter-argument to neoliberal and neoclassical conceptions of market relations (see below). More extensive coverage is given in Chapter 2. Following the 1998 Russian financial crisis, the pessimism of the Western mainstream view deepened. The following examples drawn from the media were typical of the time. One British newspaper reported 17 August 1998 as ‘the day capitalism died in Russia’ (Independent, 28 August, 1998). In another example: ‘ “The market is dead”, said Al Breach, a liberal young British economist in Moscow. . . . Breach did not mean the stock market – he meant the very notion of market mechanisms triumphing over adversity, central to the conclaves of Western advisors and Russian reformers over seven years, no longer applied.’12 However, these doom-laden assessments and predictions have a habit of changing very quickly into more positive appraisals of the situation.13 The question remains of how much damage these crises cause. Middle-class Russians with savings took a major hit. Some Western banks and financial speculators were heavily exposed. The crisis was blamed on the South East Asian ‘contagion’, and the resultant plummet of investor confidence in early 1998. The factors causing their losses were regarded as if outside human control. Russia faced an ‘exodus of investors’, and a world-wide recession was expected. The discussion heavily featured disease imagery, speaking of ‘infections’ ‘spreading’ to other markets. The entire South American continent was soon after diagnosed as the latest sick patient in waiting. Global crises, using increasingly undersocialized terminology, are portrayed as very real dangers to the adequate functioning and even the survival of international capitalism. However the reality of the situation is that crises come and go, while the international system of capital itself is never in danger. Emerging markets are high-risk, possible high-gain regions. Most forms of international control and regulation can be circumnavigated, and developing areas typically want more capital investment, not restraints on its flows. Furthermore, no market remains isolated from international finance for long. Changes from low to high confidence, and from perceived crisis to predicted growth, happen rapidly over short periods of time and over short distances. The rapid growth of large-scale corporate and personal financial services has meant that ‘emerging’ regions never remain far from the focus of international financial markets. Less than a year on from the ‘day capitalism died in Russia’ the country reappeared in the same newspaper as a possible place for large returns on investment.14 The Western media often focuses on the ‘dark side’ of globalization. A growing part of the global discourse is the idea of expanding world risks, throwing the concept of postsocialist ‘transition’ into further confusion, as the assumed target of Western free markets for postsocialist states appears to have lost its uncritically positive, progressive status. Despite the alarmism

18

Economic development in Tatarstan

of the press, Russia continues to exist and to develop as an economic and political entity. Its 145.7 million population continues to live and work. A strong international community works in the major Russian cities and foreign financial institutions still continue to operate in Moscow and St Petersburg. It was far more complicated than Western investors ‘heading for the exits’. As the director of an computing joint venture told me in the middle of this crisis: ‘We’ve been in Kazan for 11 years now. We’ve seen seismic changes in those times and expect further ones’.15 Indeed, confidence in Russia among Western investors is returning fast (McCann 2004a). Rather than being a chaotic, unobservable entity, the new Russian capitalism can be empirically studied (Ray 1996, Hausner et al. 1995), and given the trend towards undersocialized theories of globalization and transition, desperately needs to be. Along with all the pessimism and despondency about the current condition of the new Russia, there is the idea that new forms of capitalism have emerged in Russia – not at all the ones it was expected and hoped to have emerged from neoliberal reform (Gustafson 1999). Of course, the failure of shock therapy does not signal the end for development. In many ways, it is only the beginning. New questions have arisen since the early 1990s: Replacing technocratic issues of ‘How can we make Russia like the West?’, are questions such as ‘What kind of society has come into being in late 1990s Russia?’ What, in the eyes of local economic actors, happens now for Russia, given that free-market economic policies have not worked as planned?

Tatarstan – Russian economic action in micro focus The book is based on a case study of the Republic of Tatarstan, a republic16 of the Russian Federation. The fundamental questions of the research are as follows. What kind of development path is Tatarstan taking? Why has the region failed to integrate itself into the global marketplace? What does this mean for globalization theory? These questions are answered by analysing the region in terms of action and structure. Within this framework, the research has a dual focus: it examines local development and small businesses, and has an international dimension with regard to the question of foreign direct investment. The data of the book are derived from qualitative interviewing of economic actors in the Tatarstan republic in the years following the Russian financial crisis of 1998. The investment risks in Tatarstan are said to be minimal by Russian terms. The Russian economics journal Ekspert has consistently ranked Tatarstan in the top six regions of Russia for its low risk ratings since 1995–2002. Some FDI is going into the region, but at a very low level, even by the low standards of the Russian Federation. According to Goskomstat figures, (as quoted by Michael Bradshaw 2002), Tatarstan is ranked 19th out of the 89 Russian regions, receiving less than 1 per cent of the Russian total inward investment.17 FDI, according to traditional economic theory provides capital, experience and technology, and creates employment. All three benefits are

Globalization, post-Soviet development and a Russian region 19 desperately needed in Russia, particularly in the outlying regions. The breakneck pace of change in Moscow and St Petersburg is not comparable to the often-slow development of the regions. There are other moderately successful cities and oblasts, successes that are based on different sectors of the economy (Sakwa 2004). Nizhnii Novgorod is noted (perhaps erroneously) for its privatization and re-emergence of traditional pre-Soviet trade institutions.18 Samara has recently emerged as a major growth pole on the Volga. However, the total level of investment, even in these areas, is a fraction of the FDI going into Moscow. In 1997, cumulative FDI in Moscow reached 32.3 per cent of the Russian Federation total. Tatarstan’s cumulative percentage of the Federation total at this time was 1.2 per cent.19 By 2002 Moscow city’s share had risen to 42.3 per cent (Bradshaw 2002) A large number of these regions appear to have high investment potential. Tatarstan is considered one of the potentially most prosperous areas, but the level of FDI in this region remains only marginally higher than the other central Russian republics, and less than many other Russian cities or oil-rich Siberian regions. Tatarstan is rarely mentioned in the Western press, other than to raise the occasional fears about the extent of the powers of the regional bosses or to report on rare political developments.20 However Tatarstan is part of an emerging centre in Russia. The mostly Muslim regions of Tatarstan, Bashkortostan and Mari-El are, at least according to their official publications, pro-foreign investment; they are seeking to break ties with the centre and individually ‘buy in’ to globalization through the workings of their elites and the opportunities that can be provided by their Soviet-era enterprises. They offer relatively large markets for foreign goods: Tatarstan has a population of 3.8 million people. However, real international integration is barely on the agenda. As we shall see, Tatarstan’s elites are very much focused on the local and internal, as opposed to the global and external, as the centre of their developmental policies. Tatarstan was also very slow in its privatization programme, eschewing so-called ‘shock therapy’ in favour of what they called ‘the soft landing,’ meaning a slower pace of privatization, more state regulation, some retaining of price controls, and more concern for social programmes (see Fazulliina 2000). The global stage is of limited relevance to the action taking place in Tatarstan. Consequently, the lived experience of the regional Russian economy seriously challenges mainstream theories of economic globalization. Instead, the Tatar story contributes to a growing body of literature that emphasizes the importance and persistence of local varieties of capitalism. The Tatar Republic has managed to secure fairly substantial economic freedoms from Moscow, enshrined in the 1994 treaty on the Demarcation of Subjects (Walker 1996). Partly as a result of this political position, Tatarstan tends to be rated as a low-risk place for investment, with medium to good prospects for development. Qualitative data, however (see Chapters 3–5) do not necessarily confirm this picture. The problem with the quantitative, statistical methods used to rate and compare regions is that they omit the

20

Economic development in Tatarstan

vitally important social nature of the economy. When the nature of the Tatar business world is revealed by the respondents to this study, a more risky environment is described, one with reasonable to high potential but with so far very limited Western involvement. Up until the crisis of 1998, the main forms of Western involvement were the establishment of local distribution chains for imported Western consumer goods and a small number of largely unsuccessful joint ventures. By the end of 1997, Tatar consumer markets were filled with Western goods to the tune of over 60 per cent (Zamova 1998: 4). However the nationwide financial crisis of August 1998 and the rise of Putin in 1999 has seen some important changes. State control of privatized companies rose sharply following 1998, notably in KamAZ, the truck giant and the oil producer Tatneft. The Russian Federal government itself stepped in to prevent KamAZ’s liquidation.21 Clearly visible in Charts 1.1 and 1.2 is how the role of oil in the Tatar system has become even more vital in recent years, as the slowdown in machine industries has continued. Heavy industry has shrunk dramatically since the end of the Soviet Union and the 1998 crisis, contracting from 40 per cent of Tatar industrial capacity to 19 per cent in eight years. Its place has more or less been taken by the oil sector, up from 12 per cent to 43 per cent. The heavily state-controlled petrochemical sector has retained the same structurally important role. The food processing sector (which is not examined in this book) has also remained stable. Light industry has shrunk from 8 per cent to 1 per cent, underlining the drastic difficulties in converting military facilities to civilian use. These data suggest that Tatarstan is indeed in danger of becoming ‘an advanced backward economy’ (Thornhill 1996, see also Shaimiev 1999, Khakimov 1996). Oil sales account for over 90 per cent of Tatarstan’s exports, given the uncompetitive state of the region’s other industries, it is easy to see why. However, according to Goskomstat, in 2001 Tatarstan ranked alongside the other two top regions in the Volga Federal District (Samara and Perm) by virtue of GRP per capita standing at above 43,000 roubles.22 This represented a substantially better performance than its neighbours, as the Volga Federal District itself reached only the third of seven ranks for Russia as a whole. (This third rank registered GRP per capita of 35,084 roubles. The highest rank, the seventh, registered GRP per capita of 74,685 roubles.)23 Tatar GRP has risen steadily since 2000.24 In 2001 Tatarstan was ranked alongside Moscow oblast, St Petersburg, Baskortostan, Smolensk, Vologda, Astrakhan, Perm, and Voronezh as the regions that have most improved their relative incomes per capita from their position in 1992 (Solanko 2003). Next is the consumer sector, constituted by Western consumer products (usually through locally-established distribution chains, not via direct sales), Soviet-era shopping and street infrastructure, and the new Tatar localist development dynamic. Since 1998, the dependence on Western imported goods has fallen dramatically, being replaced by Russian and Tatar import substitutions. However, some limited direct investment in the consumer sector has also taken place recently. McDonald’s first outlet finally arrived in

Globalization, post-Soviet development and a Russian region 21

Electro-energy and fuel

11.8%

Chemical and petrochemical Light industry

20.2%

7.9%

Machine-building and metalworking

40%

Foodstuffs

9.3%

Other branches

10.8%

Chart 1.1 Branches of Tatarstan industrial production, 1990 Source: Khakimov (1999a)

Electro-energy and fuel

42.9%

Chemical and petrochemical Light industry

20.1%

1.3%

Machine-building and metalworking

19%

Foodstuffs

7.7%

Other branches

9%

Chart 1.2 Branches of Tatarstan industrial production, 1998 Source: Khakimov (1999a)

22

Economic development in Tatarstan

Kazan’s main shopping area, Bauman Street, in April 1999. A second, drivethrough outlet opened in the Gorkii region of Kazan, a residential area some distance from the city centre. Both have been a success. The phenomenon of queues around the block to get in to sample McDonald’s hamburgers was similar to that in Moscow in 1991: Even on a below-freezing day like this, [the queue] stays here all day whenever it’s snowing or raining or whatever, people queuing to get in. And you know what’s the most important thing? Not only that there’s so many wanting to be customers, but that when they come out they go away happy, really happy with what they’ve eaten and how they’ve been treated, and they’re telling themselves they’re going to be coming back. Marc Winer, Director of McDonald’s Hamburgers, Moscow, 1991 (Parker 1991: 333–4) Moscow’s Pushkin Square outlet remains the world’s busiest McDonald’s. Upwards of 30,000 people were served on its opening day, in the middle of winter, 31 January 1990.25 As of March 2004 McDonald’s has 103 restaurants across Russia: in Moscow, Moscow oblast, St Petersburg, Niznhii Novgorod, Yaroslavl, Samara, and Kazan.26 It is probably no accident that these outlets have been established in regions with the most liberalized tax and property laws.27 However, as we shall see in Chapter 5, the fact of a McDonald’s operating in a Russian city is not sufficient evidence for declaring ‘globalization’ is at work. This view is far too simplistic. Opening McDonald’s franchises in Russia is not the same thing as meaningful economic co-operation and global integration. The Swedish cosmetics firm Oriflame also opened their Kazan branch to scenes of queues around the block.28 Offering a taste of the West without fast food, Guiseppe Sparta, an Italian entrepreneur, opened his own chain of Italian restaurants across Kazan.29 The central restaurant is a big success, but the branches in further outlying regions are a great deal less busy.30 Western products are highly desirable in Russia, and are becoming more and more available in Tatarstan. Consumer durables are readily available; audio-visual equipment and computer hardware are for sale in large quantities and varieties, and have completely filled the gap in the market left by the disintegration of the Soviet alternatives. However the import sector was hit hard by the August 1998 financial crash. Prices of imported goods have since risen considerably, but availability of foreign goods is no longer a problem. The variety of clothes, music and magazines is increasing. There is a domination of the market by those who have been quickest to take the chance to flood it; the products of companies such as Adidas, Levis and Nike have found their way into the newer shops, and Mars, Coca-Cola, Snickers, and Philip Morris brand cigarettes are sold at every street kiosk. On the other hand, foreign direct investment in Russia remained very limited throughout the period 1992–2000. It grew slowly from 1992 to 1997,

Globalization, post-Soviet development and a Russian region 23 but fell dramatically after the crash of 1998, recovering strongly in 2002–4.31 Investment in Tatarstan from abroad has also been very limited, despite the ‘low risk ranking’ of Ekspert magazine. Why is this so? It is the intention of this book to reveal, through the concepts and ideas of a sample of Tatarstan economic actors, the nature of the local economic system and why development is largely dependent on local, not global systems.

Russia and the new global discourse Globalization is a hugely influential theoretical paradigm. However there are some interesting counter-arguments to this global-change scenario, broadly grouped around the ideas of path-dependency and the traditions of economic sociology and institutional theory. Path-dependent development is a concept based on the idea that the role of history cannot be ignored in the processes of change. Not only does it pose a question mark against theories of rapid change; it seriously challenges the wisdom and the likelihood of success of free-market reforms based on the idea of capitalism ‘by design’ (Stark 1995). In doing so, it allows for a much more diverse concept of business systems: ‘[f]rom the aggregation and recombination of existing building blocks emerge genuinely new structures and processes’ (Stark and Grabhner 1999). Path-dependency has been successfully applied to postsocialist Eastern Europe. It explains many of the reasons why global integration is so difficult for these regions, and pays much more attention to the varieties of local action and structure (Stark and Bruszt 1998). ‘The past matters’ (Hausner 1995: 6), and this means looking deeper at the structural and ideological elements that impede free-market change. Some accounts of postsocialism, such as Burawoy’s (1996), resemble the dependency theories of the 1970s, making claims to the extent that postsocialist regions’ historical legacies are so constraining that a shoddy copy of capitalism is all that can possibly emerge from current attempts to marketize. In his words, Russia is ‘carving out its own road to underdevelopment’ (Burawoy 1997: 1444). However, the pathdependent approach is not without its own difficulties, as we shall see. Although accepting the need to consider path-dependent development, some analysts in this school look towards examining how inherited features from socialism can be incorporated into alternative development models. This approach has recently undergone some further theoretical refinements. Stark and Bruszt (1998) talk of ‘recombinant processes’ that allow for reflexive pragmatism in the organization of firms to develop new forms of interaction. ‘Heterarchies’ (Stark 1999) of networks within firms, between firms, and between state and economic actors represents the essential organizational principle. Meantime, long-standing material and organizational features of the economy become the ‘ambiguous assets’ of the postsocialist firm. One of the problems with this approach is that it focuses strongly on institutional barriers to modernization. It perhaps neglects at times the physical structures of regional economies. I would argue that path-dependency

24

Economic development in Tatarstan

is a multi-faceted concept, with institutions being just one of a multitude of relevant social and economic elements. Although the de facto reality of inter-enterprise debts and industry–state networking is definitely supported by research in the field, it is not clear that these arrangements help future development in Tatarstan (see Chapters 3–5). There is an urgent need for new ethnography on the realities of postsocialist business interaction. How do local actors go about explaining and accounting for the importance of networking and regional authority? What characterizes these networks and how important are they in explaining the kind of capitalism that is emerging in the Russian regions? Do they perceive global development as a realistic option that has meaning in their lives? These questions will be addressed in Chapters 3–5. It is vital to show how certain regions can fail to become integrated into the ‘global economy,’ despite all the neoliberal rhetoric and despite how real globalization may be in other parts of the world. The material and physical realities of the regions also require further emphasis. Path-dependency accounts focus so far have focused almost exclusively on Central and Eastern Europe, and much less on the former Soviet Union, where material economic crises are often much more serious. The assets of much of Tatarstan’s economy remain distinctly unambiguous – oil reserves and Soviet machine-building plants remain fundamentally important to the regional economy, and are the main focus for what little investment that exists. There are some major difficulties involved in attempts to integrate such industrial plant into the ‘world’ economy (see Chapter 5). The history of the Soviet built environment and its existing economic features must be taken into account (as one part of the social structure, see Chapter 2) along with the perceptions and accounts of local actors’ business interaction (individual action). Path-dependency is nevertheless a useful theoretical starting-point. It is necessary to thoroughly re-examine the received wisdom of what Soviet state socialism was, and what kind of capitalism is replacing it. Economic growth need not imply increased rationalization or complexity. As Schumpeter showed, like Marx before him and Berman after, capitalism works on the basis of transforming itself in a variety of unpredictable ways in order to maintain its dynamism and growth. A similar position is taken by Harvey (1990). Capitalism is inherently unstable and crisis-prone. Time– space compression (now called globalization) is the result of capitalist firms’ incessant search for new markets. Berman (1983) demonstrates how modernity is chaotic – it is not simply the ‘iron cage’, but ‘a unity of disunity: it pours us all into a maelstrom of perpetual disintegration and renewal, of struggle and contradiction, of ambiguity and anguish.’ (Berman 1983: 15) The complexities and uncertainties of a region such as Tatarstan therefore lends itself well to an analysis of development that can account for such contradiction, crisis and change. Modernity is not just the imposition of the ‘iron cage’; it involves developments that reach into the heart of people’s

Globalization, post-Soviet development and a Russian region 25 everyday lives, providing restrictive and emancipatory features. Giddens calls modernity ‘troubling and tumultuous’ (1991: 14), and this description is thoroughly borne out in the data to be presented here. The instability and change of modernity are particularly worth restating in relation to the Soviet Union, which was often seen as the most selfconsciously ‘rational’ society of all (Bauman 1991). The experience of modernity for Soviet citizens was also one of profound changes – political indoctrination and resistance, urbanization, mass education, purges, freespeech repression, stagnation, and finally rapid liberalization and economic collapse. Berman rightly argues that Russians and Soviets experienced modernity in different ways from the West. Soviet systems, following the changes of perestroika and glasnost must be ‘assumed to have a capacity for self-transformation through internal means.’ (Davis 1989: 194) It is a mistake to assume that Soviet systems were unable to change and transform themselves. They were modern systems, and hence were subject to change and transformation. Globalization in this context, then, is just one particular form of development. Its most extreme proponents (Lockwood 2000, Ohmae 1994, Giddens 1990, 1999, Urry 2000) perhaps overstate its reach. It applies to some regions in some ways, but it means little to others. Transition is the Eastern European and former Soviet Union ‘wing’ of globalization, where there is scant evidence on the ground in Russian regions to support the position of growing world economic integration. Is Russia’s future development a part of a broader process of globalization? Path-dependency theory suggests that history provides different starting points from which development (possibly including globalization) operates. There is ample evidence to show the profound differentiation of Russian and Soviet systems from Western systems. Contemporary evidence from one Russian region (Chapters 3–5) also reveal some major differences of the postsocialist experience from the new Western discourse of globality.

Introducing the sociology of economic change The sociological approach to economic action opposes the undersocialized conception of atomized economic actors and attempts to fill the social gap by stressing the importance of social action and social system as fundamental to understanding economic action. Sociological classics have had much to say about the economy – Marx, Weber and Durkheim wrote extensively on it. Karl Polanyi was the one of the first classical theoreticians to lay the basis for what became ‘economic sociology’, or ‘the sociology of economic life’. According to Granovetter and Swedberg (1992: 6–19), economic sociology rests on three central claims. First of all, economic action is a type of social action. Second, economic action is socially situated. It is ‘embedded’ in ‘networks’ of personal relationships, as opposed to being functions of atomized economic actors. Third, economic institutions are social constructions.

26

Economic development in Tatarstan

That is, economic sociology addresses not only micro-economic functions; economic institutions are by no means beyond the pale of sociological analysis. For the purposes of my research, I shall add a fourth claim: that national and global economic systems cannot be divorced from the interactions that take place at a local level.32 Analysis in economics has become dominated by abstract, non-social, mathematical interpretations that emphasize the inevitability of greater disembedding and internationalization. It tends to exclude the social nature of economic life from consideration. But in some areas the very notion of international, or even national, integration, theoretically central to contemporary versions of economic transition, barely exists. The economic sociology paradigm was taken up mostly by North American scholars such as Granovetter and Burt, leading to the development of network theory.33 Much of this work developed along a highly abstract and mathematical road. Factory-floor ethnographic studies of workplaces, although not uncommon, appear to have declined somewhat along with the industrial landscape they analysed (Burawoy 1979). Network theories are hence very much a post-industrial idea. They fit well with concepts of ‘think work’ (Castells 1996) and the growing ‘virtual’ paradigm (Urry 2000). Instead of being a potential resource for challenging the claims of globalization, network theory has sometimes instead contributed to its abstract way of thinking. Sociologists interested in economic areas have often been attracted to the abstract, theoretical ‘high road’, neglecting grounded empirical study. At the present time in the UK most workplace ethnography takes place in business school environments. Economic sociology hence must recapture the ethnographic ground if it is to effectively critique the globalization paradigm. This is not to ignore the international context. On the contrary. I do not wish to omit either the international or the local elements of the path of Russian development. Rather, this study gathers information from the local actors themselves and builds new theoretical frameworks out of their reflexive understanding of the system. In development issues of postsocialism, the four claims of economic sociology have vital importance. Not only the theoretical basis, but the actual physical and social make-up of the postsocialist landscape has been directly changed by the reforms of the Russian central government based on theories of neoliberalism. It is a central claim of this book that a sociological understanding of this new landscape must attempt to uncover the extent and relevance of the social nature of postsocialist market relations, and therefore must, at least in part, form a critique of the undersocialized model of economic action. It is important to recognize the importance of historical and cultural social settings in which economic action takes place so as to effectively critique the ‘undersocialized’ model of neoclassical economics. However, one must not go too far down this road. There also exist all kinds of physical, financial and

Globalization, post-Soviet development and a Russian region 27 ‘purely economic’ barriers that prevent Russian and Tatar economic actors reshaping and improving their businesses, their region and their lives. Giddens’ (1986) development of the theory of structuration was a welcome critique of undersocialized ideas of rational choice theory/action. His account of the knowledgeable agent is progressive and very strongly borne out by empirical research. However, he is somewhat dismissive of the importance of resources, and tends to collapse structures into action (Ray 1996). The theory is nevertheless helpful, as a tool with which to discern from the interviews what rules, resources, structures, and social forms are instantiated and ‘called upon’ by the respondents (Chapters 3–5). The ‘duality of structure’ is a key part of my methodology (Chapter 2). However, structures have a broader and less abstract meaning in my interpretation. The respondents in this study talk continually about real and imposing barriers to their development and to their struggles to work with dignity. These barriers are social structures beyond their control, and in some cases, have existed since long before the birth of the actors (Elias 1991). Over the course of the empirical chapters, a critique of the notion of ‘structuration’ will be developed. Material resources are crucially important in structuring the way social systems reproduce themselves. After the cultural turn in the social sciences, it has become unfashionable to be interested in such structures. But it is essential that sociological accounts of development do not dismiss the fundamentally important role not just of cultural and social forms, but of physical structures and resources (Reed 1997). Granovetter introduced the problem of ‘embeddedness’.34 The idea is that economic action is embedded in the social system, the second of the three central tenets of economic sociology. Polanyi was concerned with the role of institutions, constructing sociological theory around supposedly non-social, economic institutions, taking his lead from the classic works on capitalism by Marx, Weber and Schumpeter. With these as starting points, and combining them with the newer literature specific to postsocialism, economic sociology provide a strong theoretical grounding for a counter-argument to the neoliberal transition process. Since then, sociology has somewhat moved away from economic issues. Although globalization theory has been contributed to heavily by sociologists (Giddens 1990, Sklair 1995b, Robertson 1992, Ritzer 1999), these theoreticians have been unwilling to draw on the insights of their predecessors in economic sociology. Much of this can be explained by the ‘cultural turn’ (Ray and Sayer 1999). Economic globalization is taken as given – the cultural forms of globalization (Appadurai 1990) simply add more weight to the concept. Grounded analysis of the truth or falsity of globalization has been left to a minority of analysts who focus on the macro level, (Hirst and Thompson 1999, Went 2000), whose views are often described as ‘iconoclastic’. Little has been forthcoming in terms of ethnographic research done to test the claims of globalization theory. Burawoy’s work is a rare exception (Burawoy et al. 2000, Burawoy and Verdery 1999).

28

Economic development in Tatarstan

The dominant, globalization-informed ‘transition’ frame of reference tends to exclude consideration of the development issues facing Russia that suit a sociological interpretation of postsocialist society. The focus on politics, macroeconomic indicators and global integration does little to further our understanding of the social dimension of postsocialist economic action and therefore postsocialist development itself. Even consideration of the aspects of the above that better correspond to sociological analysis, such as corruption, tend to be restricted by the undersocialized frame of reference of the transition approach, although there is a growing sense within transition circles that the mainstream, undersocialized view was largely mistaken, and more consideration needs to be given to institutions that make markets work (Stiglitz 2002, World Bank 2002). Standing in direct opposition is the concept of path-dependency. Initially the preserve of economic historians such as Paul David (1986) and Brian Arthur (1989), the term has an explicitly historical character. With regard to contemporary Eastern Europe, the work of Stark (1995) and Hausner et al. (1995) emerged as a response to neoliberal postsocialist reform, recovering path-dependency as a conceptual tool to explain pre-existing and emerging embedded networks of personal economic relations. Their conceptual constructs emerged along the lines of economic sociology. For example phrases such as ‘routines and practices, organizational forms and social ties’ (Stark 1995: 69) provide an explanatory theory for corruption and barter exchange with reference to the actually existing social relations in what the neoliberals have taken to be an atomized economic system.

Structure and contents of the book The structure of the book is as follows. The next chapter deals with the methodology of the book. The main empirical body of the book is found in Chapters 3–5. Russian and Tatar economic actors’ accounts of social networks, the region and development are analysed to test the truth or falsity of globalization claims. Finally Chapter 6 looks at the implications of the nature of the Tatarstan system for globalization theory. It asks why economic globalization has largely failed to make a significant impact on the Tatar model of capitalism. The book is first an examination of what kind of society has emerged in a Russian region following the end of Soviet state socialism and the partial application of neoliberal ‘designer capitalism’ policies, and second an assessment of the question of future development. It is essentially a test of the limits of globalization theory from a sociological viewpoint of contemporary Russian capital relations. It looks to provide an explanation of why this troublesome postsocialist system came about, and why it reproduces itself. It does this by analysing human action within an accounted-for socio-economic structure. Sociological approaches to the economy tend to stress the role of historically traceable features in shaping development paths. In opposition to

Globalization, post-Soviet development and a Russian region 29 free-market orthodoxy, whereby ‘liberalization’ and the retreat of the state are said to be the best way forward for development regardless of the historical specificities of societies, sociological approaches demand that the details of individual societies are analysed in order to acquire the beginnings of a locally grounded approach. Rather than engage in a thorough investigation of the history of Soviet economics, I hope that the interview data themselves will be able to illuminate some of the continuing problems associated with its legacy. But before they can be examined, it is time to turn briefly to issues of methodology.

2

Methodology

If there is one disastrous thing at the roots of what has happened in modern economics, it’s that it has cut itself off from genuine field observation. Look at it, study it, and then develop imaginative ways to conceptualize and measure it – that’s what’s needed in economics. Economist Harrison White, quoted in R. Swedberg, Economics and Sociology

This book is primarily a work of qualitative sociology. It is built on data from interview sources. The object of the study is to account for the action and structure of economic life in one region of Russia, where evidence to test globalization theories can be found. A combination of theoretical positions were utilized, in order to understand this complicated region within a context that includes change and uncertainty as well as stagnation and stability. The structural features of this region are best understood using theories that can account for historical and physical resources and the possible pathways to development that they enable or constrain. Path-dependency theory attempted to account for the structural, historical features of postsocialist development. Tatarstan (in common with the rest of Russia) does possess a large number of historically path-shaping features (see Chapter 1). Giddens’ structuration theory is also drawn on, in an attempt to understand the importance of inherited, reproduced forms of action, and why action in post-Soviet conditions takes on certain distinct shapes. ‘Far from being uninteresting and inconsequential trivia of day-to-day life, some of the features of mundane social systems are embedded in the most casual or ephemeral local interactions’ (Giddens 1987: 44). Neoliberal theories are normally used in relation to quantitative, large-scale data. Theories that are critical of mainstream economics, such as institutional economics, path-dependency and Marxist development economics, also tend to be built around a concern with macro-social features and quantitative data. Qualitative interview data, as Cawthorne notes (2001), are rarely taken seriously in political economy circles. However, in order to gain insights into

Methodology

31

the features of economic life as they are seen by local actors and international investors, a different, qualitative approach is needed. It is necessary to build new theory from the evidence on the ground. The foundations I have chosen to build on are derived from structuration theory, and these theoretical foundations inform my methodology. It is necessary to consult local actors if we are to understand the qualitative nature of the sociology of Tatarstan economic life. For this reason, the central method used in the research was semi-structured interviewing.

Why semi-structured interviews? Semi-structured interviews provide an empirical focus for the researcher and an allowance of freedom for the respondent. Both focus and freedom are essential if the researcher is to find out anything of worth from the interview process. I chose to partially structure the interviews because I intended to uncover the respondents’ views about certain socio-cultural phenomena and physical-historical structures. As such, a totally unstructured approach would not be acceptable.1 Instead, I had to make sure there was some structure on the proceedings, and some set questions that I would ask every participant. An interview schedule was developed before my first trip to Tatarstan. This was then used as the rough basis for all of the 44 interviews conducted in 1999 and 2000. The interview schedule was based on three key themes that became the basis of the three empirical chapters of this book – the themes of actors’ social network connections, the impact of regional features on actors’ business decisions, and future development prospects. Following structuration theory, there are certain avenues of questioning and discussion that relate to societal issues (Giddens 1986: 298, 327–34). Through the method of semi-structured interviews it was hoped that the economic actors in the sample would be encouraged to speak about the rules, resources and practices that make up the social structures of Tatar economic life. In using such qualitative data it is important at the analysis stage to avoid falsely creating structures (reification). Miles and Huberman (1994) argue that the researcher’s view of the field changes as he or she becomes immersed in it. The researchers’ view of the world he or she is researching adapts and develops as more time is spent in the field. My experiences certainly back up this claim. Although this may seem unscientific, there was no way this continual learning and changing of ideas could be avoided. Despite seeming to be a somewhat haphazard approach to learning about the field, it does not become a problem if a similar interview structure is stuck to once it is decided upon. At least in that way, the same kind of freedom and structure is provided for all respondents, theoretically at least. I say theoretically, because no interview progresses in a manner that a research textbook would like to predict. Interviews are social situations, as much framed by experience, history and preconceptions on either side as any social system a sociologist sets out to research. Just as Tatarstan economic life

32

Economic development in Tatarstan

has its own set of tacit rules and historical backdrop, so do the interviews. Hence a major question to address is whether the background of the interview creates bias in the responses of the participants. With a British researcher from a British university interviewing Tatar and Russian people in Kazan and Naberizhnii Chelny, and some Westerners in the UK, it could be argued that there are major differences in outlook. Is there a major cultural difference between the Western and the Russian/Tatar participants? Am I comparing like with like? In one sense I am, in another I am not. The Tatarstan respondents are better informed about the history of Russia and the Soviet Union than their Western counterparts. Also, it is important to remember that the participants need not, and generally do not, have any prior knowledge of the sociological concepts I use in the theoretical understanding that supports this research. I am not convinced that this is particularly important, as it does not affect the things they say in the interviews, which is of primary interest to the researcher. Another relevant point is that the physical environment in which the interview takes place can also be of critical importance. Sometimes, nothing could be hidden and what the Russians knew I had seen was referred to, to ground the respondents’ observations in the social and physical environment. This was often done with reference to the Soviet built environment, such as the state of the roads. This suggests that instantiating social structures (Giddens 1986) is not simply a question of language. Talk of social structures is often couched in terms of physical commodities and resources. The way in which material structures intersect with social structures is of crucial relevance to the globalization debate (Chapter 5), and to the debate over structuration theory. As Thompson argues, ‘it is the range of alternatives which is restricted, and these restrictions do not stem from semantic and moral rules, but from the structural conditions for the persistence (and decline) of productive institutions’ (1984: 168). But we are getting ahead of ourselves. Let us return to the research process and how it developed in the field.

Formation of the sample I arrived in Kazan in May 1999 with a very vague idea about the place, gleaned from introductory state-produced brochures and the Kazan State University website. I was aware of the ‘liberal,’ ‘progressive’ tax breaks for foreign investors, had heard of KamAZ and the oil, but that was about it. Before I embarked on my first fieldtrip I had plans to examine how and why foreign direct investment operates in a region such as Tatarstan. I had largely taken for granted the concepts of globalized development, and had assumed that Tatarstan’s famous semi-autonomy from Russia meant that it was in an excellent position to serve as a test case for establishing direct ties to the ‘global economy’. I did not have the luxury of selecting entirely by myself those whom I was to interview. Meeting contacts was determined largely by the research

Methodology

33

environment and the respondents themselves, only partly by me. Personal contact had to be established with key people in enterprises and government agencies, and these were typically made through an intermediary person (often postgraduate students with previous research experience, or through ‘snowballing’ from earlier respondents). It was not possible simply to call people from the Yellow Pages telephone directory. Any analyst who has worked in industrial or economic sociology research would know that a telephone directory approach is pretty much impossible in Western societies, too. Obviously this raises potentially severe problems as regards the validity of the findings. Operating alone, without any standardized or validated instruments, the field researcher runs several risks of generalizing wrongly from specific instances. [. . .] [Y]ou can talk only with people who can be contacted; some people are harder to contact than others. (Miles and Huberman 1994: 264) I was at times warned by colleagues at Kazan State University that I had spent too much time talking to state people and chinovniki (bureaucrats), who cannot be expected to tell the truth about Tatarstan socio-economics. When presenting some of my findings at a conference in Kazan in November 2001, one delegate in particular criticized me for believing what I was told about there ‘being no oligarchs in Tatarstan’ (see Chapter 3). In public discourse and the media, the role of powerful families in Tatarstan is common knowledge. It is true that my data reveals this only partially. However, the sample is designed to avoid providing only elite views. Of the sample of 44, 30 are from middle-class backgrounds (see Tables 2.1–2.2). Four of the 30 middle-class respondents are from Western states. Indeed, two of the 14 elite respondents are also foreign. So the criticism that I have been duped by the Tatar elites does not stand up to scrutiny. However, I feel that the elites in the sample were also surprisingly willing to talk about problems that they face, and their hopes and fears for the future. In general, I think the dataset contains both optimistic and critical assessments of the future of Tatarstan and the policies of its government. The focus is mostly on Kazan, except for the Tatneft and KamAZ interviews. However, the three strategic companies are also well represented in the secondary sources I gathered, so a fair amount of background knowledge of these companies was gained. I was disappointed to miss out on any contact with the petrochemicals giant Nizhnekamskneftekhim, which is the other main structural enterprise of Tatarstan. As we shall see below, a number of the main former soviet enterprises (FSEs) have been accounted for by at least one interview (the truck plant KamAZ, oil giant Tatneft, the former centre of Soviet electronics Kameks, the petrochemistry complex Orgsyntez, and the important fur-processing plant Melita). I believe the coverage of this sector, while by no means exhaustive, was good considering the limited resources and

34

Economic development in Tatarstan

time at my disposal. The response rate was good for those I managed to get personal contact telephone numbers for. Occasionally some of these strategic FSEs would not agree to talk to me, such as Kazan Helicopters (although an article written by the chairman of this enterprise is available – see Lavrentiev 1999). The connections of this enterprise with the military (and the other aircraft plants in Kazan) prevented openness.

Validity The reservations raised above could cast doubt on the validity of the findings of this study. However, I was encouraged to see that secondary sources, such as the articles by FSE managers (Galeev 1997, Ivanov 1999), and an interview with Guiseppe Sparta, the Kazan Italian restaurateur (Sparta 1999), do not significantly contradict my interview findings. At a more general, former Soviet Union level, in academic texts and to a lesser extent in the press, what is being said about bribery and corruption is nothing new. The material on the state in the interviews does at times contradict what is said in the stateproduced sources, but some of the interviews also back up the state view (see Chapter 4). It is difficult to know how far interviewees are prepared to talk about crime-related issues, and it is doubtful whether they would open up to a greater or lesser extent to a Russian or Tatar interviewer. When it comes to talking about their own lives and their own businesses, there is no reason to suggest that there are any overly difficult problems with exaggeration or lying. I cannot see any reason, political or otherwise, why I might be deceived by the participants of the study. The most important issue is not whether they are lying or exaggerating. The biggest problem is whether what they say they do is a fair reflection of what they actually do. Qualitative interviewing (and indeed quantitative surveying) always contains this problem. Even then, the interviews are not primarily about establishing facts: they are personal accounts of life and society, and are useful for the purpose of understanding social structure and action first and specific facts distinctly second. As we shall see in the next chapter, the views of the local actors and the concepts they use are fair reflections of the reality of the society as it is perceived by the local actors. It is these perceptions of society that make up my data, and in this regard I have achieved what I set out to do. Of the interviews, 34 were tape-recorded. The remaining ten I was unable to record, as the respondents refused the use of the tape-recorder. This is not because they did not quite trust me; it was more that they felt restricted by it. Twice I did not even ask if I could use it, as I thought that asking might jeopardize the interview altogether. This was also the experience of Southworth (2000). His response was to use paper, and if even this was not allowed, then to attempt to memorize as much as possible of what was said, note it down as soon after as possible, and write up the ‘half transcript’ the same day. I was forced into doing this on three occasions.

Methodology

35

As is always the case with interviewing, some of the most interesting things were said once the tape-recorder was switched off. I made notes of what was said immediately after leaving (often on the tram home). The physical context of the conversation is important. One of the most interesting things mentioned to me by a manager was said while walking through the decrepit and empty shopfloor of Kameks, the drastically de-industrialized electronics plant in Kazan. Whilst showing me the way to the exit it was impossible to gloss over the problems that were so visible: As you can see, it was a very large plant Was it all for electronics? Yes. But it died five years ago. It used to be completely state-owned? Yes, state, then private, then dead. Notes taken from post-interview conversation with business centre manager, former state-owned electronics plant, Kazan Every social study faces problems with constraints on time. These can be particularly acute when looking to interview business people, especially in the somewhat chaotic environment of Kazan. I missed out on a potentially enormously interesting meeting with the head of Santel, the major privatesector competition to Tatinkom, the state-owned mobile phone service. Also there was no time to follow up a meeting with the manager of Kazan’s McDonald’s. Perhaps more of a ‘globalization’ picture could have been created if I could have interviewed these two characters. Or perhaps not. As I argue in Chapter 6, surface manifestations of Western goods and services, fast-food culture and technology do not necessarily mean that global processes are a reality. I did, however, get some very strong impressions of ‘global culture’ in the burgeoning fashion/advertising/design sector, employees of which I did meet, all of whom were in their mid twenties. Their views will be looked at in Chapters 3–5. The major structural gap was in missing out on Nizhnekamsk altogether. Access to the failed Elagbuga-GM project was also not available. However, I did manage to get interviews with people at KamAZ (twice), Kazan Motor Production Association, Tatneft (twice), Kameks (twice), Orgsyntez, and Melita – all of which are major Soviet-era industrial plants. The military sector (including the Tupolev aircraft plant, Kazan Helicopters and the Optical-Mechanical Plant) was, unsurprisingly, closed to me. Let us now examine the sample in more depth.

The sample Table 2.1 is a break-down of the people included in the interview sample. It excludes any industrial workers, but is made up of what I call elites and

Table 2.1 Interview sample Description

Location

Identity

Age/ Sector gender

Size

Performance

Government Kazan chairman

Elite Russian

50 m

State, economics

–

Good 2000

Russian Moscow government expert

Elite Russian

55 m

State, economics

–

Good 1999

Government Kazan expert

Elite Tatar

45 m

State, economics

–

Good 1999

Economist, investment bank

Elite British

40 m

Banking, UK

Not Medium available 1999

Political Kazan party leader

Elite Tatar

26 m

Private, political

–

Good 1999

Electronics director

Kazan

Elite Russian

45 m

Former state, industrial

320

Poor– medium 1999

Electronics manager

Kazan

Elite Tatar

57 m

Former state, industrial

320

Medium 1999

Auto director

Naberizhnii Elite Chelny Russian

57 m

Former state, industrial

6,000

Poor– medium 2000

Auto director

Kazan

Elite Tatar

61 m

Former state, industrial

10,000

Poor– medium 2001

Industrial director

Kazan

Elite Tatar

63 m

Former state, fur

2,000

Medium– good 2001

Electronics director

Cheshire, UK

Elite British

65 m

JV Electronics 12,000, Poor down to 1989–98 320 (interview 2000)

Software director

London

Elite 40 m Australian

JV Software/ Electronics

Not Poor available 1989–91 (interview 2000)

Energy director

Kazan

Elite Tatar

65 m

State, energy

75,000

Petrochem manager

Kazan

Elite Tatar

34 m

Former state, 7,000 petrochemical

Newspaper reporter

Moscow

Middle British

37 m

Media

Aerospace manager

London

Middle British

35 m

JV Aerospace Not Poor 1997 available (interview 2000)

Moscow

Medium 2001 Medium– good 2001

Not Good available 2000

Description

Location

Identity

Age/ Sector gender

Size

Performance

Accountant Moscow

Middle Russian

34 f

UK–Dutch, banking

Not Medium available 1999

Clothing manager

Kazan

Middle Russian

33 m

Former state, 2,000 clothes manufacturing

Medium 2001

Energy accountant

Almetevsk

Middle Tatar

35 m

State, energy

75,000

Medium 1999

Auto engineer

Naberizhnii Middle Chelny Tatar

45 m

Former state, industrial

6,000

Poor– medium 2000

Clothing manager

Kazan

Middle Tatar

40 m

Former state, clothes manufacture

700

Poor 2001

Packaging manager

Kazan

Middle Tatar

27 m

Former state, industrial

210

Good 2000

Former London teacher, now entrepreneur

Middle British

37 m

Former university, now private tourism

2

Good 2000

Pharmaceutical employee

Kazan

Middle Tatar

26 m

State pharmaceutical

20–40 (est.)

Poor 1999

Consumer manager

Kazan

Middle

26 m

Foreign soft drinks

24

Poor– medium 1999

Consumer employee

Kazan

Middle Tatar

25 f

Foreign soft drinks

24

Poor 1999

Consumer manager

Kazan

Middle Tatar

26 m

Foreign soft drinks

15–35

Medium 1999

Agriculture manager

Kazan

Middle Dutch

28 f

JV energy– agriculture

400

Medium 1999

Agriculture manager

Kazan

Middle Tatar

27 f

JV energy– agriculture

400

Medium 1999

Consumer manager

Kazan

Middle Russian

35 m

Foreign cosmetics

10

Medium– good 1999

Newspaper reporter

Kazan

Middle Russian

26 m

Media

20–40 (est.)

Medium 1999

Advertising manager

Kazan

Middle Tatar

24 m

Advertising

14

Good 1999

Advertising manager

Kazan

Middle Tatar

26 m

Advertising

10

Medium 2000

38

Economic development in Tatarstan

Table 2.1 (cont.) Description

Location

Identity

Age/ Sector gender

Size

Performance

Clothing director

Kazan

Middle Russian

35 m

Clothes manufacture

40

Poor– medium 2001

Consulting director

Kazan

Middle Russian

40 f

Consultant

5–30 when needed

Poor– medium 2001

Former official now author

London

Middle Tatar

53 m

Consultant

1

2002

Consulting/ Kazan training

Middle Tatar

46 f

Consultant

1

Medium 1999

Auto mechanic

Kazan

Middle

26 m

Mechanic

1

Medium 1999

Pharmaceutical

Kazan

Middle Tatar

28 m

Pharmaceutical sales

1

Poor– medium 1999

State property

Kazan

Middle Tatar

26 m

State property –

2000

State economics lawyer

Moscow

Middle Tatar

24 m

State economics

–

1994 (interview 2000)

Economics lecturer

Kazan

Middle Tatar

30 m

University

–

1999

Economics lecturer

Kazan

Middle Russian

26 f

University

–

1999

Student

Kazan

Middle

21 m

University

–

1999

middle-class Tatars/Russians and Westerners. For a breakdown of the sample by class and origin, see Table 2.2, below. I made no distinction between the views of Tatars and Russians in my analysis. Elites in this context refers to individuals who are involved in the most elevated positions in the Tatarstan economy, such as FSE directors and managers, state representatives, political advisors, and foreign investors. They have access to a wide range of information on the Tatarstan Republic and some are able to exercise considerable political and economic power. The level of power and status varies, however. Many of the domestic elites have managed to adapt to the postsocialist world while maintaining their prestigious positions, as in Anderle’s study of the Czech elites (2001). All of the respondents show very high levels of active understanding of the events they describe, and of the larger, abstract, issues they often draw on and illustrate, in a way that justifies Giddens’ overall

39

Methodology Table 2.2 Complete sample by class Elite domestic

Elite foreign

Total

11

3

14

Middle class domestic

Middle class foreign

Total

26

4

30

37

7

44

theoretical approach to action. However, what they actually say does not provide much evidence for Giddens’ theory of knowledgeable action ‘structurating’ society without regard for external factors. The structures described by these actors are seen as historical, somewhat unchangeable and highly restrictive of action. There are 14 elites in the sample, and 30 middle-class, non-elites. The middle-class respondents are either entrepreneurs, employees of SMEs, government officials, media employees, or academics. The sample provides coverage of several key sectors of the Tatar economy. The ‘strategic’ branches, such as oil, petrochemistry and heavy industry, are dealt with, producing a substantial amount of data on the conditions and prospects of the heart of the Tatar economy. As economics is always intertwined with politics, there is also some coverage of government official positions that are connected to the economy. Foreign actors are not particularly well represented, just seven in total, but their inclusion does provide a more balanced picture, as these individuals no longer had an interest in promoting any falsely positive views of Tatarstan’s prospects, unlike the state actors who clearly do. The official/media/university subsample is useful in that it tended to provide some more analytical data, divorced from the particular interests of particular firms. This is also to some extent true of the SME sector data, which contain numerous statements of an anti-government nature. Table 2.1 gives details on the entire sample, including job description, location, identity, age, gender, sector, and, if applicable, the size and performance of their enterprises at the time of the interview. The mean age of the sample is 35.9 years. Twelve members of the sample were aged below 30, the remaining 32 were aged 30 and above. This is potentially significant. People under 30 years of age in the post-Soviet bloc came to maturity with little inside knowledge of how the Soviet system operated. Elites and middle-class people would have had substantial interaction with the nomenklatura, or would have been nomenklatura themselves. The elites, as expected, are overwhelmingly of the higher age bracket. The average elite age was 47.9. This also means that the older the respondent, generally speaking, the more time he or she has had to establish social networks that may or may not be important in their economic work.

40

Economic development in Tatarstan

Table 2.3 Business subsample by size of enterprise FSE domestic

FSE foreign

Total

13

4

17

SME domestic

SME foreign

Total

14

2

16

27

6

33

Table 2.4 Official/media/university subsample by sector State economics/property domestic

Media/university domestic

Total

6

4

10

State economics/property foreign

Media foreign

Total

0

1

1

6

5

11

The sample is broken into two subsamples – one of business actors (Table 2.3, 33 interviewees), the other of official/media/university actors (Table 2.4, 11 interviewees). My original intention was to put together a sample of 40 business people and 10 official/media/university actors, but 33 and 11 was the result. The 33 were the major target, with the 11 others to provide a balance of views that were not directly connected to the needs of particular enterprises, and could, potentially, provide more of a Tatar or Russian regional overview. Respondent identity was often described in the interviews with direct reference to the development and everyday-existence struggle. The elite respondents typically identified themselves closely with the actual development of the region itself: I am an optimist, always. . . . The only slogan I believe in – ‘We shall overcome’. [Laughter] Tatarstan Chamber of Commerce Chairman Respondents coded as elites often identified themselves more closely with the national struggle in very Soviet-style language: Tatarstan and really Kazan, before perestroika, was a centre of computer technology. And I hope Tatarstan has now the possibility to take back

Methodology

41

this position in the Russian market. … And I will do all what will be needed in this area. I will do all I can to restore Kazan’s reputation to this high position. Director, former state electronics firm, Kazan Typical phrases used by smaller businesses to describe their everyday existence reveal much greater levels of pessimism: At the moment we survive on a day-to-day basis, not knowing what the future holds. Small business consultant, Kazan It is up to the government to work it out. We simply have to struggle on as normal. Spare parts supplier, Kazan This lower level of optimism can be attributed to the existence of serious structural and social problems identified by this group of the respondents, to be analysed as the theoretical concepts of networks, regionalization and development below. The framework has now been set for the main body of the book to reveal itself. It is time to begin our investigation of the sociology of economic life as the actors involved speak of it themselves. We start by looking at the phenomenon of networks in postsocialist Tatarstan and what role they have in shaping the region’s organizational future.

3

Informal networks in the Tatarstan economy

It is a fact of life here that if you have family relations in the government your business is more likely to be successful. This is not an economic basis for running business, but a sociological one. Law Advisor, Agency for International Cooperation and Development, Tatarstan Ministry of Foreign Economic Relations1

This chapter, the first of three based on qualitative interview data, examines the first of the three main themes of the book – networks of affiliation and their role in the sociology of Tatarstan economic life. Networks form a particularly important element of contemporary Russian social organization, one which resists fitting into theoretical frameworks that stress the necessity of implementing Western ‘purely economic’ organizational forms, such as transition theory or globalization. Accordingly, the sociological theory of structuration is used instead as the theoretical basis for understanding these networks. The social networks in operation here are not the post-industrial forms of the kind Castells and others talk about as being a key form of the new Western economic paradigm. Russian and Tatar social networks as they emerge from the data do not correspond well with this paradigm. Nevertheless, from this particular sample there is a very strong perception that capital and, in a problematic and specific way, capitalist forms of organization and action have embedded themselves in Russian society and are there to stay, despite the popular Western perception of all-pervading social and economic chaos. Looking beneath this simplified, largely media-constructed veneer, the respondents reveal a complex and highly particular economic and social system. The rationalism and agency of the respondents are very clear. The respondents are centrally involved in the processes of social reproduction and transformation, even though these processes are often expressed in terms of everyday life in ways that strongly support Giddens’ (1986) conception of agent knowledgeability. Of more difficulty is the integration of the substantive features of the region’s system into an overarching and broadly accepted

Informal networks in the Tatarstan economy

43

Western framework such as transition or globalization. As we shall see, much of what goes on in a system of regular, often historically reproducible, actions is understood and explained through respondents’ own concepts that place the emphasis on the local and the specific, as opposed to the global and uniform. Networks are shown to have a central role in the normalized action and reproduction of Tatarstan economic life. They reveal the specificity of Tatarstan’s nascent capitalism, in a way that supports the idea of varieties of organizational pathways (Stark and Bruszt 1998), and ultimately, different forms of capitalism (Whitley 1999, Hall and Soskice 2001), that have emerged from the profound processes of change that have affected the territories of the former Soviet Union through the 1990s. Of course, Tatarstan also reveals many of the problems experienced by all territories of the former Soviet Union.

Elite networks2 The study of networks was initially grounded in the theoretical concepts of economic sociology, concepts which stress the socially-situated nature of economic action. Offe (1995: 47) emphasises the development path-shaping roles of networks: ‘This relationship [between institution and agent] is far from unilateral, however; it is reciprocal and cyclical. Moral agents generate and create institutions; the latter in turn generate moral agents.’ All of the above features are revealed in these data. However the more recent work on networks (Castells 1996, 2000, Urry 2000), derives its theoretical basis from the new economy/post-industrialism book. Such work is therefore not entirely appropriate for looking at Tatarstan networks of elites, hence the use here of structuration and path-dependency theories (see Chapter 2). Tatar networks remain largely based on the former nomenklatura links that emerged to manage the distinctly old economy of the command–administrative system. Information was not shared across these Soviet networks, it was tightly regulated and controlled. The networks operated around concrete, physical resources, not around ‘flows’ of electronic media and capital. It appears that much of this Soviet-style system of networks survives today in Tatarstan. When I questioned an important actor in the electronics business on his security concerns, he responded in a way that emphasizes reciprocal, face-toface relationships: We have a good relationship with the police, not simply because the police must help us and help everybody, but we help police with system integration, with computer systems. In this case we have a very good relationship with the Minister of Police, and he helps us if need be. We have a lot of relationships with KamAZ companies and people. We have done a few systems, they continue to work there. And now the chairman

44

Economic development in Tatarstan of KamAZ, president of KamAZ, Mr [. . .], invited us like a consultancy company for KamAZ. Director, Kazan JV and FSE electronics firm

To some degree, these elite networks operate instead of the formal legal–state apparatus that exists in Western systems. As far as the elite respondents are concerned, elite networks function in a far more useful and socially relevant way than the workings of the weak Tatar formal state apparatus. In fact, the only way in which the state is seen to be useful is when it itself participates in the functioning of elite networks. The manager of the distribution department of an electronics and software firm described how the government has a purely instrumental value in relation to the company’s operation. This does not approximate to the globalized model of free markets, with the state taking a more divorced, regulatory role. In this example the government favours a particular company to provide management systems for all of the state-owned strategic companies, including in particular the prized oil and gas facilities: We don’t need much from the government. The less they deal with us, the better for us. Sometimes they can be helpful. For example, in 1996, they adopted a decree to adopt MRP3 standards and make mandatory the standards of management for all facilities in Tatarstan. After this, we started to give training to companies to this standard for the top management Now we are working with the government to issue another decree concerning MAX [MRP management software] system use for managers of oil and gas companies, such as Nizhnekamskneftekhim, Tatoilpetro and others. Manager, Manufacturing Systems Business Centre, Electronics FSE What I call elite networks show some characteristics of the so-called FinancialIndustrial Groups (FIGs) (Bikchantayeva 1998, Sakwa 2004). FIGs are closely-knit and quite strongly identifiable groups of powerful interests, organized around capital concerns such as energy, media and production industries. Some of the individuals involved include those commonly identified as ‘oligarchs’. However the networks revealed in this dataset appear more like quasi-markets of enterprises, rather than identifiable ‘groups’ of important individuals. I use the term ‘quasi-markets’ because these markets retain the closed nature of elite networks yet show the market-driven features of supply and demand. FIGs refer to high-level structural interests, whereas networking occurs at all levels of economic life. The above account of the distribution of the MAX computer management systems across strategic Tatarstan enterprises is a good example of the quasimarket. One of the reasons for the market being so closed and so closely related to the state is that there are simply no other major centres of economic operation other than the state and former-state sectors. Without this close

Informal networks in the Tatarstan economy

45

relationship of elites across enterprises and the apparatus of the state, there is no area for economic interaction to take place. There are no Western-style ‘free’ markets in which to pursue development. Moreover, as I will try to show later, it is economically rational for structurally crucial enterprises such as KamAZ and Tatneft to remain unrationalized and free-marketized, for given the lack of viable economic alternatives in the region, these enterprises are the richest and most productive, despite their numerous and profound productive, organizational and managerial problems. Although there are horizontal links between foreign companies and Tatar enterprises through joint ventures (JVs), the local enterprises are also inextricably linked through state involvement and material networks. However this picture is highly deceptive. The existence of these links themselves explains little or nothing about how elite-level and developmental economic action is pursued. Although the Western economic actors featured in this study were well aware of the importance of these state and inter-firm links, potential investors in the West with no knowledge of how postsocialist systems typically function may well be used to conceptualizing business along ‘purely economic’ models that have little or no relevance to regions such as Tatarstan. Without the functioning of elite networks, none of the region’s linkages would be operationalized, and no economic action, be it basic system reproduction or state-led structural development, can take place. Many economic theories vigorously object to such purely quantitative and structural methodologies, which had more currency in the 1970s than today.4 What I mean to show is that basic accounts of the linkages between the organizations of state and economy tell us nothing about the importance of the role of the human agency of elites in postsocialist society, and do little to explain the necessity of maintaining Soviet-style material integration. There are some major path-dependent features of Tatarstan’s economy. The economic system cannot function without the elite networks that are anathema to transition-style policies. As I will go on to argue, there are physical as well as social reasons as to why this is the case (Chapter 5). These economic reasons, usually tied to the history of the Soviet system of development, cannot be adequately accounted for by Giddens’ theory of structuration. It is wrong to claim that ‘[s]tructure only exists in so far as people do things knowledgeably and do them in certain contexts that have particular consequences’. There are different kinds of structures. Giddens can only account for socially constructed structures such as speech codes, not for economic structures such as strategic post-Soviet Tatarstan enterprises and their interconnections. Once again, elements of the path-dependency idea are borne out by the empirical realities of action in this region, whereas structuration theory struggles to account for the realities of the way action is circumscribed by social and physical structures and how social structures are inextricably linked with economic and physical structures. What we see in Tatarstan is a dense pattern of bureaucratic and economic power, with a large degree of state involvement. The resultant effects of this

46

Economic development in Tatarstan

bureaucratic structure are to constrain much independent action, but the main feature to note here is the elite’s concentration and control of economic and political power through exclusive network linkages. There are signs across Russia that the state is becoming stronger, more Westernized and formalized, and that payment to official bodies such as the heavily armed federal tax police is becoming gradually normalized (Ledeneva 1998: 191–2, Varese 2001). But it is not clear that formalization will mean the dissipation of the less formal, elite economic linkages. Of course, these linkages do not exist in a vacuum. Tatarstan’s economy is fundamentally based on economic transactions involving industrial resources. A crucial element, missing from Giddens’ theoretical picture, is the continuing importance of capital, including industrial goods and particularly raw materials. Despite serious industrial decline in many areas, Tatarstan’s economic system has little in common with the ‘post-industrial’ society. Notwithstanding the encouraging growth in Tatar SMEs (see Chapter 5), nothing has emerged to replace the centrality of oil extraction and industrial production in the region’s economy. The service and communication sectors remain distinctly marginal. Strong remnants of the Soviet economy still exist, although gone today are many of the housing allocation, transport, health and welfare subsidies. Planning has of course also disappeared, but similar supply shortages, bureaucracy, patronage networks, and general regional and structural imbalances still exist. The system of elite networks is not completely unformalized. However the general picture certainly supports the approach of economic sociology, in that the actual workings of the economic actors at this level of society can be explained not by the operation of formalized, ‘purely economic’ systems but by complex, highly informal, but socially reproduced networks of affiliation. Elite networks provide more evidence to show the misunderstandings of the mainstream transition and globalization frames of reference. There is little evidence of the death of the state-socialist system and the emergence of any new path reflecting Western-style democracy and free-market economies. Instead it is a system whereby new forms of technology and management can be incorporated into a system that has unique features, with Soviet-style and market-style features both represented. This system tends to support the approach of path-dependency. Russian elite networks are not a complete continuation of state socialism, they represent a new form of organization, but it is far from the one the freemarket reformers predicted would emerge. Important historical and sociological evidence was ignored by the reformers (Castells 1996: 144).5 It was clear, even from texts published in the 1970s and 1980s (Gershenkron 1970, Filtzer 1986), that the realities of the Soviet ‘planned’ economy were very different from the ideology. The quasi-markets of elite networks do not necessarily restrict development but they certainly restrict globalization. Foreign partners may well be largely excluded from the inner workings of elite networks (Chapters 5–6). Some of the data from the large industrial state

Informal networks in the Tatarstan economy

47

sector industries reveals that sector’s general need for foreign technology. Strategic enterprise networks are a kind of market, in that they are driven by demand, but the lack of competition makes it a physical, materiallymotivated type of elite network. As such it is far from the global ideal, nor is it the unhappy result of global processes. It is structured from within, and this structuring impacts directly on future action. We shall now examine how state actors behave within this system.

Familial networks Family linkages in developing economies, which almost automatically imply to Westerners a large degree of nepotism and corruption, are highly visible in the upper strata of Tatarstan economic and political life. Some of the local actors were critical of the role of familial networks: You can see on a list of business and government appointments the same family names again and again. The same people have been in charge of the government since the 1980s. Some politicians bring their families here and look after them by helping their business grow in Tatarstan. Law advisor, Ministry of Foreign Economic Relations, Kazan This is an aspect of postsocialist elite networks that has a particularly Soviet flavour. Nomenklatura promotion of family members was relatively common. In ethnically defined autonomous regions, family relations at the top levels of the administrative polity and the economy were said to be more extensive than ethnically Russian regions, reflecting their cultural difference. There is some ethnic stereotyping along the lines of ‘Great Russian chauvinism’ here. Nevertheless, it is another phenomenon that was described with some frequency in the interviews. The degree of nepotism involved makes the phenomenon appear considerably corrupt. Others are adamant that local familial networks are legitimate and rational forms of economic organization: We have no oligarchs such as Berezovsky. We have no famous families. Yes there are some positions held by top politicians and their family members. These are formal positions. They are converting political power into economic power. This is bad news. The good news is that political power changes. You have new power, then it goes. Chairman of Chamber of Commerce, Kazan The denial of the oligarchs is particularly revealing. The concept of oligarchs is one that is largely informed by the idea that capitalism has served only to accentuate the already large division in Russia between elites and the rest of society. In this context an oligarch is a person who has access to vast amounts of power, influence and resources. Boris Berezovsky was, at the time of this interview (1999), only the most obvious of several examples of an oligarch,

48

Economic development in Tatarstan

controlling strong energy and media concerns that generated massive political capital. The denial of the existence of such characters in Tatarstan shows the tendency to differentiate Tatarstan’s economic and political system from that of Moscow, which, by implication, is much the more corrupt and illegitimate. This reflects a broader, commonly held idea in Russia, of Moscow’s contemporary and historical difference from the regions. It also reveals a tendency among the respondents towards sharing concepts of systematization that objectify regionalization. In other words the respondents show a willingness to talk of the phenomena they observe and participate in as parts of distinct systems, often regionally distinct systems. This includes Tatarstan itself, which becomes conceptualized as a distinct entity and a region with a high degree of closure from federal and global processes. This is done with little or no Tatar nationalist–secessionist sentiments. This concept is elaborated in the next chapter, and is further evidence of the importance of local dynamics. Again no real access was available to properly analyse the phenomenon of family linkages at the highest level of the local economy and polity. It can be recognized and accounted for but it offers few insights into the workings of postsocialist development. It is a fairly standard feature of the Russian regions, and is described as such as one of the ways in which to differentiate this particular region from Moscow. Familial networks are simply a particular aspect of elite linkages. With the onset of marketization and privatization, family networks in business would, according to the norms of neoliberal economics, be faced with sudden decline. This does not appear to be the case in Tatarstan. Of course the national Russian reform strategies were deliberately not pursued here (with around 30–35 per cent of the economy still state-owned) but the system is indeed a capitalist one. Ledeneva’s work, based mostly on Novosibirsk data, shows how the reforms have meant an end to friendshipbased blat relationships (1998: 194–200). However, there was no real evidence in my region to show that these kinds of relationships in business are becoming any less viable. When compared to the relationships of the Soviet era there has almost certainly been a change,6 but this does not mean that networks of friends and family have been totally supplanted by the disembedded norms and risks of the new market economy. Ledeneva also has little to say about the role of family members, something that does appear to be important in the elite networks of this region.7 They are perhaps not quite so important and unregulated as those in Moscow, but they certainly exist. Generally speaking, however, they are closely related to Tatneft, as opposed to banking, car dealerships, media or computing that the Moscow oligarchs mostly dominate (Freeland 2000, Gustafson 1999). The expensive tastes of the new Tatar rich is common knowledge.8 Of course, key family networks are hardly unique to Tatarstan or to Russia. Any in-depth comparison of Tatarstan’s familial networks to those in Southern European and South American economic systems is not possible

Informal networks in the Tatarstan economy

49

here, but it appears that many of these societies (and developed societies, too) exhibit similar features. Tatarstan’s markets have a strong role for networks of patronage. They are historically important and will in all likelihood continue to be important, as networks tend to replicate themselves through processes of social reproduction (Giddens 1986). Networks are not a ‘fall-back’ mechanism, they are path-dependent aspects of development. Some analysts even claim that the networked nature of post-Soviet interaction is actually conducive to developing into a Western-style ‘network economy’ (Morawska 1999). It is difficult to come up with supporting evidence for this particular interpretation in this study. Some of the elites speak of social networks as useful, but the attitude is not that this path represents the future. And the interviews with the Western respondents contain heavy criticism of these networks. Social networks on a general level are a clear path-dependent development that more than adequately backs up the theoretical position of Stark, Bruszt, Grabher, and others. However these analysts have little to say about familial networks. Structuration theory is again only partially suited to coping with the existence of this phenomenon. Families are considered to be a structuring resource, as per the theory, but this resource connects with real structural and political resources, which are not a well-developed part of Giddens’ theory.

Networks of state control Even as late as 2000 as many as 35 per cent of Tatarstan companies are stateowned,9 amounting to around 680 firms, although this number is slowly shrinking. Most of the Tatar government’s stake-holding is in the agricultural sector (around 50 per cent of all firms), construction (10 per cent) and petrochemistry (7 per cent) (see Vvedensky 2002: 2–3). According to Damir Bikbov, the chair of the State Privatization Committee, in 1999 approximately 65 per cent of ‘the economically active population of the Republic’ was privatized (Bikbov 1999: 44). Despite some major efforts in the direction of privatization since the deliberately slow reform process of 1991–96, Tatarstan is some way from the model of a heavily privatized Western-style economy. In the state sector respondent interviews, the data reveal further tendencies toward Soviet-style organizational forms, which is hardly surprising given this high level of state control in the natural resource and industrial sectors. According to many of the respondents, and in direct conflict with the freemarket concepts of the transition theorists, this state control is not always a problem, and does not necessarily obstruct development and foreign investment. In fact, it is precisely the largest and most ‘state socialist’ of the enterprises of Tatarstan that are the best examples of the strength of the Tatar economy and are advertised as looking to attract Western partners – such as KamAZ and Tatneft. Tatneft is the fourth largest oil company in Russia by production volume, producing half a million barrels a day, with an estimated 6.5 billion barrels of

50

Economic development in Tatarstan

oil reserves (approximately 35 years’ worth). However, as an example of a company controlled by vested local government interests, its market capitalization is tiny compared to its Russian competitors. It takes the form of a giant pyramid with a huge number of subordinates. The chairman of the board of directors is also the current Prime Minister of Tatarstan, Rustam Minnekhanov. Tatneft owns 12 oil production sites, six closed joint-stock companies set up with FDI ties (including a relatively successful one with TotalFinaElf (Adjubei 2000: 227), 16 ‘other’ companies (including financial investment and communications), and as many as 21 other fully owned agricultural companies.10 In total, around 70 subordinate units are included in Tatneft’s audit. Tatneft is fundamentally important to the health of the Republic’s economy. Its oil revenues are used by the local government to subsidise the Republic’s other, struggling, enterprises (Kommersant, 17 February 2001, p. 53). However, other respondents, those representing medium- and small-sized businesses in particular (but not exclusively), see the state role as highly obstructive to development, whether that involves foreign or domestic capital. Some of the management and ownership of these enterprises is seen to have maintained highly state-socialist features: It is clear who is the owner of a small company. This is not so of the large enterprises. Most big companies are not private in practice. Some are governmentally owned. The worst thing is what I call ‘industrial kolkhoz’. There is no owner, no control. The directors feel they could do anything, but they have no desire to capitalize. They only want to spend. Chamber of Commerce Chairman, Kazan This is a typical description of the position of firms run by those who benefited from nomenklatura privatization. It is another of the features of postsocialist society that becomes subsumed under the misleading header of ‘corruption’. It shares many of the familiar ideas about the problems of Russian ‘economic culture’ (see Chapter 5): Soviet-style managers are unable to discharge their duties properly because they are corrupt, greedy and poor managers. The ‘industrial kolkhoz’ is a highly revealing term. The kolkhozi were notoriously badly managed, often in ways that involved the wastage and theft of state funds for personal gain. This type of management of state enterprises is seen to be highly obstructive of development, with the main reasons given being that the managers are incapable of adapting to market conditions and will not allow restructuring as it will cost them their jobs. Of course, state control of industry as a constraint on development and foreign investment is not a view held only by Western observers. Many of my respondents shared similar sentiments: There is only the prospect of oil extraction, and our government is keen to protect this sector of the economy with heavy regulation. This

Informal networks in the Tatarstan economy

51

means that there is nothing special about Tatarstan’s position in the international market, despite what the government might say. Their policies amount to nothing more than words, no actions. [. . .] The Tatar government is afraid its greatest asset, oil, will be taken from them. Owner, small business consultancy service, Kazan In the above response, the reasons given for state obstruction of development fits the nomenklatura model. Such respondents see development as not in their own interests as they seek to maximize their own earnings and cement their position among the elites. Often, this negative perception of the state role infers a shift from ‘state control’ of the economy to ‘state interference’ in the economy. This view of interference is not shared exclusively by small, independent businessmen. Here an employee of a state-owned firm describes the interfering and illegal actions of other state actors: Political interference [. . .] is still a major problem. With our company, the problem is that the state is used to getting its own way, and it is supposedly a free market now. It is the law that a minister cannot participate in business but this does happen. It is common for a ministry to find lobbies. It is basically a process of state-fostering of individual companies. They make it easier for a certain company to trade and then take a share of the profits. Employee, medium-sized state pharmaceuticals company In my opinion, there is no favourable climate in Tatarstan. (Although there are a lot of words about a favourable climate.) [. . .] In the Republic of Tatarstan all is managed from one centre. This is both positive and negative. Sometimes even small questions are decided only by the President of Tatarstan. In Tatarstan nothing is done without Shaimiev’s consent. Head of property department, giant petrochemical combine, Kazan Further down the elite hierarchy there are ‘tasty pieces’ of the Tatarstan economy that cannot be touched, not even by the state departments responsible for initiating bankruptcy procedures: In large enterprises there is a possibility to get investment in Kazan, it would solve lots of problems, but there needs to be the possibility of working there. There are people who are close to administrative bodies within the organisation, and if they get some kormushka [pigs’ feeding trough] you can’t get involved. [. . .] Some people have got profit [from kormushka], and they won’t be glad to see Western investors, because they will lose out on this feeding-place.

52

Economic development in Tatarstan I’ll tell you something I shouldn’t. Recently we got a report about a bankrupt enterprise from the state tax office. We, from time to time, send stuff to this department, legal notices that this state enterprise has large debts, to remind them, that you are in debt, so make sure you sort it out. They need to find out what is happening to help those state enterprises. But sometimes, there are no notices, there are for some enterprise, and they from the tax office, say ‘don’t touch them even if they are bankrupt,’ meaning they have support from the cabinet, personal interests. Some of those enterprises have been founded by cabinet, local leaders, local administration. If you are an official who found the enterprise you will never dare to enter any enterprises. Competitiveness is broken – some are untouchable. There are those you can’t touch, these you can, those you can’t. Out of 100 legal notices, maybe 20 you can’t touch. These [untouchables] are the tasty pieces, distillery,11 chemical–oil complex. Legal advisor, Bankruptcy Department of Tatarstan State Property Committee

It can be helpful to view the situation as one of conflicting interests that spread across sectors of the economy. Some of the respondents revealed this in their interviews. In effect, this is a new form of class stratification – either you are ‘in’ or ‘out’ of the ‘strategic’ state networks of influence (McCann 2000). Hence the problem of competing interests in the region: Important companies pay no tax. [. . .] There are no organs for collecting tax and enforcing management change. There is a conflict of interests of enterprises and government. Fifth-year economics student, KFEI Furthermore, the question of state power can relate in very specific ways to the problems of everyday business functioning. It is not an easy thing for a researcher to enquire about. The following question is somewhat unclear, as a major political question is alluded to in reference to its relation to everyday life. It received quite varied answers, referring to everyday items (documents), centre–periphery relations and even a reference to abstract, pre-modern political forms (khanate). You mentioned that Shaimiev has a lot of power in Tatarstan. Is this a problem for your business? It is a very complicated question. It’s a very specific situation, Russia, including Tatarstan. The president has a strong, personal role. He is at the centre of everything important. You need his signature on all the documents. The situation is like a khanat. Shaimiev is the khan – he’s . . . not a democrat. Senior manager of SME, Kazan

Informal networks in the Tatarstan economy

53

Why is there such a small amount of foreign investment into Tatarstan? The rules of investment are defined by a narrow number of officials. They think about their interests. In conditions of closure of the top brass [zakritost’ verkhushki] and corrupt officials [korrumpirovannie chinovniki] – nobody will work. [. . .] What needs to change to improve matters for business in Tatarstan? To change the tax system. To remove the local taxes. We must prevent the khans from creating a petty principality [Nado ustraniat’ khanov ot sozdania melkih kniyjestv]. Director, private research and consultancy firm, Kazan If these sources are to be believed, then free-market style globalization is not taking place in Tatarstan. There are major constraints on non-elites to develop their businesses. The power relations at the top of Tatarstan’s economic system are described as undemocratic and unfair. Again, premodern historical forms are used to describe current conditions, and again it must be stressed that the respondents are referring to a structure they feel alienated from. The processes by which the local government has secured such control of the republic’s resources are processes of social division. The idea that these alienated economic actors are themselves in some way responsible for this continuing situation is not a fair assessment of the situation. Giddens’ concept of structuration does not adequately deal with this structuring of exclusion. There is an extremely uneven distribution of resources (see Kiselyova and Castells 2001). Tatarstan’s state is indeed a stable one, as the official literature is at pains to point out. This stability, however has not so far been a factor in stimulating inward investment and growth. The everyday workings of the polity are uncertain and changeable (as seen in the fast-moving and unpredictable tax legislation and regulation). In this region we do not find the classic foreign investment risk problem of ‘political instability’. Instead Tatarstan’s state apparatus, from the President downwards, is one in which personal influence and power is fundamental. A foreign company wanting to invest here would have to do it in the knowledge that political action is as necessary as economic action, just as domestic Russian and Soviet firms have been doing for decades. Hence it is not ‘politically unstable’ – everyone knows that Shaimiev is the one you have to deal with, and favours and bribes need to be distributed with the relevant networks further down the structure. It can be uncertain; that is to say, if the state does not want a certain enterprise to operate in a certain area, it will not permit it. To use the words of one foreign investor, it can place a ‘blanket of bureaucracy’ (see below) over those firms that exhibit an unacceptable modus operandi. Far from globalization theory’s concerns over trans-national corporations threatening nation states (Waters 1995, Ohmae 1994, Hutton and Giddens 2000), here we have precisely the opposite situation – the local state dominating the rules of the game.

54

Economic development in Tatarstan

This is not just a feature of large-scale industrial and raw-material enterprises. The growing number of foreign businesses in Tatarstan with a focus on the consumer market are not exempt from having a close relationship with the state. For example, much of the share of the ‘Subcontinent’ supermarket in central Kazan, which is majority owned and run by an Indian company, is also owned by the government. The close, and often overlapping, spheres of government and private ownership explains the very common ‘good relationship with the local government’, and the occasional ‘serious problems with the government’ responses in the interviews. Even some of the smaller entrepreneurs involved in firms of 12–15 employees mentioned some personal knowledge of high-ranking Tatar political figures. The state role cannot be reduced to the persistence of the unchanged Soviet system at work, nor a reconstituted but effectively Soviet-style system attempting to interfere with and restrict the workings of a nascent capitalist system resentful of state power. Elements of both are true, and both are located in an environment of elite networks functioning across different sectors of the economy in a quasi-market system. This system is characterized by personal influence and informal relationships, although as we shall see in the next section, it still operates in a climate where economic factors do indeed dictate that much of the Soviet system must remain in place in order for the economic system to reproduce itself. Individual agency has a strong role in the functioning and reproduction of elite networks, but these networks exhibit features of an established social structure, and along with the material features of the state and former state enterprises, have a very strong constraining role on action.

Strategic enterprise networks The links between the state and former state enterprises form a large part of Tatarstan’s economic networks. A common term for describing this sector of a socialist or former socialist economy is the military–industrial complex or MIC. Tatarstan was endowed with a very large and highly developed MIC, with oil, gas and petrochemistry industries very strongly represented, several large high-technology military installations present, and some mechanical production industries. It is in these areas that the current Tatar government’s role is the most extended: The government has a stake in retaining its interests in the strategic branches of the economy – oil, the military–industrial complex. Law Advisor, Tatarstan Ministry of Foreign Economic Relations Via this extension the state attempts to act as both enterprise owners and investment legislators. Officially much-vaunted, the government’s locally formed investment strategy, particularly its tax climate for foreign investors, remains critically qualified by the constraining material realities of the

Informal networks in the Tatarstan economy

55

ownership and management of struggling industrial enterprises. Strategic enterprises are simultaneously an indispensable asset to the government and a great economic burden. Do you think that Tatarstan is a good place for foreign companies to do business? Yes I think it is. I think it is. Moreover, it was even a better place to do investment in when KamAZ worked properly, you know KamAZ truck company? Ah, when the situation in the oil with the world market was better, for Russian oil I mean. Now we have some difficulties because of the economic crisis in the country, and KamAZ truck company, maybe [their output is] 10 per cent lower [than 1998], they do not work very well. Manager, foreign consumer products company, Kazan The working of KamAZ is described as central to the health of Tatarstan’s economy, even when taking into consideration global factors such as oil prices and national problems such as the 1998 currency devaluation and foreign loan defaults. Strategic enterprises and natural resources remain crucially important in allowing the economic system to reproduce itself, particularly in such times of industrial decline and low market capitalization. The above respondent went on to describe the only available avenue to continue the operations of a Tatar–British joint venture during a crisis period in the 1980s: Even when we opened the joint venture, there was time when the rouble was not convertible, and we had to find something, some product to sell in order to get dollars, and then to pay [foreign firms] in dollars for their equipment, services, etc., etc., and that product was of course oil. [. . .] after that they started working and everything was good. ‘That product was of course oil.’ It is one of the main features of this region, and of countless others of the former Soviet Union, that raw materials are often the only bargaining chips available. This links directly to the problems of regionalization (see the following chapter). Global companies are supposedly divorced from physical–local specifics. According to Castells (2000: 163–215), the international network of globalized firms and their subsidiaries is the main economic actor, not the local firms themselves. However given the total scarcity of alternative ‘globalizing’ commodities (such as financial services, images and communications media) and the absence of financial capital, highly embedded local resources (such as raw materials) are all that is left. Giddens’ notions of disembedding mechanisms and expert systems are not at all evidenced. The development of capitalism across Eastern Europe should mean some sort of disembedding, globalizing effects. They are not visible in this region. Regional action is constrained by the nature of the production enterprises set up under state socialism. This

56

Economic development in Tatarstan

is path-dependency at its most constraining. Even when new customers do arrive, the only capital on offer is that related directly to raw-material production. A manager of a Dutch agricultural investment project in Tatarstan was well aware of the extent of this phenomenon: Why did you choose [the joint venture] to take the form of a barter project? The kolkhoz cannot raise capital, it has no money itself, as it is owned by the state. This was revealed in the building of the storage house. It had to be financed with foreign credit. How does this relate to the investment climate in Tatarstan? I mean, are barter projects normal? For agriculture this is normal, precisely because of the lack of credit within the collective farms. Agricultural Project Manager, Kazan The perceived importance of firms such as these in the context of the regional economy provides some insights into the continuing relevance of regional problems. Global processes of development and integration, have little relevance to Tatarstan. Despite major oil and petrochemicals exports, Tatarstan is largely excluded in any real sense from the global economy. The connections that do exist are not based on the fast-flowing informational economy, but are rooted in older heavy industrial and extractive sectors. Strategic enterprises, some owned and run by the government, and all overseen by strong government surveillance and influence, have become the central means of compensation for this exclusion, even as it helps to exclude FDI.12 One of the ways of keeping the economic system alive is to try to ensure the continuation of the vitally import strategic enterprise networks. This is one of the central ideas of Tatarstan’s ‘soft landing’ approach to market transition. Some of these networks form very closed, tightly linked structures. These structures form obstacles to development. From the perspective of a Russian working in a Moscow branch of a foreign bank, these structures are highly Soviet and completely unmodernized. The impression is given that these kinds of linkages must be broken down to allow the introduction of modernization processes. They have such a nice, simple little system. Tatneft takes the oil out of the ground, it goes to Nizhnekamsk where they make the, ah, what is it called, kaychuk, the ah . . . Rubber? Yes, its not the same as natural rubber, its the artificial stuff they produce there. Then it goes to KamAZ to make the tyres. All very simple.13 Of course, it also sounds as if the system is continuing to function. These are by far the most powerful enterprises of the region. There is a large number of

Informal networks in the Tatarstan economy

57

‘purely’ economic reasons for the continuity of this closed system. Production of these firms has not suffered to the same extent as the catastrophic falls in output that has afflicted so much of industry across the former Soviet Union territory. Of course they have been subjected to major dislocations. Tatneft’s production has been steadily falling for 18 years. But these are the enterprises that, because of their size and structural importance, will not collapse under the prolonged crisis. They are strong enough to withstand the contractions and have some means of adaptation through limited foreign linkages. More important than these international linkages is the local government’s refusal to allow them to perish. President Shaimiev’s bailout of KamAZ following the devastation of the April 1993 engine plant fire is a good example.14 A completely free market approach to privatization and rationalization would in all likelihood sweep away monopolistic state firms such as KamAZ, but for the sake of the region’s economic stability, they cannot be allowed to go under. The monolithic plant employs one-fifth of Tatarstan’s industrial labour force (MFERRT, 1996: 15). Tatneft produces 33 per cent of Tatarstan’s GDP.15 Path-dependent postsocialist economics dictates that Western norms are often incompatible with the needs of local scenarios.16 Enterprises such as Tatneft and KamAZ are the most well-known nationally and globally. It is in these firms (and several other smaller ones) where the existing, limited international integration and foreign investment is to be found. It is also these enterprises that need the most capital in order to develop, including foreign capital: How important is foreign investment to your company? It is very important. [. . .] Now do you want lots of foreign participation, or – what are your plans? We have signed agreements to rework and expand into other areas of production. Romashkino, a giant field, is one of the main projects now. And therefore, how to say, we have been working for 15 years on this oilfield, and in order to gain the extracted product from this idle area and make some recovery, we need new technology. For this we need money, and a large amount of it. Tatneft employee, Almetevsk The continuing centrality of state enterprises, their closed horizontal linkages and their shared long-term crises of production show that face-to-face relationships and informal elite networks are categorically not the only forms of economic organization at work in Tatarstan. Tatneft is continuing to expand, building on some of the ties inherited from the Soviet period. In 2003 it acquired Nizhnikamskshina (a tyre production company), and now owns a controlling stake in Ukrtatnafta (a new oil refinery in Ukraine). It may be that the economic interactions between the actors involved in these sectors of the economy are informal and embedded, but the linkages are actually bound by physical and material transformation and transportation of products and

58

Economic development in Tatarstan

resources. There are definite, material and economic reasons why these strategic enterprises share these relationships. Without them, the economic system of the region would be paralysed. The continued importance of strategic enterprise networks means that social structure cannot be ignored, and does have existence outside of face-to-face relationships or the perceptions of individual agency. Giddens’ theory cannot satisfactorily account for this. Economic action in this region is constrained by material and socialstructural problems. Whereas path-dependency tends to emphasize the role of institutional ‘drag’ in development, this dataset shows that institutions are only one of many path-dependent constraints on action. Of equal importance to post-Soviet institutional persistence are the social realities of elite networks and the material needs of the industrial economy. The term ‘social structure’ should include material and social enabling and constraining features.

Networks and corruption Mainstream transition frameworks also tend to associate informal networks with corrupt economic practices. This was an aspect of networks that frequently appeared in my interviews. As one might expect, the respondents at the top strata of Tatarstan society said little or nothing about ‘corruption’ as such. Instead, the connections between economic elites (such as former state enterprise directors and state officials) were described as a legitimate, if inefficient, system that operates as a form of market capitalism. As I will show, this system is best understood as the functioning of elite networks. In reference to small-business development and to the role of family linkages, the elite-level interviews revealed a shift from describing the system as inefficient to describing it as criminal. Even so, there is still a large overlap, as corrupt/ criminal networks were described as undesirable and inefficient, although distinctly analysable and functional: If you know what to pay to whom, it [corruption] is not a risk, simply another form of expenditure. Payment to officials . . . can protect you against the improper behaviour of big private companies. . . . [I]f you want a counterbalance against big business the only comparable centre of might is local government and federal government. It is a corrupted system of checks and balances. Analyst, Russian Presidential Administration, Moscow The inadequacies of the term ‘corruption’ in explaining the complexities of the postsocialist system are highlighted. The system encompasses the extension and contemporary functioning of established state socialist networks across time. Substantive manifestations of this often appear corrupt to Westerners but not necessarily to the respondents at the elite level. Established forms of action are difficult to dispense with, and, in fact,

Informal networks in the Tatarstan economy

59

their casting aside is not something deemed desirable by the local actors (Stark 1995). At the same time, the Giddens position, that these systems are instantiated over time according to norms of social reproduction, is also partially supported. Bribery is a systemic feature that is certainly an unintended consequence of action. It has become locked in to Russian economic action because of the continued willingness of economic actors to participate in it (Varese 2001). However it would take a major change in people’s perceptions for these practices to disappear. There is no way of really operating outside of this system of elites or of avoiding the practice of bribery of officials. Corruption is hence a structural form, reproduced over time. It enables activity in the economic sphere, but it also constrains the shape of the activity. It prevents the further development of the legal sphere, something essential for globalization and FDI to have a chance to operate. In the words of Stark and Grabher, ‘early successes’ can ‘lock-in to suboptimal outcomes’ (1997). In Giddens’ language, this equates to the unintended consequences of knowledgeable action. The consequences of corruption are highly constraining and path-shaping. The persistence of illicit economic practices contributes to a low-trust environment, dominated by local sectional interests, into which international capital is not inclined to go. In this case, even though purposive action of course creates and sustains bribery and informal economic practices, it is not helpful to see this sustaining of the system as only the result of individual, repetitive action. It has become a social structure that severely inhibits some sectors of the economy, particularly the SME sector, and restricts all manner of action and actors. Some members of the networks have a great deal more freedom of action than others. Those that are excluded, including potential investors (see Chapter 5), are not able to reproduce their own versions of social systems. In other words, if you are outside of the right circles, your ‘knowledgeable action’ is restricted. The term ‘corruption’ is best used only in relation to governmental bribery. Bribes, unfortunately, have an essential role to play in system reproduction. The networks of interaction at the highest level of the Tatar economy are best described as elite networks, not as networks of corruption, as ‘corruption’ is really a sub-group of features within the working of elite networks. Some parts of the elite networks show features of political corruption, some do not. The markets in which elite networks typically function are those that involve a high degree of interaction with governmental organizations. Face-to-face relationships between business elites and political elites appears to be less ‘corrupt’ as such, and operate more like a system of patronage networks. There is a very large degree of ‘Soviet-style’ management of the resources taking place here, as described in a general sense by a somewhat disillusioned British former joint-venture manager: Now in the Russian system to get a sale probably means the head man, general director of outfit A speaks to general director of outfit B, they’re

60

Economic development in Tatarstan old pals, and say, ‘well, OK, I’ll let you buy some of my stuff, and I’ll buy some of your stuff’, and that goes on then you get a sale, and exchange of goods. Or more like a barter. Director of former UK–Tatar joint electronics venture, Kazan

To those on the outside it all appears corrupt and illegitimate, to those working within these networks they are seen as essential parts of the economic system. It is a highly specific and differentiated system. There are no obvious grounds for assuming any convergence (via globalization) with Western forms of political–economic organization will take place. Dismissing these elite patronage networks as ‘corrupt’ prevents any understanding of the specificity and importance of these systems, assuming instead that neoliberal reforms aimed at convergence around the ‘free market’ have failed because of illegitimate individual behaviour of ‘corrupt’ actors. In the words of Hirst and Thompson, ‘This analysis is both complacent about Western institutions, as anyone who remembers the early 1990s Savings and Loan scandal17 can see, and also superficial. It blames not liberalization of financial markets, but the failure to go far enough.’ (2000: 138) It seems that the behaviour of Tatar managers is path-dependent on the necessities of maintaining economic control using the only means available through the only networks of affiliation available – both of which are Soviet-style organizational forms. Hence we see different kinds of networks from the type described in globalization theories. These are not global networks (Castells 1996, Urry 2000), they are distinctly local ones. Furthermore, although Giddens’ concept of the networks being structurated over time by repetitive, reproducing social action is substantiated, a vital proviso needs to be inserted. These networks are not instantiated and reproduced out of choice. These elite social networks are inextricably linked with material, physical resources inherited from the Soviet era and Giddens’ theory has trouble accounting for this. Globalized theories are also barely supported here. The economy continues to depend on local social capital and inherited Soviet linkages. Although it is not helpful to regard elite social networks in Tatarstan as ‘corrupt’, at the level of middle- and small-sized companies, the words ‘corruption’ and ‘bribery’ arose more readily. Bribery and corruption among local government officials was described within a more readily ‘right or wrong’ conceptual framework, although their responses still contained observations on corruption as a system with a general level of importance and efficiency: The worst aspect is the bureaucracy when dealing with the state. The time taken is far too long. One project took one and a half years for the contracts to be resolved. Foreigners expect one or two months at the most. Also, dealing with the state requires personal influence, possibly extending to bribery. Tatarstan representative of foreign oil company working in Kazan

Informal networks in the Tatarstan economy

61

Long-term Russian traditions of being different from the West were occasionally invoked in the interviews: I hardly think that you can do anything without bribes. I’m totally convinced that you have to give bribes to many people, many people, at almost any price. [. . .] Why, in your opinion, is bribery and corruption so widespread? In Russia? I don’t know. It’s a historical development. It’s a well-known fact, it’s not just what I think. [. . .] I know that to do business, you have to do that. To be honest, I don’t think this will come to an end soon. Because I don’t – like everywhere people in the government, not many people are clever and well-educated, just, I mean, the manners are not European. The manner of doing business is very much the Russian understanding of doing business. Not many people in Moscow or in higher education you will not find many people with European points of view, so that’s one problem. It’s not a problem if you have some drive you can go in and everything will be all right, I think. I mean, bribery hasn’t stopped people from investing in Moscow, so why should it stop you in Kazan? Right, absolutely. You can always negotiate. Employee of legal department, former Tatar–Norwegian joint venture, Moscow There are strong elements of path-dependency revealed here. The respondents’ use of historical language in explaining contemporary problems is not simply a kind of habit or reproduced social action that instantiates these historical structures. Historical trends of action have external features, like concrete geographical structures. Many people outside of the networks of bribery are unable to create effectively functioning business systems, or legal–political systems. These ideas are echoed by a participant in the Siegelbaum and Walkowitz study of post-Soviet Donetsk, the heart of the Ukrainian coalmining industry: People in the mafia are mutually interconnected, so that it is difficult to know where administration begins and where it finishes, where authority begins and distribution begins. [. . .] The more you gave to the authorities, the bigger and better the apartment you were given. . . . It is all inter-connected. So it is difficult to say now where the mafia begins and where it ends. Maybe the word ‘mafia’ does not suit; ‘corruption’ is perhaps better. It is because there are too many things here which cannot be defined in one word. It has been developing this way for decades. (Donetsk translator, as quoted in Siegelbaum and Walkowitz 1995: 168)

62

Economic development in Tatarstan

Although I chose to narrow things further and use corruption to refer only to official bribery, the issue remains methodologically very tricky to deal with. Respondents in my study were often quite happy to recognize and discuss the issue’s existence, but had misgivings about revealing anything that shows how the system works. This is due in part to the closed nature of the system itself. As far as they were concerned the interviewer could be told the basics of what happens but the details need not be spelt out. This also gave the system of networked reciprocity an established and legitimate feel, something that is not necessarily illegal. It is hard to know whether a ‘specially organized agreement’ is strictly legal or not. Your office is new, yes? Is the rent expensive? Not really expensive. Why? We have an agreement. Generally in Russia rent is expensive, for offices. But we have a specially organized agreement. Vice-president, advertising company, Kazan Occasionally the subject was expressed with the use of simple, universal signifiers and it was often made clear that further discussion of the subject was not on the agenda. Do you have a good relationship with the local government? Yes. [Smiles and makes gesture of fingers rubbing money together.] Worker in foreign drinks distribution company in Kazan The aspect of these linkages that best fits the term corruption is that of the system’s closed nature. Access to information on how these links are established and maintained is virtually nil. The absence of informational structures that was a characteristic feature of the command–administrative economy is a key element to show that this system’s social networks are far away from the Castells-style ‘global informational networks’ that supposedly comprise Western economic systems and are the motors of globalization: Corruption is very serious. Information is not available to the people in general. Tax and profit information is collected by the state but not published. The system is closed. It is hard to say what is really going on. Fifth-year economics student, KFEI Closure is something that also characterizes the informal economy. The two issues have much in common. Corruption is a too wide-ranging term to be useful, but it is possible to go from this general issue to something more specific and explanatory. Related to the theme of corruption are several different issues: networks of elites; official bribery; and family–ethnic control of the economy.

Informal networks in the Tatarstan economy

63

Bribery of government officials was something that I could not observe. It is difficult to say exactly how this kind of corruption works, and what exactly it enables and restrains. Historical explanations of why it occurs are easy to construct. The very high frequency of references to it from a range of different respondents suggests that it has an undeniable and concrete role in the economic life of this region. Such a role suggests that transition or globalization processes are far from the reality of economic life in Tatarstan. The existence of corrupt officials should not, by definition, obstruct foreign capital. It failed to do so in the Soviet era, when the state was in a position to actively control and restrict the actions of foreign so-called ‘partners’, and there are signs that the Tatarstan state is doing something similar today. For this to be so, then connections at the highest level are absolutely essential. Russian and Western actors are well aware of this: The most important thing is to have connections. Influence in government is essential. Influence, not money, is the problem. Dutch agronomist working in a Tatar–Netherlands joint venture, Kazan The necessity of highest-level connections is a theme that can be explained in more detail as elite networks. The definition of corruption should be narrowed to refer to official bribery exclusively. This allows bribery to be distinguished from the informal economy and from organized crime. This helps to reduce the mysticism surrounding all three phenomena, which have tended to be falsely grouped together under the banner of ‘corruption’, thus explaining little. This implies a certain retreat from researching official bribery, but given the restraints on access this is unavoidable. Corruption was not an issue I explicitly set out to research but its sheer frequency made it impossible to ignore. It is difficult to draw valid conclusions on its working from this dataset, although it is fair to say it is a very widespread phenomenon. Bureaucracy is very strong in Tatarstan. Many businesses are registered in other regions. There, maybe, it is not so high a level of prices, and fewer bribes. Salary of state officials is not high. It’s a serious problem, a restriction. The system of bribes works in a stable fashion. Manager of Property Department, giant petrochemicals enterprise, Kazan Although this respondent believed that the Tatar bribery system was developed further than in other Russian regions, other research confirms the prevalence of informal networking and official bribery as an essential function of the economic system in all of the Russian regions (Ledeneva 1998: 178–82, Gustafson 1999). The persistence of corruption (i.e., bribery of officials) supports path-dependency theory, in that bribery of officials is an

64

Economic development in Tatarstan

established part of the old system that cannot be eradicated by the influx of market forces. In many situations economic actors are forced to participate in and therefore to reproduce systems of bribery and networks of power influence in order to achieve any kind of meaningful economic Other material forces also come into play that ensure the structures continue to be constructed in this form. It is a local process of construction, creating a local social structure. The process and the end result both tend to deny the relevance of globalization, and point instead to a conclusion more in keeping with the varieties of capitalism literature. In later chapters, we will examine the sustainability of this Tatar capitalism.

The shadow (informal) economy The ‘shadow’ (tenevaya) or ‘black’ (chornaya) economy was also recognized and described by the respondents as well-functioning system. It is better to describe it as the ‘informal economy’ today, to differentiate it from the shadow economy of illegal markets in Soviet times. Of course, the shadow economy is nothing new. It was an established feature of the Soviet economy, often referred to as the ‘second economy’, with the planning ministries, state industry and the accepted kolkhoznii rinok taken to be the ‘first economy’. However, in the new Russia small businesses and entrepreneurship are of course legal and, at least in theory, actively encouraged by the authorities. Today’s small businesses are much more developed, diverse and extensive than the illegal ‘second economy’ of the Soviet era. Small business in contemporary Russia are most definitely not to be identified with the extension of the Sovietera second economy across time to today (Castells 1998: 182). The majority of small businesses are formally legitimate. Others make up part of the shadow economy. The shadow economy can be defined as all economic activity that is undeclared and is hidden from official quantification and registration (see Varese 2001). Obviously it is hard to judge its exact size, but its importance in everyday life is formidable. It has a definite, if problematic, system identity and possesses some elements of established legitimacy. Some of it is highly legitimate in terms of its social value, even if some of the economic action is formally illegal and has actually existing criminal links. The shadow economy is definitely not just mafia. Family and quasifamily companies can be very useful for people. . . . After the crisis [of 1998] this was the first part of the economy to experience change. It is very flexible and fast-moving. . . . Shadow economy is family business, small business, private people. Chamber of Commerce Chairman, Kazan The change of the meaning of the shadow economy from the Soviet era to today is subtle yet important. The second economy of the Soviet era was a

Informal networks in the Tatarstan economy

65

good example of the duality of structure (Giddens 1986) functioning in one of the world’s most repressive regimes (Kotkin 1996). Today it formally acts in opposition to the regime, in terms of tax evasion, but it is also a largely accepted part of Russia’s economy, and particularly of Tatarstan’s. It has become a system in itself. This is particularly sharply revealed in a seemingly paradoxical phenomenon that emerges from the dataset, which cannot be explained with Western economic terms. Many of the respondents freely admitted to paying little or no tax yet also said they had a good relationship with the government. This would be almost inconceivable in a Western system. All the money we make in the firm we then give to an organization that launders the money. It is black money [chornii dengi]. Therefore we pay an awfully small amount of tax. [E]very company does this. It is terrible [Eto orchin strashno]. Senior manager, SME, Kazan This is a most interesting quotation, as this respondent appears unconcerned at admitting his firm’s involvement with criminal organizations. However, this manager also alludes to the structural forces at work that prevent him from acting otherwise. Another SME entrepreneur has similar things to say: [The shadow economy] is very serious, and there are many factors at work that make solving the problem impossible. First of all, the black economy is completely invisible. The media tells us nothing about who is really involved. Secondly, the government itself is involved in the crime system. Furthermore, the large amounts of money leaving the economy through crime must be replaced by high taxes. Owner, small business consultancy and management training service The notion of ‘the crime system’ is a very revealing one. It appears in several of the interviews and is indicative of the trend towards respondent systematization of events that may be experienced on a day-to-day level. This is not to say that the respondents are actively operating in and reproducing ‘the crime system’, but they perceive it as a system with its own boundaries, some of which are crossed in the everyday struggle for economic security and survival. What about the shadow economy in the region? The laws are broken by practically everybody not just by black marketeers. According to MVD, the percentages are about sixty per cent, maybe fifty–sixty. If you have profit of one hundred per cent, then

66

Economic development in Tatarstan Goskomstat will, say, add twenty per cent,18 but the MVD says even forty–fifty, even more. Everyone breaks the laws and the rules, but how seriously they break them is the real issue. Accountant, Tatarstan State Property Committee, Kazan

As we shall see, this systematization has profound implications for the region’s development, further emphasizing the importance of local structures. The same is true for the organization of crime networks.

Organized crime networks Given organized crime’s perceived closure as a system, it is difficult for local respondents to gain any real knowledge of its function, nor of the identity of its actors. It is difficult to know which customers are genuine and which belong to the crime system. Foreign automobile spare parts supplier, Kazan It was not easy to ascertain from the data exactly to what extent the local actors were involved with the workings of organized crime. What emerged strongly, however, was the very high frequency of statements about the importance of paying protection money and the need for security. General economic trust extended towards individuals outside of immediate working business relationships appears to be extremely low. ‘The crime system’, according to several of the local actors, is extended into much economic action. Organized crime to Westerners is a comparatively small and less important phenomenon. For the small business respondents it is perceived as a system that extends well into the practices of the economy at the everyday level. This extension of criminality most certainly should not be described as ‘the mafia’. There was a large degree of uncertainty about how to define and distinguish organized crime and the mafia, or whether there is any distinction between them. The few respondents who mentioned the word ‘mafia’ mostly used it to refer to a very ill-defined and invisible high level of distinctly criminal linkages between the bureaucracy, former nomenklatura elites, police, and industrial interests, characterized by economic crimes and violence. This ‘mafia’ does not affect the local actors.19 Nevertheless, some fear of crime and general mistrust is revealed in the data. Organized crime and ‘the mafia’ is one area in which the local actors are not completely knowledgeable agents. There is a great deal of confusion over this issue. Some respondents were concerned with the risk of crime: We use these [Russian-built] Volga and Niva cars. We don’t like to draw attention to ourselves. We don’t need a Chevrolet Blazer!20 Tatarstan representative of foreign oil firm, Kazan

Informal networks in the Tatarstan economy

67

Others were much less concerned by the potential risks, stressing that times have changed since the more chaotic years immediately following the end of the Soviet Union. Moreover, in Tatarstan it is because of locally specific policy that organized crime is supposedly less of a problem than in other regions. Are there any problems with security in Kazan? I think that now in Kazan it’s the same problem as in Moscow or St Petersburg, or some other. Probably it is better, because President of Tatarstan made a special decree on criminal activity, and it was helpful for all the cities, but really it is still important. And we have our own security department for our JV company, and at the same time we use a special system for [electronics firm], because really inside [electronics firm] it is important. Director, State Electronics firm, Kazan Do you have any security problems? No, not now. Worker, foreign drinks distributor, Kazan Once again, networks of elites explain this phenomenon. The close linkages between industrial managers and state (police) officials provides this guarantee of protection. Smaller business have no such guarantees. In this study they often did not want their names recorded, not because the information they gave was sensitive business information, but because they wanted to remain anonymous for security reasons. One of the main areas of concern, and one surrounded with controversy, is to establish the extent of organized crime’s involvement in the local economy. Almost all of the small business respondents in less-established forms of employment expressed major concerns and were convinced that organized crime controls much of the economic realm in which they function. Every small business has problems with security. Senior manager, SME, Kazan Small businesses . . . have to pay very high taxes, too. They also cannot work without payment to the mafia. They have protection running in all types of small businesses, kiosks on the street, the rinok [food market], everywhere. Fifth-year economics student, KFEI The central Kazan banya (public baths) is widely said to be ‘controlled by the mafia’ and is subjected to frequent police raids for drug dealing and prostitution. Violent crime aside, respect for official rules and bureaucracy is very low. The levels of confusion about taxation and registration of businesses

68

Economic development in Tatarstan

among the respondents were very high, not just at the level of small businesses: The amount of work to be done [to simplify the tax and registration processes] is complicated, certainly. As we have economic independence from Russia, we have our own laws in some areas. Let’s say for instance that you wanted a licence for selling strong alcohol, just like in England. We have our legislation for this, which co-exists with the Russian Federation’s codes, which makes the number of documents that must be signed go up from four or five to nine or 10. We are trying to make this more simple as we look to improve our legislation. But it depends of the quality of the businessmen if they are to be successful. Law advisor, Agency for International Cooperation Development, Tatarstan Ministry of Economic Relations This extent of this bureaucratic mess is confirmed at the lower end of the economic scale: The biggest problem is the tax, and the changeability of tax. The system changes at least every three months. We recently had an official audit, in which small discrepancies were found and we were fined heavily. We were heavily fined for mistakes that are so small they amounted to nothing and were caused by the impossibly difficult tax situation. If we had not called in the auditors, an even larger fine would have been faced instead and that would have meant certain bankruptcy. Owner, small business consultancy and management training services, Kazan The taxation and registration processes are certainly extremely complex and cumbersome. However, this can easily be used as an excuse to avoid due process. Can it really be so difficult to keep up to date with the changes? Tax evasion is generally accepted as an established postsocialist pathology. It is just one of many tricks of the trade informed by an absolute lack of trust in the local authorities. There is indeed much in common between the illegal evasion of officialdom of the second economy of the Soviet Union and that of today’s Tatarstan. Cheating the official system is not a psychological inheritance from the Soviet era, or at least that accounts for only a small amount of it. The fact is that the current economic system, characterized by networks at every level, operates on a level in which official bureaucracy is something that has to be evaded if any kind of profits are to be made. At the level of small business, the actors are just trying to eke out a living any way they can. A common element in the data on crime is that it is described as a universal problem. Tax evasion is often legitimized by reference to the idea that ‘everybody does it’. Further-

Informal networks in the Tatarstan economy

69

more, this reference to tax evasion reveals how small business networks are set up in opposition to the local government: You must understand . . . that every small business does this. Illegal forms of tax evasion are a necessity of the life of the small businessman. The government does not tell us the truth, so we do the same. Foreign automobile spare parts supplier, Kazan Further up the economic system, nothing was mentioned about tax evasion and cheating of the official system. Of course this does not mean that it does not happen, but it does suggest that the top echelons of economic actors are happier with the system they operate in. There is very little of the direct opposition to the local government that so strongly characterizes most of the small-business data. What oppositions there were, were usually directed to the workings of the ‘inefficient’, ‘wild’, ‘criminalized’ smallbusiness economy, which was often simply identified with the shadow economy itself. This points to the existence of definite class distinctions in Tatarstan society. Moving to a more abstract level, theorization is beginning to emerge around how the organized crime system is reproduced and how the level of criminalization might decrease. An analyst in Moscow described to me how [a] specific climate has been created, blocking the creation of sophisticated, intelligent people into small business. They prefer to be employed and not self-employed. It is too risky and too unpleasant to be part of this milieu. Small business reproduces criminalization of the sector. It provokes racketeering and corruption. People are marginalized. It is a vicious circle. No-one knows how to change this situation. For me it is a generational problem. The first generation has to create a more or less tolerable atmosphere. The system has become a little bit more civilized. It is a process of institutionalization and normalization of relationships. Russian Presidential Administration Analyst, Moscow This often included a tendency towards generalizing one’s own everyday experience across other economic actors at their level. At the same time this tends to engender an ‘us and them’ perspective. The small-business actors generally view the local government and the elites as their opposition. Class divisions are visible. As one moves down the ladder of socio-economic spheres of activity from elite to small business level, it appears that networks have enabling and constraining features based roughly across these classes. An elite network participant realizes the important enabling role of operating economic action through these linkages. The action potential of formalized and bureaucratic ‘official means’ are largely exhausted.

70

Economic development in Tatarstan

Conclusion – Tatarstan’s version of the ‘network society’ Informal networks constitute a large part of the basis for economic interaction among Tatarstan agents. These networks have a greater degree of acceptance at the elite level, and a lower level of acceptance at the mediumand small-business levels of the economy. At its least formal, that is, illegal level, formally illegitimate networks operate, including action that demonstrates symptomatic features of the working of a significant undeclared, informal economy, and criminal networks. What does this mean for the relevance of the globalist theories introduced in Chapter 1? All of these features point to a high level of systematization to such a degree that networks of affiliation constitute a definable economic system. Although it is impossible to generalize from a small dataset to the rest of Russia, quantitative data tends to support the findings of this qualitative case study (Ledeneva 1998: 8–9, Lonkila 1997). This evidence reveals only in part the chaotic, high-risk environment that has become the received Western understanding. The problems are defined on a day-to-day and a structural basis, reflecting real problems that are not just chaotic, random events in the way Westerners often regard them.21 It is understandable that local people perceive this more accurately than foreigners, but this understanding is also strongly informed by a widely held tendency to systematize the everyday events of economic system interaction. This is not to say that the features of this system of networks are acceptable to the people who have to live and work with them. The respondents all agreed that development and change in the region and in Russia at large is necessary. The necessity of change was an implicit theme running through all of the interviews. Informal networks of affiliation, particularly illegal ones, are not just ‘the Russian way of doing things’.22 Nor is it just a simple historical repetition of the developmental pathologies of ‘economic backwardness’. Tatarstan’s contemporary situation entails a new set of circumstances. There are strong continuities of organization and material features from the Soviet era, but they exist in a completely new social situation. Economic networks operate in the new Russia following the reforms (whether ‘shock therapy’ or the ‘soft landing’) because there are currently no other realistic pathways for the economic reproduction of the society. The data I have collected point to a variety of empirical issues that support each other in a consistent sociological picture of the complex relationship between social structure and action, in which some aspects of the social structure are hindering development and others can accommodate it. The development we are considering is, however, non-global. It is highly localized and dependent on local development paths. Several concrete features of the Tatarstan economic networks are revealed: •

Informal networks are extended across all sectors of economic life, participated in by elites, small- and medium-sized business actors.

Informal networks in the Tatarstan economy •

•

•

•

71

Elite networks have an all-pervading role in the economy. They operate across the FSE networks and the interactions of state power. They are able to accommodate foreign roles in providing capital and technology, but only in ways in which the existing power structures are not affected. The role of foreign companies is generally seen to be very much secondary in importance to development when compared to locally-oriented development. In any case, the foreign role is limited in size. Serious, ‘purely economic’ problems persist. They constitute a very real and problematic constraining role of the material structure of the economy. Partly because of this situation, strategic state enterprises are grouped together to form a kind of material network, with raw materials in particular providing a hugely important ‘currency’ for foreign bargaining. This is not a market in the Western sense, although some of it is motivated around quasi-markets of demand and supply. It operates through the workings of elite networks. This economic system has survived the end of state socialism and the USSR, and is of key importance for allowing social reproduction. Small business have particularly strong linkages to the shadow economy. Some also have links to overtly criminal organizations. These ‘social’ elements of the social structure are perceived by the respondents to be highly constraining of action and development. Economic action in this highly unregulated and highly networked world of small-business action is often perceived to be of definite social worth despite its occasionally illegal nature.

This sociological account of Tatar social networks must be related to the globalization theories. Any theory that concentrates on the idea of the explosive impact of neoliberal theories is somewhat disadvantaged when applied here. The forms of capital in Tatarstan do not equate to neoliberal, Westernized markets. They appear to be a kind of state-capitalist hybrid. Nor are they direct results of the ill-advised following of neoliberal reform practices. ‘Shock therapy’ was never properly applied to Tatarstan. Yet still there has been a dramatic drop in production, widespread informality, barter, and a strong system of mutually reinforcing strategic networks between state and large enterprise managers. Gray’s anti-neoliberal dystopia (1998) cannot really explain the Russian regional economic system, despite his fairly accurate descriptions of the actual local behaviour and crises. The Marxist interpretation of global theories is also not particularly well supported by the evidence here. Evidence for Harvey’s time–space compression concept (1991) is difficult to find. There are some improvements in transport and telecommunications, but the connections are not being utilized to create a more integrated and interdependent economic system. Tatar localized networks are a larger resource than international networks. Lockwood and Sklair’s ideas of globalization as the expansion of class capital are also difficult to

72

Economic development in Tatarstan

substantiate, as the new form of capitalism in Tatarstan appears not to be the result of global transformations. Much has remained stagnant since the Soviet Union’s ‘collapse’, and many of the same people are in charge of the economy, which includes a large role for formal and informal state-steering. In other words, capitalization has not advanced as far as Marxists and conservatives both argue. Evidence for Giddens’ theory of globalization being inextricably tied to modernization is also not plainly visible. Tatarstan elite social networks are not democratic. The idea of ‘flows’ replacing societies is also hard to sustain. Urry’s and Waters’ talk of the fluidity of boundaries might well apply to the language and the imagery of Tatarstan’s capitalism, but not to the social networks that operate within it. These remain very much tied to the locality. It appears that there are some regions that either resist, or are left out of, ‘global’ transformations (Ray and Outhwaite forthcoming). The theories of Bauman, Sassen and Castells, with talk of ‘winners and losers’, would appear to be reasonably well-supported. However, there is still very limited evidence so far to suggest that we can prove the existence of a global constitution that causes Tatarstan to be isolated from investment flows or international networks. If local social networks are seen as more important than global flows in regional development, then it seems that the more cautious version of globalization as a possible result of numerous local practices, formulated by Jessop in particular, may be more realistic than the pro-globalist or more orthodox Marxist versions of global economics. Does this mean the ‘global sceptics’ are right? At this stage, it would appear that scepticism about the penetration of global capital into all regions of the world would be an advisable position to hold. It could be that the following chapter, which is based on the idea of regionalization, will reveal more pro-globalist evidence, but so far, there is little in the way of support for global theories from the data on social networks. However, it is not just social networks that may confound globalization narratives. Social structure can refer to physical as well as organizational features. ‘Social structure’ by itself is not an entirely adequate term. Each society is made up of a material structure, a social structure and individual action. Economic action is embedded in two structures: material and social. Both have ‘constraining and enabling properties’ (Giddens 1986). However, general structural constraint is far higher in Tatarstan than in Western systems. These networks are constructed around the material features of the post-Soviet economy. They are implicitly connected with material structures. Of course the action of elite networks takes place though interaction in situations of co-presence (Giddens). However, they are still highly structural, and help to constrain the action of lower level economic agents, mostly through processes of exclusion and isolation. As we shall see in more detail in the next chapter, the elites face a different set of problems from the smaller entrepreneurs. Small businesses are particularly problematic. Crime, opposition to the state and general unpredictability has created an

Informal networks in the Tatarstan economy

73

unpleasant, almost Hobbesian environment, which is reflected in the data by the respondents’ critical stances to local government and the ‘crime system,’ yet it remains a definable society of active, rational agents and a systematic structure. What seems to Westerners to be corruption is systematized and explained by the Russian and Tatar respondents in different ways at different levels of society, from the elite stratum to that of small business: Economic risks – these are stable. They are predictable. They are not a good definition of risk. Corruption – predictable level of corruption will exist. Unreliability of police – predictable. Tax disorder – predictable! Russian Presidential Administration Analyst, Moscow The Russian and Tatar economic systems are different systems from the Western paradigms, with unique sets of circumstances. Parts of the Tatar system (such as the informal economy) will remain mostly excluded from processes of global development, but this does not mean they are dysfunctional and irrational and must be eliminated. It also does not mean that ‘capitalism has failed’. It just means that the development of capitalism since 1991 has taken and will take a different path from Western ‘global’ paths (Whitley 1999). Of course, societies with highly developed localized network systems are not without historical precedents. At times regions in Italy, South America and the US have all revealed similar functions. ‘The system’ itself is highly systematized by the respondents. The existence of networks does appear objectified as definite elements of a social structure. So objectified, the structure seem to possess longevity and even some legitimacy. Networks do allow a large degree of change in terms of network actors. Power and influence can change rapidly.23 (1) Money from industry for politicians will maybe only make them successful for two or three years. (2) After this time they will have a choice – become a successful businessman or be swept out, maybe by other politicians with new power. It is a problem of transition. Chamber of Commerce Chairman, Kazan Other data conflicts with this: ‘The same people have been in charge of the government since the 1980s’.24 Whether or not the same actual people have remained in control over an extended period (and the data certainly points to that conclusion), the continued existence of networks of affiliation themselves appears never in doubt. The system of networks in Tatarstan has powerful motors of system reproduction. The persistence of and the self-replicating and closed nature of Soviet-style family and cultural networks and the high level of state control and ownership of industry are two factors that explain this. The system at the top level, therefore, is relatively stable. This is

74

Economic development in Tatarstan

something that is constantly referred to in the official literature and in several of the interviews in this study. It is a central tenet of the set of views I call ‘the standard view’ of the region. The region’s ‘political stability’, much of which is constituted of a strong system of elite and family networks, is one of the most important factors in measuring the quality of the regions investment climate. It is one of the most valued variables in the Ekspert ratings, and is invariably given as the most important reason why firms – foreign firms in particular – would wish to invest or not in the region. Despite Tatarstan’s good scores in these ratings, there is little FDI even by Russia’s low levels. The objectification of networks, even of the shadow economy. does infuse in them forms of legitimacy. In an interesting paradox, it can sometimes appear that low-level networks, involving illegal but entrepreneurial activity with an implicit social value, are more legitimate than elite ones, which can appear to reflect corrupt personal influence for personal gain. Unfortunately, low-level networks also show evidence of major disenchantment with this system. Several of the respondents told me of their desire to leave Russia altogether. Although parts of the economic networks are de facto legitimate and essential parts of the society, they are distinctly unpleasant economic forms within which to work as an individual. Once again, we see evidence of the need for this system to change and how far it is from global concepts. The objectification of networks provides a serious challenge to globalization theory, just as it reveals existence of the same problems identified by transition observers following the failure of the actual application of their free-market paradigm. At the same time it becomes a good example of the embeddedness of the economy, and partially supports the path-dependency concept insofar as there are strong elements of continuity from the Soviet system. The networks of Tatarstan actors are very informal, yet highly institutionalized. They are informal and personalized. What is path-dependent about Tatarstan development is that it is operationalized through the relationships between the elite economic actors, not through the remnants of the state-socialist economic, political and legal institutions. Formal institutions appear to play small parts in the operation and reproduction of today’s Tatarstan economy. Elite networks are, in a way, the new institutions of the region’s economy. They effectively amount to new forms of markets, but they are far from the formalized, ideal-type of Western markets, and a world away from the global processes examined by Bauman, Castells, Giddens, and Harvey. Jessop’s interpretation of globalization is far better supported by these data, in that ‘globalization’, instead of being one overall process, is created from multiple and diverse local processes, if at all. Of course, there are some ‘enabling’ elements of networks. Elite network markets are the places where interaction involving development issues can be realized. It is not a Western style ‘free’ market, but it is a system that has its own ways of accommodating change and renewal. Foreign capital is not explicitly excluded from the functioning of elite networks, but it is

Informal networks in the Tatarstan economy

75

accommodated in definable ways, differentiated from ways that foreign investors may be used to, and ways in which transition theory tends to anticipate. FDI is supposed to bring much-needed capital and expertise to developing areas as part of the perceived process of globalization. The practice of FDI in Tatarstan, as we shall see in the next two chapters, reveals rather different features. Networks provide the background and context for the Tatarstan postsocialist development issue. They show quite explicitly the complex of issues involved in the linkages between economic actors at every level of Tatarstan economic action; networks of elites, structural economic linkages, official corruption, bribery and power influence, and the shadow economy and organized crime. Some of these networks are new, some are partially inherited from the Soviet era. The mass of different elements involved pose a direct challenge to the simplifications of the transition and globalization models. The different networks reveal how the current local economic system operates, show how they are rational in a way that Western economics and transition models cannot account for, and begin to suggest a framework for future developments. Change will take place within the context of local networks. This statement may seem reminiscent of Castells. However I want to stress the local nature of the networks. They are not the global networks that link transnational ‘network enterprises’. The main point is that there can be many kinds of networks, just as there are many kinds of markets, and indeed many kinds of capitalism. In this way, local Tatar informal networks are highly path-dependent features. Effective economic action, from the avoidance of tax registration in a home-run spare-parts business, to the interaction of elites working to implement a development-related international joint venture, cannot be done outside of the framework of networks. The actors are acting out of the logic of the situation, and they are fully aware of the existence and importance of networks. The concept supports to some extent Giddens’ structuration theory, insofar as networks represent a both constraining and enabling social structure. However the material constraints on action are very serious, and cannot be explained by Giddens’ approach. The central questions of how the respondents perceive the region, its economic structure, and what the future holds are explored in the following chapters, on regionalization and development.

4

Tatarstan and regionalization

My first question was: ‘Where the hell is Kazan?’ W. L. Hixson, Witness to Disintegration

As explained in Chapter 1, the region is a vital concept in Russian development. ‘Regionalization’ is here taken to mean the intersection of processes that cement regional features into a definite concept in which overall national and global process are de-emphasized.1 In this chapter interview material organized under eight themes is examined to reveal what local actors say about Tatarstan as a region. The aim is to see whether Tatarstan economic actors see their action within a global, national or local framework of development. Transition theory has included a growing role for local and regional investment strategies, as regions other than Moscow are supposedly targeted by potential investors. The unilinear concept of ‘transition’ is making way for a multilinear conception of ‘transitions’, as a more nuanced picture of regional uneven development across the former Soviet Union (FSU) is appreciated by the majority of observers, partly as a result of the Washington Consensus coming under sustained criticism (Nekipelov 2000, Sapir 2000). The Soviet economy was ideologically non-regional in the historical operation of the planned economy until 1991, and many of today’s postSoviet systemic pathologies are universal for all the regions. Management problems, infrastructural problems and overbearing state control are all very much overall FSU problems. However the attempted empire-wide universalizing processes initiated by Gosplan were different from the reality in that individual enterprises managers ‘enjoy[ed] a large sphere of independent activity’ (Gerschenkron 1970: 292), and that, as bureaucratic socialism expanded its economic base, ‘the dangers of localism’ (Gerschenkron 1970: 298) were very real to the central planning agencies (see also Clarke 1996, Schwartz 2004). This chapter examines the views of the participants of this study on the regional features of Tatarstan, and what these features mean for development and globalization. The region shares all of the typical features of post-Soviet

Tatarstan and regionalization

77

transformation, but at the same time it is often perceived by local actors as a unique place. Perspectives of future development are often focused on highly localized, small- and large-scale projects and concepts, which are contingent on recently developed Tatar policies and the specificities of the Soviet regional planning legacy. There has been a definite downturn in expectations for what Tatarstan can achieve since the limited independence struggle between Kazan and Moscow of the early 1990s. Several of the respondents say that Tatarstan’s competitors are not internationally and globally integrated nation states, but other local regions. The Tatarstan Chamber of Commerce Chairman, quoted in the Financial Times, explains this position, following advice from Monitor, a Massachusetts-based consultancy: Monitor has been very important in changing our ideas about competition. A year ago I thought Tatarstan’s competitors were France and Germany. I now realize that our real competitors are neighboring regions such as Yekaterinburg and Nizhny Novgorod. Monitor argued Tatarstan must aim to distinguish itself from neighbouring regions to attract increased international and domestic investment by developing a supportive business environment. (Thornhill 1996) Tatarstan is largely isolated from any large-scale international development processes. However empowering and diverse the notions of localized, competitive advantage development might seem, they may well mean the continuation of poverty and industrial decline. This is the central problem faced by ‘Third World’ societies which may or may not attempt ‘delinking’ from international capitalism (Frank 1971). Burawoy (1992, 1997) sees a similar ‘involution’ as the future for Russia. Small-business development may eventually provide some means of renewal, but the respondents from these sectors of the economy express concerns over the myriad social problems facing them. There is a strong tension between the ethnographic accounts of everyday workings of business (which reveal highly complex and specific problems, with a particular sensitivity to social problems as opposed to economic ones) and overall Tatar development (which tend to focus on the region’s supposed large potential, and economic and political issues). Following Giddens’ notion of the double hermeneutic (1986), it is a part of the methodology of this book that actors are able to fully understand the processes of development and social reproduction. The rules and resources that they refer to are the central organizing structures of the Tatar local economy. As the respondents talk in this way, it becomes clear how notions of the global are not a major part of their discourse, if at all. This causes problems for Giddens’ rather free-floating notion of social structure (1986), and for the more abstract globalization theories of Giddens (1991), Urry (2000) and Waters (1996). In spite of the application of structuration theory to the interviews (an abstract theory that tends to support non-physical

78

Economic development in Tatarstan

conceptualizations of social structure), a picture of localism and the importance of local power and local material resources was created. The interviews focus on the regional features of Tatarstan, with the aim of answering questions related to the degree of specificity of Tatarstan.

The standard view Since 1992 Tatarstan’s authorities have been advertising the region to potential investors as politically stable with a educated workforce and developed industry in a good location. It has a legal basis supportive of economic growth, including the offering of tax incentives to investors; in general it is an economy with a high potential for development. It is ‘open for business’ with Western partners. Independent Russian research has ranked Tatarstan consistently in the best five to ten regions of the Russian Federation in terms of low investment risk (see McCann 2004c). Not surprisingly, several of the respondents of this study were well aware of these figures and occasionally made reference to them to support their views. Regional information similar to that given in the government-produced sources was also prominent in the interviews. An article in a Russian magazine also begins with these considerations: ‘Tatarstan – one of several republics of the Russian Federation with strong population and industrial potential. Geographic position, rich natural resources, powerful industry and a developed agricultural economy define Tatarstan as a notable economic region’ (Rossisskoe Stroitelstvo 1998). The concept of development that this literature refers to as the driving force of the reforms in the region is one which involves restructuring of what economic strengths are already present, very much along the lines of the path-dependent model. Soviet plant is considered to be a definite source of growth. Integrating these economic features into the world economy and introducing new technologies with which to develop and restructure them are the two main elements of this plan. Teleological processes of developing the economy towards the goal of realizing economic potential are therefore certainly not restricted to the Western transition concepts, although the official Tatarstan literature differs from these concepts on several issues. It makes no mention of the ‘transition to democracy’, and the inclusion of information on the existing power structures implies that the system is already sufficiently democratic. Moreover, what changes that have taken place in the polity are assumed to be sufficient to support the development of the economy. President Shaimiev in October 1994 signed the decree ‘On Encouraging Foreign Investments in the Republic of Tatarstan’ (MFERRT 1996: 57), providing potentially lucrative tax breaks for large investments in strategic enterprises. For foreign investments of more than $1 million and comprising at least 30 per cent of the project’s capital investment, the investing foreign company is exempt from income tax for three years or possibly longer, and property tax for three years.

Tatarstan and regionalization

79

The legal provisions for securing, registering and protecting foreign capital are already in place (MFERRT 1996: 43–65). Why, then, is investment not forthcoming? From a sociological point of view there are many other considerations, located in the very nature of systemic change itself, for those potentially involved in committing money to development. FDI is not the only developmental path available. As we shall see, some of the respondents, particularly Western ones, state that there is no point in having these protocols if the overall system is not trusted. Moreover, no amount of incentives, fiscal or otherwise, will be enough to encourage investment in enterprises with no potential for development. The European Bank of Reconstruction and Development (EBRD) is actually highly critical of tax breaks, claiming that it is better to alter the institutional environment in the direction of a pluralistic democratic polity, an environment in which Western companies can function. All of the provisions created by the government are purely formal, legal requirements. The EBRD is correct to state that tax breaks are inappropriate for foreign investments and are not enough to attract foreign capital by themselves, but I would suggest, further, that they are almost completely irrelevant when taken on their own. Given the context of the informal, networked operations of the economy, what few parts of the economy that are formalized find themselves excluded from Western rationalized and globalized forms of business interaction. Despite the Ekspert survey’s methodological accommodation of political, social and even criminal risks, none of these data get close to explaining the realities of the social relations in which economic interactions operate. These risk figures are disembedded and decontextualized. As such they explain little of the realities for potential investors, and mystify the action of local businessmen and government officials. Nevertheless the economic policy of Tatarstan does reveal features that represent some strong regional autonomy and action. It does not support the tendency towards globalizing Westernization inherent in EBRD and other such international organizations’ transition models. As we shall see, the regional diversity of the Russian Federation is further revealed in the interview material. Tatarstan is described in the official literature as a society in its own right, including multi-ethnic population and differentiated systems of authority: ‘The republic is inhabited by representatives of 107 nationalities. Among them: Tatars (48.5 per cent of the population); Russians (42.3 per cent), Chuvashs (3.7 per cent); Ukrainians (0.9 per cent); Mordivinians (0.8 per cent); Udmurts (0.7 per cent); Marinians (0.5 per cent) and others. It consists of 43 administrative districts, 19 towns, 22 town-type villages, and 3,163 villages.’ (Mustafin and Khuzeev, 1994: 156) This ‘societal’ description is part of the ‘sovereign Tatarstan’ ideology, and is highly compatible with the attempts to integrate the region into the world economy via its ‘pathbreaking’ legal right to conduct its own ‘foreign economic policy’. The foreword to a 1993 Tatar government report, published in English, states:

80

Economic development in Tatarstan

‘Nowadays Tatarstan is open for the world and strives to take a becoming place in the world community’ (MFERRT 1993: 1). Different sources share much identical data and even commentary. Compare these two quotations: Economic potential of the republic is based mainly on industry and agriculture. Infrastructural branches are less developed. (Mustafin and Khuzeev 1994: 156) Economic potential of the Republic is featured, first of all, by its industry and agriculture; less developed are infrastructural branches. (MFERRT 1996: 14) Advertising of investment projects is also carried out in much the same way across different publications and economic sectors. Monthly magazines, such as Bizniz v Tatarstane and Tovari i Uslugi Tatarstana,2 which were produced by the government in 1992–3, exclusively contained enterprise advertising and some commentary from state officials. Written in Russian and English, they were aimed at domestic and foreign investors. Taking the Kazan MedicalInstrumental Plant as an example: ‘Instruments manufactured by KMIZ Industrial Association feature high performance, convenience, guaranteed quality, long service, and, [what] is more, at the very lowest prices!’ (Bizniz v Tatarstane, 2, 93: 19). These older sources are not representative of the Tatarstan government’s views on investment and development today, but they are historically useful in that they reveal that the local authorities seemed to believe that advertising of supposed investment potential would be a step along the road to attracting inevitable domestic and foreign investment. The focus remained almost entirely fixed on material, physical means of production (often with detailed description and photographs of produced goods), with a highly optimistic appraisal of the role of required foreign capital and the likelihood of its arrival. Produced in 1996 and 1998, the Tatarstan investors’ guides show a much more deliberate approach on the part of the government, in which each firm’s data is condensed into standardized entries such as these: The project envisages creation of toothpaste production (first in Tatarstan) with annual output of 25,000 tubes. Production processes include production of polymer tubes and cosmetic substance. Further production of other items in tubes (creams, shampoos) is also possible. Required are polymer tubes production lines, process equipment for toothpaste manufacturing, tube filling machines. Estimated amount of investments required for project implementation is USD 5,775,000. Recoupment period is three years. Form of investment – share in joint venture. (MFERRT 1996: 97)

Tatarstan and regionalization

81

11 – State Scientific & Production Enterprise ‘Chemical Plant n.a. V. I. Lenin’ PRODUCTION OF ACCUMULATOR BATTERIES Planned is the arrangement of production of competitive starter accumulator batteries . . . with annual output of 600,000 units. Basic product characteristics comply with German standard DIN 43539. Available are qualified staff, production areas, sales market. Amount of investment needed – USD 25 mln. Forms of co-operation sought – joint venture, credit. (MFERRT 1996: 99) The local government clearly has a considerable range of detailed access to production enterprises in Tatarstan, and believes that openness with information is necessary for the generation of investment interest. This kind of information would be very expensive to procure in a Western system, where such access is regulated by financial and consulting intermediaries. Throughout these sources, the foreign firms provide a purely instrumental role in a distinctly secondary position to that of the state and local enterprises. This is hardly the relationship that transition or globalization models anticipate. Transition theory tends to advocate the possibility of a strong, at least semi-autonomous role for foreign firms in postsocialist development. Instead we see the failure of the free-market reform process in that it opened up the processes of the market, but allowed the political elites free rein over the control and distribution of resources. These elites are happy to reform only what is absolutely necessary in order to accommodate whatever limited capital forms may emerge. This situation is repeated across many other Russian regions (Slider 1994). Instead of the globalization of Westernized capitalism, the crash reform process created ‘capitalism Russian style’ (Gustafson 1999). In Tatarstan largely the same figures since perestroika are in control of the highest level of the economy and polity. Major alterations to the legal system have taken place to accommodate capitalism but the enforcement of the system remains poor across Russia (Varese 2001). Following Stark (1995) I would argue that this points to the conclusion that ‘capitalism by design’ in post-socialism was an unworkable concept, and the idea that free-market reforms would create a functioning capitalist system was a myth. The shift from ‘transition’ towards ‘transitions’ reflects the acceptance among reformers that free-market experiments have failed and that a unique kind of capitalism has emerged. This has major implications for the idea of globalization as a process or as an end result. Of course, the end of free-market reforms is not also the end of development for Tatarstan. The ‘shock therapy’ reform process barely occurred here. However, change and modernization are current processes, implicit in the very working of the economic system, and are perceived as such by the participants of this study. They fully understand

82

Economic development in Tatarstan

that the economic situation is complicated and difficult in its everyday operation, and prone to occasional serious financial crises characterized by panic and uncertainty. As shown in the last chapter, few of the respondents were happy with this situation and everyone realized the necessity for change and development. Where do Tatarstan actors get their information? Does the sample go along with the state view of stability and a large potential to be realized by cautious processes of local development and some foreign capital accommodation? Or is the standard view dismissed as the idle talk of the apparat, still communist in all but name? Of course, the elite respondents are precisely the kinds of character who are accused of this. What is surprising, therefore, is that the distribution of the standard-view response to the regional issue is very even across the respondents of the sample. There is a variety of ways in which the regional issue is discussed at all social levels of the sample, but some of the elites give a precise and exhaustive run-down of the standard view, such as the following: The infrastructure is rather good. It has a central location of the Russian Federation. Two big rivers, the Volga and the Kama. It has a not good but important road network. We have nearly finished a bridge project across the Kama to link the road directly to Bashkortostan. This cuts the travel distance from the Moscow route by 3–4 hundred kilometres. We have a unique telecom system. Tatinkom3 runs a cellular network across the whole Tatarstan territory. You can call Kazan from Bugulma in the east of the Republic. This is the only such network in the Russian Federation except for Moscow. Kazan has the university and the technical institutions. There is a huge number of natural scientists and engineers. Chamber of Commerce Chairman, Kazan Other elites stressed other problems, such as taxation and the Soviet legacy in the region. There was some strongly conflicting accounts, with some directly denying the local infrastructure’s ability to support investment and modernization. Medium-sized business respondents also varied in their accounts of the region. The standard view was represented quite strongly, such as in this account of the region’s infrastructure: It’s good. It’s developed, absolutely developed, because it used to be a very well developed production area. Tatarstan was [geared towards] heavy manufacturing, and this is why the infrastructure was developed very well. And moreover, the position of Tatarstan is very good, because many roadways, airways, river transport, they go through Kazan in several directions, and especially we are in between West and East, so it’s a very good position. Manager, foreign pharmaceuticals company, Kazan

Tatarstan and regionalization

83

The standard view depicts Tatarstan as a distinct and powerful region, as the major player in the newly emerging centre of influence that is the Central Volga Region. Of course, the standard view does not necessarily imply regionalization in terms of opposition to globalization. The region, precisely by the process of attempting to pursue modernization, is attempting to take part in national and global markets and processes of development. However, what is important here is that the region is taken to be a definite economic entity by many of the respondents and is described as such in all of the secondary sources. In a sense this is nothing new. The Soviet planning agency collected and used highly specific and detailed data on the regions’ productive capacities. Soviet economic planning periodicals, such as Region, show this in very close detail. Goskomstat figures, historical and current, show this clear regionalization of production in the historical context of state planning and in today’s ‘emerging market’ paradigm. Even within the boundaries of the 89 regions legally demarcated as oblasti, kraya, republics, and okruga, the literature contains references to subregions, areas which are often equivalent to raioni (or local council administrative divisions). The same is true of the information the state provides in Tatarstan. The republic is formally split into four economic zones, and has 43 administrative raioni (Mustafin and Khuzeev, 1994: 9–10, 156). Right down to the level of individual industrial machines on the shop floor, the government continues to produce information about what each factory, at least formally, produces. It is in this context that the pitiless detail of the Tatar advertising sources and the Investors’ Guide (MFERRT 1996) can be explained, and the motives for publishing such data understood. It is not ‘informational capitalism’ (Castells 2000), but a remnant of Sovietstyle regional management techniques. Occasionally, respondents suggested that the region’s material infrastructure was typical of the rest of the Russian Federation. This suggests that the ‘standardization of regionalization’ is a phenomenon left by the Soviet planned economy, in that it produced and reproduced areas with very similar features, particularly in terms of technology, for the purposes of state planning. The infrastructure in Tatarstan is normal. Just the same as the rest of Russia. It is not such a bad place for foreigners, I think [to invest in]. Now, with the Balkans crisis,4 I think it is not in their minds. Manager, foreign drinks distributor, Kazan Moreover, the methods by which development is pursued often has very similar features to other former Soviet regions and Union Republics. Despite regional detail and the official centre–periphery asymmetrical federal demarcation, local regions face much the same economic crises and have similar crisis exit routes.

84

Economic development in Tatarstan Tatarstan’s infrastructure is less well developed, but it does have huge raw material reserves. Raw materials can be used for exchange payment. It is a similar situation in Uzbekistan. Tatarstan representative, foreign oil company, Kazan

The respondents have a very clear understanding of the macro-level problems facing the region and readily refer to them, as well as providing information on the everyday functioning of their own businesses. Any supposedly global features of development were generally not mentioned. In a similar way to the systematization of networks shown in the previous chapter, the respondents tended to stress the regional aspect of development in Tatarstan. As we have seen, many seem to accept the standard state view, or at least were happy to provide it to me in the interviews.5 They generally accept the ideas about the region’s potential, including its supposedly strong resources and human capital. However, they are very pessimistic about the prospects of attracting foreign capital and, in some cases, expressed concerns about the worth and relevance of foreign capital itself. They certainly do not perceive ‘transition to the market economy’ as any kind of globalizing process. Russian, Soviet-style and local forms of development were all seen as much more important and relevant. As we shall see in the next chapter, even ‘development’ itself is a highly problematic concept when applied here. There was little consensus as to what it means for economic life in the region, except for a distinct lack of the use of such concepts as ‘globalization’ and ‘transition’ when accounting for their economic system in the interviews. Given former state socialist systems’ lack of real integration into the world economy (Ray 1996: 178–9, Castells 1998: 190), this is entirely predictable. The state’s role in providing information is still strong. Even though there is strong evidence to suggest that people’s trust in the government is low, especially at the lowest economic strata, local business people and state officials often expressed the same ideas about the more structural issues. In a way, the smaller business actors are not ‘told the truth by the state’6 in that the political and economic institutions are falsely shown to be formalized. However there is considerable openness to different, largely useless information. This is all part of the idea being spread that Tatarstan is a strong, independent region with specific energy resources and industrial capacity. The standard view contains some small reference to nationalism, and strong appeals to legitimacy, particularly in relation to the socially legitimate ‘soft landing’, which was also a local policy, infusing the Tatar administration with political legitimacy. It helps to identify the aims of the government with the population over a shared struggle for development. This partially explains some of the similarity in accounts of the structural advantages of Tatarstan (its potential) and some of its problems (undeveloped infrastructure). The sociological ones – networks, informal economy, nomenklatura privatization – are left out of the standard view. Only the features of Tatarstan society that are said to be characteristic of a Western

Tatarstan and regionalization

85

model are included. This produces a false picture of the Tatar economic system, because as we shall see, Western economic features are less well developed. Globalization as process or end result is not supported. Information is shared across the Republic, but it is largely useless public information, derived from basic Soviet-style sources. This information is very far from approximating to the Castellsian model of the Information Society. In the same way that there are several types of network (see Chapter 3), there are also different kinds of information. Globalization theory equates information, networks and communication technology together and this unified process is called ‘globalization’. This is the kind of ‘omnivorous gathering together’ (Hirst and Thompson 1999: xiii) that globalization theory is guilty of. I will argue that this is a grave mistake, and the picture created by others, such as Jessop (1999, 2000), is a much more realistic appraisal of modern capitalist development. The sharing of Soviet-style information is largely a result of the continued presence of a partially unreconstructed Soviet-style government in Tatarstan. It is clear that this local state will maintain a central role in Tatarstan’s future development. The state remains a central part of any of the region’s potential exit routes from crisis. Its strength is reflected in its influence via information. While it is too simplistic to say that the state and the citizens are sharing in a common struggle (given the complexity and exclusivity of elite networks and their differentiation from other economic networks further down the status ladder), it is certainly the case that the institutions of the state and state-employed elite actors are playing fundamentally important pathshaping roles for the economy and society.

Regional conflict Centre–periphery conflict, in this case between Moscow and Kazan, provides the backdrop to much of the contemporary and historical understanding of development. Just as in the academic theory surrounding the issues of Russian federalism, in this dataset there is no clear consensus as to whether Moscow or Kazan is really in control of Tatarstan as an economic entity. Once again, the concept of a conflict of interests is raised by some of the respondents: Here in Tatarstan, the politicians are protecting their own interests. They want to maintain control of the natural resources, but they are in desperate need of investment. The Tatars believe they have the rights and the abilities to do as they please, but the Russian government is really in control. Tatarstan representative of foreign oil company, Kazan From a Muscovite perspective, the situation is viewed rather differently:

86

Economic development in Tatarstan The leaders of the regions will try to profit as much as possible [from the power struggles surrounding the presidential elections in 2000]. They will look for time to build strong positions and to take as much power as they can swallow.7 Analyst, Russian Presidential Administration, Moscow

These are similar sentiments to those of the Western observers of ‘the multi-state state’ and asymmetrical federalism (Sakwa 1999, Treiseman 1998a, 1998b, Walker 1996), although it is largely accepted that the risk of the Federation splitting up in a similar way to the ethnic and political fragmentation of the Soviet Union in 1991 has turned out to be a minimal one. The lack of consensus reflects the very real lack of institutional and legal clarity on the relations between Kazan and Moscow. The 1994 treaty ‘On The Demarcation of Subjects’ has only partially solidified some of the relationships into some kind of legal framework that everyone can hope to understand. In accordance with an agreed five-year assessment protocol, the treaty was ratified in 1999 and, predictably, the same issues were debated at length again. Oil transportation and dividing the share of oil ownership were the main issues (Jack 1999). The 1994 treaty is a subject of great debate itself. Broxup (1994) is extremely critical of it, sharing some of the sentiments of the Tatar nationalist extremists. Shaimiev’s still-ascendant popularity testifies to the lack of opposition to the treaty and general agreement that it has helped look after Tatarstan’s interests for the time being. Complete Tatar autonomy from Russia is really an impossibility for numerous reasons, not least the number of Russians who live there. There is confusion over this issue among the respondents. From a Western business point of view the treaty, although rightly regarded as transparent and legitimate, explains little about the actual legal and formal rights between the two political entities. It can be assumed that these are the issues that would interest potential investors, just as it appears to confuse one particular Western banker: What would be really useful would be for you to look at the fiscal relations with Moscow. No-one really understands how this treaty works. It is all very unclear to us. People who have looked at it before have only skated the surface. UK investment banker, Moscow The local view is very different. Tatarstan actors seem dismissive of its actual workings. As long as it is enshrined in law, there are no problems with it as far as they are concerned. As a businessman I have no reason to be concerned with the treaty. For tax I pay the same amount as the rest of the Russian Federation. This is

Tatarstan and regionalization

87

a problem for local government – what to spend, what to give to Moscow. It is not my headache. It’s a problem for local government but not for business. So, yes, because I live in Kazan, it is interesting, . . . but directly, there are people from the street not very conscious about this problem. Chamber of Commerce Chairman, Kazan This is one particular area in which the abstract, structural aspects of the economy and polity are not understood to be relevant to everyday life. These two extracts reveal little concern for such ideas as asymmetrical federalism, and what little concern exists is purely instrumental: What about the federal situation? There is a great deal of confusion in the West about the relationship between Tatarstan and Moscow. No not really. It was a problem maybe three weeks ago, because the agreement which was signed three years ago [actually five years ago], was finished in February, and there was a great deal of difficulty in signing a new one. But it now is signed and I hope its not a problem for us. In this case we pay part of tax in federal budget, part of tax in the local administration, and part of tax in the city budget, and part of tax in the republic budget. We know the exact figure, and we do it. Director, former state electronics firm, Kazan Does the policy of the Russian federal government concern you? Ah, no. Ahh, the thing is, quite recently, they’ve agreed recently, the Tatarstan and Russian governments, on the new protocols on the rights and authorities of both sides, so basing on the agreement on the protocol, I think there will be no, erm, strange things. Moreover, we’ve been working under such a protocol for maybe five years already, so this is OK. Manager, foreign pharmaceuticals firm, Kazan Still the confusion about the relations between Moscow and Kazan remains. How can we go about getting beyond this confusion? Secondary sources (Walker 1996, Giuliano 2000, Rossiskoe Stroitel’stvo 1998, Khamidullin 1999) tend to show that Tatarstan, economically, is indeed little more than a Russian industrial region with an interesting ethnic and cultural mix, which some local people consider to be an important contemporary issue and others take for granted. I have already shown that most of the respondents tend to systematize the region into a separate economic entity from Russia. However, there are some very Russian, and indeed Soviet, elements to the Tatar economic system. Some are very positive about Tatarstan’s economic freedoms from Russia, citing the laws and regulations that allow for foreign investment to be registered only in Tatarstan, and the ‘Foreign Economic Policy’ that has

88

Economic development in Tatarstan

allowed the signing of agreements with foreign states and the establishment of overseas representative branches of the Tatar Economics Ministry in the US, Australia, Austria, France, Lithuania, Azerbaijan, Uzbekistan, Ukraine, Czech Republic, and Moldova, as well as with the Russian Federation and some Russian and FSU regions. Others believe it is effectively no different from the rest of Russia. I would be inclined to agree with the latter position. Given the vast disparity of wealth between Moscow and the Russian regions, it is unrealistic to assume that Tatarstan has any specifically superior features to the other regions. There are some notable exceptions. The gigantic projects such as KamAZ, Tatneft and Nizhnekamsk (and to a lesser extent the now seriously struggling and restructuring optical and medical production enterprises such as OMZ and KMIZ), are specific and important enterprises. The local government advertises them as if they are still the main assets of the Tatar economy. This is partly true but they require huge investment in modern technology if they are to become anything more than outdated burdens in the economic and social spheres. They need to find a way to maintain production and at the same time find investment. This is not easy. This was the thinking behind the ‘soft landing’ approach to marketization, but the standard view has tended to exaggerate Tatarstan’s economic strength and oversimplify the complex processes of FDI. The approach to the latter problem has already changed, with Tatar elites more or less giving up on the expectation of large-scale inward investment (Chapter 5), and jaded Western investors echoing their claims. What does this mean in the context of regionalization? Tatarstan differs from Russia in the specifics of the economic features of its Soviet ‘commanding heights’ and its raw materials enterprises,8 but they are weakened by Soviet-style management and regional factors. Local tax and political control can be enabling of development (such as Shaimiev’s rescue of KamAZ following the 1993 fire in the engine plant and debt restructuring after the 1998 rouble crisis) but are also constraining. Tatarstan has a strong structure, manifested mostly in elite, informal networks. The biggest potential seems still to lie with these structural enterprises. But they now represent Tatar, not Soviet, interests. They are attempting to modernize but, by appealing to the Tatar national–ethnic issue in doing so, they perpetuate elements of Soviet ideology and organization. Tatarstan’s economy is attempting to appear at once nationalist and open for modernization, but actually appears to Westerners as highly Soviet and backward. This implies that local economic linkages will remain absolutely vital, including elite and material networks. Development via foreign economic relations appears to be unlikely. The only real integration into the world economy comes through Tatneft’s oil sales. The establishment of economic integration with states of shared ethnic–cultural roots such as Turkey and Bulgaria are very limited. Such linkages are barely at all revealed in this dataset, and when they did crop up in the interviews, the coverage was not overly positive.9

Tatarstan and regionalization

89

How true is the picture created by the Tatar media of the alliance with other Islamic regions such as Turkey and Iran? Are they really helping the situation, or is it all over-inflated? I certainly don’t sense that, no. I know a lot of Tatars. It’s easy for me because I’m neutral, I’m not Russian, and I’m not Tatar, so I’ve got access, really. Obviously I deal with intellectuals generally, intelligentsia, I suppose I’m trying to say, but I don’t feel anything really. There’s this brotherhood, yeah, but on the other hand they look to Europe, really. Students, they write this, ‘OK I’m a Tatar, I’m a Muslim, but I’m European-looking, my values are European. And they don’t see anywhere they can look up to as an example to emulate. So at a political level, yeah, there’s a Turkish consulate there and the flights – although these have stopped, yeah, the flights from Turkey are now closed. They’ve stopped and apparently there is some conflict there. Turks are not particularly popular in Kazan. There’s the Tatorus travel. Tatorus was the original joint venture, yeah. It seems to be doing all right. The Turks are quite happy, they’ve got their own café, and a lot of Turks in Kazan, a lot of Turks. They’ve done a lot of building work, which is not all of it good, I mean some of it’s been quite criticized. And you know despite the religion, the Turks, despite the fact that they’re also European, they don’t seem to have the European values like the Kazan people do. I mean they were brought up in the Soviet Union or even since, although they’re nominally Muslim they tell me anyway that they emulate London, and Paris, they want to be Europeans. I think it would be very difficult to sort of work up any sort of pan-Turkic union, but the groups are there, like Ittifaq. But they’ve been very quiet. I think the general thing is that people are busy getting on with making ends meet. They’re becoming like the West in that way, the people are not politically aware any more, or not so interested in larger questions. You get that much less now don’t you, much less opportunities to discuss things. People don’t talk politics such as they used to. There’s a sense of disempowerment. We’re not, we can’t you know, ‘it’s basically nothing to do with us any more’. UK entrepreneur, Kazan Instead of representing a new kind of ethnically motivated FDI, or a general exposure to overall ‘global flows’ of capital, most foreign projects, particularly joint ventures, show mostly Soviet, glasnost era features. The standard view interpretation, that of advertising the investment projects, establishing laws and tax breaks and assuming foreign capital will somehow, almost automatically arrive, is shown to be false by these respondents, although most agree that Tatarstan nevertheless does have large developmental potential. You become a partner in such enterprises [in Tatarstan] in much the same way as McDonalds is a ’partner’ with the Moscow city authorities. All is

90

Economic development in Tatarstan well until it is put to the test. The problem is, risk ratings and legislation are all very well until they are tested by a crisis or an unhappy Western company. It is the state that is to be put to the test, not the companies if things start to go wrong. UK investment banker, Moscow

Business enterprises can be linked directly to what the state perceives as the tasks of fulfilling this potential for development. This is explicitly enshrined in the Tatar investment laws. Article 14 of the ‘Law of the Republic of Tatarstan On Foreign Investments’ states: Foreign investors have the right to get additional privileges and governmental guarantees for investment projects presenting a special significance for the economy of the Republic of Tatarstan in case of getting approval for such projects by the Government of the Republic of Tatarstan. Investment projects approved by the Government of the Republic of Tatarstan are certified by the Resolution on granting the investment project with the status of ‘approved investment project’. (MFERRT 1996: 47) In this way, the standard view of the region’s development potential provides a strong legitimizing role for the continued existence of old, Soviet-type enterprises even if the managers of the enterprises themselves admit to severe crises in production and profit volumes: I think Tatarstan has a good climate for western investors, but if it’s compared with others, I don’t know, but, er, Russian magazine, you probably know, Ekspert? Yes, I know it. They show Tatarstan for the last five years its somewhere in the top two, five, six, somewhere there. I think this looks like real, because Tatarstan government have a special Tatarstan law in this area, and chemical production, oil production area, is very powerful, and Kazan is a culture centre, a lot of universities, a lot of students, many enterprises with high technologies, like helicopter, aircraft enterprises, instruments for aircraft enterprises here also. And of course our enterprise. But for our enterprise it is not so real, because we lose old technology but we cannot take new technology. Really we have a possibility to take new technology through [our two Western partners, and they] help us as many [much] as possible. It means that, in the information area, we can educate our personnel, but not important problem, it’s a development [in] market. [. . .] We sell in Kazan and in the Russian Federation also, complete information systems and information technology. We worked from the

Tatarstan and regionalization

91

beginning with producing technology and PCs, programming. Now these projects have finished. We now have links with Microsoft and sell their software, and provide Kazan with this global service. Director, former state electronics firm, Kazan As well as giving yet another account of the potential and stability of Tatarstan’s investment climate, this respondent reveals something about the nature of the material struggle for new resources and capital. He shows how it is entirely possible to hold the standard view and the opposite view at once. There is some notion of globalization, not surprising given the links with Western electronics firms. Yet the concern is still said to be for the growth of the Tatar regional market, not for profit-making. It is not a Westernstyle market. In this case, even as the state-socialist production of Soviet computer systems for the Comecon states ends, the distribution of Western ‘global’ products and services is still embedded within the realm of Tatarstan regional development, with a strong emphasis on state-led Soviet-style development. Now, [the market for the locally-produced MAX management system] is not so big. The state of industry here is not good. The market is small. The object now is not to receive profit, but to win this market, and make ourselves into a strong position. In Tatarstan our main customers and potential customers are JSC KamAZ, Nizhnekamskneftekhim, and other oil companies. Why are your products useful for these companies? They allow effective management of business in a developing market. First of all, they reduce costs of production, and they also increase, er improve the level of service to the customer. It also allows for more flexible production, and so on. . . . Manager, Manufacturing Systems Business Centre, electronics firm, Kazan The second response is dressed in Westernized language, but it also reveals how these state enterprises are being restructured into producing services that the local government apparatus finds necessary for the local enterprises. ‘The object now is not to receive profit.’ A more succinct and precise description of the problems facing the region and its differentiation from Western ‘global’ economic ideas could not be hoped for. Tatarstan was undoubtedly heavily affected by the 1998 crisis (Shaimiev 1999). The rouble is Tatarstan’s currency. Many of the respondents were prepared to accept that Russian problems are also local problems. We are performing well. We are positively profitable. Our profit is not very big, because, after the crisis which happened in August last year, our volumes went down, we had to cut some people, and also we lost some

92

Economic development in Tatarstan distributors and eventually we lost some business. But nevertheless, we managed to survive and, in particular, the Kazan branch finished the year very well. [. . .] It’s not big, maybe around 8–10 per cent, only, but it is good. In this situation in Russia, it is good. [. . .] I think the economy of Tatarstan will be better, because we have all the fundamental bases of that, but the situation in general in Russia is not good, that’s why we also suffer from that. But I believe it will be better here. Manager, foreign pharmaceuticals company, Kazan

Regionalism, informality and barter meant that Tatarstan was to some extent shielded from the worst effects of the 1998 crash. Southworth (1999) reports similar findings in neighbouring Bashkortostan. This contradicts market transition notions that the crash showed just how far Russia had come in terms of its involvement in international financial crises (Gustafson 1999). However, the crash was as much an internal event as part of a ‘spreading global contagion’. Political decisions at the highest level, errors committed by the Kiriyenko administration, and the uniqueness of the hybrid Russian economic system were the main contributory factors to the instability and panic. In the words of Nekipelov, ‘in a situation where a substantial proportion of firms lack hard budget constraints, the result of such fiscal austerity is not so obvious. [. . .] [T]his means that there is a danger of a vicious circle: reduction in government expenditures – increase in budget deficit.’ (2000: 472) Sharing the same currency and many of the same markets supply chain as Russia, the Tatar region is clearly not autonomous from Russia in any meaningful sense. It is perceived as a systematized region, but it is subjected to some national and international problems. These are largely de-emphasized by the respondents but they definitely exist. Its material structure is not substantially different from other FSU industrial regions. It shares all the same features of economic action, such as barter and informal networks, yet the economic actors do strongly perceive Tatarstan as its own economic entity. It may not necessarily be actually different from other Russian regions, but respondents saw it as definite region, whether differentiated from others or not. Conflict between the federal centre and the periphery is largely a continuation of elite power relations over material resources. Conflict between Russians and Tatars over sovereignty is not really the issue at stake for economic actors in the region. Development now means local system reproduction, not world integration. It is development through localism and state-led growth. The economic actors are well aware of the need to survive day by day and to see what happens. It may be enlightening to examine some of the local features in more detail. In the interviews the respondents attached much importance to the issues of regional political power and taxation, the Soviet legacy and the infrastructure, and local management. They shed light on the localized nature of Tatar development.

Tatarstan and regionalization

93

Taxation Although Tatarstan has a degree of autonomy over its ability to raise taxes, complaints about the taxation system came from many of the interviews. Most of the elites admitted that it was too high and was restricting development, but some only went as far as to criticize it on the grounds of its inefficiency. Others said that the tax regime was inappropriate but any change was impossible, here with a reference to the restrictions on local agency imposed by the processes of globalization: The tax situation is not good, not only for foreign but for domestic investors. You know, it is a strange situation. The IMF prevents a decrease in taxation [Laughter]. They are the priests of the market economy [Laughter]. Chairman, Tatarstan Chamber of Commerce, Kazan It is difficult to see the relevance of transnational organizations in this context. Given the highly extended nature of the Tatar state’s authority over many aspects of the economy (including in particular the locally set tax breaks for large-scale investments) it is hardly fair to attribute the reason for such high taxes on small businesses to them being forced on the authorities by external pressures. From a perspective further down the earnings and influence ladder, the grounded realities of the everyday, concrete restraints of the tax system are revealed. This respondent gives different reasons for why the taxes are so high: The taxation is very difficult to cope with. It is hard to breathe under this regime. The tax policy changes continually, as the government reacts to the economic situation rather than being in a position to influence it. The government also needs money for the social sphere. The tax collected in income is so low that high business profit tax must be taken out. Gross tax currently works out as 80 per cent of our profits. Small business training and consultancy owner, Kazan Familiar tactics of survival are employed in the face of this harsh tax regime: [T]he worst problem is taxation. The tax is far too high. It works out as 80 per cent. How do you survive? It’s a secret! Sometimes you have to seek ‘real’ income, because it is impossible to pay all the taxes demanded of us. If we paid everything, we’d be bankrupt immediately. Foreign automobile spare-parts supplier, Kazan

94

Economic development in Tatarstan

In the above case, the rate of taxation was used to justify tax evasion and the ‘secret’ was almost certainly a reference to money-laundering processes via organized crime, similar to the explicit description of this given in a response included in Chapter 4. This tax system is not helping the emergence of small businesses in Tatarstan. It is helping to create an unpleasant and risky small-business environment in which unpayable tax volumes, unexpected tax alterations and arbitrary fines contribute to an already high-risk sector of the economy, in which the majority of small businesses is forced into contact with local crime networks via money laundering and protection payments. This is hardly a problem exclusive to Tatarstan (Varese 2001). Moreover, even though the prospects for the development of SMEs in Tatarstan are good (see Chapter 5), the tax regime serves to criminalize some otherwise perfectly legal and socially important entrepreneurs and their firms. Although the 80 per cent tax rate sounds incredibly high, and specific to the region, this same figure is given by a respondent in Ledeneva’s study, with precisely the same implications for provoking evasion (1998: 196). The interviews provide further evidence that Giddens’ conceptualization of structure ‘instantiated in the knowledgeable activities of situated human subjects, which reproduce them as structural properties of social systems embedded in spans of time–space’ (1986: 306), is not sufficient explanation for the restraining capacities of postsocialist structure. The tax system is a constraining structure (of organization, not material origin) that exists over and above the actions of the economic agents who struggle to live and work under this system. The unacceptable tax system of the Republic also serves to identify Tatarstan as an undeveloped region as far as this element of the economy is concerned. It has a highly developed code of tax breaks for FDI, yet provides no incentive for small business to profit legally. Although it is difficult to get reliable data on this question, it is safe to say that none of the small businesses in the region pay their taxes in anything remotely approaching the amount that the law ascribes. This is another typical feature of today’s Russia across all of its regions.

Political interference Another generally established pathology of an undeveloped region is the level of political interference that takes place on a day-to-day basis in the workings of formally private enterprises. Resistance from state ministries . . . the Ministry of Healthcare is used to getting what it needs below market price. We gave a written request to the Ministry of Economy to clarify this situation, it is against the law. But it seems these are not real laws, but merely abstract concepts of how to conduct business within ministries and state companies. State-owned medium-sized pharmaceuticals company, Kazan

Tatarstan and regionalization

95

This is a good example of respondent agency and knowledgeabilty that strongly supports Giddens’ (1986) concept of the actor, in terms of us ‘all being social scientists’. This respondent’s idea of ‘abstract concepts’ instead of laws is not dissimilar to the idea of the functioning of personal networks, but bears a closer resemblance to the concept of a unique Russian economic culture. The cultural explanation of Russian failure to copy Western norms of operation can be illuminating in some aspects. However, as with Giddens’ structuration and Boden’s talk analysis, it tends to neglect the importance of existing structural and physical conditions in which culture, talk and economic exchange are located. Russian economic cultural differences cannot be based on essentialist cultural inheritances. ‘Economic culture’ is embedded in economic–structural arrangements (Whitley 1999, Castells 2000, Hamilton and Biggart 1992). The government’s strong role can be seen in the context of the crisis-management features of Soviet administration and planning, as shown by Ray (1996) and Smith and Thompson (1992). Government interference, although nearly always understood by the respondents as a disruptive and restraining role, when seen as part of the continuity of the state’s role in the economy and de-differentiation of the polity from the economy it becomes a sign of the continued importance of structure. Of course, this does not mean the state involvement in economic affairs is unproblematic. Far from it. Much of its interference does indeed restrict and negate economic action, and its interference can bewilder economic actors who are trying to do their best under difficult circumstances, particularly as the government and business people are working for development of the region with some shared aims of the government. We had some serious problems with the Tatar government this year, but up until then [the company’s progress has been] very good. The Tatar government treats foreign companies with contempt, believing if one is forced away, then there will be plenty more lining up behind them. In theory there are many more willing investors, but as long as the government treats the companies in this way, the numbers will decline. Tatarstan representative, foreign oil company This respondent, the company’s local representative, was educated as a political scientist, a wholly appropriate background for the type of work she was forced to undertake on an all too regular basis, that of bargaining with government ministers and bureaucrats. Although nothing was said about exactly how the government interferes, the frequency of such similar statements is indicative of a general problem of an overbearing state. The state’s interference can be understood, but to many of the economic actors, often it cannot be justified. This situation cannot be said to be specific to Tatarstan. Once again the region reveals systemic post-Soviet and Russian features. The relation of local government ministries to private business is also very unclear. There has been a retreat from free-market enterprise in the healthcare

96

Economic development in Tatarstan

sector, which means smaller suppliers are marginalized: Of course, [the state] it is very important, but you know, for those established in market, five, six, seven years it is much easier. For new companies it is becoming more and more difficult. Or it depends on what is the relations of people who work here, VIPs, people who make decisions. Of course good relations make it easier. Of course the state recentralization is not what it was like before. It is not ‘Ivan Ivanovich’,10 people decide questions in the broad sense of this word. Now the process of state decision making is much more complicated, the opinions of more people are involved. Is this new scenario more democratic than before? No, I don’t think so. This is a more organized and more attractive situation for the state because they can easily save money. It means that the actual quality of the service to the society is not necessarily improved. [. . .] The system we had before [free market before renationalization] was of course less economical, for the state could not control prices, but it was much more democratic for people, because they had a choice. Things are now quite strongly centralized. Manager, small pharmaceuticals distribution firm, Kazan Although the formal apparatus of the state is weak as regards tax collection and the legal sphere, the actual political and legal power the local state wields in everyday socio-economic life is very considerable. Rather than this state influence being seen as a ‘structuring resource’ (Giddens 1986) that can be drawn on in the reproduction of social practices, it is something that the SME actors feel alienated from and threatened by. The legacy of the influential state is a localized, not globalized feature, that has strong historical resonance from the Soviet days. The path-dependent nature of this state role manifests itself in several different ways. Some more explicit references to ‘Soviet’ persistence emerged in the data. Here the focus is on the material inheritance, not any psychological and social factors (which will be looked at in detail in Chapter 5). This concept manifested itself in many of the interviews, as the respondents drew on it in a variety of ways in order to articulate a complex mix of historical and contemporary problems. There were several direct references to the continued relevance of Soviet history to Tatarstan’s current condition: I think, ah, Tatarstan and really Kazan, before perestroika was a centre of computer technology. And I hope Tatarstan has now the possibility to take back this position in the Russian market, in Russia. And, I will do all what will be needed in this area. I will do all I can to restore Kazan’s reputation to this high position. Director, former state electronics firm, Kazan

Tatarstan and regionalization

97

At other times the chaotic nature of the establishment of private enterprises was emphasized. The ad hoc nature of all work and organization during periods of business creation was a strong theme: Our office is far from the city centre. We have our office next to the warehouse. It is very rational for us to be next to our stock. When we opened, we had nothing, no electricity, the office was just a kind of hut. No-one knew what to do. Employee, foreign drinks distribution company, Kazan Occasionally, the word ‘Soviet’ (the adjective sovetskii) was used to describe objects of the built environment: housing, offices, vehicles. It was also used to describe organizational forms. The meaning relates to the backwardness of Soviet technology and the inappropriateness of Soviet organizational forms in the context of a modern emerging market economy. Interestingly, the word ‘Soviet’ was still used to describe organizational and structural features (such as industrial plant), whereas a Western observer would tend to use the term ‘post-Soviet.’ The constructions were from the Soviet era, but they remain Soviet to some extent. Sovetskii as a pejorative term, was often used to imply that any organization described as such is damned to a life of economic failure. I think there is no real difference between what is produced by KamAZ, the Avtozavod in Nizhnii Novgorod, or any of the major Soviet plants. You may have heard much about KamAZ living in Kazan, but what they produce is still nothing to be proud of internationally. Owner, foreign automobile parts supplier, Kazan According to this view, Soviet firms need to be Westernized in order for them to be involved in any sort of global development. Many of the smallbusiness respondents shared these sentiments, particularly if the necessity of Westernization was located within the need to educate business practice and management methods. The Soviet legacy is a complex set of issues. The physical environment still largely resembles that of the Soviet system, with some Western trappings such as foreign cars and Western advertising hoardings. The Soviet legacy is one area where Westernization and globalization are seen as relevant concepts, particularly within the economic culture and business ethics sphere. These largely ideologically ideas are the most easily globalized. This supports Waters’ apt summation: ‘material exchanges localize, political exchanges internationalize and symbolic exchanges globalize’ (1995: 156). Globalization is a multi-layered concept. The Tatarstan case is not a complete denial of the existence of globalization. Many of the local actors suggest that Western managerial norms are desperately needed. Those at the elite level were typically less concerned with it. Even if the desire for Westernization is present, there is no guarantee of its arrival. It is ‘surface Westernization’. The

98

Economic development in Tatarstan

globalization of concepts has done little to alter the underlying structures, such as local networks , the centrality of the state, widespread bribery, and the threat of violence in some economic spheres. Other elite respondents were typically less positive about the need for or the likelihood of global development. President Shaimiev himself often refers to the need for local control and stability, albeit within the global context. ‘The main task is to stop the fall in production’ (as quoted in Lindsay 1996). As for Tatarstan’s vital oil sector, the same picture is revealed. An interview with a Tatneft functionary stationed in Kazan revealed the fundamentally localist vision of this company, in that its capital is spent locally and that the lack of FDI is not necessarily a problem, because local companies will look after local interests: Why is there such a small amount of foreign investment into Tatarstan? Because foreign investors need ustoichivost i nadezhnost [stability and reliability]. However in the Tatarstan economy Tatneft invests [laughter]. First of all in Nizshnekamskshin,11 in various projects in the town of Nizhnekamsk. Secondly in Tatar agriculture – Tatneft has 46,000 hectares of land, and 11 podsobnih hoziaistv,12 milk-production, flour, bakeries, sausage production, etc. [. . .] Tatneft helps Kazan with infrastructure – we participate in a programme called ‘Vetnoe zhilyo’,13 in Kazan we have 15 petrol filling stations and this will rise to 35. Director, Tatneft’s Kazan Office, Structuration as a theory remains highly problematic when considered with this kind of data. The rules and resources that the respondents talk of relate directly to material and organization difficulties that most certainly exist outside of what people create through their actions and talk. There are serious material and structural organizational problems that all of these economic actors face. As May argues: Power structures, once products of human actions, can become sedimented in social systems, thereby affecting the degree to which agency can mobilize power in subsequent actions – as in the case of the relationship between women and paid work. (May 1996: 117) The social structures that the actors instantiate in the interviews are structures that can in general be more constraining than they are enabling. They are also seen as the product of long-term social trends. It seems that if an economic actor is well connected to the correct social networks in the economy (see Chapter 3), then it is possible to have action enabled through these networks. But these networks are usually closed for the vast majority of Tatarstan actors and for foreign investors. Path-dependency, on the other hand, appears highly

Tatarstan and regionalization

99

relevant, in a physical and institutional sense. The state retains a hugely important steering role that assists strategic enterprise but tends to limit the options of small- to medium-sized enterprises. In other words, there is an unfair distribution of resources and social network capital, weighted heavily in favour of the elites, and primarily still based in the strong sectors inherited from the Soviet era (Stoner-Weiss 1999).

Infrastructure The infrastructure of the region is inextricably linked to the issue of Soviet legacy. Soviet modernism shaped the very fabric of Russian urban life. Housing, schools, industrial plant, and administrative buildings all share the same features of cheap construction materials and functional design (Kotkin 1996). Now much of it is in serious decay. Urban planning of such places with no pre-Soviet history (such as the city of Zelenodolsk, the home of several top-secret submarine and missile factories) was along rigidly modernist lines. The centres of the older cities were also strongly Sovietized. Kazan’s Freedom Square features a standardized Lenin statue in front of a typical 1930s CPSU administration building (now the Tatar parliament), alongside the former headquarters of the TASSR Komsomol (now a supermarket and housing). The Sovietization of Kazan’s central urban environment built on the visible social inequalities inherent in the city’s Tsarist landscape. In outer regions the so-called ‘dormitory area’ is dominated by concrete ‘super blocks’ of housing, familiar to any East European traveller. Apart from the newly redeveloped central shopping street, Ulitsa Baumana, many of the roads are in a state of disrepair. Major infrastructural links are in just as bad a condition: I would not suggest that you to go to Naberizhnii Chelny. The road to there is in a terrible state. You would need a very good driver. Manager, foreign pharmaceuticals company, Kazan Moreover, physical infrastructural problems are just one aspect of the difficulties faced by Tatarstan businessmen. Although improving massively with the spread of the cellular networks, fixed communication technology in the region was, according to some respondents, highly primitive and constraining of action: The roads are pretty awful. We use Volvo trucks, and they stand up to it pretty well. The communications are pretty bad. In order to contact [Naberizhnii] Chelny we have to order a telephone call with the operator! Our email system is closed [internal only] as well. Marketing manager, foreign drinks distribution company, Kazan At a more general level, the lack of adequate technological provision is given as one of the main reasons for the lack of FDI:

100

Economic development in Tatarstan We have the opportunity to have a leading position in the Volga region, but only if we build a working business infrastructure. I know of many foreign businessmen who have turned away from Tatarstan because of its poor business infrastructure. They have no phone, no fax machines, no communications that they take for granted in the West. The lack of business infrastructure is the biggest problem for foreign investment here. Law advisor, Tatarstan Agency for Economic Co-operation and Development

Physical necessities are of vital importance for businesses. Giddens’ structuration theory is rather unsatisfactory here. Time–space distanciation is dependent on technology, and is highly uneven in the way distanciation is spread. Path-dependency is also not completely satisfactory, as it cannot account for the improvements that have been made. It is possible to make qualitative leaps in technological development, as we are beginning to see with Tatarstan’s GSM cellular network, with its three service providers, Tatinkom, Santel and Sortel. This is now supplanting the ancient and unreliable telephone system established in Soviet times, which never fully covered the region. Of course the ability to circumvent backwardness via new technologies applies in some areas only, such as computers and mobile telephones, not in building structures, roads and banking systems, which remain archaic unless large amounts of state and private money are invested in them. The respondents of this study typically see infrastructure as very important. Hence we see again a large agreement on the need for globalization, but little in the way of actual globalization. If the infrastructure is to be improved in order to facilitate globalization, it will be the local state, not international firms, that will provide the funding. We now look in more detail at the role of centralized power in the Republic, and how it enables and restrains development.

Centralized power The president has a strong, personal role. You need his signature on all documents. The situation is like a khanate. Shaimiev is the khan – he’s . . . not a democrat. Vice-president, small advertising company, Kazan The above response is fairly typical of a middle-class view on Shaimiev. However it is not just the President’s personal control over Tatarstan economics that is a cause for concern: State control of enterprises in general is a very bad thing here. They give no-one any access to their affairs.

Tatarstan and regionalization

101

I tried to contact an employee of Kazan Helicopters but he wasn’t interested. This is not just your problem. State companies don’t talk to us, either. They have no competitors, and want to keep it that way. Tell me about KamAZ. They are struggling at the moment. Yes. They build large-capacity automobiles, again with no competition. Their production is not economical. They have one model, first turned out in 1977. They have produced no new models. The fire in 1993 was extremely serious. They are not profitable. They typically sell 26,000 a year. This is a very small number for such a large company. They have no marketing, no strategic management, no advertising to speak of. The American Cummins Engines Company provides the engines now, but they receive nothing for this. The control lies with the republic, and it is very hard for foreign companies to get a fair deal. [. . .] Western banks, such as ING Barings give credit to Tatarstan. There is a large budget deficit. Now the credit system is not running properly. There can be no credit. The government does nothing to help. Only the government has contacts with these banks, not the enterprises. The information is not published. Fifth-year economic student, KFEI This appears completely irrational in a Western-style free market. Not allowing private companies proper access to credit-supplying institutions appears almost unbelievable for a region which is supposedly in the middle of a concerted modernization drive. However, this is yet another example of elite networks running the economy from an unassailable position at the top of the economic framework. This kind of network is highly constraining on action by those lower down the social scale. Resources in this region are almost exclusively owned and controlled by the government and the elites, even to the extent that potential foreign investors rich in capital and expertise are excluded. A high level of state control implies that the influence and power of ‘the region’ is generally much more important to development than global or national aspects. Centralized state power and local elite control are nonglobalizing forms of organization. Moreover, the state and elites are showing little concern for the development of small businesses. Low-level economic action is often at odds with that of the state-led, Soviet-style firms. The system is characterized by strong class divisions. One’s firm is either ‘in’ or ‘out’ of these centralized networks. The centrality of networks, particularly those of the informal state, therefore contribute to Tatarstan’s regionalization. Personal networks prevent global integration. This is the opposite of what globalization theory claims: ‘[T]he global presupposes the metaphors of network and flow rather than that of region’ (Urry 2000: 33). This is not the case here. Globalization as a process or end result is not yet evidenced in Tatarstan.

102

Economic development in Tatarstan

Management Another area in which Western ‘free market’ conceptions of economic behaviour are at odds with the realities of local action is the concept of management. Under Western conditions, the types of people in management of Russian companies generally, and in Tatarstan companies locally, would mostly be said to be inappropriate for the economic needs of the region (EBRD 1999). Smaller businesses are generally not seen is this way from a Western perspective. Local entrepreneurs are often seen as the ones who might bring a more Western future for Russia.14 As for the FSEs, there has been a longidentified problem with the Soviet managers, whose relations with the staff were operationalized in often completely ad hoc, improvised ways (Filtzer 1992, Granick 1960). Many of today’s management problems are located within the wider complex of postsocialist relations of enterprise ownership: There is a problem with who is the real owner. It is clear who is the owner of a small company. This is not so of the large enterprises. Most big companies are not private in practice. Some are governmentally owned. The worst thing is what I call ‘industrial kolkhoz’. There is no owner, no control. The directors feel they could do anything, but they have no desire to capitalize. They only want to spend. It is a contradiction in labour and capital. Managers are part of labour. They are not entrepreneurs. Entrepreneurs take risks. They have different emotions, different personal incentives. Chamber of Commerce Chairman, Kazan However, there is also much evidence in the data to suggest that many economic actors believe that the management of their companies is also preventing change. Senior positions are often perceived not to be based on a meritocratic system of employment. A lack of education, according to some respondents, appears not to impede the progress of those who wish to pursue a management career. Many businessmen here are uneducated [neobrazovanii]. Some of them can’t even speak Russian properly. I mean it, it is a serious problem here. Particularly those who want to work in banks. They can’t be bothered with getting an education, and just work directly with their own power. Senior manager, SME, Kazan Management is bad – our previous boss in Lower Volga was a loader. A loader! Then a driver, then a manager. They try to be big, tough guys. Still, they get their insurance, car, mobile phone all from the company. Office worker, foreign drinks distribution company, Kazan

Tatarstan and regionalization

103

These are hardly the sorts of managers who will help bring about a Western ‘civil society’. They are in fact perpetuating the ‘Wild East’ phenomenon (Gustafson 1999). A perceived lack of consumer culture was a long-standing Soviet ideology question, dating back to the Thirties (Hessler 2000). The Soviet state was forced to try to inculcate culture from above. Now this process must somehow be repeated in order to develop a modern managerial culture. There are some peculiar ways in which this can be perceived ideologically. Some respondents looked towards Russian tradition as a source of economic cultural renewal. What emerges is a Western-style system within the context of a respect for national history. The Old Believers15 . . . The ideas they worked with are useful. Today’s businessmen can learn from them. They are examples of good business people, they had a businesslike character. In many ways they shared the best ideas of Peter the Great, such as emulating the economic culture of the West, and attempting to modernize Russia. The difference in their spiritual values from those of the state was very important in defining this open-minded character. Economics teacher, Kazan State University Certainly there is a need for some way of improving managerial efficiency and standards, given the reality of a failing system and an unpleasant and riskstrewn business environment. Many entrepreneurs have no idea who they are really dealing with, particularly when involved with money-laundering organizations. The differences between Russian culture and Western culture is only a partial explanation of the differences between these forms of management. It is wrong to say that Russian management is ineffective because the managers are culturally different from Western managers, or because they are ‘learning how to manage’ under market conditions. Clearly the economic operations of Tatarstan are not market conditions, certainly not in the established Western sense. The specifics of the situation are again at odds with an overall ‘transition’ picture. How are Tatarstan managers supposed to ‘manage’ in a largely non-market environment? (Filtzer 1991) The ‘learning of economic culture’ idea is closely linked with the need for more time. It is unreasonable to expect postsocialist managers, particularly as they are mostly the same nomenklatura elites who gave remained in charge of the ‘commanding heights’ of the economy, to change to being Western-style managers over a short period of time. I experience this contradiction personally. I am the owner and manager of [large telecommunications company]. If I want a higher salary it is bad for me as the owner. I must think further ahead of time. It is very doubtful that large companies have the discipline in their managers. This is a problem even in the USA. Big companies have big management problems. They are all overpaid. They pay themselves! They may be theoretically

104

Economic development in Tatarstan a shareholder or on a board of directors, but they are puppets to the manager. For example look at KKR. [. . .] I have a position in KamAZ.16 [. . .] The problems they got into were started by their top manager. He began the process of the company’s fall into crisis. This was after two hundred years of experience. We have had ten. Owner, communications company, Kazan

Management change and the need for Westernization and accountability were strong elements of the interviews. Western management has also undergone myriad changes since the 1970s (Harvey 1990). However it is clear that the objectives of Westernizing management are far from being realized. If they were realized, it would further undermine the idea of Tatarstan’s regional independence. As it stood at the time of these interviews, full development of these managerial norms was described as an almost impossible task, although there was a very strong theme of learning from the West. Western-style management, accounting and marketing are not, of course, necessarily incompatible with the Russian–Soviet style networked economy. We are seeing some form of convergence. There is some globalization of the perceived need for Western-style management, but very limited implementation of Western management. (Of course, there are also significant sectors of the economy actively opposed to the perceived need of Westernization.) Management is a complex and contested matter, located within a longestablished context of regionalized power relations of networks along the lines of the former Soviet economy. This partial convergence of Western ideas to some extent forces a rethink of the very nature of capitalist development itself. Capitalism is not a unified concept. We are at a time in history where there is no longer any significant left–right divide in Western Europe, and the twentieth-century political economy debates of Keynesianism versus monetarism have evaporated (Ray 1996: 1). Modern capitalism in the Western world is better understood in terms of networks of power and resources. How these networks relate to the individual workers and consumers employed and integrated into the system is the central question of contemporary political economy. Regional differentiation and uneven development, however, remain fundamental issues in world capitalism. Globalization theory tends to deal with issues other than real economic ones of wealth and poverty. Time and space (Giddens 1990), cultural imperialism (Ritzer 1999) and ‘flows’ (Urry 2000) have little to do with the fundaments of economic resources and how they shape societies and action.

Conclusion – Tatarstan as a non-globalized region From the interviews Tatarstan emerges as an interesting regional variation of the unique Russian capitalist hybrid. Tatarstan’s differentiation from Moscow is a very strong theme in the accounts given in this study. Materially, however, in terms of the organization and distribution of production enterprises, it

Tatarstan and regionalization

105

is little different from many other Soviet industrial regions that had an emphasis on raw-material extraction and processing.17 Tatarstan industry still retains much of what we may call ‘state socialist’ organization, but this certainly does not mean the persistence of communism as the state ideology. By state socialist in this context I mean networks of personal affiliations at each level of the economy, material linkages between strategic enterprises, and the importance of regional state power. There is no chance of a return to Soviet socialism as a political and social system. The Soviet ruling nomenklatura elite has been successfully privatized. Anti-communist statements were quite common in the interviews. Networks – the local regional networks, as distinct from Castells’ or Urry’s global networks – are a very Russian feature of economic organization, and are also very Soviet. Material linkages between structural firms are of course one of the direct inheritances of state planning. Materially, when considering the size and appearance of the built environment and productive capacities of industrial plant, the region is not substantially different from many other industrial Russian regions, but organizationally has some features that are perceived as distinctive. I return to the idea that ‘structure’ is not a completely adequate term and there ought to be a proper distinction between material and organizational structures. Today’s sociological conception of ‘society’ is one of fluidity, diversity and change. Society is not perceived to be nearly as solid and closed an entity as it once was. Giddens’ (1991) notion of time–space distanciation is a particularly influential account of this fluidity and of today’s societal ‘borders’. Recent work by such theorists as Urry (2000) expresses a need for sociology to distance itself further from the local and to embrace the fluidity of global network mobility. However it seems that the further one abstracts from local empirical reality, the harder it is to explain the reasons for the ongoing economic struggle of Russian regions. Tatarstan remains relatively ‘closed’, even though it is certainly a strongly integrated part of Russia as opposed to its own distinct society. Some limited connections between Tatarstan and other economic entities have been established and may grow further, but this does not mean that these connections have to be global in their way of working. In other words, we do not need to describe them as the global processes of a global economy. There is very little acceptance of any set Western norms or international norms of going about development, even when Western products are being sold. The Soviet system was integrated in a very problematic and limited way into the world system through diplomacy and some technology transfer (such as the experience of KamAZ). The signs are that this has not substantially changed. As we shall see in the next chapter, clear differences between Western and Russian/Tatar ways of conducting business were often described in the interviews. Perhaps the main element to emerge from the data is the vast level of complexity associated with the region and the concept of development. ‘Development’ is not one thing, and neither are ‘globalization’ or ‘regionalization’; they are all catch-all terms encompassing a mass of different social

106

Economic development in Tatarstan

features and concepts. However, this region of Russia is an example of the limits of the globalization model. Regionalization is a much more appropriate term to use to describe the way Tatarstan is largely excluded from international linkages and cross-boundary capital flows, and how future development of the region will be pursued in a regional, locally administered way. The main aspects of regionalization that are revealed from the interviews are as follows: •

•

•

•

•

•

There is much support for the local government’s prescribed ‘standard view’. The agreement is strongest on the issue of the potential for development, but there is also some significant opposition to it, particularly regarding the likelihood and purpose of FDI. Despite the lower-level respondents’ explicit lack of trust in the government, much of the government-produced information is accepted by respondents across all classes as regards its treatment of the structural issues of Tatarstan’s economy. Very little is agreed on at the individual business level. This suggests that the regional government’s information influence remains high. Regionalization is supported in so far as Tatarstan is understood as a distinct region, but there was also some understanding of some limited global and national processes having a direct effect on the region. These mostly related to ideology and culture, but not to established economic links (with the exception of oil sales). Conflicting accounts were given as to the extent of Tatarstan’s development and its suitability for further development, reflecting the sense in which development is not a unified, linear process with set, agreed goals, but is rather a continual process of change sharing a small number of very basic indicators of the creation of wealth. Tatarstan regional development does not reflect the results of the ‘transition’ to a market economy. It has more to do with system reproduction and economic survival. It is localized; development is not perceived to be any significant part of globally interactive processes. Some features, such as management and ownership, are structural problems for Tatarstan just as they are for the whole of the former Soviet Union. There is some general agreement among the respondents that Tatarstan is highly differentiated from Moscow, but also some agreement that Tatarstan is not significantly different from other Russian regions with the exception of Moscow. This reflects the deeply ambiguous relationship of Tatarstan with the rest of the Russian Federation, and general confusion as to the nature of the federal legal system.

We have seen that local networks form the basis for much of the most important economic action (Chapter 3), and that regionalization means an

Tatarstan and regionalization

107

acceptance that Tatarstan is a distinct region largely isolated from transition and globalization. Regionalization as understood by many of the respondents implies a partial retreat from the structural-level economic development paradigm, away from transition as a global project involving FDI and towards localized, smaller business development. Where does this leave the globalization theories of Chapter 1? It seems that a combination of sceptical and regional theories seems to explain this Tatar situation most adequately. In other words, the more abstract, internationalist and universal theories, those tied to such concepts as modernity (Giddens 1991), neoliberalism’s dangerous effects (Gray 1998), time–space compression (Harvey 1991), the transnational capitalist class (Sklair 1996, 2000), are weakly supported by the data of Tatarstan’s experience of capitalism. A grounded approach to globalization, with globalization as a possible result of many practices (Jessop 1999, 2000) is best suited to this scenario. What has caused the localization of the Tatar system? According to the actors interviewed here, a combination of historical factors, the legacy of state socialism, and a chaotic and flawed reform process have contributed to making a region in which large-scale inward investment and connection to the world economy is unfeasible. It seems that the idea of globalization creating winners and losers (Sassen 1998, Bauman 1998) is also quite difficult to sustain with this evidence. The local actors generally do not see it this way, although there are exceptions. Just because globalization appears not to be either the development process or its result, this does not mean that Tatarstan is doomed to poverty. Development is still the implicitly understood and often explicitly stated backdrop to the majority of Russia’s contemporary concerns, in Western and Russian discourse. The next chapter aims to look more closely at what the local economic actors perceive ‘development’ to mean; how it affects Tatarstan and Russian society and how it affects the actors themselves in terms of its manifestation in the everyday working of their business interests. We will see how these ideas create yet further difficulties for the discourse of globalization.

5

Tatarstan’s future development

FDI is not very important. It never will be too important to us. Tatarstan Chamber of Commerce Chairman, Kazan1

The two previous chapters have constructed a picture of the functioning of Tatarstan’s economy, embedded in complex social networks, and located within the fundamentals of physical and political regional features. Neoliberal transition or globalization theory would suggest that our case-study region is in dire need of economic restructuring and privatization, and is facing a crisis of governance, manifested in the persistence of Soviet-style political and managerial arrangements. The path-dependent approach, on the other hand, suggests that global-style marketization is not really possible and that some state role must be maintained. The historical legacy is very strong in this region. Hence Stark and Bruzst’s (1998) concept of ‘recombinant practices’ is reasonably well supported, at all levels of the respondents examined. The importance of the institutional legacy in defining the economic structure is also revealed. The influence of the local is considerable in the control of resources and access to information. State and former nomenklatura actors strongly participate in the elite social networks that run the local economy. Other actors show evidence of working in highly unregulated markets, in small businesses that have no formal institutional framework. Social networks are fundamental in filling this institutional legacy (Chapter 3). It seems that development in this region is radically new and uncertain, with a variety of actors using a variety of methods. Across the whole system there is a chronic lack of capital. Structuration is supported only in so far as knowledgeable agents clearly exist; however, the constraining features of the socio-economic structure of Tatarstan are all too real. Although there are repeated social practices that equate to Giddens’ model, they exist because of the continuity of economic troubles and conflict over resources. Even as local responses and action can be radically new and individual, the structure (both physical and social) is so strong that it is impossible to escape its influence and range of constraints. Networks and the role of the region are

Tatarstan’s future development

109

centrally important. The question this chapter focuses on is ‘what comes next for development?’ In what ways are the economic actors of this region going about attempting to develop the region’s economy, or to improve or perpetuate the material existence of individual enterprises? What does this action mean for postsocialist development as a whole? Does this development reflect anything that approximates to global processes and flows? And is globalization itself to blame for the inequalities and exclusion? Development is a multi-causal dynamic of change that aims towards increased economic and technological accumulation from uneven starting points. Development can take on many different forms. Terms such as modernization and globalization are distinct forms of development. Actors show many different types of development at work in their own accounts. All sorts of responses were given to questioning about the future of Tatarstan and Russia in general. Responses included come from references in whatever sections of the interviews that relevant data emerged, and from direct questioning. ‘How do you see the future for Tatarstan?’ was a question asked in every interview,2 and the majority of the responses included here relate directly to this question. Given the variety of responses, this chapter’s data are typically broad, occasionally tangential, and at times overlapping in content. What they all relate to is the kind of developmental model the respondents construct. Following path-dependency theory, no set Western path of development is accepted, and deviance from this norm is not the way in which Tatarstan’s path is to be understood. Instead what these data refer to are specific forms of development, which can be Western or Russian in origin and relate to the contemporary problems facing Russia and Tatarstan. Postcommunist transformation represents a conflict over which kind of development paths will be taken. As we shall see, these may or may not involve active engagement with the world economy. Let us begin by examining the views in the data that claim that Tatarstan, in spite of its difficulties (see Chapters 1, 3–4), is indeed becoming more Westernized.

Westernization Although the term itself was not used by any of the respondents, ‘Westernization’ is a concept that has some definite relevance to Tatarstan. The idea is central to transition theory, and it is important to chart the extent of its perceived extension in this region following the 1998 financial crash. Leftward-leaning interpretations of development are often critical of Westernization as a manifestation of cultural imperialism (Ritzer 1998: 87). Although the respondents expressed some concerns about the loss of Russian identity under contemporary conditions, the foci of the interviews rarely fell on this issue directly. They were more concerned with discussing their views on the copying of Western managerial and organizational forms, and the possibilities that may or may not exist for successful future development, often in a context of international co-operation and development. There was

110

Economic development in Tatarstan

some suggestion of convergence of postsocialist regions with those of the West. This notion often went hand in hand with the need for more time for Russian regions to form market institutions: It is now absolutely impossible to return to totalitarianism, even if the people wanted it. No-one wants a return, and so the future lies with the market economy. However, it will take a very long time indeed for it to be well-developed, so until then we must put up with the problems. Owner, small business consultancy, Kazan Transition approaches, having realized the errors of outright neoliberalism, now insist on the need for democratic institutional forms in order to accommodate capital and indeed all aspects of postsocialist development in general (EBRD 1999). As we have seen, several of the elite respondents, and all the official Tatar literature, state that sufficient institutional accommodation already exists.3 It is generally described as a free market, open for business. I don’t think the process of investment is complicated. I’ve got experience with the former electronics joint venture company where I worked. And we didn’t have big problems. [. . .] Now, the rouble is convertible, and it’s easier to start business here. And the processes, the procedures of starting business in Tatarstan, now are less complicated. Manager, Foreign Pharmaceuticals Company, Kazan However, this institutional context is accompanied by serious risks in the investment sphere. Given this situation of an operational, supposedly free institutional framework combined with high risk factors, developmental action (particularly FDI) has to come in a particular form if it is to be successful. Investment capital does not come out of thin air. It must be backed by a strong ‘political will’ from the directors of the investing partner. Even when partnerships are formed the struggle is continuous, and the kind of investment necessary is defined more by the climate of Tatarstan business and the staff and features of the host enterprises, than by the aims and ideologies of the investing partner: This is a long-term project for [the company] and we are not particularly concerned if we do not receive instant remuneration. So far we received nothing after a year. This is the kind of investment needed in this country. You cannot run away once committed. Agronomist working for a foreign company involved in an agricultural project in Tatarstan The evidence suggests that despite the Western-style free market scenario that supposedly exists, Western-style investment based on fast-flowing capital and skills transfer is not occurring within it. The specialist quoted above went on

Tatarstan’s future development

111

to describe the demands made of her company by the Tatar government. Interestingly, this was linked, in her view, to a wider framework of the typical needs of developing states, implying some sort of convergence with global developmental norms. If the type of investment arriving in Tatarstan is not Western-style ‘risk capital’, then this is simply because the Tatar market is not yet sufficiently developed to accommodate it: How did you become involved in investing in Tatarstan? How did you find out about the opportunities here, was there any marketing by the Tatarstan authorities? [Another oil company] was involved in a JV in Tatarstan and our company bought them out. The government was interested in specializations, not dollars. Developing countries typically look to build the agriculture first, and the Tatar government insisted that this project go ahead. Agronomist working for a foreign petrochemistry firm involved in an agricultural project in Tatarstan Westernization is therefore a long-term process that need not mean the immediate arrival of global firms and risk strategies. This is a view that contrasts with the notions of path-dependency and more leftward-leaning interpretations of postsocialism, which stress the constraining material specifics of the region. It shows the strong role of the state and the undoubted need for specializations, but downplays the role of capital necessity, something which is very much out of kilter with the realities of post-Soviet economic crises. The above is a Western perspective, born of a very different economic system from that of postsocialism. Postindustrialism, JIT production, global telecommunications, and the information age4 are all features of an economic system at large that is alien to regions such as Tatarstan.5 What is intriguing is that some of these ideas are nonetheless being taken on board by actors at the summit of Tatarstan’s economic system: At the business centre the most important thing is information, and the ideology and concepts of management. Today’s concepts are very advanced. Our companies are studying how to live with market relationships. We teach them how to use modern methods of management. Business Centre Manager, FSE electronics firm, Kazan The picture given is very much one of learning from the West, and copying precisely the kind of post-industrial system that the West supposedly enjoys. Investment, according to the post-industrial book, is not all about capital, but also about the transfer of skills, sharing of information and learning about global business interaction. Hence, FDI into a region like Tatarstan cannot be expected to entail a large-scale transfer of capital and resources. Instead, a developing postsocialist region can expect to find investors (if they arrive at

112

Economic development in Tatarstan

all) to be more concerned with importing specializations, training and the politics of downsizing. This has been well understood by the respondents. They are not expecting foreign firms to risk their capital in such difficult regions as Tatarstan. A very pro-market, Westernized account of the need for risk-taking by foreign firms to enter this region, is given below. The value of skills and processes that make up a market economy are also given strong support: Those [foreign firms entering Tatarstan] who took the most risks got in a very good situation. Those who took no risk did badly, and are gone. Where is General Motors?6 They are nothing compared to Coca-Cola and P & G. It is strange. FDI is not very important. It never will be too important to us. The most important thing is not really the investments but the process of trade that has come into place following investment of Western companies. Now we understand marketing, distribution, stock control, the whole process from production to consumer. This was previously unknown in Soviet times. The lack of business culture was very bad. Production was there, OK, it’s Volga, KamAZ, not Volvo. But the support was nothing. Now foreign companies have made this for us, but they are gone with the wind. This is a very good result for Russian companies who can fill this niche. Tatarstan Chamber of Commerce Chairman, Kazan There are some clear indicators of Westernization here. There is an expression of the need for Russian entrepreneurs to learn the ‘business culture’ of the West, implying definite East–West convergence along the transition model. Of course this does not necessarily mean that this supposed convergence is real. This is a very abstract, theoretical viewpoint, focused on Russia as opposed to the specifics of Tatarstan. It also emphasized the continuation of Tatar control of the economy instead of allowing foreign control. It is far from a statement advocating Westernization, because it explicitly states that the departure of risk-averse foreign firms was a ‘very good result for Russian companies’. However, the ideology of the free market and postindustrialization seems to have won considerable influence over regional elites, irrespective of the fact that this ideology is a product of a very different world from post-Soviet Russia. The ideology of globalization and ‘flexible accumulation’ is an historical combination of the experiences of differentiated Western systems (such as the US, UK and Japan), developed over many years (Harvey 1990, Castells 2000). Despite the postmodern concern for the importance of skills over capital in this interview and the snippets of free-market rhetoric, globalization is largely denied. This interview segment includes references to the need for localism and the irrelevance of FDI. The restatement of the importance of the local is a very common response, one which is backed up by some of the official literature (Shaimiev 1999, Bikbov 1999, Galeev 1997).

Tatarstan’s future development

113

Westernization is a valid term to describe the processes of development in Tatarstan only in certain areas. Perhaps it is most valid with regard to the development of the SME sector in Kazan. Although facing some severe problems with taxation, unfair competition from established FSEs and criminal interference, the potential for growth is impressive. As a former government official turned consultant explains: The thing that also should be watched very much – I think the future lies here in fact – is small and medium-sized enterprises. How they are developing now in Tatarstan, and this is the most crucial thing. I think this whole ten-year period, with all ups and downs, a lot of lip-service to the small and medium-sized enterprises. You know ‘we can do this, we can do that, we will provide’ but in fact almost nothing has been done. [. . .] They are looking at the bigger things and trying to solve them, but the margins there are much smaller except for oil of course, but here I can tell you [. . .] For example the hotel business. The capacity still is about 20 per cent only. The rest of the small business are also like that, also like 20–25–30 per cent at the most. Huge potential and huge demand now. It has come from this crisis of 1998. Now people more or less have some money. And they would like to spend. But how? Not much choice. Especially, as you know I was in America to talk to people there, to talk about Islam. And I met a lot of businessmen, you know the managers of multi-billion hedge funds, people like this. And I was trying to talk them into this, because this small and medium-sized – why are they so good now? You know that the margin there is absolutely incredible. One lady [. . .] and a couple of people who are doing this thing, they are building the hotels and doing this thing – and she, for example, she opened this year, three years she opened new restaurants in Kazan itself. And three different restaurants, not like a chain. One is like a kind of medieval style restaurant, one is [. . .] like a bar or club, and the other is in a hotel. Former Tatarstan government official, now consultant, Kazan Westernization can also refer to the consumption of Western products. This is often seen as one of the effects of the spread of ‘easily-globalized’ products in the contemporary world economy. The contemporary Western economy is supposedly all about the sale and consumption of signs and consumer symbols (Lash and Urry 1987, 1993). It would be expected, therefore, that globalization would reach these new postsocialist markets in a largely unproblematic way. It is revealing in this regard to look at foreign company workers’ responses. Here, however, it seems that the symbols of globalized Westernism can be blocked out by cultural reasons or persistent poverty: After 4 [in the afternoon] everyone just buys vodka. It is cheaper than Pepsi! They say fuck off, fuck off to Pepsi! Yesterday I was out jogging,

114

Economic development in Tatarstan maybe at 6 in the morning. I saw some guy sitting by a tree drinking vodka. I don’t understand it. Pepsi Cola distributor, Kazan

Even working for a foreign company does not by any means guarantee equal treatment across the globe. This respondent was unhappy about her wages in relation to Westerners who do the same job, and under what she considered to be easier conditions: They [Pepsi distributors in Western Europe] get such higher wages than us. We work so hard and deserve a lot more. Still, this is just my perspective. Others in Russia have much less than us. Furthermore, the international management of this global company is seen to be out of touch with the realities of the Russian market and unwilling to get its hands dirty by being directly involved. Some of the Western management doesn’t understand us. They sit and play with computers, they don’t understand our problems. They set us impossible targets. [. . .] The US managers don’t want to come here – it is an uncivilized country. The one coming this week is only doing so because he is forced to [because of a current sales crisis]. Interestingly, the marketing manager of this same enterprise gave the opposite view, stating that the company enjoys an exemplary relationship with the Western management. We have an excellent relationship with them. [Makes ‘thumbs up’ sign.] We are learning from them. We are studying the West. Manager, Pepsi-Cola Distribution, Kazan In a sense both positions are true. At the ideological level, this company is learning directly from the West. However, it operates in such a specific Russian environment that Westernization cannot truly be said to be taking place. Other Western brands have made it to Kazan and have a quite conspicuous presence. When the first McDonald’s outlet opened in Kazan’s central Bauman Street in May 1999, its opening was preceded by a highly Westernized ‘countdown to opening’ banner. It was followed by the opening of a ‘drive-thru’ in the Gorkii housing district in November 2000. Western products are clearly in strong demand in this region. It can be argued, following this interviewee, that before the 1998 crisis at least, this made the emergence of Russian alternatives impossible: The dollar to rouble exchange rate rendered the profitability of any Russian producer negligible. They were paralyzed by foreign competition.

Tatarstan’s future development

115

This situation was aggravated by the large percentage of the population being psychologically sold on the Western brands. Russian Presidential analyst, Moscow There is certainly some strong evidence to suggest Western multinationals are in a position to distribute and market their products regardless of Kazan’s prolonged economic struggles. This respondent shows how his company is attempting to dominate the market without adequate infrastructural back-up, and with over-reliance on imports: How is your enterprise performing? [. . .] Are you happy with the company’s progress? Really, the company is not profitable. We have to import everything. The bottles, the lids, the cups, even the sugar is imported. We have a factory, warehouse in Samara. We take the products from there to the Tatarstan market. We operate for all of Tatarstan. Coca-Cola marketing manager, Kazan Taken on its own, the fact of the existence of Western brands in Tatarstan is not sufficient for Westernization to be said to be occurring. The foreign companies with the largest capital base (such as Coca-Cola) can afford to expand into markets like Tatarstan in spite of the knowledge of expected loss-making. As we have seen in the above example, individuals regard the implications of this in different ways. This highlights some of the difficulties with the qualitative approach, in that the individual responses reveal a range of interpretations, but it is impossible to come to solid conclusions about the range and extent of these views without a larger sample. What we can say, however, is that there is a general lack of evidence of simple global or Westernizing ideas in the region. The qualitative experience is complex and reveals a distinctly local, as opposed to global, focus. In this context it is very difficult for alternative Russian brands to emerge if the market becomes flooded with Western products. A typical street kiosk in Kazan will contain locally harvested produce and locally distributed foreign manufactured foodstuffs. When it comes to manufactured foodstuffs there are very few Russian products in existence. The entertainment industry is similarly full of globalized products. US action movies are sold at every kiosk and street stall in the cities. The market is saturated with pirated Western software and music tapes. As we have seen above with the growth of the local Tatar entertainments/hotel industry, there alternatives to Western products are growing in importance. Take this example, given to me in an interview to stress the importance of the informal economy in helping the recovery from the 1998 crisis: Import substitution is the main direction. Frozen food from Germany was 40 roubles per kilo, now you can buy our own for 20 roubles. This is

116

Economic development in Tatarstan a new form of labour consumption, but it is good. A year ago, one guy started a simple business. He got 20, 30 unemployed women, he bought a meat-cutter, he produced home-made pelmeni 7 – froze it, then sold it in good packaging. Now the company employs 100 people. He started using a domestic fridge! Obviously the largest you could possibly buy! This was extremely profitable. He paid no tax. He received no investments. Now his is a medium-sized enterprise. Tatarstan Chamber of Commerce Chairman, Kazan

The experience of Guiseppe Sparta, the Italian restaurateur in Kazan, is not dissimilar (Sparta 1999: 120). Companies who produce and distribute internationally branded products such as Coca-Cola and Snickers can afford to work in risky markets such as Tatarstan because of their overwhelming global market share and capital base with which to work. This can be seen as evidence of cultural imperialism if the observer is so inclined, implying that Westernization is already taking place and is surely set to accelerate, leading to worsening conditions for Russian terms of trade and public dependency on Western branding. However, there is also evidence to suggest Westernization can mean simply the desire for the best products available on global markets. The automobile industry is certainly one area with a vast discrepancy between Western and former Soviet versions in terms of choice and reliability: Yes, there is a very large demand [for Western cars]. You must have seen the large number of foreign cars around the city. We supply for Mercedes, Audi, BMW, and others, occasionally Ford. Japanese and American jeeps are proving very popular here and we will soon see an explosion in the number of foreign vehicles in Russia. Manager, spare-parts supplier, Kazan Ledeneva (1998: 166–7) mentions that Russians are slowly but surely being drawn into the world of Western consumer products, with the younger generation in particular wanting to consume the trappings of Westernism: Young people are not interested in agriculture, only in material things, cars, stereos, fashion. They are not prepared to invest in their own companies. Extremes of status are visible, look at the New Russians. Dutch agronomist working for joint venture in Tatarstan Is Tatarstan developing along some sort of Western path do you think? I think only superficially, and I think it’s only for a small percentage, a small elite of the population. I mean there are people with Western bank accounts, send their kids to Western schools and have foreign holidays and things, in that sense they are Western. But for the majority of the population, I haven’t noticed any radical change in the mindset of the mass of the population. People still want the same things, people

Tatarstan’s future development

117

entertain themselves in the same way. They don’t seem to have the Western aspirations to live like in the West. Most people. I mean it’s just the new generation isn’t it? Younger people who are into the music, the dress, they’re becoming part of the global pop culture. Anybody over 30 is still basically doing the same things. What about the implications of McDonald’s coming over? Yeah well, it’s all symbolism isn’t it? You know people want, there’s the educated part of the population want to say ‘we’ve got all these things as well, we’re no worse than you’. My neighbours – I had along talk with my neighbours. He’s a lawyer basically he works in a private practice. I gave him the arguments against McDonald’s and he gave me the arguments for, so it’s convenient, comfortable, the service is good. The things that were bad in Russia, go to McDonald’s and they’re good. And is it proving popular? Oh yeah, very popular. It’s always full, yeah. People like him, working for themselves, they’ve got a good education, like in developing countries, they want to detach themselves from their own people and at least present themselves as being Westerners, Europeans. British entrepreneur, Kazan Westernization as applied to consumption in Tatarstan poses a number of questions. It appears from this particular dataset that the trappings of the West are available, are in demand and are set to expand. Of course this in no way means that the path of development of Tatarstan is following a Western one. It simply means that Western products are now a part of everyday Russian life. These products are the easily globalized ones. Even with the distribution of these products, the realities of the networked Russian regional economic system is clearly visible. Just because these goods are present in the local market does not in any way shape a city such as Kazan into a European or American city. Of more pressing concern is the way in which development is actually operationalized. Is economic change taking on a more Western form as per the globalist discourse, or is it reproducing Russian and Sovietstyle interactions? Within the operations of business interactions themselves, the problems of Western versus Russian perceptions are commonplace. Communication problems can be very difficult. Foreign managers working in this region are crucially aware of this. If they come to work in places such as Kazan they have to adapt and take on some Russian elements of organization and interaction in order to survive. Communication is a huge problem. The capacity for misunderstanding is enormous. In particular I keep coming across problems about the different ideas of what people’s positions and statuses are. I describe myself as an agronomist, and no-one seems to agree on what that means. Foreign agricultural project manager, Kazan

118

Economic development in Tatarstan Yes, of course [we have had problems working with Westerners]. And today too, and most of them are [from] misunderstanding. First it’s a difficult culture, but as for me, because I am already working with [Western electronics firm] more than eight years, I started really from 1989 to prepare all documents to establish joint venture. And many [Western electronics firm] high-level managers know me personally, its good for me personally, for understanding. But the biggest problem [with] [Western electronics firm], and it is general for most Western companies, is that they do not understand the process which is now going on in Russia. We understand it better and our position stopped and tried to change the political stage. We are a business. We need to look at all the changes. We need to know how to run it, where it is going. And we know what to do now, what we need to do tomorrow, but its not so easy for our partners. Director FSE electronics firm, Kazan

Along with a further restatement of the importance of personal networking, the differences between Russian and Western managerial styles are clearly shown. What’s important, however, is that foreign companies understand this: The working attitudes are very different from those of the West. They want to discuss everything at great length before any kind of action is taken. They are used to doing this, but it is unnecessary. The infrastructure is not so bad – computers, email, mobile phones, all readily used. They do it their way, but all this administration is unnecessary. Foreign agricultural project manager, Kazan Some of the most basic contours of Western economic life are not observable in this region. There was little evidence of a ‘post-Fordist’ economic system. The enterprises that do show evidence of Western concepts such as downsizing and de-industrialization do so only in terms of resources and output, and have only gone through these processes as a direct result of the devastating drop in production and the profound investment crisis that has hit all regions of the former USSR. These firms strongly retain Russian and Tatar networked features, and in the case of FSEs, these are linked to the highest levels of the local polity.8 Foreign companies have to use Russian styles of management in order to progress in this market. Indeed, Western investors in Tatarstan show a lot of flexibility and knowledge of they ways in which they work, and a distinct willingness to take part in this way: We thought we’d be able to stamp, we did try to stamp our approach to it all, we sent down a chap called . . . [T], who was our sales manager in Moscow. Went to Kazan, and we said ‘right go in there, and set up a sales team’, you know with targets and vertical markets and all this sort of stuff, and drive it. And it seemed to work, but of course it was all

Tatarstan’s future development

119

subsidized by oil money, so it wasn’t really such a straight, such a realistic thing to be in. So we tried that, and that didn’t work after the oil money ran out. And it didn’t really work in terms of motivation, because salesmen are motivated by getting a basic salary and a commission for sales. [. . .] We tried to bring in quality [management systems], and that was, they played along with it, but they had no intentions of carrying it through, they even appointed people, but they were has-beens, or wannabes. But just playing lip-service to it. I always felt that – I could never work out who was pulling whose strings. Mine was straightforward, I had a boss in Moscow and a boss in the UK, and you kind of argued your case, but in the end you did what you had to do. There was delegated powers and all that. Now my deputy was appointed by Kameks when I arrived, so I assumed that their side was represented by him. But as the whole thing collapsed on their side, he seemed to be left stranded and it made me wonder how could he stay there. And well, what I tried to understand, I took the view there was still some old-style connections there to keep his place. You know, keep your job, but look, because no Russian can keep his job just like that, there’s always a krysha. Probably someone in the President’s office, someone in there. Former Director, Tatar–UK electronics joint venture, Cheshire UK Foreign actors realize that it is impossible to function as they might like to at home in this environment. This seems a familiar, rather obvious argument.9 But against a backdrop of shock therapy, globalization and free-market rhetoric, it needs restating. There is certainly no unconditional acceptance of Westernization in this region. In fact, the explanatory use of this term in relation to Tatarstan’s economic growth is in serious doubt. The only areas in which it makes sense is in description of copying and learning from the West. Western products are widely available, even though this is mediated by networks of local elite agents, in a very closed system. Elsewhere, Westernization is not at all a useful concept to use. These sectors of the economy are highly localized and networked, and have nothing in common with global flows of information technology, and the trappings of globalism. The terms Westernization and globalization were never themselves used in the interviews. Where Westernization was implied, it more showed anti-American prejudices than any real understanding of the processes of change. There is Westernization of the easily globalized items, such as management terminology and consumer goods. The real substance of the Tatar economy is still based on local social networks, monopolistic state enterprises and a growing number of SMEs. Given this situation, forms of organization other than Westernization may well be much more evident in the development struggle. Let us look at the main alternative referred to by the respondents, that of bureaucratic development.

120

Economic development in Tatarstan

Bureaucratic development One of the key problems of postsocialism is that of simultaneity. How can a state transform its economic system and political system simultaneously (Stark and Bruszt, 1998, Sakwa 1999: 38)? We have seen how elements of the previous regime (particularly elite social networks and structural enterprises) can enjoy sustained periods of existence despite reforms in both the economic and political sphere. This leads to a very high level of systemic complexity, characterized by change and uncertainty but also by stagnation and stability. This makes for a highly confusing situation in which firms have to function. Dynamic economic action is made very difficult because of the radical uncertainty within the system. Native respondents view this as a systemic fault, not as a problem with actions of individual entrepreneurs. I have heard from foreigners working in Russia that Russians have a habit of discussing everything at unnecessary length. No. The real problems are with changeability of laws and taxes. They change so fast that lengthy discussion is necessary at every stage. Russians are driven by profit, just like any other businessmen, but they have to spend more time finding out how to make profit in this environment. This is not a habit of Russian businessmen. State-owned pharmaceuticals company, Kazan Throughout nearly all the data there are concerns expressed about the lack of information and clarity needed for business to work effectively. There is a need stressed for information and communication between firms and state. The system is closed and elite-dominated. The potential is very high. But without information things can’t work. We need better organization to enable things to work. It will take a political change for this to happen. Political risks here are still high. We have a chance to change and maybe it will happen. [. . .] There is no competition for many of the enterprises in the republic, such as an oil transport company. Last year, 23 million dollars worth of oil went through their system, and none of the received money was registered. Fifth-year economics student, KFEI Lack of competition, the functioning of elite networks, the centrality of structural enterprises, and the power of the state are all inextricably linked features. The central features of the Tatar economy are locked in to this state-centred development path. It is radically unregulated in some areas, but the fundamental economic structure in this region is still controlled informally from the centre. Just as the ideology of the West is peripheral to the core of the networked Russian and Soviet-style actual functioning of the

Tatarstan’s future development

121

system, the unregulated, ‘wild’ elements of the market are peripheral to the power of the state and the size of the problems facing structural enterprises. In this context the role of bribery and its massive extension into economic life makes more sense: It is impossible to bribe the head of an oil company, but oil companies can undermine any small shareholders and if you want a counterbalance against big business, the only comparable centre of might is local government and federal government. Russian Presidential Administration Analyst, Moscow As we have seen, ‘corruption’ is a necessity created out of the social structure of networks, non-capitalized firms and transactions, and lack of enforcement of the formal legal structure. The state role is there to maintain some sort of control of the system, without which there would be further confusion, instability and decapitalization.10 The state is a key player in the informal economy, which makes it appear ‘corrupt’ to outsiders, be they Westerners or lower-level business actors, but their action is central to maintaining the systemic integrity of the economy’s strategic sector. In this context, the role of President Shaimiev and his close allies is absolutely vital (Bukhariev 1999). What we have is essentially the continuation of the Asiatic mode of production at the centre, but with a radically unstructured, ‘wild’ economy around the periphery. There is only the prospect of oil extraction, and our government is keen to protect this sector of the economy with heavy regulation. This means that there is nothing special about Tatarstan’s position in the international market, despite what the government might say. Their policies amount to nothing more than words, no actions. Owner, small business consultancy, Kazan However centralized and effective Shaimiev’s economic management may be, there are some clear concerns about the nature of Shaimiev’s legitimacy at the political level. Two British opinions were as follows: I’ve got a friend in an institute who you should speak to, who does sociology of politics [in a Kazan higher education institution]. He’s basically a member of the opposition, basically a highly critical member of the opposition. A very, very eloquent man who knows what he’s going on about. I mean he would say that Shaimiev is a bit like Mugabe. He’s got his fingers on the electoral system. When the elections are on he goes out to the country and basically coerces people to vote for him. Get the files of people in the rural, Tatar areas and says ‘vote for me or else’. That’s where his support is.

122

Economic development in Tatarstan He does get astronomically high results in elections. Mmm. I mean in the last one, it was 70 odd per cent wasn’t it? What do you think the implications for development are for having a guy like him in control? Well, he’s old school isn’t he? He was the local general secretary, wasn’t he, in the old days. He’s been there a long time. A bit of a Franco figure. It would be very strange to think of Kazan without him. I mean if he went away there’d be a certain amount of destabilization, but a lot more freedom as well. I think most people, despite whatever vote-rigging goes on, I think most people would say that, certainly for the period up to now, he was the best man. British entrepreneur, Kazan [I]nfluence very much so. The amount of time colleagues would spend setting up meetings, high-level meetings, all kinds of level, and meeting people who were supposedly very influential, signing protocols, endless work. I actually spent an awful lot of time arranging visits. Why did I do it? Because I couldn’t afford a visit to go wrong. If you get sort of the chairman of [a UK electronics firm] coming in, I never took anything for gospel. I wanted to know every step on the way. Oh,influence,yeah.Thefirstmajoronewasfrom [B],thenchief executive. [Also B], the former home secretary. He came on a visit to Kazan. And it was really ‘we wanted to go round and see customers, have a look at industry’ and that sort of thing, which is what you’d expect, but they really didn’t want that, they wanted them to have a big meeting with Shaimiev, have all the press and the President seen to be a big influence in the world, big timers and so on. And later on we had the new chairman of [the electronics firm], a Japanese chap. That had to be organized very carefully. And various other delegations, and the Japanese have a certain expectation; directness, orderliness, that isn’t really always there. He wanted to know, sometimes, what time the flight would be, and all this kind of thing. There were timetables, but we don’t need to book it just now. Because they won’t let us have the tickets. Their expectations were a little bit different. The only way to get around it was to keep being on top of it, to make sure, endless emails and stuff, people from the UK on the phone. That was all for a visit. Then trying to get the messages right, you’ve gotta play to your audience. Then we had British delegations there, British Ambassador came down. Delegations from businessmen in Moscow. We were taken to Shaimiev’s palace. [. . .] You know when you come from the airport? Yeah. There’s a, a road [that goes over] another motorway, then you turn right and go to Kazan. You never see anyone go over there, but on this occasion we went over. And there’s a wonderful palace there. All mod. cons, marble floors, very modern. Carpeted bedrooms, very swish. And that’s Shaimiev’s place.

Tatarstan’s future development

123

What do you make of Shaimiev? Well he’s a wise old fox, isn’t he really? A stabilizing figure. We used to watch, we’d sit at the round table, the round room where we had the big meetings, and it was interesting to note where people were sitting. The key personalities were Shaimiev rock solid in the middle, the father figure, I suppose for Kazan, and up and coming you’ve got your [B]s, [I], various other figures whose names escape me now. But [B] was definitely almost the prince pretend. [M] who was Prime Minister for a while and former chairman of the Assembly, and then that there was a sort of little crowd, a new Prime Minister emerged or new Minister of Economics or something. It was an interesting grouping that. You thought well, Shaimiev’s only supposed to be in there for eight years and then someone will follow, but he somehow managed to keep in there for another four years. And I suppose until the succession is in place, he’ll stay. I don’t know if it all fits in with democracy, voting and all that kind of thing. It could be. In the UK, you know, if you want to be a candidate for an election, you get 14 people to sign a form for your ward and there you are. To be put up as President you’ve probably gotta be careful. I mean, I think he was unopposed wasn’t he? [. . .] Well I think there was a group of observers to watch the election of ’93, and found that it wasn’t appropriate, they had to re-do it. Former director of UK–Tatar electronics joint venture, Cheshire, UK These concerns lead directly into the concept of the next section – development as a state-run process far from the globalist transition model of market economy and democratic polity.

State-run development Political power has a very large part to play in Tatarstan development. As shown above, approximately 35 per cent of the Tatar economy is state-owned. Furthermore, the state remains a central player in the economic life of the region. Chapter 4 showed how state actors must be interacted with by businessmen on a regular basis, and that the boundary between state and business actors is unclear. The erosion (and in some cases annihilation) of the markets that the Soviet sector supplied to has meant that post-Soviet firms struggle but are subsidized by the Tatar state. The Optical-Mechanical Plant (OMZ) in Kazan was threatened with closure in mid 1999, but was saved by state guarantees and restructuring of debt. The Nizhnekamsk chemicals giant was on the verge of disaster during the 1998 crisis, but Tatar and Russian Federal political intervention has seen restructuring of debts and a healthier future (Spridonova 1999). KMIZ (Kazan Medical Instruments Plant), Orgsintez (Kazan’s petrochemistry facility) and many others show no signs of going bankrupt, despite prolonged crises of production and

124

Economic development in Tatarstan

sales. Hence: [d]evelopment will be slow. There won’t be large growth. The government here is not so interested in foreign investment. They are conservatives. Many enterprises are still in business here but do nothing. Take KAPO im. Gorbunova.11 For the last five years they haven’t built a single aircraft. Fifth-year economics student, KFEI While it is an exaggeration to say that the government is not interested in FDI, the focus on the paralysis of Soviet economy is significant. This is bureaucratic development at work. It is a major path-dependent phenomenon, and one that restricts globalized development. Despite this, the Soviet-style firms manage to survive, mostly thanks to state patronage. Their exposure to ‘the global economy’ is small. Export of oil and processed petrochemical materials (such as ethylene, artificial rubber and polymers, the main products of Nizhnekamskneftekhim) are the staple commodities that prop up the Tatar economy, sold in Russia and internationally. They represent the only fundamental economic connection Tatarstan has with the outside world. There is very little in the way of inward investment to help develop these other enterprises. This absence of FDI is, in part, due to the regional government’s practical ownership and control of these structural enterprises. Western companies have few rights of access. In any event, there is always a very strong political element to all business transactions in Tatarstan. A UK investor in a 1997 project to bring Kazan Airport into line with international standards (a classic example of attempting to pursue a globalist policy of linking regional hubs directly to international markets) described it as ‘a pipe-dream’. The project failed miserably, but was eventually completed with a different contractor: It was a very significant project, you were looking at a 200 million dollar exercise. It was supposed to be that the capital was raised through foreign credit with Tatar oil used as collateral. The Tatars had absolutely no money of their own. The whole thing had to be done on trust. What happened was, after a month or so the money dried up. They’d say ‘it will be here, the money will be here’ but one month, two months passed and it never came. We eventually had to pull out. There was mountains of paperwork. Piles and piles of it. None of it made any sense. The bureaucracy was just – unbelievable. And the corruption was unreal. God knows how much went missing. When you finally did see some money, maybe 10, 20 per cent of it went God knows where. We were there as consultants. We even tried to bring in our own British contractors to get the job done, but they weren’t interested. They just stonewalled us. No response. All they ever wanted to know was ‘where is the finance?’ Of course it was hard talking though interpreters, but nothing would get through if they didn’t want to know.

Tatarstan’s future development

125

[. . .] Essentially the problem was that the whole thing was motivated politically. It was a huge project, that made no real sense economically. It was a huge pipe-dream. UK Consultant in Kazan–UK aerospace project This sounds similar to the failure of a similar project in 1987, nearly ten years before. The lack of progress is depressing. It was all about power. Their power was real. They owed their positions to power and were out to protect it. Everything had to be signed for. To transfer a box of equipment from one building to another you needed to sign when it left, sign when it arrived. You even had a means whereby if the courier dropped the box and broke the contents, he could be personally liable. It was an intolerable system, a silo culture. Western things like the MRP simply don’t work unless you share information, and their culture was to share nothing. Australian investor in Tatar–Norwegian joint venture, London In relation to the rest of Russia, the politicization of economics is also generally the situation, although a full regional comparison is, unfortunately, impossible here. As for the economic systems elsewhere in the world, it is, of course, not so rare to see such politicized battles in the economic realm. Robert Went (2000) argues convincingly that the concept of globalization is misleading because there are intense conflicts between firms and firms, and between states and firms, over resources and markets. It would appear that the Tatar evidence backs up this critical view of globalization. If globalization is a real process, it is complex, contradictory and conflicting. There are enormous structural conflicts opposing any notions of development that rest on theories predicated on simple causal processes. When this part of Tatarstan’s society is analysed it is also very difficult to come to the conclusion that social actors are ‘structurating’ society. If Giddens’ concept is to have any use, it must be modified to allow for uneven structuration across different areas of the economic region. Economic risks are differentially distributed according to macro socio-economic features across regions (Solanko 2003). In a similar fashion, a centre–periphery analysis makes some sense of the social dynamics of the region, in that we have a solid structural ‘core’ of state, enterprises and resources, surrounded by a highly unregulated ‘wild’ market in which the social structure is more dependent of the agency of entrepreneurs. According to Ledeneva, ‘[b]lat was embedded in both individual action and the structural characteristics of the Soviet system’ (1998: 7). Giddens would argue that a phenomenon such as the informal economy is an unintended consequence of purposive action. In a sense this is indeed true. But this is a necessary, but not sufficient explanation of the persistence of this social formation over time. People

126

Economic development in Tatarstan

do not replicate informality for the sake of it. It is done because of the lack of legal and regulatory norms, and the lack of finance capital . Russia’s realm of business is a low-trust and high-risk environment. It is the informal, small business sector that has the highest instability. The unfortunate people who are far from the centre, (or ‘the tasty pieces’ of the economy, as one respondent called it) are excluded and left to a fate of struggle, uncertainty and the threat of violence. ‘Freedom, one could say, is enjoyed by different people in varying degrees’ (Thompson 1984: 170). What about the freedom of action for foreign investors? The political sphere is indeed ‘the number one risk factor for foreign investors’, but not because of ‘instability’. It is rather more the case that the state remains a key economic player in the region. It provides serious (and often unfair) economic competition and regulation, and can be highly obstructive of the free market. This is not ‘political instability’. Shaimiev has a largely unassailable position, and the polity has remained pretty much unchanged since the perestroika era. In comparison to the political environment of the West, and certainly to some other regions of the Russian Federation, Tatarstan’s is fairly stable. Of course the everyday workings of the polity are uncertain, but this does not mean it is an unstable system. It is fair to describe it as ‘state capitalist’. The state remains the fundamental economic player in the region.12 The position as described by the interview respondents is sharply at odds with the official literature and the supposed attempts at global market integration. As we shall see, globalization has little or nothing to do with the realities of Tatarstan’s nascent capitalist system, although there is some limited reference in the interviews to Tatar’s experience being to some extent a result of global forces. Let us now examine those ideas.

Globalization Globalization’s many meanings make the term difficult to define in a universal way. Its theoretical roots are also contested. It can be argued to have a single or multi-causal dynamic, and it remains a subject of debate whether globalization is best formalized as a process or an end result (Chapter 1). The following two positions are typical of the sociological view on globalization’s extension into modern life:13 A social process in which the constraints of geography on social and cultural arrangements recede and in which people become increasingly aware that they are receding. (Waters, 1995: 3) For better or for worse, we are being propelled into a global order that no one fully understands. (Giddens, 1999: 1)

Tatarstan’s future development

127

[I]t is an ‘in here’ phenomenon too, influencing intimate and personal aspects of our lives. (1999) In Tatarstan, however, there was not a great deal of evidence to back up either of these two theoretical positions, nor any of the others shown in Table 1.1 (Chapter 1). Out of all the respondents, only two made direct reference to global processes affecting Tatarstan’s economy. Just one (an SME senior manager in Kazan) mentioned the term ‘globalization’ itself. Some statements could be analyzed in terms of globalization theory, however. The main description of global forces affecting Tatarstan was a detailed account of the complexities of today’s international business environment, characterized by strong financial linkages and interdependencies: The Tatar government treats foreign companies with contempt, believing if one is forced away, then there will be plenty more lining up behind them. In theory there are many more willing investors, but as long as the government treats the companies in this way, the numbers will decline. This is because of the nature of the international market today. Banks have access to much shared information. A cautious foreign investor will be told: ‘Don’t attempt to take your company to Tatarstan – their government will not treat you with respect’. Tatarstan representative, foreign oil company Beyond these two respondents, from the elite and medium-sized business strata, global features were never mentioned. There was some notion of Tatarstan’s international fragility (in terms of its exposure to global economic crises), but even these claims were made more in relation to Russia’s international position as opposed to the fashionable ideas of regional economies’ world economic integration, or the ‘global–local nexus’ (Sassen 1998). Much more traditional and mundane problems, such as fluctuating international oil prices (hardly a recent phenomenon) were given as important. Even a direct question on the supposedly low-risk rating of Tatarstan failed to provide a globalization-type answer from this respondent: Do you think it is a complicated process for foreign companies to be involved in Tatarstan? I don’t think so. [. . .] Do you think it’s a relatively low-risk area? Erm, when you do things with Russia, it is always risky. Of course. Because, ahh, you never know [laughter] what the situation will be tomorrow.

128

Economic development in Tatarstan Sure. You know that, until 16 August [1998] everything was OK. Everybody worked, all Western companies were happy, and then all of a sudden, the crisis, the new policy, everything was turned upside down, inside out. It’s unpredictable. Absolutely. [Laughter] Manager, foreign pharmaceuticals distributor, Kazan

The fashionable current ideas about global economic risk seem to be supported here. There is no doubt Russia’s emerging market economy is inherently unpredictable. Globalization’s negative effects can be said to cause this condition of uncertainty (Bauman 1998, Beck 2000, Giddens 1999, Hutton and Giddens 2000). Russia is struggling to recast itself in the new political and economic order. If one believes that globalization caused the death of socialism (see Chapter 1), it is also causing Russia’s current problems of economic instability (Gray 1998). Globalization, it is argued, causes uncertainty all across the globe (Giddens, Gray, Hutton), but globalization is not really the path of development that Tatarstan is following. The uncertainty inherent in Tatarstan economics is a result of largely internal, not global dynamics.14 Globalization to some extent has had a direct historical effect on Tatarstan, (it helped break down the Soviet economy) but it has since not helped produce any meaningful or sustained steps towards world integration. As we have seen, much of the Tatar industrial economy is unfit for global economic interaction, and insignificant progress been made in establishing a global-oriented service-based industry, although the ongoing development of SMEs and telecommunications has been notable in recent years. The globalization of free-market rhetoric is a reality, the globalization of economic development is not. Moreover, the continuing damaging effects of globalization seem to be in decline. It has little relevance in explaining Tatarstan’s contemporary problems. The focus has shifted very much back to local problems. Global markets were seen by some in this dataset to be constraining of local action, but only in a very general and unsubstantiated fashion. International oil markets were said to be important in some of the interviews. This is without doubt true for the structural enterprises of Tatarstan. What is much more relevant for the economy as a whole is the widespread absence of capital for investment, the indispensability of personal networking (Chapter 3), the interfering state role in enterpreneurship (Chapter 4), and struggling heavy industry (Chapter 1). However there was some general agreement that global forces cannot be ignored. Two of the elite respondents spoke of ‘attempting to improve Tatarstan’s position in the world market’. The official sources are stuffed with globalization rhetoric. It appears, however, that local actors are concentrating on matters that they have some control over. Global market fluctuations and

Tatarstan’s future development

129

FDI attraction are largely out of the hands even of Tatarstan’s highest elite actors. They have come to realize the extent to which the language and promise of globalization do not live up to expectations: The euphoria for FDI has gone. Tatarstan Chamber of Commerce Chairman, Kazan Tatarstan’s economy is now focused much more on the local, not the global. Interestingly, foreign consultants’ advice may have had some effect on this (see Thornhill 1996). This would back up the claim that the ideology of regional competitive advantage may be easily globalized, but that real integration into world systems is far more difficult to achieve: How do Westerners regard Tatarstan as a place for investment? I think they don’t really appreciate it. It is nothing compared to Nizhnii Novgorod. We do have some foreign companies here. We have Pepsi, Coke, Oriflame, Philip Morris, so we have some. Distributor, Pepsi Cola Kazan The above companies are ‘there’ only in the sense that their products are sold and distributed there. Oriflame has a direct sales outlet in Kazan, much like McDonald’s two outlets. But Pepsi, Coca-Cola and Philip Morris have nothing but regional distribution centres that supply their products to the street kiosks, shops and the rinok. This is not global investment by any stretch of the imagination. If this is globalization, then it is very limited in scope. Globalization has certainly affected this region in terms of ideology and culture, but has little part to play in Tatarstan’s future economic development. Nor is it a serious focus of concern among the vast majority of the economic actors featured in this study. Regions such as Tatarstan have little to gain from globalization. They lack the right kind of industry and workforce. The reasons for both are rooted in the crisis of the Soviet economy’s failure to adapt to the communications revolution. If it is ever to benefit from the ‘informational mode of development’ then it would be looking at a ‘transition’ period of decades (Castells 1998). There is no doubt, however, that Tatarstan business actors are acutely future-oriented. They perceive the need for development, but realize that today’s economic task is one of survival, not of radical change. This survival implies a local focus, and dependency on the current working system of networked elite state management of the economy. In a similar way to the treatment of Westernization, it is clear that the language of globalization may be used, but this does not really represent the workings of Tatarstan’s contemporary economic system. Given the lack of inward investment this is hardly surprising. However there is more to it than this. The specifics of Tatarstan’s system means that it is not in any meaningful way globally oriented. The elite networks of affiliation that accommodate the workings of

130

Economic development in Tatarstan

the economy, the persistently strong state role, and the centrality of Soviet industry mean that the possibility of globally viable economic interaction remains low. The persistence of ‘Sovietism’ in the economy is the next focus of my analysis, and is perhaps one of the most important non-global and path-dependent elements of Tatarstan’s economic life.

Soviet continuity Even while embracing the language of international cooperation and globalization, the official Tatar literature persistently reveals the importance of Soviet-era industry to the region’s economic system. Soviet commodities are still forced to be the central part of the economic discourse, even though the socialist ideology has totally collapsed. The core of Soviet industry, built out on the concepts of Soviet modernity, is surrounded by a periphery of postmodern Western rhetoric: You must remember that Russia is a huge country. The West is much more developed than the East, and the economic links are mostly geographically determined. We have some strong links with the Muslim nations. We are involved in a kind of league with them, but so far they provide no real help. Just words, nothing more. We are currently selling KamAZ trucks to the Caribbean and to Africa. We are looking to restore our position in the world market. You may be aware of the recent investment in YelAZ from General Motors, so that Chevrolet jeeps can be made there. They cost 20–23 thousand dollars. Law Advisor, Agency for Economic Cooperation and Development, Kazan This interview was conducted in November 1997 and there seemed to be a greater chance for the GM–YelAZ joint venture to work at that time. This investment was regarded as a more substantial example of Tatarstan’s increasing world economic integration than any pan-Islamic movement, indicating the future for development is a more Westward one. However the YelAZ–GM project in fact turned very sour. The comment on ‘looking to restore our position in the world market’ is very similar to the Kazan electronics plant’s chairman’s, comments and they are equally unrealistic. Both assume that the remnants of Tatarstan’s Soviet industrial base are compatible elements of the global market. The evidence from the interviews seems to suggest otherwise. As the hollowed-out electronics factory now sells Western-style management systems instead of manufacturing Soviet alternatives, KamAZ is also left to an uncertain future (Akmetov 1998). Even so, these enterprises remain the assets of Tatarstan. They are explicitly advertised as such by the official literature. How long they can remain so is another matter. For the time being it is clear that these structural enterprises remain a vital part of the region’s economy.

Tatarstan’s future development

131

A concern for the social consequences of letting these enterprises die is part of the reason for the local and Russian federal government’s refusal to let them go under. But there is more to it than this. Thousands of jobs in these sectors have indeed been lost. What is more important is the need to maintain these major enterprises in the hope that they will eventually become profitable and gain access to Russian and overseas customers. So despite ‘globalization’ and its supposedly colossal impact on Russia and its regions, we can see that there has not been a complete destruction of the old system. The ‘universal’ (Nekipilov 1999) medicine of shock therapy was not taken in all the regions (Thornhill 1996). Tatar economics has been to some extent able to resist pressure from the Moscow centre (Bikbov 1999), and from IMF or EBRD prescriptions. However the Western perspective on this can be very different: What needs to be changed to improve the level of FDI? Overemployment. Employment could be cut by 50–60 per cent. There is no wish to tackle the resulting social problems. Agronomist working for Dutch joint venture in Tatarstan Elements of the Soviet redistributive economy are still at work. However, it appears that this has no real long-term sustainability. State-sector provision of employment and health is in deep crisis. There is a clear conflict between the need to maintain elements of the redistributive economy and accommodate free-market capitalism: There is no government investment policy for improving the infrastructure that I know of. The businesses have to do it all themselves. All of the government investment fund is spent on raising production levels or on the social sphere, for example medical equipment. Law advisor, Agency for Economic Cooperation and Development, Kazan Parts of the Soviet system are still functioning in Tatarstan. The Republic is not by any means some ‘island of communism’, but nor is it a freemarket capitalist system. It is a particular regional version of hybrid state capitalism, located within the already unique Russian form of capitalism (Gustafson 1999, Nekipelov 1999). The most persistent form of Sovietism remains the use of networks and the closed nature of the elites in the society, and the associated lack of information. Socialization into the norms of management under state socialism lasted since the consolidation of the Stalinist system, approaching 70 years (Rootes and Davis 1994: 9). It is unlikely that it could be swiftly dispensed with. As such, Soviet continuity is a major non-global feature. Of course, another major Sovietstyle problem is the inefficiency and incompatibility of Russian industry with the norms and markets of Westernized modernity. Even if we ignore

132

Economic development in Tatarstan

the social side of things, there are few economic reasons for globalization to take place. You got to get it . . . to move forward, they need investment. People aren’t gonna invest unless they’re gonna get a return for their investment in a reasonable time. So that, private investment is going to be a problem. There’ll be a lot of companies still willing to try it out, but unless the powers that be can ensure that you can bring an investment in, get something going, and work at it without being dragged down by bureaucracy, banking, law and order issues, probably a bit of fear. Foreigners have gotta go in there and feel safe. You’ve gotta get over all that. So you’d be looking to the President and his men to put all that safety cordon round, and ensure that they play the game all the time while the investment’s there. [. . .] But what happened to this great big Russian market? Former Director, Tatar–UK electronics joint venture, UK Despite all the attempts to marketize as swiftly as possible, the transitional globalist Washington Consensus prescriptions have not been followed, and have not created what was expected. This suggests that internal dynamics are more important than global ones, and that globalization is perhaps not as powerful as the left and right of the political spectrum both claim. Despite this lack of international integration Tatarstan continues to survive as an economic system, and development is taking place along local paths. Tatar economics is a good deal more successful than the economics of other Russian regions: How would you say Tatarstan and Kazan is getting on economically in the current period? Well, judging by the other regions I’ve been to, it’s doing very well. On the surface. You don’t have to be on the train for long travelling through Russia to see that there are a lot of places far worse. I went to Ekaterinburg a couple of years ago on the train, and some of the places we stopped there – grim. I went down to the Black Sea in the Ukraine back in 1995, that’s going back a few years, but again, compared what was there to Kazan, these provincial towns were definitely ‘developing world’. Are we talking no running water, this sort of thing? Well, no running water no, but actually the appearance of the place. Obviously you can’t tell much from the train, but the appearance of the city and the people. It was much more run down, much shabbier. I mean Ulyanovsk, which is only just down the road from Kazan, totally different, or Yoshka-Ola, which is the other way, in Mari Republic, just up the road three hours away, totally different. They would say, because the president is a communist, the same with Ulyanovsk. You’ve not got

Tatarstan’s future development

133

the shine you’ve got in Kazan. The roads are much quieter. I mean Yoshka-Ola, three hours away and suddenly you’re back to the Soviet Union really. In terms of traffic, there’s nothing, whereas in Kazan it’s bumper-to-bumper at times. You say that Kazan has got the oil, hasn’t it, but you talk to the oil people and they say ‘well ten more years and that’s it’.15 Without inward investment, of course. Yeah, without investment. British entrepreneur, Kazan Of course, the sociology of Tatar economic life is not all about stagnation. There are all kinds of unregulated and fast-moving elements that were strongly referred to by the respondents, as we shall see in the next section.

The ‘wild market’ The informal economy is an area of vital importance that only partially fits the picture of a persistent Soviet-style system. The shadow economy of the Soviet Union existed illegally in the interstices of the planned economy. It was deviant but also systemically functional action (Ledeneva 1998). Under socialism it was politically and philosophically intolerable according to the state ideology. Today it is illegal for instrumental reasons. Today’s shadow markets are more directly acceptable, as they show high degrees of entrepreneurialism and as such are compatible with the new ideology of transition to the market. This is one part of economic life characterized by rapid change and uncertainty. According to the director of a major Tatar electronics firm, the informal economy creates unfair competition: In this area there are lots of small companies. They take PCs from distributors, distributors take them directly from Western producers, from Taiwan, Singapore, from United States. And when the small companies sell the PCs, they use black money. They never pay any taxes. Small companies don’t pay tax, but we must pay. We are big company. We cannot compete. Director, FSE Electronics firm, Kazan The unregulated nature of this sphere of the economy means that it has many enabling features. In this way the actions of small entrepreneurs support the claims of structuration theory. These entrepreneurs are bringing into force new structures of economic life. The small-business sector, however, remains small and has a tiny capital base. It still faces many of the problems that are created by the central state apparatus, in terms of the large tax burden and continual legislation change, and the dominance of the ‘corrupt’ FSEs. The operations of small businesses are plagued by security problems:

134

Economic development in Tatarstan [The situation facing small businesses] is very bad. The most vulnerable parts of the economy are small businesses. They face problems with: 1 The tax system 2 Corruption can make true competition impossible 3 Organized crime. Analyst, Russian Presidential Administration, Moscow

There is a conflict of interests between the centre and periphery. The state and former state sector wants its share, and the SMEs want their share: If they [local government] don’t like the investor there will be no chance. It depends whether the regional administration has any interest in it. It depends if, for example, a loyal governor will have any personal interest in the region, then obviously the investor will be helped, plus, for example an unprofitable region has 50 bankrupt enterprises and says he will build a new factory and bring some changes in here and pay lots of taxes, then obviously the governor will help. But if someone wants to buy a ruined factory, then anyone will give it away. Obviously if the enterprise is falling apart then no-one will mind, you can invest money, but if there is something working well then there is no chance to get involved, especially a Westerner. Even the courts are listening to the governor, so if you have a problem or don’t have a problem, you need to work with him. For example take an agricultural enterprise. After the property is sold, the governor can try to make such problems for another because it is in his interest to leave the equipment here, as the money is not there to be taken away. It’s good in a way because he will let a local person buy it, so the local administration can loan or give the equipment away to help with the harvest. There will be fighting if someone abroad wants to buy it. Accountant, Tatarstan State Property Committee, Kazan Regional development is a complex issue. Tatarstan’s experience of postsocialist development is one of multiple levels of detail and competing sectional interests. Structuration (Giddens 1986) is shown to be an uneven process in this contradictory and difficult development scenario. It happens in different ways because some actors have a greater range of access to resources than others. The economic ‘centre’ of Tatarstan (the regional government and the FSE sector) has a very powerful economic structure, the periphery (SMEs and the informal sector) has a radically unregulated nature and a much smaller degree of structuring resources. The solid core of structural enterprises (except for the oil sector) also has limited monetary resources. However its inextricable proximity to the local state allows access to major structuring resources. In the periphery of small businesses, a new social order is being structurated around the outside of the Soviet-built core. It is an unregulated, and wild market, but with some substantial potential opportunities for individual action. However, in order to realize any of these

Tatarstan’s future development

135

opportunities, economic actors generally have to circumnavigate official routes, especially tax payments. This in turn, leads to the growth of new economic areas, such as money laundering networks. In that sense this criminal economy is very much an unintended consequence of purposive action (Giddens 1986). However, it appears that processes of structuration need not necessarily lead to a globalized modernity. The development of Tatarstan’s centre and periphery alike has little to do with global flows or time–space distanciation. When the role of history is examined, it appears that there has not been such a dramatic change in the real nature of social action in the economic sphere since the end of the Soviet era. This centre–periphery picture is not too far from the Soviet system at work. Soviet citizens generally felt isolated from the Soviet state since at least the Brezhnev era (Volkogonov 1999). We can assume that this social pattern will persist in future development of the region, particularly given that this social pattern tends to limit the role of foreign actors. However, there was also a large amount of evidence in the interviews pointing towards significant, but gradual, change. At the same time as supporting the free market, it stresses the need for time for it to work. I think the economy of Tatarstan will be better, because we have all the fundamental bases of that, but the situation in general in Russia is not good, that’s why we also suffer from that. But I believe it will be better here. Manager, foreign pharmaceuticals firm, Kazan [A]dvertising, the general concept is very weak here, and there is no set system that everyone understands, or it is much smaller than in other countries, so therefore advertising and trade are two of the main businesses to have a strong expansion. It is the current situation in Russia. Advertising was non-existent for a long, long time in Russia and now it is returning fast, but it is not so well developed [as the West]. Vice-president, Kazan advertising firm Another explained about an entrepreneur he knows in Kazan: [S]he is trying to do something else, she is moving into the hotel business. Small-sized hotels, because of this 2005 anniversary, [the] millennium anniversary of the city of Kazan, it’s a big occasion. And the money is flowing in now for this. And she told me that, for example, she can expand [her wine bar] through the basement, build a dance floor and a bar, and a small cinema in there. And I asked her ‘what did she spend?’ And she said about $80,000 to renovate from scratch. And she got this money back in eight months. Now imagine. It is amazing, but this is true. Imagine how the market can develop. Former government official, now author, Kazan

136

Economic development in Tatarstan

These interview excerpts assume Westernization to a certain extent, but the references are to Westernization that is abstract and devoid of context. It seems that Tatarstan needs more time to develop as a functioning market economy. However the main message of the interview data is that this longterm development picture is one in which the local role is far more relevant than international concepts such as globalization and transition. Assuming that this is a viable development option (and the signs are that this option is very much possible), then there will be little role for Western multinationals. The Westerners in the sample agreed: Tatarstan could go it alone, but [the citizens] will live like paupers. They have the resources and the labour force, but the infrastructure and the lack of competition is so severe that its hard to see the upside. I feel bad to say this, as I like the Russians and I like the country, but Russia and Tatarstan are not places I’d recommend to investors. Australian investor in Tatar–Norwegian software joint venture, London Yet further problems for the globalization picture are revealed. Given time, it is assumed that more confidence, better infrastructure and competition will grow in the region, but this will not be as a result of globalization. It will be a local development, that is necessary as a prerequisite for any possible globalization to come. Another part of the transition narrative is the concept of time needed to get over the long-term social–psychological problems of nearly 70 years of state socialism. This concept was indeed partially revealed by the economic actors included in the interview sample. Statements such as the following were not uncommon: Russians today . . . are struggling to shake off the memory of the command–administrative system. They are used to being told what to do. Economics teacher, Kazan State University This is a fairly standard argument (Slider 1994), with some reasonable evidence in some sectors. Much of the Soviet system was characterized by waste and inefficiency. Historically, Russians are seen as lazy and slovenly compared to ‘modern’ Westerners, and Soviet propagandists were desperate to inculcate a new Soviet dynamic work ethic, which was partially successful. At the end of 1991 it was still possible to hear Russians berating their country for its supposed laziness: Americans, you know, they work much harder than Russians: most of my staff are Russian girls, and they find it hard sometimes to keep up with the pace. We are not used to such hard work in this country, believe me: I think we are lazy and dilatory and not at all well organised, so when we

Tatarstan’s future development

137

find ourselves having to work as the Americans do it is a shock. It is good for us of course, but all the same it is new to us and we have to adjust to it. Russian secretary, Moscow, as quoted by Parker (1991: 62) However, the majority of the respondents in this study appeared to work very hard indeed. Ledeneva (1998: 205) comes to similar conclusions. The acceptance of the need for long working hours in the small-business sector has happened quickly. Parker’s secretary continues: [B]efore long I may leave my office after I have fully learned modern American business methods, and perhaps then work on a freelance basis as an interpreter, secretary, and translator. . . . You can always get a very good wage for yourself, especially if you are efficient and competent. Russian secretary, Moscow, as quoted by Parker (1991: 62) This may sound as if global norms are affecting the Russian workplace, and that there is a generational process of change. It could be assumed that younger Russians will be less dominated by older Soviet era practices. Working capital (oborotnii kapital) and business on the whole is up 30–40 per cent. Why is there such growth? We work a lot! Vice-president, advertising firm, Kazan The ‘legacy of communism’ as an impediment to the transition goals of free market and democracy is a good example of what Granovetter calls the ‘undersocialized view’ of social relations.16 According to the mainstream transition narrative, if only the last vestiges of the state socialist system could be swept away, Russia would at last begin to make serious progress towards democracy and a free-market economy. This perspective ignores the systemic continuity of Soviet-style structures in the central, former state economy. There is a need for more detail on the idea of the generational development of the region. This was something that was not covered in the interview schedules, which is perhaps unfortunate. In Ledeneva’s work, younger actors tend to be less concerned with Soviet-era concepts like ‘blat’. A handful of those under 30 in my data expressed a desire to leave Tatarstan. If I am right about the type of society emerging (that is, a socio-economic system that retains a lot of Soviet-style features) then I must assume that the younger generation is growing into and becoming assimilated into these conditions instead of changing them. There is evidence for and against this position. On the ‘for’ side, although both from Western observers and not from Russian or Tatar young people themselves, the following was said:

138

Economic development in Tatarstan There’s a lot of Russians who can’t quite understand the idea of foreigners owning part of their economy. It just doesn’t make a lot of sense to them. So they’re quite happy to have investment get something going, then they say, shoo, ‘right, by the way we’re keeping your logo’. They can’t understand that. The ownership of logos and things like that don’t make a lot of sense in Russia. So they’ve got to solve all those problems, but that’s going to be a huge task. A huge political task. So I mean I suppose the answer is, for a long while nothing is going to happen. Former Director, Tatar–UK electronics joint venture, Cheshire, UK

Before the collapse, the guarantees were so concrete, initially. It looked like there was money and opportunity there. It was perceived as a great place to go – look at the size of the market, the potential. But now its gone. Any real money has been exploited by the small group of people. Maybe 20 people have become astronomically rich, the millions they have made . . . I’ve seen some real spoilt behaviour. Rich Russians are so arrogant, it’s horrible. Really horrible. Recently the middle classes have started leaving. There’s gonna be no able people left, and no hope for the country. There was a chance for a very short period. The corruption has killed the chance. Forbes magazine called the Russian system ‘kleptocratic’. It’s so true. They really needed a tough military regime to crush the corruption. The transition was done too quickly. Now if a deal is being done for two million, the question is ‘how can I get myself five hundred grand?’ Australian participant in Tatar–UK and Tatar–Norwegian joint ventures, London This element of social-psychological ‘hangover’ was never part of the explicit focus of the interviews, but there are certain pieces of evidence to the contrary here. There are some definite elements of domestic entrepreneurship that are radically different from the thinking of the elites. Although some SMEs can grow very quickly, many are constrained by a lack of capital, the expansion of criminal networks and by punitive taxation. Furthermore, they have taken very well to the idea that no-one pays their taxes and that personal relationships are what get you by, no matter how Westernized their business ideology and consumption patterns may be. Ledeneva (1998: 212) supports the view that the younger entrepreneurs are already subsumed into the informal practices of the unofficial economy, and may even be better adapted to it and more informal in their actions than the older, Soviet-era managers. They are forced into acting informally by ‘the economic logic of Russian conditions’ (1998: 24). My data is, unfortunately, limited here. To really get an idea of whether there is a ‘hangover’ from Soviet-style practices in the older generation

Tatarstan’s future development

139

of Russians that is on the way out, then explicitly inter-generational research would be needed. As far as this book is concerned, the findings on this issue are ambiguous. I would suggest that the concept of Westernizing working practice is most relevant in the SME sector, but less so in the FSEs.

Conclusion: a non-global future We have seen how Tatarstan’s developing capitalism depends to a great extent on informal social networks (Chapter 3), and is largely tied to local forms of capital and organization, not to international ones (Chapter 4). What can we conclude about the views on the current and future development trends? According to the data presented here, there are several key features we can expect to continue in Tatarstan: • •

•

• •

•

There is a strong state role in steering the economy. Social networks are an essential part of the economy system at all levels. Effective economic action is impossible if one is not connected to the networks that can enable things to work. The Tatar economy is heavily reliant on an elite-dominated strategic centre of FSEs, with a ‘wild’ periphery of SMEs and local entrepreneurs. Often the two sectors are in conflict over resources (material and ‘network capital’) and influence. There is major uncertainty and change in the political–legal sphere in so far as it relates to everyday business action. The system is only partly Westernized, in that the rhetoric of openness, transparency and interconnection is used but real economic linkages are rarely of this nature in reality. The role of foreign actors and foreign capital is limited, and when it is involved, it is secondary to the importance of state influence.

Let us return to the global theorists of Chapter 1 and see how this empirical picture compares with the theories. It was noted in Chapter 1 that if globalization is really ‘reaching into all our lives’ then we would expect to see certain forms of it even in places like Tatarstan’s economy. The notion of cultural and economic ‘flows’ are not really evidenced here. There are too many parts of the social structure that prevent any kinds of inflows, except ideological and cultural ones, which seem to spread very rapidly. Neither the pro-globalist or Marxist conception of the impact of global capitalism seem to be supported here. Tatarstan capitalism is largely its own emergent system. Global sceptics, such as Hirst and Thompson, and particularly Burawoy, whose own Russian research reveals some similar localized features to those of Tatarstan (Burawoy 1996, Burawoy and Hendley 1992), are in a better position as regards the current limitations to the spread of supposedly ‘global’ capital.

140

Economic development in Tatarstan

On the other hand, there is strong evidence of major difficulties in Tatar manufacturing. This mirrors the ‘global’ trend affecting manufacturing in advanced Western economies as jobs are exported out of traditional heavy industrial regions. The 1998 crisis was widely viewed in the West as evidence of how connected Russia is to the world economy. Giddens and Gray’s concepts of the dangers of neoliberalism without ‘global control’ seemed to be supported by this event. The 1998 crash and the collapse of Russian industry since 1991 have both had profound local impacts. Local production, particularly as a replacement of imported goods, appears to be continuing along this localized trajectory. Globalization (conceptualized as a process) has had a limited impact here, and has had mostly negative effects. It helped to destroyed the old planned system, it possibly contributed to the 1998 financial collapse, but is proving incapable of providing a basis for constructing a new system in the Russian regions. Of course, the communist ideology was destroyed, but much of the political and economic system remains very similar to state-socialist conditions. Ideology is easy to get rid of; state-socialist industrial dinosaurs pose a much longer-lasting problem. If globalization is conceptualized as an end result, then the internal development structures of Tatarstan seem incapable of bringing it about in anything other than a very slow and partial fashion. A final analysis of Tatarstan and globalization is provided in the next chapter. Qualitative research can reveal a highly differentiated and complex economic life, which may have little in common with the kinds of notions that have become so easily absorbed into everyday Western thinking. The experience of Tatarstan should force us to question uncritical appraisals of such basic concepts as the market and the state, let alone more advanced theories such as globalization and postcommunist transition. The effects of globalization are observable in some areas, but in others is not present at all. The establishment of Russian forms of capitalism may well prove to be stronger than people expected (Ledeneva 1998: 212, Gustafson 1999). The trappings of Westernization (brands, management ideology) hardly constitute a serious expansion of Western organizational forms eastward. Despite the uniqueness of Russian or Tatar social systems, there are also major economic reasons why ‘global capitalism’ should not be at all concerned with Tatarstan. Western firms are interested in Tatar oil reserves, but show little interest in its other sectors. In the case of oil they are only interested in importing existing Tatar oil, not really (so far) in investing in the infrastructure to find more of it. Even that Tatar oil was considered by some Western analysts as only a qualified asset: the Monitor report talked of the danger of Tatarstan becoming an ‘advanced backward’ economy based on raw material exports like Saudi Arabia (see Thornhill 1995). Tatar development will be based on local power, that of former party linkages of the ‘informal state’, elite networking and familial relationships. FDI will play a small role in Tatarstan development. The obstacles that FDI faces have been partially overcome in some joint-venture projects, which

Tatarstan’s future development

141

proves that FDI is not impossible to achieve. But the fact is that foreign capital has got no real reason to get involved. This does not represent some sort of crisis of capitalism, but is simply a recognition of its current lack of need to expand into areas such as Tatarstan. When it has done, it has done so with easily globalized instantly recognizable brand-named products and with easily transferable market rhetoric. There appears to be no necessity for capital to spread to these areas as part of the necessity of ‘time–space compression’ (Harvey 1990) or time–space distanciation (Giddens 1986, 1990). This need not be a bad thing for Tatarstan. Development will take place according to its own social structural norms. It is vital to have an appreciation of the existence of divergent forms of capital across the globe, a fact so often lost in the rhetoric of globalization. This includes the foreign companies partially reshaping themselves to fit Russian situations. Tatarstan is largely isolated from global ‘flows’. The Tatar economy will in all probability continue to struggle on as normal, and can expect little or no interest from Western companies, except in the oil industry and there at a low level. Despite the rhetoric of globalization, and the spread of Western managerial and business concepts into Russian economic actors’ discourse, why would a Western transnational corporation bother to invest in Russian industry when it could make profits from other less-risky ventures in more-developed regions? We need only remind ourselves of basic indicators of anti-globalization such as this: ‘Over 90 per cent of FDI is sourced in ten developed countries . . . [and] the destinations of FDI largely match the sources’ (Waters 1995: 77); see also Hirst and Thompson (1996: 76–98). Globalization is peripheral to the real, networked operations of the Tatar economy. Development here will encompass a central role for the state. Tatarstan’s giant informal sector is also largely non-globalized, even if it sells Western products. Furthermore, and with great relevance to the globalization debate, Tatarstan’s experience shows that the immense diversity of modern capitalism has to be re-emphasized. The specificity of Tatarstan’s economic system and its difference from Western systems is not just a result of the limited FDI in this region. It is also because of the historical, ideological and concrete economic features inherited from the Soviet system. The material, industrial problems cannot be easily resolved. There is a variety of possible future patterns. It is somewhat unpredictable, but yet also stable in a way that the Giddens’ ‘runaway world’ or Beck’s ‘risk society’ cannot really account for. This neatly explains the central problematic of Russian development: its social structure creates action that is unstable but predictable. We return to a phrase from the data which brilliantly captures the essence of the situation: Economic risks. These are stable. They are predictable. They are not a good definition of risk. Corruption – predictable level of corruption will exist. Unreliability of police – predictable. Tax disorder – predicable! Analyst, Russian Presidential Administration, Moscow

142

Economic development in Tatarstan

Development in Tatarstan is therefore taking place along Russian paths, not Western ones. The dislocations of shock therapy have happened partially, but minimally when compared to some other regions. Privatization and marketization happened slowly, but are now well-advanced. The difference here is that this Soviet continuity was part of official regional policy (Chapter 3). This is not to say that Tatarstan is some kind of ‘island of communism’. It is still very much a capitalist system, but not one that Westerners are familiar with. There is cause for optimism as long as the social situation remains a concern of the ruling elite. However, one cannot soon expect major domestic capital growth in a volume likely to take Tatarstan out of its peripheral position in the world economy. The question remains of what is needed for a region such as Tatarstan to develop in any meaningful sense? From this dataset it seems that a combination of strategies is necessary. The mixed economy of state and private sectors must be considered a viable theoretical option and should be given more support from reform-oriented bodies. Whether or not such a strong state role would be tolerated by international bodies such as the EBRD, this strategy is nevertheless currently being strongly pursued, and one can expect it to continue for the foreseeable future. Help is desperately needed in the smallbusiness sector, and education provision needs radical reform. Lastly, any business actor who hopes to survive in this hostile environment must realize that years of intense hard work is a prerequisite. The signs, at least from the respondents in my study, show that at least this precious commodity is not in short supply. The future is uncertain, but we can be sure of one thing – globalization is not an appropriate paradigm to use to explain Tatarstan’s current economic activity and its future development paths. Let us conclude by returning to the theory of globalization, to assess it more thoroughly in relation to the qualitative experience of Tatar socio-economics.

6

Conclusion: Tatarstan and globalization

Nothing is so astounding as the vitality of the social organism – how it persists, feeding itself, clothing itself, amusing itself, in the face of the worst calamities. John Reed, Ten Days that Shook the World (1977: 117)

The economic development of Eastern Europe since the demise of Communism is often described as part of the process of globalization, with the end of the Soviet Union in 1991 typically referred to as the beginning of the new global capitalist order (EBRD 1999, Giddens 1999, Hardt and Negri 2000: xi, 276–9, Kaldor 1999, Lockwood 2000, Schaeffer 1997: 1, Urry 2000: 41–2). With such an open and wide-ranging a concept as globalization there are many ways in which post socialism is perceived to be a part of this process. Heterogeneity, homogeneity, chaos and lack of control play a major part of the underlying assumptions of this ‘new global order’ (Giddens 1990, 1999, Lash and Urry 1993, Ritzer 1999, Urry 2000). The question of this final chapter is ‘can globalization theories explain Tatarstan’s postsocialist economic experience?’ Based on the answer to this question, what might be the implications for future development in post Soviet Russia? This chapter will answer these questions. I draw on the conclusions of the qualitative chapters, and unite them with the historical and structural issues drawn out in Chapters 1 and 2. In doing so, this chapter represents a return to the book’s overall theoretical concerns, away from the specifics of the regional qualitative data.

The structure and action of Tatarstan development We have seen how the economy of Tatarstan explicitly contains a variety of social and historical forms that have persisted despite the end of state socialism and the attempted adoption of market capitalism (Chapters 3–5). Tatarstan’s economy contains few international linkages of any substance. The proceeds from Tatneft’s oil sales tend to go into the hands of the local government elite, to be spent on regional redevelopment projects (such as the

144

Economic development in Tatarstan

Kazan town centre modernization). There is little FDI incoming, and a very high state role in steering the economy. There are serious problems associated with a lack of systemic trust in institutions and legal norms. On the other hand, some enterprises claim to use Western-style management, Western products can be bought easily (although they are not sold and distributed in Western ways) and Western culture has a strong foothold in the media and in popular consciousness. I will summarize the argument thus far. The historical development of Russia has always been highly awkward, largely unique and mostly isolated from the West. The Tatar Autonomous Republic was a paradigmatic example of Soviet regionalism. Its economic structure was dominated by physicalresource extraction and industrial production, but was also contributed to by informal practices. Although both features have undergone considerable transformations, informality remains central (Chapter 3). The result is an economy highly differentiated from Western paradigms of the global, flexible economy. The role of the state is crucial in overseeing the development of the FSEs of the region (Chapters 3, 4). The future is somewhat uncertain, but steady development with little FDI and little Western aid appears to be the most likely outcome, at least for the medium-term future (Chapter 5). The high oil prices of 2000–4 have helped sustain the latest developments, but beyond sales of this commodity, there is little in the way of global integration. Tatarstan informal state-led economics, it appears, can deliver steady growth. This suggests that global market expansion need not break down all Chinese walls for its survival. Global markets can continue without dealing in any serious way with regions such as Tatarstan. In fact, global capitalism benefits from omitting isolated regions such as Tatarstan, as doing so protects capital from wastage and protects capitalists from personal loss. Foreign actors who were active in the region would now generally advise others against attempting investment there, despite its well-publicized ‘low-risk climate’. Local actors are rightly concentrating more on SME development, and do not expect large-scale FDI. Using a combination of path-dependency and structuration theories to analyse qualitative data, a certain number of observations have been made about the nature of Tatar economic life. These observations have accordingly revealed serious inadequacies in several of the theories addressed in the book. The isolation and regionalization inherent in Tatarstan’s experience of economic life in the ‘late modern era’ are generally unaccounted for. New theory is needed for lesser-known regions such as Tatarstan, as they do not ‘fit’ the varying globalization models, not even those that do allow for the negative effects of globalization, including isolation and social disruption (see the discussion of Bauman and Sassen below). At the end of this chapter I will attempt to show in what directions theory on isolated postsocialist regions might usefully take. Let us return to defining globalization.

Conclusion: Tatarstan and globalization

145

Defining globalization Urry (2000: 13) neatly explains that the word has two senses, derived from the verb and the noun: globalization as process and globalization as end result. Globalization in the latter conception means a truly globalized world, a world of total planetary engagement, freed of national boundaries, indeed with nations themselves deleted. No serious analyst has attempted to claim that this situation is anywhere near existence, but several believe that the idea of this end result is useful as a comparative tool (Waters 1995: 93–5). Sociology as a discipline, it is claimed, is becoming less and less able to describe and explain action effectively; it must hence abandon the national and local, and embrace the international and fluid (Urry 2000: 33). This is more than a little controversial, for it challenges notions not only of the nature of the social world but also of whole sociological traditions of analysing it. Burawoy (2000: 3–4) hence expresses his fears for the traditionally local-based method of ethnography. When invoking the global and the fluid as all important in understanding late modernity, how can ethnographic research explain anything other than the local and the static, and hence the mundane and irrelevant? Burawoy’s response is to go from the local to the global – showing how local responses to globalization, and local contributions to globalization, create these characteristics of ‘scape and flow’. This certainly provides a much more empirically grounded approach than that of Urry’s abstract theory. However, in examining my case study region, little in the way of international linkages is revealed. Those who have attempted to integrate themselves (from external states into Tatarstan) talk of failures to work successfully, invoking long-term historical, cultural, economic, and structural reasons for this. In this scenario, why is there the need to talk of ‘grounded globalization’ where globalization is absent? Surely it makes more sense, in this case of isolation, to stick with the traditions of ethnography – the local is still the local and has little significant to do with the outside world. Of course, global theorists do concede that globalization is an uneven process (Schaeffer 1997: 1, Burawoy 2000: 348, Sklair 1995: 7). A major difficulty in attempting to critique the idea of globalization is that the process supposedly causes both integration and isolation along the lines of ‘winners and losers’ (Sassen 1998, Bauman 1998). As an extension of this idea, the antiglobalists have begun constructing critiques of the effects of globalization on societies, but not on the concept of globalization itself. The anti-globalization movement has grown rapidly in recent years, alongside widespread media coverage. Klein (2000) describes in detail the various fields of resistance to corporate capitalism and it trappings: from ‘culturejamming’ and large scale protests to the education of protestors in economics and the tactics of street warfare. The WTO and G8 protests were heavily media-covered, from Seattle in 1999 to Genoa in 2001. A major part of the Klein argument is that international technologies and global mindsets can be

146

Economic development in Tatarstan

turned against their instigators. Informed protest sites on the internet and the defacing of advertisements show the hidden reality of what these corporations represent (Klein 2000: 280–8). This has interesting implications for the debate on ‘material’ versus ‘ideological’ globalization. As Burawoy points out, ‘ideology may be mobilized to resist globalization’ (2000: 342). To add to the argument earlier that ideological globalization can occur without material globalization, it is also true that in some spheres across the globe material and ideological globalization can even directly oppose one another. In critiquing globalization, or being ‘anti-capitalist’, the activists are actually railing against transnational corporations. They are not antiglobalization per se, but are anti-corporate globalization. They fail to see that globalization, in any real sense, is a largely meaningless term for much of today’s world, including Russian regions: [A]s connections have formed across national lines, a different agenda has taken hold, one that embraces globalization but seeks to wrest it from the grasp of the multinationals. Ethical shareholders, culture jammers, street reclaimers, McUnion organizers, human rights ‘hacktivists’, school logo fighters, and Internet corporate watchdogs are at the early stages of demanding a citizen-centred alternative to the international rule of brands. (Klein 2000: 445–6) But how can one have globalization without international capitalist firms? The internet is as ‘global’ as anything today, but remains a means to an end. It is supported financially, ideologically and materially (in terms of hardware and cabling) by giant multimedia corporations, it is a new forum for the spread of capitalism and a major conduit for advertising and direct sales. It is not some free-floating utopian alternative to the market. The reality of ‘globalization’ in Tatarstan shows us that global concepts make little sense in relation to concrete economic reality. There is minimal FDI, and what little of it there is tends to be in low-risk, low-exposure projects, which work in an unpredictable and difficult fashion for both local and foreign actors.1 The most global ideas are the retail consumer products, the advertising of Western symbols and the importing of Western management ideas. However the way in which Russian and Tatar capitalism works has almost nothing to do with global ‘scapes and flows’. Social networks and physical inheritances from the Soviet era constitute regionalization, not globalization. Tatar ideologues may (in some cases) continue to harp on about integrating themselves directly into the global marketplace and cutting ties with Moscow, but the reality could hardly be further from the truth. Since the 1998 financial crash, the former goal is compromised. Since the rise of Putin, the latter is also subdued. Not only is the region highly Russified and extremely ‘Soviet’ in its political and economic structure and physical

Conclusion: Tatarstan and globalization

147

structure; there are few avenues down which Western capital can meaningfully travel. In fact, why would it need to invest in a place like Tatarstan? It can just as well be completely ignored by Western firms, who can take their finances, technologies and staff elsewhere.2 The ongoing debates surrounding globalization and the anti-globalization movement provide the backdrop to the discussion here. It is time to return to the central question: does Tatarstan’s experience fit the theories of globalization? This question is answered by close analyses with the ideas of the various competing global theorists. (It might be helpful to refer to Table 1.1 and the introduction to these theorists given in Chapter 1.)

The pro-globalizers: Giddens and Urry According to Giddens’ view, Russia’s economic involution can be explained by the country’s lack of institutional expert systems and the generalized trust needed for investment and globalization. It possesses ‘symbolic tokens’, such as money, but on their own these are not enough for late modernity to flourish and develop new systems of exchange and investment. However, there are clearly some expert systems too. The Soviet state was, in a sense, a giant expert system, governing the Soviet Union’s entry into the space race, development of nuclear power, nuclear arms, even Stalinist collectivization and the Five-Year Plans. All of this was done on trust informed by a radicalizing modernist project and backed up by a good deal of physical force or its threat (see Chapter 1). The Soviet project was not without its believers (see Kotkin 1996). After the 1960s the Soviet Union no longer possessed this revolutionary activism and desperately lacked legitimacy (Volkogonov 1999). The necessary elements had been put in place for speedy systemic collapse. In some form, trust remains in the informal networks that pervade local Russian economies, but generalized trust in abstraction, such as confidence in institutions and formal law, is conspicuously absent. According to the neoliberal orthodoxy, trust in the system is required for investment (EBRD 1999, Hutton 1997: 41): ‘Where civil society is inadequately developed, as in Russia today, there can be neither proper government nor stable economic growth’ (Giddens in Hutton and Giddens 2000: 18). The financial system is inherently risky, because so much is at stake. There is much that is correct about this view, but it describes an alien world from that of Russia. To begin with, it embeds the discussion of development firmly in the abstract realm. There is little or nothing said about the importance of material resources and the networks that emerged under state socialism and which continue to work in post-socialism, linking them with supply and demand. Urry’s work (2000) is particularly empirically divorced. He believes it is time to stop looking at the structures of the national as the base unit of sociological analysis, and instead study the ‘networks and flows’ of the global. It is hard to apply any empirical evidence to this theory. The experiences of local actors in Tatarstan are irrelevant to Urry’s ‘mobilities

148

Economic development in Tatarstan

for the twenty-first century’. Tatar elites’ lack of mobility simply cannot be accounted for. It is difficult to place Russia’s experience in abstract latemodern categories of risk and trust. Despite all the global talk, Giddens seems to say elsewhere that Russia is a unique case: Russia has vast natural resources, including large stocks of oil and natural gas. It is potentially a wealthy country. But at the moment what I would foresee is the rapid development of certain cities and regions, especially Moscow and its surroundings, with much of the remainder being fairly stagnant. (Giddens, in Giddens and Pierson 1998: 188) This judgment is about right, and more or less fits in with the approach of Sassen, Castells and Bauman. Giddens is not really a global extremist in the realm of economics,3 but he is perhaps the strongest advocate of globalization (in both supporting it morally and theorizing it into existence as a valid concept) in terms of its democratizing effects and cultural mixing. There might well be evidence for this cultural and political globalization. However, Russian regional economics does not have much in common with the disembedded notion of the world economy and of global risks. This is partly because Giddens’ notions of disembedding and the globalizing tendencies of modernity are based on a kind of social topography that is based on the abstract notion of structuration. This theory, while useful as a method for interpreting ideas expressed in qualitative interviews, is not really geared towards a full understanding of the importance of structural, physical and economic resources, and how they interplay with the role of human action. It is this reliance on an overly abstract conception of social action that allows Giddens to be rather too dismissive of the role of local differences that can prevent the bringing about of a new global order. Giddens believes that globalization is somehow an integral part of modernity. This is to some extent true, but it does not help us understand the diverse nature of modernity (there appear to be several kinds of modernity, just as there was during the Cold War era) nor the uneven and partial configuration of globalized links between regions. It appears that modernity may not necessarily be inherently globalizing. Parts of the Tatar experience shown here do relate to globalization, in the sphere of hybrid Western– Tatar–Russian culture and in the political–ideological language that economic actors often use. But these small pieces of globalization are not caused by the ‘juggernaut’ of modernity. Instead I believe it makes more sense to argue that they are based on contingent local social features. These local features may produce a society that is more globalized; alternatively, they may not. The universalizing ideas of globalization described in this section are very much Western ideas, and they do not work particularly well in the Tatar context. The Soviet Union was a unique form of modernity and Russian post-

Conclusion: Tatarstan and globalization

149

socialism is a unique form of late modernity. Can it be fitted into one of the other major competing theoretical perspectives of the global, that of Marxist class analysis?

The Marxist response – globalization as the workings of class capital: Sklair, Harvey, Lockwood Leslie Sklair made a bold attempt to build a concrete theory of the process of globalization (1995). Under his conceptualization, there are three main forces that cause globalization to happen, known as ‘trans-national practices’. These three practices revolve around the trans-national corporation, the transnational capitalist class and the culture–ideology of consumerism. While Sklair’s argument finds some strong support in the elites of the developed world, which is his main focus, his theory fails somewhat with regard to the former Soviet Union.4 Where is this trans-national class? In some regions it is present to some degree, concealed inside the postmodern glass and steel offices in Moscow. In others, such as in Tatarstan, the only ruling class is the local elite. Sklair makes an explicit attempt to escape ‘state-centrism’ in his theorizing (1995: 4–7). In so doing he ignores the continuing salience of local state and enterprise arrangements. However, where Sklair’s argument works is in his acceptance of the ‘asymmetry’ of global arrangements (1995: 7). This is also the argument of Giddens, Harvey, Sassen, and Bauman, who are concerned with the increasingly divergent levels of power and wealth of ‘global classes’ in relation to local actors. Of course there is evidence for this in Russia, but less so in Tatarstan. Here, the rich are the local elite, and trans-national elites have never had much of a role. Those who have some experience of the region have little positive to say about the processes and outcomes of their work in the region. It is worth reminding ourselves of the views of one of the most outspoken of the Western respondents of this study: [T]he Russians are all very clever, they had this attitude ‘I’m gonna be here long after you’re gone’. It’s one of those cultures where its virtually impossible to know what’s really going on. Being a Russian speaker wouldn’t really help. The excuses they made for stuff were incredible – ‘you can’t get hold of this guy today, there’s been lots of rain and the telephones won’t work properly’. I mean, half the time there would be a good reason for things breaking down, but the amount of bullshit they could give you . . . [. . .] For example, look what happened to the people who went in to work with the Moscow State Circus – great name, great brand, no money. They started to get the thing going, made some money, but the Russians objected to the Americans taking the profits out. It’s like ‘the Circus is ours – why are you making money out of it?’ There was actually an assassination there. They don’t understand the mentality of profit – it all

150

Economic development in Tatarstan gets completely political. A similar thing happens in other places in times of trouble – in the UK in recession it becomes very political, but not like this. The ruthlessness – people just accept it, they’re so used to it. Australian investor in Tatar–Norwegian joint venture, Kazan

Although the trans-national corporation struggles to gain a foothold, the ‘culture–ideology of consumerism,’ does undoubtedly exist in Tatarstan, and appears to be growing by the day. According to Sklair, ‘the aim of the global capitalist system is total inclusion of all classes, and especially the subordinate classes in so far as the bourgeoisie can be considered already included. The cultural–ideological project of global capitalism is to persuade people to consume above their own perceived needs in order to perpetuate the accumulation of capital for private profit, in other words, to ensure that the global capitalist system goes on for ever.’ (1995: 47) This is a broadly correct assessment of the nature of capitalism in developed societies, but is not especially applicable to the realities of capitalism in developing societies. Local elites in regions such as Tatarstan take on the ideas of consumption, advertising and marketing, and create diverse forms of capitalism from below. While we have the emergence of Kazan branches of McDonald’s and distributors of Coke and Pepsi, we also have all manner of new local Tatar firms, for advertising, distribution and in the entertainment business. It is difficult to see these local firms’ links with Western ‘hegemons’. Even those corporations that have physically extended their spans into Tatarstan via the establishment of distribution offices (such as Pepsi, Coke and Philip Morris) often struggle to impose their culture– ideology. Sklair continues: ‘the culture–ideology of consumerism is, as it were, the fuel that powers the motor of global capitalism. The driver is the trans-national capitalist class. But the vehicle itself is the mighty transnational corporation.’ (1995: 49) This statement mistakes the symbolic results of local development as the outcomes of the action of members of the global trans-national class. Development is not all a result of globalization. Much of it is internally produced, and the cultural ideological forms of globalization in Tatarstan are taking place without the ‘vehicle’ of the trans-national corporation. We have to allow that these growths occur according to a different logic than Sklair’s trans-national practices. State-centrism, according to Sklair, must be abandoned, in order to provide TNPs with the ‘conceptual space’ in which they work (1995: 59–61). Studies such as Dicken’s (1998) throw light on the globalizing tendencies of capitalism. But Sklair wants to go further – to show that culture–ideology ‘complement[s] the economic globalization, [. . .] and thereby demonstrate[s] the limitations of state-centrism for a genuine theory of the global system’ (1995: 62). This theory of the global system, then, revolves around the perceived need for global capitalism to continually increase production and international trade, to guarantee the political conditions for this to occur

Conclusion: Tatarstan and globalization

151

uninterruptedly all over the world, and to create in people the need to want to consume all the products that are available, on a permanent basis. All three facets of Sklair’s ‘global system’ have, in Tatarstan, limited empirical evidence to sustain them. The features of Tatar economics are highly differentiated from those of Western systems, and all have local, not global origins. In order for the global system to work in Tatarstan, a sea change would be required in external and internal practices. For example, Western companies would have to go and invest in the region ‘like McDonald’s’,5 something they are, at present, unable to do because of the nature of the Tatar government centre’s almost total control of the Republic’s strategic interests. To remind ourselves of the experience of one such member of the ‘transnational capitalist class’ when describing emerging business in Kazan: With joint ventures and the new cooperatives when they started to emerge, everyone made mistakes. You come to realize that there is only one way to work. A new guy comes in and he must be like, you had to literally push the guy [pointing at my chest] ‘I’m gonna do this, this is how it’s gonna be’. Australian investor in Tatar–Norwegian, and Tatar–UK joint ventures, London And a successful Tatar businessmen about to break into politics spoke in a similar way: Investment here is very dangerous. The laws are not right [ne pravilno]. Russian businessmen don’t want to work in Western ways. The laws are not international. They do not work in the way that laws work in France, or the US. Foreigners can’t understand it here. The two mistakes they make are very serious. First, to give money. Secondly, to give industry [equipment]. You can pay your capital to this Russian factory, and they are together. But without knowing it, a bureaucrat can just take all of this away. The mentality is totally different. It’s a different system, totally. Capital doesn’t do the same thing in Russia, it’s a historical problem. Joint ventures are doomed [obprechinii]. Director, new political party, Kazan The trans-national corporation has proved itself not strong enough or willing enough to reform so that it can work effectively in this scenario. A disembedded, wholly Western way of working in Tatarstan would mean coming into conflict with the state, which remains the central ‘fixer’ and authoritative force in the economy. True, Tatarstan does have tax incentives for foreign investors, along with most developed and developing states. Sklair takes this as evidence for increased trans-national practices and the influence they assert over national economies (1996: 63). In Tatarstan this is hardly the case. The laws have to be

152

Economic development in Tatarstan

trusted if they are to mean anything more that abstracted concepts loosely positioned at the margins of real economic action. Tatarstan has changed many of its laws, but it is loath to change its practices (Chapters 4–5). Sklair agrees with Lockwood (1999) that globalization caused the Soviet Union’s collapse (Sklair 1995: 247). The turmoil and transformation of 1991 were results of ongoing processes. That is also the argument of Harvey, along traditional Marxist lines of conceptualization; the expansion of market forces and the crisis tendencies of capitalism. The orthodox Marxist view of globalization tends to exaggerate the importance of trans-national elites and the value of their ideas as much as the pro-globalizers. Harvey’s ideas on the nature of the elites under ‘flexible accumulation’, while they may work for the advanced West, do little to help our understanding of postsocialism: The local availability of material resources of special qualities, or even at marginally lower costs, starts to be ever more important, as do local variations in market taste that are today more easily exploited under conditions of small-batch production and flexible design. Local differences in entrepreneurial ability, venture capital, scientific and technical know-how, social attitudes, also enter in, while the local networks of influence and power, the accumulation strategies of local ruling elites (as opposed to nation-state policies), also become more deeply implicated in the regime of flexible accumulation. (Harvey 1990: 295) This is an admirably clear conception of the complexities and advanced nature of late capitalism, but it cannot account for the way in which elites remain local, not global, in regions such as Tatarstan. Tatar capitalism remains local and tied to material production, not to the flexibilities of ‘postmodern’ design and detail. Harvey would not wish to deny this: ‘More and more capital is embedded in space as landed capital, as capital fixed in the land, creating a “second nature” and a geographically organized resource structure that more and more inhibits the trajectory of capitalist development’ (Harvey 1995: 7), Unlike Sklair, Harvey has not yet attempted to apply his ideas to postsocialist or other regions, and hence skates around the thin ice that Sklair strays onto. Perhaps this was advisable. Harvey’s theory interlocks with that of Sassen over this issue of geographical isolation and physical ‘lock-out’ from global flows of capital (Harvey 1990: 295). Russia, we can assume, is one such excluded space, or a ‘loser’ in Sassen’s terminology. Yet the problem remains. How can globalization be said to cause this exclusion? It is far more sensible to talk of the exclusion amounting to the absence of globalization rather than its unpleasant result. It is worth noting that Sklair’s newer work (2001) contains no mention whatsoever of the former Soviet Union, and focuses instead on the Fortune 500. Is it hardly surprising that he finds evidence for globalization taking place in these companies. However, one would struggle to come up with the same globalist argument if Russian

Conclusion: Tatarstan and globalization

153

companies other than the three Russian Fortune 500 companies (Gazprom, Lukoil, and Yukos) were surveyed. Lockwood’s account of globalization is the most traditionally Marxist of the three. Within a global context, including East Asia and China, Lockwood makes his case that the Soviet Union’s demise was a direct result of broader changes that continue to threaten what few state-run economies remain. While this seems theoretically correct given the trend over the last 20 years for deregulation and privatization in developed and developing economies, evidence for such actual changes in practices is hard to find in areas such as Tatarstan. Instead of dealing with the empirical reality of the future paths for postsocialist regions, the fact that they all call themselves capitalist seems to be enough for him to argue that globalization is an unstoppable process until the social relations of the productive forces are overthrown again with a ‘real’ socialist revolution. Even if we put the issue of the likelihood of this event to one side, Lockwood’s argument has some serious flaws. He completely omits the whole issue of culture and hybridity, which surely would have made his argument more convincing. The cultural–ideological elements of Sklair’s theory, for example, are certainly the best empirically supported parts of his theory, at least in this part of the world. However, even in the sphere of economic culture, there is much to be said about the uniqueness and locality of Tatar consumer ideology. It is here where the real crisis surrounding global sociology in relation to postsocialism hits home. Sklair is forced to admit that the ‘culture–ideology of consumerism may have made the New Second World less like the First World it was intended to emulate than like the Third World’ (Sklair 1995: 262). There is some substance to this claim in some parts of Russia, but one wonders how this can possibly contribute to his and others’ arguments on globalization. If globalization causes disruption, isolation and poverty, how can it be called ‘globalization’? Globalization is expected to do too much. We should perhaps instead examine the local formations of capital and their potential to develop into globalized (or not globalized) structures. Moreover, Tatarstan shows that a region does not need to possess a similar economic base to Western nations in order to share its global ideological notions. Hence globalization can only make sense as an end result, not a process. Sklair argues that globalization may not help Russia and the former Soviet states and in doing so effectively concedes that his ‘sociology of the global system’ cannot account for the continuing difficulties that the FSU faces. This is also a feature of Giddens’ writing where, faced with the problem of FSU market failure, the ‘absence of civil society’ and the untrustworthiness of the nascent economic system and its actors are blamed (Hutton and Giddens 2000: 38–9). Surely, however, these problems preclude globalization? These are the social structural features that prevent global capitalism from taking root. Globalization cannot happen because of these local, historical, social and economic arrangements. It seems absurd to argue that globalization

154

Economic development in Tatarstan

causes these local problems. In this situation, we return to the classic problem of development, not a new one of globalization. It appears that the globalization discourse is irrelevant to former Soviet societies, and what we see instead is a restatement of the classical problems of market development. Rarely do Marxists analysts admit that globalization can be less pronounced than the orthodox neoliberals or leftists state it is. The Marxist Robert Went argues (2000: 13–14), quite rightly, that ‘[w]hile foreign direct investment has been increasing, it is still marginal compared with short-term movements of capital, which have grown explosively’. This is true, but the implications of this fact are usually blown out of all proportion in arguments that talk of ‘out of control’, ‘borderless flows’ of capital and their global destabilizing effects, arguments that get support from mainstream theorists, Marxists and conservatives alike (see Giddens 1998, 2000, Castells 1998, Sklair 1995, Gray 1998). But the socialist left tends to exaggerate the importance of ‘fictitious capital’ and its pernicious effects on the developing world. There are places, of which Tatarstan is just one, where financial speculation is largely irrelevant to the workings of the real, socially and physically-embedded economy. And this is perhaps no bad thing. EBRD figures for 1995–2000 show that Russia received 0.5 per cent of total world FDI inflows. This is 80 times less than the EU and 50 times less than the US (Cordonnier 2002, EBRD 2000). FDI has always been peripheral to the growth of the Russian economy. Since the 1998 crash, all manner of localist development options have been revived for the Russian economy. The rouble devaluation has actually helped Russian regions to gain some sort of control over their own destinies. SMEs have shown particularly impressive growth since the crisis. The regional power structures remain significant. These are all reasons why hope for the future is a common thread running through the interviews. Hence the move towards restricting capital flows, or mobilizing ‘antiglobalization’ movements, or a rebirth of socialist alliances (Harvey 1995, Lockwood 2000, Sklair 1996) do not help our understanding of the complexities of development in all of its forms. There are still viable forms of local, domestically-focused development strategies. In fact, there are places where this is the only viable option, and global talk is a diversion from the realities of everyday life. However, others want to go further, to state that Russia’s malaise is the result both of long-term Russian problems and of neoliberal reforms in a high-risk macro environment. Gray’s anti-communist and anti-capitalist views are examined next.

The conservative response – globalization as threat to liberal stability: Gray’s False Dawn Tatarstan’s experience of uncertainty, isolation, risk, and (to a lesser extent) violence very much fits in with Gray’s fiercely critical interpretation of

Conclusion: Tatarstan and globalization

155

globalization. As an account of the incompatibility of market capitalism with Russia’s unique history, Gray’s chapter on Russia neatly captures part of the paradoxes of Russia’s troubled marriage with the market. The evidence of this study strongly supports the idea that Western-style designer capitalism cannot take root in Russia because of the country’s unique history. Unfortunately, Gray’s anti-globalization is just one part of his idiosyncratic yet populist stance that theorizes capitalism’s imminent demise. He is convinced of the ‘realities’ of a new global instability that threatens the economic and social realms of all societies, even the most developed ones. Yet it seems that in the West, and in particular the US, disembedded capitalism is stronger, and more politically entrenched than ever.6 What is more, as Bauman (1998: 11) shows, investors from these nations can choose to opt out of whatever sections of the world they are reluctant to work with. The key issues facing global political economy is the level of global inequality, not global instability. Gray’s analysis of Russia’s ‘anarchocapitalism’ fails to account for routinized practices and regional differentiation within the country. He refuses to allow the possibility of indigenous features of Russia being integrated into a global framework. According to this view, state control and informal exchange amount to criminality, and nothing more. A focus on Tatar business practice shows that de facto informality is sustainable and persists along with a strong steering role of the state (extending as far as direct ownership and control). There is little evidence in this study that the Tatar interpretation of ‘survival economics’ will imminently collapse, just that development will be state-managed and will involve little in the way of foreign investment.

‘Winners and losers’ – Bauman, Sassen and the new global elite While not as extreme as Sklair’s depiction of the processes of globalization, Bauman and Sassen share Sklair’s worries about the undemocratic nature of the elite global capitalist class. Giddens also shares this fear (1990, 1999). What Bauman and Sassen go on to argue is that the processes of globalization create serious inequalities and isolations: ‘Globalization divides as much as it unites; it divides as it unites – the causes of division being identical with those which promote the uniformity of the globe’ (Bauman 1998: 2). It is partly these sorts of claims that make globalization such a difficult concept to argue against. If globalization creates greater international interconnectedness and greater isolation, then surely cases such as Tatarstan can be subsumed under the latter heading of isolated regions within the exploitative globalization process? I would disagree. One of the key problems with Bauman’s work when applied in relation to Russia and the former Soviet Union is the way in which regions are so diverse as to confound his general argument that trans-national capital can effectively do as it pleases and, if necessary, appeal beyond local orders to get its wishes (1998: 124–5). This simply has not happened in

156

Economic development in Tatarstan

Tatarstan, where the opposite is closer to the case – trans-national elites (in their small numbers) have had to adapt to the ways of the local economic networking. The elites in Tatarstan are not international, they are ideologically and spatially located in the region, often directly situated within the physical needs of individual enterprises and their associated supply and distribution chains. Bauman, rightly, also shows that international capital can exist perfectly well while simultaneously ignoring troublesome areas (as does Castells 1998). While local restrictions on international capital flows are ‘few and far between’, Bauman claims that the few restrictions remaining are ‘under tremendous pressure to be effaced or just washed out’ (1998: 11). Tatarstan’s experience, however, shows the opposite situation. In the abstract world of legal and constitutional supports for investment there are indeed no restrictions. But there are major restrictions on investment in the real, social world of business. A cursory glance at the experience of the Western investors in Tatarstan reveals this fact. I would suspect that there are many more places in the world with a similar dearth of investment, trans-national linkages and development. The very absence of linkage is evidence to contradict the globalization position. If capital does not go to some places, then global capital cannot be blamed for causing isolation. Isolation was already there before the rise of global talk, before the transition to an ‘informational mode of development’, and before the end of the Cold War. Isolation is not going away. Bauman continues: ‘[t]he sole limits which could make themselves felt and respected would be those administratively imposed on the free movement of capital and money’ (1998: 11). Politically imposed restrictions on capital are unnecessary in places like Tatarstan. The social, physical and regional– geographic limits are already strong enough to prevent large financial inward movements. Bauman wants to deny that there are any really existing barriers to ‘globalization’. It is unfortunate that sociologists as pre-eminent as Bauman are so readily able to make mistakes based on undersocialized conceptions of economic life. Such errors are based on the all-pervading theoretical assumption that social life and development is predicated upon weightless, non-physical commodities, manifested through electronic forms of communication. If this were so, formal–legal constraints on capital would indeed be the only possible way of preventing globalization. However, it is not the case that economies are all about ‘flows’ and ‘signs and spaces’. Social formations, including networks and informality are crucial, as are physical and geographical constraints.7 Analysts such as Bauman, Giddens, Urry, and others are fixated on the notions of transport, electronic communication and time–space compression. As such they ignore the social realities that resist globalization. [R]ather than homogenizing the human condition, the technological annulment of temporal/spatial distance tends to polarize it. . . . For some

Conclusion: Tatarstan and globalization

157

people it augurs an unprecedented freedom from physical obstacles and unheard-of ability to move and act from a distance. For others, it portends the impossibility of appropriating and domesticating the locality from which they have little chance of cutting themselves free in order to move elsewhere. (Bauman 1998: 18, italics removed) Tatarstan’s experience does bear this out, involving transnational elites simply leaving as they see fit,8 but this is surely because of a lack of globalization, not a result of it. This is the case because time and space barriers have not been fully broken down. Although some of Bauman’s account of globalization is partially supported by the evidence of this study, the remainder of it cannot be substantiated by empirical evidence because of its highly abstract, philosophical nature (see in particular 1998: 19–21). Much of the same applies to Urry’s recent work on networks and flows (2000). A more ‘real-world’ approach to globalization as a producer of inequalities is taken by Saskia Sassen. Her long-term interest in the globalizing tendencies of Western business practice is essentially a political–economic one. She rightly talks of the necessity of ‘global’ firms such as financial houses to ground themselves in local areas that contain the right kinds of financial support, infrastructure and geographic position for the operations to function ‘globally’. The creation of new winners and losers in the global game is a valid concept, and has some relevance to the Tatar situation. A number of the elites have had their wealth and influence dramatically increased by the political and economic changes wrought on the system since 1991 (see Castells 1996: 139–44, 1998b: 186). Conversely, poverty and social isolation has increased for many. But is this the result of globalization? Is it not just the result of a divergent form of capitalism emerging in a region with a distorted and troublesome internal economic base? There is little that is ‘global’ about this distortion. Despite nomenklatura privatization there is still a desperate lack of ‘global’ movement among the vast majority of Tatarstan’s population, even of its elites. Their power is tied to Soviet-era enterprises that remain locked into local sources of financial and social capital. Kazan, as of 2004, is pretty far from a ‘global city’ despite the government’s best efforts to modernize the airport and telecommunications infrastructure. The elites stay pretty much rooted to the spot, and no meaningful foreign elites come ‘flowing’ in and out. The analyses of Bauman and Sassen are prone to the same problems of Urry’s; Tatarstan, although certainly a capitalist system, is a system characterized by lack of mobility and has an intensely local focus. The attempts to attract capital and form partnerships with other states, such as Turkey, Kazakhstan and others, may be a potential ‘globalizing’ tendency in the future, but little has come of these linkages as yet (see Chapter 4), and they do not really correspond with the ‘trans-national elite’ ideas of Sassen, Bauman, or Sklair. This constitutes further evidence against the global idea.

158

Economic development in Tatarstan

The sceptics: Burawoy, Jessop, Scott, Hirst and Thompson There are few accounts of globalization available that are openly critical of the notion. Sklair asserts that there is ‘a good deal of hostility to the idea of globalization in academic circles’ (2001: 76, note 1). If this is true, these critics are generally not publishing their ideas. The main exceptions are dealt with in this section. The concluding chapter of Burawoy’s collection Global Ethnography is highly critical of some of the more mainstream accounts of globalization theory. Giddens’ Runaway World receives heavy criticism. He asks ‘[w]ho is the “we” he is referring to?’ (Burawoy 2000: 337). According to Burawoy, Giddens’ account of the global is more a reflection of the experiences of his own elite academic privilege than a coherent world theory.9 Ethnography, Burawoy argues, nevertheless connects with the global. Tatarstan seems to show us that it can indeed connect, but in a particularly loose sense of the word. As globalization is such a theoretically ungrounded and conceptually loose concept, there is really no way we could fail to apply it in some way to Tatarstan’s socio-economic order. However, the reality of the postsocialist economic struggle shows us the limits of the globalist model. While there is much to be said for Burawoy’s concept of ‘involution’, we also need to know more about why some regions of Russia have been isolated from such effects. The answer surely lies mostly in local features. While the work of John Scott has tended to be pro-global, along the lines of a Bauman or Sassen-type argument, his edited book The Limits of Globalization, (1997), is an interesting collection. The concluding theoretical article (Altvater and Mahnkopf 1997) is abstract in the extreme. It is hard to imagine a less grounded approach. Altvater and Mahnkopf operate in a broadly traditional Marxist framework and, while generally going along with Giddens as regards the continuing process of disembedding, argue that full globalization of the economy is not possible: Globalization . . . meets its limits; globalism is never attainable. . . . In contrast to neo-liberal assumptions that more market means less state, market economizations produce an enormous demand for legal regulations. . . . [I]n the transitional economies of Eastern and Central Europe we hear the call for order, for contractual and legal security so that the private ‘investors’ can make their decisions under conditions of calculable ‘risk’. . . . The pure disembedded market is thus a mirage. (Altvater and Mahnkopf 1997: 320–1) This is an excellent point, and is definitely substantiated by the evidence of Tatarstan – strong belief in the notion of disembedding and of the need for regulation and control, but very little actual presence of either phenomenon in real economic practice.

Conclusion: Tatarstan and globalization

159

However, Altvater and Mahnkopf’s completely theoretical argument cannot fully critique the inadequacies of globalization as a development theory. Globalization is highly ungrounded, and cannot be effectively assailed in the abstract. This is also true of much of the network theories being developed, which follows the dominant US-style epistemology and methodology of mathematical mapping and modelling. Such abstraction merely contributes to justifying the empirically divorced theoretical approach of the globalists. Analysts who criticize globalization in this abstract way fail to provide the empirical facts that social researchers ought to provide to critique globalist assumptions. Nor does this theoretical approach take the moral high ground from the neoliberals, whose policies have been an important factor in contributing to the growth of appalling rates of inequality in Russia.10 Bob Jessop’s work on globalization is also highly theoretical, but does more than the other theorists analysed thus far to critique the concept effectively. He refuses to get drawn into the somewhat tired ‘sceptic versus radical’ debate and instead puts forward a convincing and original account of the way global and regional issues are related. Again, there is nothing in the way of empirical research here, but at least there is a theoretical ground that can be built on by real-world data. The experience of Tatarstan is very much in line with Jessop’s ideas of institutional and social ‘embedding of the circuit of capital’ (2000: 4), and the ‘marked reinforcement of uneven development’ (2000: 6). His work is supported on two counts. First of all, Sassen’s argument that local centres are necessary for globalization of capital to occur is supported by Jessop (1999). Second, he supports Bauman’s analysis of globalization as movement for some and paralysis for others. However, he is more sceptical of the reach of globalization than most other analysts of a Marxian persuasion (such as Lockwood, Sklair and Harvey). He concludes (1999) that globalization is not a single causal mechanism but a complex and even contradictory trend resulting from many causal processes. I am not denying the evidence for increasing structural interdependence on a global scale in many different fields, nor for the increasing importance of the global as the most extensive strategic horizon of action for ever more actors. But we must decompose globalization into its various constitutive processes and also consider the counter-tendencies that hinder its complete realization. There are objective limits to economic globalization due to capital’s need not only to disembed economic relations from their old social integument but also to re-embed them into new supportive social relations. When the details and contradictions of qualitative, empirical accounts of development are analysed, it seems that the only possibly useful definition of the term ‘globalization’ must surely be along these lines.

160

Economic development in Tatarstan

Although not written by a globalization theorist as such, the points made in Roderick Martin’s article on the limits to globality in East European development (1998) are strongly supported by the data in this study. Castells, for all his enthusiasm for the ideas of global networks facilitated by information, is also very much a realist about the FSU’s problems. Lewis’ article (1997) is highly critical of globalization per se, and is about the only source I could find that contains such ideas.11 Globalization, he says, is of little theoretical use because the underlying causes of international change are never discussed and there is no distinction made between important changes and trivial ones. Instead we have endless descriptions. Globalisation theories wallow in a proliferation of levels, ‘scapes’ or meanings. As a result, the relationships between cause and effect, significant change and trivia, remain shrouded in the wonderful world of information technologies or the frightening nether world of global environmental risk and chaos. (Lewis 1997) I have seen little in the empirical world so far that discourages me from holding a similar view to the above. It seems that to make any sense of international political economy in the twenty-first century, one must be willing to pay more than idle lip-service to today’s conditions in the less integrated regions of the world.12 Social theory on its own (such as Giddens, Urry, Waters, Bauman, Beck, Harvey) usually does not allow for the failure of globalization to manifest itself in other regions.13 To his credit, Castells’ truly international perspective, with a combination of theory and evidence, manages to account for non-global regions in a very effective manner. He does this without recourse to theorizing that globalization causes inequalities and ‘losers’. Hence he uses the word ‘globalization’ sparingly. There is no doubt that much of the ‘network society’ view is a correct analysis of advanced Western societies, but it remains debatable as to whether such a society has really emerged in Russia. Hirst and Thompson’s Globalization in Question is already a classic text, chiefly by virtue of its being almost one of a kind. The book actually dares to question the material existence of globalization in the empirical world. They effectively criticize the ‘fact’ of globalization, but yet also call for more control and regulation. As a critique of the notion of globalization in the face of bare economic facts, Hirst and Thompson’s work is virtually unique. It is often referred to as ‘iconoclastic’. However, they too call for more control and regulation of markets, in a similar way to Gray, Soros, Hutton, and Giddens.14 The fact is surely the failure of markets in Russia that is of cause for concern, including its accompanying internal mismanagement, social control and disastrous privatization strategy. If regulation is going to keep out investors, what will happen to Tatarstan society when the oil runs out? Investment is desperately needed, and risks need to be taken. Global

Conclusion: Tatarstan and globalization

161

capitalism is afraid of heavy capitalization – why bother investing in an operation like KamAZ? A firm would need to get involved in major capitalization to replace the outdated equipment, and would expect to be involved in major disputes with the Tatar and Russian Federal authorities. The firm would require large guarantees of sales, which would be unlikely. In the current economic climate, FDI on such a large scale is considered far too risky, while financial speculation is more profitable (Soros and Giddens 1998). If this trend continues so-called ‘global capitalism’ will never succeed in transforming former Soviet Union state enterprises into profitable, globallyintegrated firms. Local arrangements of resources and political power (Stoner-Weiss 1998) will remain much more important. Hirst and Thompson leave out the cultural and ideological forms of globalization. For this they have been criticized (Urry 2000: 197, Giddens 1999). They ‘believe that without the notion of a truly globalized economy many of the other consequences adduced in the domains of culture and politics would either cease to be sustainable or become less threatening’ (Hirst and Thompson 1996: 3). This dataset seems to show that the ideology of globalization spreads faster than the reality of its economic transformations and flows. It appears that cultural and political forms of globalization cannot be reduced to the effects of changes wrought by economic globalization. Tatarstan shows no meaningful evidence of globalization in the development of the economic sphere. Yet it is awash with the ideology, rhetoric and surface images of Western ‘free’ markets. Hence there is no way that concrete economic changes can directly explain cultural and political notions held by economic actors.15 It could be argued that the destructive side of globalization that partly caused the end of state socialism (Chapter 1) is also responsible for the holding of free-market ideologies in contemporary Russia. This is a plausible explanation, but does not explain where these ideologies come from. The local state is one of the main source of these ideas. The communality between the concepts and phrases used to describe Tatarstan’s future prospects by economic actors (at all levels) and the state is striking (see Chapter 4). If this is the correct analysis, then this economic ‘double think’ will persist for as long as the local informal state continues to have such a strong role in contemporary Tatarstan economic life. This still does not answer the original question of where these ideas originate. It is relatively easy for ideological and cultural forms to be globalized.16 However, it is quite another thing for structural and capital forms to be globalized. McDonald’s, Coca-Cola and Philip Morris may, in a sense, represent the arrival of Western modernity. But the reality of life in Russia for the vast majority of people is far removed from that of the West. It is precisely these global brands that have the least problem arriving and profiting in regions such as Tatarstan. It is far harder for real development, in infrastructure, industrial plant and financial institutions. These sectors have few meaningful foreign partners except for some limited trade links, and it is debatable whether the limited foreign investment that has arrived does any

162

Economic development in Tatarstan

significant work in improving the local economy (Busse 2004). Many of these projects never really get off the ground, leaving their Western managers demoralized and unlikely to persist with Russian regions when there are so many other potential regions to make profit in this world. Education, healthcare provision and the rest of what the Russians call ‘the social sphere’ lies even further behind.

Tatarstan experience as globalization: the case against The persistence of Soviet-style organizational norms and of Soviet and indeed Russian ‘economic culture’ is perhaps the single most important piece of evidence in Tatarstan to use to counter the concept of globalization. If Russian and Tatar capitalism is to be theoretically incorporated into the above models of global networks, flows or classes, these theorists must be prepared to accept that there can be many forms of global capitalism. This tends to limit the usefulness of the term globalization. Moreover, Russian integration into the world economy will remain highly problematic and characterized by intense conflict. The experience of foreign actors in Tatar development is that they have a distinctly subordinate role to local elites. The continued informality of Russian economic behaviour also counts against global models. Furthermore, when Russia’s economy is considered to be part of a global system, the issue of inequality sharply arises. In this case globalization is really a new word for the growth and success of Western business and Western dominance in its share of the economic world. It was the contradictions and problems of the Soviet economy coupled with the expansion of Western capitalism that caused the USSR’s downfall, not ‘globalization’ as a process by itself. Globalization is thus a manifestation of Western economic dominance, it is not the cause of it. A further problem with thinking of Russia in global terms is the material fixity of strategic economic networks. Foreign capital finds it extremely difficult to penetrate and transform this interconnected and networkembedded system. At present, there is little evidence that inflows of foreign capital can do anything to change them. However, the volume of FDI into Tatarstan has been so small, we may yet have too little evidence for my analysis to be conclusive.17 Fears that unemployment levels, for example, are in reality far higher than official figures indicate are common among Western commentators, as is the idea that many thousands of employees work in unproductive enterprises that need to be closed, further adding to unemployment. The evidence in this study does not necessarily confirm these fears. Tatneft, for example, has gone through fearful series of worker lay-offs, but the number employed remains over 75,000.18 This is hardly a unique problem for Russian fossil fuel enterprises. Of course, the environmental globalization thesis is supported by this, but this is not to deny that the model of Tatarstan’s material networks of strategic enterprises do not support the economic globalization paradigm.19

Conclusion: Tatarstan and globalization

163

The world remains a vastly differentiated place. Russia has virtually no tourist industry, there is little generalized knowledge of the place, only fear born out of media panic stories of the mafia and environmental disaster. The end of the Soviet Union did not mean that the Western system was the right one.20 Investment into Russia from, say, India or Kazakhstan may be ‘foreign direct investment’, but is not Western market expansion.21 Thinking at this level challenges the global model even further – the existing social structures of these societies are all different and are modified only by the occasional linkages between them. There is no overarching logic of globalization changing the world, it is just that the advances of technology and the need for new markets pushes capitalism into new forms. It is hard to see that there is anything new in the concept of globalization – it is just a further expansion of capitalist market relations, and into some areas it cannot advance properly. Much of the ‘advance’ comes from below, as Burawoy indicates. Furthermore, there is considerable regional differentiation within each society itself, often with overlapping, possibly contradictory areas of power and markets. There is more than one economy within each society. More importantly, the demise of socialism in the East does not imply that there is any set path of development for the former Soviet Union countries or for the world. There are many forms of capitalism across the globe, many of which share little in common with Westernized, flexible systems. The systematization of network features in Tatarstan represents one such anti-globalized feature. These networks exist because of Soviet industrialism, they are historically developed over time and they operate according to distinct, quasi-market logics (Chapter 3). They are restrictive, but do not conform to the rationalization of Weberian modernity and the ‘iron cage’. Regionalization, a key effect of these closed social networks (Chapter 4), implies further non-globalized development. It appears that globalization does not help us to understand such isolated regions and the importance of localized development strategies. However, there are some parts of the Tatar experience that partially conform to the global discourse, which we will now examine.

Tatarstan experience as globalization: the case for I do not intend to assert that the work of globalization theorists has absolutely no relevance to contemporary Tatarstan’s experience of market capitalism. The very fact that capitalism (albeit of a unique and highly ineffective kind) is the chosen economic path taken by the region’s elites and small entrepreneurs alike is a particularly strong form of ideological globalization. ‘Cultural hybridity’, along the lines promoted by cultural globalization theorists, is also to a degree empirically supported here. Whether or not Tatar or Russian enterprises actually have the technologies of the Western business world, the spoken need of their necessity in order for business to work is a strong globalization element. This emerges quite strongly from the majority of the interviews. There is also some evidence to suggest

164

Economic development in Tatarstan

that Tatarstan’s economy is being ‘opened out’ to market forces in a way that is creating some of the welcome and unwelcome effects of economic action all nations in the capitalist world are exposed to. Unemployment, having for nearly 70 years been largely avoided, is now a major worry for all. Only the continuation of indigenous social practices of informal economics are hiding this reality. One can only speculate, for example, what has happened to the 91,901 staff who left KamAZ between 1989 to July 2000. Returning to the agricultural sector is perhaps a possibility, which would give further evidence for the globalization model, as this is the fate of many displaced workers in developing nations such as Brazil. It may also seem that de-industrialization is inevitable, but there is little evidence of the shift to service industries, innovation and restructuring. What little of this there is fails to get ‘on board’ global routes. Communication technologies are growing towards Western goals, but are getting there very slowly. The growth of Internet usage in Kazan is nothing like as advanced as in Western countries. Telephonization rates are still poor even by Russian standards. Although they have since improved with the state project of building new housing, in 1997 only 12 per cent of Tatar homes had telephone lines (The Economist, 6 September 1997), although the Tatar government claims 125.7 per cent growth in the number of telephone lines in 1998 (Shaimiev 1999). A large segment of academic work at KSU is done in the departments sponsored by Western NGOs. Western-produced technology is, at present, infinitely more desirable than Russian models. Tatarstan already has three mobile phone service providers. However slowly it is developing, the point is that technology development is heading towards Western directions of increased communication and computerization. The same cannot really be said for economic practices, which are doing this only in a much less profound way. The message is simple. The existence of Western managerial language and mobile phone networks are only part of the story. What matters is how they are used, which is dependent on distinct social and institutional contexts. As for cultural globalization, hybridization is confirmed here. Across Kazan, advertising of Western goods competes for space with locally produced images. New architecture in Kazan is often a bizarre cultural hybrid, borrowing from all kinds of traditions in a very postmodern fashion, such as the new pyramid-style shopping centre in central Kazan. Advertising in the region attempts to be inclusive: tapping into European/Western consumerism, but retaining its Russian–Tatar imagery. Essentially the message is that Russian and Tatar people can be Russian and Tatar and also Western. This message of Russian uniqueness yet global inclusion is reinforced by Moscow-produced new media, such as OM magazine.22 The cultural hybridity idea is certainly supported by the Tatar experience of postsocialist modernity, and it is a key part of the way in which many, particularly young, local Russians and Tatars attempt to be a part of Western culture. It is easy to develop ‘global’-style cultural concepts. Manufacturing

Conclusion: Tatarstan and globalization

165

real economic integration into the ‘global’ economic system is much harder. If we change what we mean by globalization, Tatarstan’s experience can be incorporated in that framework. If we have the negative view of globalism, that it causes instability and inequality along the lines proposed by Bauman and Sassen, then it can explain Tatarstan’s situation. What it cannot do is account for the future development of the region and why it will be significantly different from Western economic forms. It is important to remember that in this ‘negative’ view of globality, regionalization does not mean nonglobalization.23 Globalization in the advanced states of the West (Sklair 2001) goes hand-in-hand with isolation and crisis in other regions. According to the negative view of globalization, if a state is part of global market processes it becomes a part of the development and underdevelopment that globalization produces. However, it remains very unclear that globalization caused the Soviet Union’s failure, and even less clear that globalization causes Tatarstan’s current relative international isolation. Internal contradictions and crises are the central reasons for both of these phenomena. Although the West, in particular the US, are repeatedly blamed in Russia for Russia’s ills, there are good reasons to conclude that Russia’s developmental struggle is a result of numerous internal, historical problems. It makes more sense to restate the more traditional development studies paradigm of uneven development in rich and poor regions, and apply it to Russia’s territories, than to try to incorporate Russia into sociological ‘globalization’ paradigms. Globalization makes some sense for regions and firms located in developed Western states, but makes little sense for those that are not so fortunate as to be found there. A key reason why the ‘uneven development’ road to understanding Russia has so far not really been pursued is because the Soviet Union was part of the Second, not Third World, and hence largely sidelined from the modernization and development debates. Soviet modernity was a distinct form of development. By Berman’s definition, Soviet citizens also experienced modernity: To be modern is to live a life of paradox and contradiction. It is to be overpowered by the immense bureaucratic organizations that have the power to control and often to destroy all communities, values, lives; and yet to be undeterred in our determination to face these forces, to fight to change their world and make it our own. (Berman 1983: 13) Berman’s definition is correct at this abstract level. But in terms of daily life and economic organization, Soviet citizens experienced a radically different kind of modernity from that of Westerners.24 It was a modernity that was rapidly made redundant by the new form of modernity of the market economy. The transformation from Keynesian national economies to free-

166

Economic development in Tatarstan

market global ones was a painful one for the West – deindustrialization and crises of the 1970s posed seemingly intractable problems for Western citizens at many levels. Market forces continue to disrupt national institutions in developed societies. It seems that Russia merely postponed its crises to the late 1980s and in doing so, revealed the real mess that its economy was in, normalizing and lengthening its ‘crisis period’ well into the 2000s and cementing its international position into one distinctly inferior to Western nation states. ‘Ten Years of Transition’ was the subtitle of the 1999 EBRD Transition Report. This, along with the cultural-ideological similarities, is the main form of globalization I can see. The ‘negative globalization’ idea can explain the Tatar experience in terms of the failure of globalization as an end result. As a major, ongoing process of social change, it cannot account for the isolation and distinctness of the region.

Globalization reconsidered A central argument of this book is that economic sociology ought not to be about grand global theorizing, but about analyzing structure and constraints in regional economic action. Globalization, according to the majority of analysts, leads to both world integration and development, but also fragmentation and isolation. In the ‘global postmodern’ (Burawoy 2000), all is said to be risky and untethered from traditional mechanisms of safety and national influence. The stakes are upped, ‘global’ risks are disembedded and beyond state control, and the futures are uncertain for all regions of the globe. This may or may not be true for certain parts of the world. As Castells shows (1996: 97–9), globalization is, in short, not global. There are regions that are ‘switched off’ (Castells 1998: 72). Tatarstan is one such a place. It exhibits few globalized features, yet it is also a high-risk business environment. Little in the political–legal sphere is to be trusted, particularly if one is a foreign outsider. However, this risk is not a disembedded, free-floating danger caused by some kind of global flows operating now that the state has untethered itself from steering responsibilities. It is instead caused by historical, internal social and economic processes on the ground. Social practices are hardy and can survive some monumental systemic changes. New practices also emerge to fit new scenarios. Tatarstan’s experience demonstrates that the ‘global’ economy is not global at all. While the expansion of Western free-marketeerism may have contributed to the death of the Soviet Union, it has failed to eliminate the role of local state apparatuses and social networks, and it has shown no path at all for future development of its successor regions.25 Moreover, Tatarstan seems at least partially capable of putting off reform indefinitely. KamAZ and other monolithic FSEs continue to survive despite protracted crises, mostly because the state will not abandon it to the further decay and possible closure that true market expansion would surely cause.26 There have been changes to KamAZ’s employment structure, changes to

Conclusion: Tatarstan and globalization

167

management and the taking on of e-commerce ideas (KamAZ 2001). Yet there is also the maintenance of Soviet-style monopoly and isolation from global interaction. The sales targets from KamAZ’s 1999 annual report aim at 93 per cent to Russia, and only 7 per cent for export, mostly to former ComEcon nations (KamAZ 1999: 16). This is due in no small part because the latest KamAZ vehicles meet only Euro 2 environmental standards (1996 legislation) for their diesel engines. This makes exporting to advanced countries very difficult. To put that in perspective, Scania are already working on developing engines that meet the stringent Euro 5 standards (expected to come in in 2008–9).27 Unfortunately, the loss of nearly 100,000 jobs at KamAZ is an all too real effect of the market. The destructive side of ‘global’ marketization has been much more visible than its creative side. Critics of globalization’s ‘worst excesses’ (Hutton, Gray, Soros) are particularly concerned with the instability of global capitalism. Of more pressing concern is surely the inequalities and difficult life-chances for those not privy to the expanding ‘global market’. We do not need to assume, as Gray does, that modern economies are ‘in crisis’ because of the failure of Western capital to take root in places like Russia. Just because globalization is not taking place in some parts of the world does not mean that the future of capitalism is somehow thrown into doubt. Russian capitalism has plenty of potential to grow, with or without major FDI. What it does mean is that there are different forms of capitalism across the globe, some of which are far removed from any meaningful global interactions. Almost all of the respondents in Tatarstan believe that there is no alternative to capitalism and are well-prepared to battle through the hard times that have come with it. However, the promise of real economic integration with the world has for the time being been dismissed. The implications of this is a stark reappraisal of global economic inequalities. If parts of Russia are to be isolated from the expansion of market capitalism along Western lines, then what we will see is a new division of rich and poor across the region. Some areas can tap into crossnational investment. Others cannot. Hirst and Thompson’s vision of elite ‘clubs’ of cash-rich investor states looks set to become more and more the correct picture of the true functioning of international capital. There is nothing truly global about it. Of course, free-floating, disembedded systems where corporate influence far outstrips that of local states do exist in some other regions of the world. Perhaps for them, globalization does make sense as a concept. But here in Tatarstan it is of limited relevance. There is little real material globalization evidenced in the region of Tatarstan. What we do have is some degree of ideological globalization, but it is a mistake to assume that this is simply ‘imported in’ on the back of Western investors, or via the influx of foreign media. Actors in the region have partially embraced the ideology of globalization in an attempt to rebuild the local region of Tatarstan as a response to ongoing economic crises and the exhaustion of the Soviet system. As the local state attempts to develop

168

Economic development in Tatarstan

the economy, it takes on and uses the rhetoric of global expansion and neoliberalism to a certain degree. Other actors to some extent simply copy the state’s official view (Chapter 4) or share its ideas about what is needed for development in the region. If a region wants to join in the global marketplace, it is hard to think of any other option other than inward investment and horizontal economic ties. However, this is not the contemporary reality. Instead, local, embedded elites, closely identified with the state and the informal economy, are the key to Tatar development. Political economy studied at the local level reveals that development in the late modern age is not ‘globalization’, but it does involve the expansion of the idea of free-market capitalism. The expansion of the market idea in the 1980s–90s is not ‘globalization’. Capitalism has always had strong international elements. Its subsequent expansion throughout the 1980s and 1990s has led conservatives such as Gray and Soros to theorize about the need for ‘slowing down’ and ‘taking back control’ of global finance. Gray’s extravagant claims about the imminent collapse of capitalism, he thinks, were ‘largely vindicated’ by events in South East Asia in 1997–8. But Gray, along with several others impressed by the idea of impending doom, fails to appreciate the dramatic expansion in US, Japanese, Western European, and Australian capital since even the days before ‘global markets’ and instantaneous communication. Gray provides no real evidence to suggest that the end is nigh, but persists with his doom-laden predictions: It will surely be one of history’s darkest ironies if the Enlightenment project of a world civilization ends in a chaos of sovereign states and stateless people struggling for the necessities of survival. (Gray 1998: 208) It is not, however, the Western states who are ‘at risk’ – the poverty-stricken areas of the former Soviet Union and of Africa, Asia and Latin America are the real losers. The free market in developed states (and most spectacularly in China) has generated enormous amounts of capital, and capitalism continues to grow. The real issue is not global instability but global inequality. As such the fundamental problem of international political economy has not changed since the onset of capitalism itself, globalization or no globalization. The vastly increased political, cultural and ideological freedoms given to the former Soviet people represents the largest successes gained from the end of the Soviet Union, but free-market economics has done little or nothing to help the vast majority of Russian citizens in terms of wealth creation (Sapir 2000, Burawoy and Krotov 1993, Bilenkin 1996). Burawoy (1999) is convinced that ‘a more cautious road that recognizes the signal role of the state in creating and nurturing modern capitalism’ is the way forward (1999: 303). Tatarstan is a relatively successful region in comparison to others in the Central Volga.

Conclusion: Tatarstan and globalization

169

The attempts to create Western-style markets and integrate inward foreign capital have had mostly negative effects for regions such as Tatarstan, in that they have destroyed the hitherto existing social framework of state socialism, which though disastrously flawed at least provided employment, stable wage payments and social security-provision through the enterprise labour collectives (Clarke 1996, Schwartz 2003). Until investment and communication become anything like truly global, the region will remain isolated and will continue its own domestic development for decades to come. Years of isolation and stagnation was what they got under Soviet conditions, and it is what the vast majority of the citizens of Tatarstan are currently experiencing under capitalism. The extracts below tell us something about the current failure of the Russian aspirations to join the supposedly ‘global’ order: They [Kazan FSE managers] were getting quite excited about telecommunications. But you can’t just have telecommunications per se, it’s a means to an end, really. I think it’s gonna be a long, cold winter for them. They would like to see themselves in the big manufacturing set-up again. But I mean, the world’s moved on. Director of UK–Tatar joint venture When I was very little my mother sometimes said to me, ‘You know, Tanechka, maybe one day we’ll be living without any borders at all. The way it used to be, a long time ago, in history.’ Countries will have the same kinds of relations between themselves that neighbours living along the same stairwell do. There are exchanges now, and international relations have changed so much that it seems to me everything is going to be all right because people will get together on their own initiative, to see another country and somehow share their experiences and learn from the experiences of others. [. . .] It’s close – what is it, six hours to fly there [East Coast of the US] on an airplane? When we take the train to visit grandmother we ride for six hours. What difference does it make what direction you travel in? [. . .] It looks to me that in any case things are going to be better. (‘Tanya’, a young person in perestroika Moscow, in Adelman, 1991: 30) The ‘globalization as outcome’ promise of the perestroika era has not been realized. In terms of the end of state control over cultural and political life, the end of state socialism has been a great step forward for Russian citizens. However the economic experiments with capitalism have provided little for the vast majority of postsocialist Russians to be satisfied with. Is there a viable theoretical alternative to globalization that can effectively evaluate the current paths and possible futures of Russian regions? The following concluding section will deal with this final question.

170

Economic development in Tatarstan

Conclusion – recapturing the local: action and structure in focus Sociologists of globalization have generally ignored the pioneering work of sociologists of the economy. With perhaps the exception of Burawoy (2000), concepts of disembedding and homogenization have engulfed our view of the economic sphere, obscuring real understanding of development and business action in the localities.28 What Tatarstan’s experience seems to show us is that neoliberal polices (if followed to some degree) do not automatically bring about globalization. Those who fear globalization and criticize its damaging social effects on the local are also over-keen to declare the existence and expansion of globalization. The key point is that market forces still cannot effectively penetrate some areas of the world. The ‘all-conquering market’ still has places left where it cannot function. In these cases, it retreats and goes elsewhere.29 The talk of ‘winners and losers’ does not account for the fact that in some areas people are not really trying to play the global game: ‘the euphoria for FDI has gone’.30 Instead, the local remains the central frame of reference. Tatarstan is by no means among the poorest FSU regions. There are plenty more places with far less marketization and world integration than Kazan and Naberizhnii Chelny. Yet despite the top four risk-rankings and the high potential rankings of Tatarstan (Chapter 3), the global firms of Sklair and the global flows of Castells and Urry are largely refusing to risk going there. Globalization theorists must take on this problem or, by accepting it in their theoretical framework, risk losing their fundamental argument. If globalization causes integration and isolation, then why is globalization said to be stalking the whole world regardless of the constraints of space and time? Why has economic sociology not, on the whole, been called on to help explain global interactions and/or their failure to emerge? A clue can be found in Swedberg’s (1990) compilation of interviews with economists and sociologists. There Daniel Bell talks of the need to align social theory with the societies it tries to explain: The rise of East Asia as an economic force in the last quarter of the twentieth century raises, once again, the relation of culture to economy. Weber’s answer may have been true for the West, but it does not apply to Japan and China. We need some new structures of explanations. [. . .] However, instead of looking deeper at the structural and historical specifics of these societies, sociologists got drawn onto the ‘high road’ towards global macro theory. (Bell in Swedberg 1990: 229). This high road can clearly be seen with such theorists as Giddens, particularly with Sklair, and with some others such as Harvey, Urry and Beck. Such analysts therefore have severe difficulties in accounting for the failures of

Conclusion: Tatarstan and globalization

171

Former Soviet Union (FSU) regions to get involved in the ‘new global system’. So if the high road is inappropriate, which is the correct route? A better way forward would be to analyse these societies within the more traditional development studies paradigm, or the emerging ‘varieties of capitalism’ approach in institutional economics and management studies. This involves shelving talk of globalization and instead employing the analytical concepts of local history, local social structure and local ideology, in a way not dissimilar from that of Burawoy and his fellow ‘global ethnographers’ (Burawoy 2000, Burawoy and Verdery 1999). This would involve looking in much more depth at social structures, something that is rather unfashionable at present. It may be that some global elements do surface, as indeed I hope to have shown in the earlier discussion on culture and ideology. On the other hand, they may not, as I have argued for the economy. In these situations, global talk does not help us understand the causes and dynamics of development and international integration or isolation. Globalization theorists describe a free-floating world, torn free of its social and political anchors (Lewis 1997). This picture of late modern society deflects attention away from the real dynamics of growth or stagnation. To combat this approach, the notion of ‘world society’ needs to be subjected to rigorous empirical and theoretical critique. It can be argued that we are a long, long way from real global integration, even at the cultural–ideological level, never mind in economics. I would suggest that a return to the concepts of development and underdevelopment would make for much more empirically grounded and, in short, much more realistic, sociological accounts than globalization theory can hope to achieve. If the concept is so fuzzy and so partially supported in empirical life, why is globalization such a dominant idea? This issue is addressed briefly by Burawoy (2000). His argument is that global talk is the preserve of the privileged Western academic sphere. I agree. ‘Globalization’ is a major academic, media and publishing trend, and a fairly simplistic and voguish culmination of ideas about future development paths. The flexibility and looseness of the term allows it to include potentially anything, blurring the distinctions between real socio-economic forces and largely irrelevant trivia. Economic, political, cultural, and social analyses jostle for position alongside coverage of fears, panics, and outright mysticism: Let’s face it [. . .] nobody rules the world any more. The markets rule the world. Maybe that’s why your conspiracy theorists make up all those crazy things. Because the truth is so much more frightening. Nobody rules the world. Nobody controls anything. Elite US businessman, as quoted in Ronson (2001: 330). Such a populist view is not far removed from many of the expert views of academic sociology or political economy. This theoretical laxity is alarming, and political discussion becomes cloudier than ever. In a situation where

172

Economic development in Tatarstan

everyone accepts the reality of the notion of globalization, globalization becomes a major impediment to leftist political projects (Meiksins Wood 1997). One of the most popular leftist attempts to theorize the global, Hardt and Negri’s Empire (2000), explicitly attacks the traditional leftist view of fighting globalization by focusing on local developments and restrictions to world capital expansion. They remark that globalization has no ‘outside’, and that the ‘globalization or deterritorialization operated by the imperial machine is not in fact opposed to localization and reterritorialization, but rather sets in play mobile and modulating circuits of differentiation and identification’ (2000: 45). However this ‘complexity’ approach is similar to Urry’s (2000) in that it fails to pinpoint which social or economic or political features are in reality connected with ‘global flows’. It subsumes all under the rubric of ‘empire’, a philosophical construct that does little to enhance our understanding of the histories, trajectories and futures of regions, and how these histories, trajectories and futures may or may not be results of international ‘flows’. Hardt and Negri argue that ‘[w]hat needs to be addressed, instead, is precisely the production of locality, that is, the social machines that create and recreate the effects of a regime of production’ (2000: 45). This is spot on. But of course, many of these ‘social machines’ are highly local pieces of equipment, largely unconnected to the workings of trans-national, free-floating global flows, be they in ‘cyberspace’ or elsewhere. It is worth bearing in mind the idea that globalization is also an idea, not just a supposedly objectively existing feature of social life. This thread is taken up by Germain, who states that ‘ideas matter’. Globalization is as much an ideational set of claims as it is a material set of practices, and the focus . . . on the complex place of ideas or modes of thought within the dynamic of globalization represents a belief that globalization cannot be comprehended adequately without considering the ideational dimension of social life. Globalization in part exists because of the very categories of thought we use to give meaning to the social world; it is not simply that we react ideationally to an expanding world, but rather that we construct the terrain of globalization as much by particular forms of thought as by the achievements of our will. (Germain 2001: xiii–xx) I would be inclined to agree. The nature of the idea of globalization means that it has a profound effect on the media, public and academic mind. The interlocking of globalization theory with visual concepts such as networks and flows, with the language of computer science and microbiology, and with cultural, political and social concepts has meant that the idea of globalization has spread further than the reality of globalization. As Hirst and Thompson so effectively argue:

Conclusion: Tatarstan and globalization

173

[g]lobalization has become the new grand narrative of the social sciences. . . . the concept offers more than it can deliver. . . . The problem with this literature [sociology of globalization] is that it omnivorously gathers together the effects of often very different cultural, economic and social processes under the common concept of globalization, treating them as instances of a wider phenomenon. (Hirst and Thompson 1999: xiii) Hirst and Thompson’s concerns are substantiated by the evidence collected here. The evidence in Caplan’s volume (2000) also points away from ‘global’ (for global read ‘Western’) concepts of internationally universalizing risk, and points back towards classical interpretations of uneven development in the periphery. To do this we need to look in more detail at the real nature of contemporary international political economy and the natures of the varieties of late-modern capitalist systems. The term ‘globalization’ has been expanded beyond its original mandate. Globalization used to mean the modernization and development of the whole world under the same banner of the wealth that capital can provide. Now its meaning is expanded beyond this, and its expectations revised downwards. Just as ‘the transition to a market economy’ now means the perpetuation of struggle and the development of vague marketization, globalization now also means the creation of risk, isolation and poverty. After 20 years of largely uncritical acceptance, ‘[t]he hegemony of the “Washington Consensus” is in decline’ (Saul and Leys 1999: 24). What we have in the empirical world is the continuation of development issues, but within a new ideological context. Instead of the backdrop of East and West, communism and capitalism, we have the context of ideological globalization and worldwide IT technologies. Ideas and symbols may spread, but capital and working practices remain tied to not-so-footloose capital. Financial markets may be partially global, but the ‘real economy’ is not so mobile. Capitalism is not in an ‘expansive’ phase where it is willing to spend money, time and effort on recapitalizing and investing in factory plant and technologies in struggling regions. It does not want, and does not need, to invest in regions such as Tatarstan. Some, such as Castells and Beck, might say that this is because of the new technologies of the Network Society. Capitalism is able to expand without building industrial plant, or expanding its market bases. This is debatable, as foreign capital attempted, and continues to attempt on a less risky scale, investment in Russian regions. What emerges from interviewing Western and Russian/Tatar participants in these ill-fated ventures is that Western capital was unable to work in this social structure. There were plenty of people who wanted it to work, and possibly many who would have benefited from its working, but the social structure, developed over time and sustained by rational but constrained action of the local businessmen and state officials, would simply not permit it.

174

Economic development in Tatarstan

It is vital to look at regional specifics in more detail if the inadequacies of the globalization idea are to be effectively challenged. The theories used to help analyse the interview data in this book, namely structuration and pathdependency, are of partial but by no means complete explanatory worth. A key theoretical attempt to understand the complexities of the development of such a region as Tatarstan must begin by taking the notion of the knowledgeable agent from Giddens’ structuration theory, but must also add the role of histories of structural constraint in explaining why these people’s actions are circumscribed and their developmental goals compromised. As the above interview data reveals, actors at the local level are acutely aware of themselves as actors, but also of the constraints they face. Many of these constraints are historically produced (see Chapter 1). There needs to be a theory of action and economic development that allows for the way action is directly connected to physical resources, social network capital, financial capital, and geographic locations. We are born into structures that were not made by us (Elias 1991, May 1996). The options Tatar actors have for action are circumscribed by a range of social and material formations, from the interference of government to the large supplies of oil. The process of structuration itself is dependent on resources. The degree to which someone can bring structures into being depends on the resources he or she has access to. There is uneven structuration, just as there is uneven development. One could argue that the Soviet state had massive structurating resources, as does the Russian gas monopoly Gazprom, and to a lesser extent, Tatneft today. In theory, ‘the weak . . . always have some capabilities of turning resources back against the strong’ (Giddens 1981: 63). In theory yes, in practice, as shown in empirical research, they do not, and they know that they do not. A re-evaluation of the nature of contemporary capitalism is perhaps a necessary element of this new analysis of development. This re-evaluation is currently ongoing, but is growing in directions other than towards understanding impoverishment and non-development. In other words, an ethnocentric approach to the West, coupled with an unwillingness to include empiricism, is making for a social science culture in which the ‘hidden abodes of underdevelopment’ (Burawoy 1985) remain hidden.31 If we can regard qualitative findings as representative of real features of the social order, that is, if we are realists about social structures, we can begin to understand the mechanics of restraint and dynamism that human action is all about. In turn, we can look to ways of uncovering the potentially liberating role of human action in creating a more open, fair and inclusive society, perhaps even one in which capital and resources could be more fairly distributed. The competing globalization theories do not give us the required conceptual tools to understand postsocialist action and structure in the regions. But if globalization can be said not to be taking place in Tatarstan, what is taking place? The data in Chapters 3–5 reveal a system that remains substantially tied to the local needs of the existing physical, economic and

Conclusion: Tatarstan and globalization

175

political structures that still exhibit many of the former socialist systems’ features. However the data also reveal that this system, regardless of its many Soviet-style features, is certainly a capitalist system. The sample universally agreed that there is no possible return to state socialism. The economic actors interviewed in this book are very much future-oriented, and tend to be reasonably positive about their future prospects. But the future does not necessarily involve any processes or outcomes of globalization. Instead, what we have in Tatarstan is a localized economic system that is capitalist but divergent from the free-market, globalized models we have become so familiar with in the West. Instead of a global system in which convergence towards a universal model of capitalism is the trend, we have in the world regions where capitalism is emerging in many diverse and peculiar ways. Assuming that this is also the case in other regions (see below), then globalization as a theory of development will only make sense if it is conceptualized as a possible outcome of various local processes, not as a process of itself. Therefore the more sober globalization theories, such as those of Burawoy, Jessop, and Altvater and Mahnkopf are potentially useful conceptual resources with which to build new theories that can encompass diverse structures and action in economic development. We must also bear in mind if using these ‘globalization as outcome’ versions of the theories that globalization as an outcome is by no means inevitable, or by no means necessarily the current trend. Areas like Tatarstan at present show little evidence of any significant global interaction, yet the region’s economic performance is reasonable and it looks set to stick with its localized, highly politically-motivated version of capitalism. This explains the reasonably optimistic responses of the 44 actors interviewed here. It is possible that globalization will be the result of these divergent capitalist developments in certain of the world’s less wealthy regions, but I think it is safe to say that this is talking of a rather distant point in the future. Further localized socio-economic research is required and this needs to be united in order to challenge the globalization ‘grand narrative’. I suspect that there are plenty of other places where similar localized development is taking place. The problem is how to avoid slipping into a process of total relativization and subjectivity. We need to look for the commonalities between Russian regions, and between other post-Soviet nations. If there are similarities and linkages between them, does this in fact support the Bauman/Sassen/Castells picture of globalization’s ‘winners and losers’? This could be argued up to a point, but there are still major problems of relating theory to evidence when the ideas and narratives given by local actors in qualitative research are considered. In the local data presented here there is limited evidence to prove a global power structure that creates these inclusions or exclusions. Castells’ concept of the network society is perhaps the best empirically supported out of these three versions of globalization. But I would still be reluctant to use globalization as an explanatory or even a descriptive term. It is loaded with Western concepts of the inevitability of

176

Economic development in Tatarstan

future world economic integration. Even if this was to be welcomed (which is debatable) there is not nearly enough regional evidence for its actual existence. There is certainly not enough evidence to conceptualize globalization as a process. This is what turns me away from Bauman and Sassen, who tend to do this. Castells, on the other hand, has an interesting mixture of empiricism and theory in his work. Jessop’s pure theorizing is also useful, as is Burawoy’s grounded empirical critique of globalization’s erroneously universalizing tendencies. In general, the globalist theories that make more tentative claims about the levels of world integration, and which talk of globalization as a potential outcome, not as a process, can still be useful for understanding the development of poorer regions. However the Soviet bloc, Africa and South America are rarely mentioned in globalist work. These places must be included, which includes the people who live there. Their experiences must be drawn on. This would help eradicate some of the more unfounded generalizations in Western globalist theories. As for research, there are numerous interesting avenues this re-evaluation of global theory opens up. Researchers may be reluctant to apply local ethnographic research to such large and abstract theories as globalization. However, I think such application is desperately needed. The ubiquity of the words ‘globalization’ and ‘global’, along with ‘flows’ and ‘networks’, does not appear to be diminishing. But where is the research to back up, or to challenge, the global grand narrative? More research is needed, and its form must involve a way of integrating the findings with the theoretical claims. Does this kind of research always result in particular features for particular places? As such does it spell the end of larger theorizing? I hope both of the questions are answered ‘no’. If the Tatar experience does not constitute evidence of globalization, then what does it constitute? It is a highly embedded economy, which strongly supports the sociological conception of economic practice. Some believe that murmurs of discontent with neoliberal theories are growing louder in development studies circles (Sapir 2000, Saul and Leys 1999). If this is true, then it is possible that more opportunities may arise for further qualitative research into business practices. This may well produce further opportunities for innovations in theory and method to challenge the new grand narrative of globalization. Similar work taking place in Russia points to some significant commonalties and possible trends (McCann 2004a, Southworth 2000, Busse 2000, Lonkila 1997). One of these is the level of informality and social networking that takes place in most Russian economic transactions. It is vital to look at how informality and networking becomes entrenched, and how Western economic ideology is not necessarily incompatible with this system that has very limited legal and institutional regulation. Of course there is a major trend towards informality and networking in the Western literature (such as Castells 1996, Sennett 1998). But postsocialist informality is a different story for

Conclusion: Tatarstan and globalization

177

several reasons (see Chapter 3). There are many conflicts over the kinds of organizational futures and economic and social resources in postsocialist regions, particularly those involving the state apparatuses. Theorizing around these emerging organizational frameworks should significantly enhance our understanding of the uneven and partial connections to ‘global capital’ in the postsocialist regions. Further work is needed to unite these similar features and to work towards building postsocialist development theory. It is just possibly that this kind of theory may connect with the experiences of other less successful economies, such as those of South America, Central Asia and Africa. Perhaps this emergent research and theory will allow us to learn more about how business actors actually operate, or at least how they conceptualize their own socio-economic systems. It is vital that these are understood in more qualitative detail, especially when quantitative data in ‘developing’ and ‘transition’ economies can be rather unreliable. Political and physical resource structures must also be examined in more detail. To some extent, ‘returning to the local’ is also an appropriate idea for future social and economic policy in Russia. The future for the Federation’s economy may yet involve some re-nationalization of industry. It appears a political impossibility, but at many local levels this is effectively what has happened. However, it must be said that Tatarstan’s refusal to follow centrally-prescribed policies on privatization has not really helped bring about development either. It has to some extent put off the inevitable. To that extent, the region’s ‘virtual economy’ (Gustafson 1999) is set to stay, as is state control and informality. The picture at the SME level is perhaps more encouraging for the future. The problems are enormous, but progress is being made. At least markets (in some shape or form) exist for what goods and services they produce, and large markets are growing for advertising, marketing, design, and fashion firms. The education system needs drastic action, as do social services. It seems that the abstract theorizing of Bauman (1991, 1998), Harvey (1990), Urry (2000), Giddens (1990, 1999), and Sklair (1995), or the empirical focus being laid solely on advanced capitalist societies and their actors who have invested in successful areas (Sklair 2001), means that the reality of some regions and their lack of globalization never comes to light. Local actors (see Chapters 3–5), local analysts (Bikbov 1999, Galeev 1999, Khakimov 1999b), and indigenous theoreticians (Ledeneva 1998) often know a great deal more about local social and cultural specificities of Russian economic life than do Western builders of global theory. The general situation is unlikely to change significantly in regions such as Tatarstan. They still face major structural problems, and many are in a far worse condition than Tatarstan. Other than oil, gas and precious metals, Russian regions have little they can contribute to the world market. If advanced regions in countries such as the US, Europe, Australia, China, and Japan continue to grow and to spend on research and development in order to dominate export markets, then it would appear that Russia will not be a player in these markets. On the face of it, under ‘transition’ policies (the East

178

Economic development in Tatarstan

European wing of global market expansion) Russia has become a kind of market economy, but also a struggling economy. However, nothing is ever that simple. Russian regions are not historically doomed to failure. There are plenty of potential avenues for growth, but they lie along different paths from those internalized as the only existing ones by Western analysts (whether supportive or critical of them). The region of Tatarstan shows that the local is the true focus for development, not the global. Globalization-inspired free-market reforms do not necessarily bring about the expansion of the free market. Russia, and more specifically Tatarstan, is in Western terms a site of market failure. However, on it goes, as John Reed says ‘persisting, feeding, clothing itself’ in its own way. Tatarstan is by no means doomed to poverty. It continues to develop, but in its own, localized way. The Russian economy is a unique hybrid, and Tatarstan is one of several further regional variations on this theme. In their accounts of the way social networks and the local industrial and political nexus function, Tatarstan economic actors show that development for the region has little to do with Western notions of globalization. Globalization theory, if such it can be called, explains only part of the mostly calamitous recent history of the former Soviet Union. Although the ideology and language of the free market has successfully penetrated the region, the practices and capital flows have not. Sociological research methods are an essential tool in discovering this hidden reality of the lack of globalization in the regions. ‘[E]conomics is too important to be left to the economists.’32 From a sociological perspective, it appears that the region is far from a disembedded market economy. Social network ties, the history of state socialism and its failing industrialism, and decades of global isolation have meant that alternatives to the ‘free market’ do exist. The Russian regional economy runs mostly on social capital, not financial capital. There is a limit to how much longer this can persist. In 30 years, Tatneft’s oil reserves will be exhausted (Tatneft 2001: 8).33 Somehow, those who have become rich on the limited privatization and unregulated sales of raw materials will have to re-invest their profits and savings in Tatarstan as opposed to spending them abroad. They at least have the social networks that foreign investors lack. We have already seen that it is through these networks that any effective economic action is done. It is crucial that they are utilized by those who have some form of economic capital to invest, otherwise we will see further generalized impoverishment. Some of the recent developments in Kazan’s city centre (such as the newly pedestrianized Bauman Street, the Palace of Sport, the Kul Sharif mosque, and the bizarre glass pyramid near the Kremlin) have been created by this dynamic – the generation of capital through oil sales, which are re-invested in the creation of local, not global markets. FDI has a very limited role here in development. Sales of oil to Russian and international markets represents the only real form of ‘global’ interaction of the Tatar economy. This is why the majority of the respondents are quietly optimistic about Tatarstan’s future. They rightly state that nothing too disastrous will happen

Conclusion: Tatarstan and globalization

179

to their lives, yet nothing too dramatic in terms of change will happen. Although the oil problem will eventually become a major worry, this is hardly unique to Tatarstan. Foreign investors, for their part, seem unwilling to give up trying with the region. The German multinational BASF’s investment in Nizhnekamsk, announced in November 2000, is perhaps the model of future co-operation, low-risk investment as an export-oriented partnership, as opposed to major FDI along the globalization model. In Russia as a whole, many hundreds of foreign companies and financial institutions are pretty much permanently ensconced in Moscow, and to a lesser extent, St Petersburg. Other regional cities, such as Nizhnii Novgorod, Novosibirsk, and even Kazan, are all of ‘second division’ status and are likely to remain so. This does not mean that we can ignore the regional differences. They are crucial for an understanding of the future of Russian development, and how this particular scenario contributes to revealing the inadequacies of theories of globalization. With a re-evaluation of capitalism and its failures to expand, and its lack of need to expand into certain high-risk isolated regions, we will go a lot closer to gaining a real understanding of the way the world becomes a place of poverty and prosperity, integration and isolation. In that sense, despite the enormous potential of capitalism to change and adapt itself, the true nature of capitalism has not changed since the days of its inception.

Notes

1 Globalization, post-Soviet development and a Russian region 1 In the rapidly expanding globalization literature, Russia and the former Soviet Union are barely touched on, with the notable exception of Castells’ work (1996, 1998, 2000), and to a lesser extent Gray’s (1998). 2 Although there is some evidence for growing cultural hybridity. See Chapter 6. 3 The first McDonald’s outlet arrived in Tatarstan in April 1999. 4 Except for copying some Western ideas on business practice, not by receiving Western capital. 5 Although this book focuses less on the cultural than the economic, instances of ‘global culture’ are referred to in the data and the analysis at various points. 6 Poland, Hungary and the Czech Republic have stood out throughout the 1990s as the main success stories of ‘transition’ policies (EBRD 1999), and in May 2004 Poland, Hungary, the Czech Republic, Slovakia, Lithuania, Latvia, Estonia, and Slovenia joined the European Union. 7 The following quote is typical: ‘The prevailing mood about Russia in the West is one of dissolution. . . . The optimism aroused by the collapse of the USSR and the Communist system at the end of 1991 has largely evaporated.’ (Murrel 1997: 1). This is an accurate description of the general Western viewpoint, in which both the ‘optimism’ surrounding the collapse of Communism and the so-called ‘collapse’ itself are both very much Western concepts. Russian views on these issues are less generally known, and require much more attention from Western observers. Some of these views will become apparent in the following chapters. 8 http://news.bbc.co.uk/1/hi/business/3021786.stm 9 http://www.sakhalinenergy.com/about/abt_partners.asp 10 Some recent exceptions are Hughes (1994), Walker (1996), Treiseman (1998a, 1998b), Stoner-Weiss (1998), Schwartz (2003), Southworth (2004). 11 Back in the 1960s, Inkeles and Bauer talked of the detraditionalization of the Soviet family, but there is good evidence to show that Soviet families retained much of the traditional. The blat system under state socialism was often directly related to the importance of familial ties in maintaining access to scarce goods through patronage. Blatnoi goods were often sought-after to celebrate traditional familial rites of passage: weddings, birthdays and the like, and still are today. Both these elements are revealed in this poem quoted by Ledeneva (1998: 16): You want a picnic party? For celebration day? You ring Nik.Nik and he will find The necessary way.

Notes

181

12 Observer, ‘Russia’s rouble panic may lead to a comeback for the Iron Curtain’, 16 August 1998. 13 Nine months after August 1998 Al Breach, instead of commenting on the ‘dead’ market, was discussing the prospect of renewed IMF loans to Russia. Personal conversation with author, Moscow, 26 March 1999. 14 Independent, ‘Help yourself to profits of doom’, 27 March 1999. 15 Conversation with director of UK-Tatar electronics joint venture, Kazan, Wed. 26 August 1998. 16 This term is something of a misnomer. The region is partially autonomous from Moscow’s control. Economic policy and limited foreign policy can be pursued by the Tatar government, but the region remains strongly a part of the Russian Federation. The (somewhat ambiguous) laws of Tatarstan’s position in Russia are laid down in the February 1994 ‘Treaty on the Demarcation of Subjects’. For more details see Walker (1996). 17 See also Cordonnier (2002), available at http://www.ebc.ru/news/docs/fdiebc.pdf 18 Often these conceptions of local ‘models’ are highly subjective. A Moscow investment banker told me the Nizhnii Novgorod reputation is ‘a complete red herring’ (author’s conversation with economist from MFK Renaissance bank, Moscow, 25 March 1999). Cordonnier also states this reputation is mistaken, as Nizhnii Novgorod oblast also receives less than 1 per cent of the Federation’s total FDI, placing it in seventeenth place. 19 1994–97 Goskomstat figures. Glebova’s statistics (1998: 41) conflict with this. Her sources state that Moscow received 57.29 per cent of inward investment, and Tatarstan received 2.43 per cent. 20 Financial Times, 25 March 1999, ‘Tatarstan signs deal to preserve autonomy’. 21 KamAZ as of 1999 was 45.82 per cent state owned, up from just 9.01 per cent in 1997–98. In 1999 the Russian Federal government owned 33.49 per cent of KamAZ’s shares, and the Tatar Ministry of Finance owns the remaining 12.39 per cent (KamAZ 1999: 10–13). 22 Goskomstat 2001 figures: http://www.gks.ru/atlas/map06.1_2.html 23 Goskomstat 2001 figures: http://www.gks.ru/atlas/map06.1.html 24 Goskomstat 2003 figures for Tatarstan GRP: Year

GRP (billion roubles)

2000 2001 2002 2003 2004 (estimate)

233.6 264.1 271.7 281.2 287.0

25 http://www.mcdonalds.com/countries/russia/corporate/index.html 26 http://www.mcdonalds.com/countries/russia/ 27 However, they are also regions with significant state presence, particularly Moscow city and oblast, and Kazan. 28 From a conversation with an employee of Oriflame Russia head office, Moscow, 17 May 1998. 29 See Sparta (1999). 30 From a personal conversation with the manager of one of the branches, who was soon to return to Italy, Kazan, 30 October, 2000. 31 As ever with Russian studies, there are major statistical difficulties. The EBRD figures for FDI in Russia are far, far lower than those given in Goskomstat.

182

Notes

Cumulative net FDI from 1994–99, according to the EBRD is $10,344 million. Goskomstat claims that gross FDI during the same period totalled $32,005 million. The same source, Goskomtat, states that gross FDI into Tatarstan during this period totalled $1,228 million, which, although in absolute terms is falsely large, is plausible in relative terms to the Goskomstat total for Russia. Other sources suggest that Tatarstan receives approximately 2–3 per cent of all FDI into Russia, which roughly fits the Goskomstat relative levels (Glebova 1998: 41). Either way, FDI remains a tiny percentage of Russian GDP. In 1997, the best year for FDI, total net FDI, according to the conservative EBRD figures, was $4,036 million. Russian GDP was approximately $411,277 million. FDI accounted for 0.98 per cent of GDP in Russia’s most successful year for GDP and for investment attraction. In 1998, comparatively a disastrous year, GDP stood at $269,376 million, and net FDI at $1,734 million. This equates to FDI as 0.64 per cent of Russian GDP (all figures from EBRD 2000: 205 and Goskomstat 1998). 32 This claim is made by Burawoy (2000: 341–50), when he talks of the need to ground globalization theory in the experiences of the micro level. 33 For an overview of the literature and the different branches of ‘economic sociology’ and their central debates, see Granovetter and Swedberg (1992: 1–26) 34 For a summary of the theoretical components of embedded and disembedded concepts of economic systems with reference to postsocialism, see Ray (1996: 182–3). 2 Methodology 1 Issues of timing would also make a completely unstructured approach impossible. While some of the interviews approached two hours in length, others could be as short as 30–40 minutes, as the actors in the sample were business people with little time to spare for anything other than a brief description of what they do, why they do it, what difficulties they face, and what the future may hold. Other interviews, typically at the respondents’ homes, were longer. Most of the interviews lasted around 60 minutes. 3 Informal networks in the Tartarstan economy 1 2 3 4

From an interview with the author, Kazan, 8 November 1997. Elites were defined in Chapter 2. MRP stands for Manufacturing Resource Planning. See, for example, the work of Arthur (1989), Hamilton and Biggart (1992), and Whitley (1999). 5 Castells himself was the chair on the Advisory Committee to the Russian Government on Social Problems of the Transition. His report, presented in 1992, contained some fascinating insights that were ignored by the ‘young reformers’ clique (Castells 1996: 114–15). The report stated: ‘A market economy does not operate outside of an institutional context. . . . Without such structures the market economy cannot develop beyond petty speculation and one shot looting.’ 6 Generalized trust is at an extremely low level (Ledeneva 1998: 197). This does not mean that networks in business are no longer used, but it does mean that social networks in business operate within a failing socio-economic framework that Western systems take for granted. 7 Some linkages of the families that are important in Tatarstan are common knowledge. For example, the director of a highly successful Tatar retail chain is the brother of the director of Kazan’s monopolistic former state-run Krasnii Vostok (Red East) brewery. Such Tatar family linkages were described as ‘common

Notes

8

9

10 11 12 13 14 15 16 17 18

19

20 21 22

23

183

knowledge’ in an interview with an accountant from a Moscow branch of a European bank. For example the pop singer Alsou was born in Bugulma, the south-eastern Tatarstan city near Almetevsk, the home of Tatneft. Her father was the first vicepresident of Lukoil and, following the trend of the Moscow oligarchs, she was educated in an English private school. http://www.alsou.ru/ This is an estimate offered to me by R. Khasbrasiev, Department of Geography and Regional Analysis, Kazan State University. The situation is much more complex than this figure allows, as firm ownership remains highly ambiguous, complicated further by the Tatar government’s retention of financial interest in 392 enterprises via its Zolotaya Aktsiia (‘Golden Stock’) scheme (Bikbov 1999: 44), part of the local privatization programme that was highly conservative in comparison with many other Russian regions. Furthermore, Tatar firms are continually put into the hands of state-run administrators when they fall into bankruptcy, often emerging from administration many years later, if at all. http://www.tatneft.ru Presumably he is referring to the Krasnii Vostok (Red East) brewery in Kazan, a major success story since the 1998 rouble crash. This is a classic example of path-dependent ‘lock-in’ (Arthur 1989, Stark and Grabher 1997). Personal conversation with an accountant from of ING-Barings, former external auditors for Tatneft, Moscow, 25 March 1999 He was also instrumental in restructuring KamAZ’s debt after the 1998 crisis. Interview with employee of Tatneft, Kazan, 16 April 1999. Barter accounts for a large sector of Russia’s GDP (Ledeneva and Seabright 1998). One could come up with many more examples of economic malpractice in developed Western countries, if one wished (see Hutton 1995: 1, 5–8). In other words, according to this respondent, GosKomStat adds twenty per cent to the size of all declared profits in its attempts to account for the size of informal practices. MVD, which of course has more of a motive for higher tax declarations, places perhaps an extra fifty per cent on top. In that sense of the word, ‘mafia’ is similar to the way Castells (1998b: 180–90) conceptualizes it. Castells believes that this high-level Russian mafia is so successful and important because it equates to the networked, international and informational economic model of globalization. He may well be correct, but the point here is that there are also local organized crime networks that have little or nothing to do with the global model, and are more relevant to Tatar development than Castells’ ‘global criminal economy’ (1998b: 166–205). The Chevrolet Blazer, at the time of that meeting, was being produced by the US firm General Motors at a plant purchased from YelAZ, the state automobile plant at Yelabuga, Tatarstan. The climate is a risky one for investment, but this does not necessarily make it a chaotic and incomprehensible system. Only once was this kind of ethnic, traditional view described, and it was a Tatar, not Russian ethnic stereotype: ‘Tatarstan is a Muslim state and it has the Asian way of thinking. It is slow to change things, it is less concerned with material gains than the West. It is much like Bashkortostan in this way.’ Law Advisor, Agency for International Cooperation Development, interview with author, Kazan, November 1997. This is a particularly strong feature of the Moscow system of oligarchs, whose influence can wax and wane rapidly, although rarely will one powerful figure completely disappear from the scene.

184

Notes

24 Interview with Law Advisor to Tatarstan Agency to International Cooperation Development, Kazan, November 1997. 4 Tatarstan and regionalization 1 This definition differs from that of Giddens: ‘The temporal, spatial or time–space differentiation of regions either within or between locales; regionalization is an important notion in counter-balancing the assumption that societies are always homogenous, unified systems’ (1986: 376). He conceptualizes regionalization as directly connected to globalization, something fairly common in the globalist literature. My definition, however was formulated after analysing the interview data of this study, in which the region specifics of Tatarstan are seen to be linked to local, historical features, not to global concepts such as the time–space distanciation. 2 Business in Tatarstan and Goods and Services of Tatarstan. 3 TatInKom is the state communications company of Tatarstan. 4 This interview took place in March 1999, at the height of the NATO bombardment of Serbia. 5 The latter idea could mean several things. First of all, many of the respondents were unused to speaking to Western observers, who they may perceive to be largely ignorant of Tatarstan and its regional features. It is much easier to provide the researcher with such standard information than to give an explanation of what is really going on. Second, it could be a result of working within the highly regionalized realities of the Soviet planning agencies. 6 As one SME respondent put it in the interview. 7 ‘Take as much power as you can swallow’ is an oft-cited statement from former Russian President Boris Yeltsin who made it while on a visit to Kazan. A common idea was expressed at the time that Yeltsin regretted his rash words (see Walker 1996). 8 Many other regions have famous plants that were Soviet grand projects, such as Magnitka, Uralmash, Zil, and several hydroelectric projects. However, these are now Russian enterprises, not Tatar ones. They are all attempting to attract capital. The enterprises in Tatarstan are also doing this within a context of representation in terms of national independence and differentiation from Russia in order to attract investment. 9 See also the comments of the law advisor on the pan-Muslim league in the Tatar Agency for Economic Cooperation and Development, in Chapter 5 below. 10 A reference to the nomenklatura, a system of personal relations in the former Soviet system. 11 Nizhnekamskshin is the tyre-production company connected to the Nizhnekamsk petrochemical combine (which is, of course, fundamentally linked to KamAZ). 12 Podsobnoe khoziastvo – auxiliary farms, formerly known as kolkhoz, or collective farms. 13 Vetnoe zhilyo – literally dilapidated housing: a state project of slum clearances and new housing construction in Kazan. 14 Small business, particularly when compared to monolithic FSEs, are also the kinds of enterprises where foreign NGO advice and influence can have an effective role. This is the kind of thinking motivating the US-sponsored management training schemes, which some young Tatarstan business people have been involved in. 15 The Old Believers were a large group of religious dissenters who refused to accept Orthodox Church reforms in the seventeenth century. Many of the Old Believers were merchants, and the group still numbered around twenty million by the end of the nineteenth century.

Notes

185

16 KKR (Kohlberg Kravis Roberts) has been a financial partner of KamAZ since 1991. Following the rouble crisis in 1998 they have significantly reduced their interest in the complex. 17 However, this sample does not focus specifically on agricultural branches of the economy, where some limited specific methods and technologies are being used. 5 Tatarstan’s future development 1 From an interview with the author, Kazan, March 1999. 2 See Chapter 2. 3 It was admitted that some changes to this system are necessary, but these were specific, instrumental changes, such as a reduction in bureaucratic registration of enterprises, particularly the removal of any dual Russian and Tatar registration. 4 These are the macro-economic features that can broadly be referred to as characterizing the era of flexible accumulation (Harvey 1990: 141–72), an era which never emerged in the Soviet bloc. 5 Of course these features are individually represented in some sectors in limited ways and in limited number. 6 General Motors’ investment in Elabuga ended following the financial crash in 1998. KKR radically reduced the size of their stake in KamAZ at the same time. 7 Pelmeni – a Russian meat dish, similar to ravioli. 8 The electronics firm Kameks would be the best example of this. In ten years they have undergone enforced downsizing (as a market for their Soviet era products no longer exists) and enforced globalization (as Microsoft-based products are the only commodities they can now realistically sell), but the retention of Soviet-style hierarchical management with personal state, inter-enterprise and police links is clearly visible. 9 A director of a Dutch firm working in Kazan made similar comments about working with Islamic workers who took breaks for prayer on construction sites. He said Russia was a much easier market for labour discipline than Islamic states. At least they are used to working in factories according to norms and clock-time. From informal conversation, Kazan, 10 July 1997. 10 This is the essence of the ‘soft landing’. It is debatable as to what extent Tatar elites had any choice other than to try to maintain control of a highly militarized economy, one which was hugely reliant on large-scale raw material production and export enterprises. 11 Kazan Aviation Production Association, named after S. P. Gorbunov. This is a state-owned passenger aircraft production enterprise that lost its customer base in spectacular fashion with the collapse of the planned economy. 12 This is the phrase used by Mikhail Gutseriev, politician and director of Bin Group, a firm responsible for an outrageous but formally legal scam involving registering Russian companies in Ingushetia, an autonomous republic in the Caucasus. ‘What we have in Russia is not yet a market economy – it is state capitalism. [. . .] I spent my days working and selling, yet those who had political power had the authority to take my accomplishments away from me. I understood that we in Bin were getting too big to keep on fighting the chinovniks: we had to join them.’ (As quoted in Freeland, 2000: 102.) One major question remains unanswered. If Russia is not a market economy yet, when will it be one, if ever? It is not one now, but it way well develop into one. It is the argument of this book that this process of development will be along Russian national and local, as opposed to global lines, which is potentially a welcome fact. However, the process will take huge amounts of time and effort, and may involve plenty of further shocks along the way.

186

Notes

13 My own definition of the discourse of globalization can be found in Chapter 1. 14 Just as the Soviet Union’s collapse was mostly an internal economic and political event (Castells 1996). The collapse could have happened earlier in history, well before the advent of the ‘global informational economy’ (Volkogonov 1999: 288). 15 According to my sources at Tatneft (and the official Tatneft literature), there are 30 years of oil left without further investment in the idle oilfields which, with the outdated Soviet equipment still in use, oil cannot be extracted from. 16 See M. Granovetter, ‘Economic Action and Social Structure: The Problem of Embeddedness’, in M. Granovetter and R. Swedberg (1992), The Sociology of Economic Life, pp. 54–8. 6 Conclusion: Tatarstan and globalization 1 Not to mention a political system that claims all the hallmarks of pluralistic Western democracy, but is far from it in reality (Giuliano 2000, Walker 1996). This is a broader problem for all ‘democratic’ institutions in Russia, whose formal democracy is impressive, but substantive democracy is absent. (Comisso 1997). 2 This is a key claim of Bauman (1998), who describes late modern capitalists as ‘absentee landlords’. Bauman integrates this critique of capital with the processes of globalization, whereas the present study argues that the willingness of capitalists to leave such places as Tatarstan alone represents the failure and absence of globalization. 3 Indeed, he makes some guarded criticisms of neoliberalism in his earlier work (1987: 41) and explicit criticism of it in his recent work (1999). 4 Others, such as Waters (1995: 66), claim that Sklair reifies the concept of the trans-national class to an unrealistic point, even in relation to advanced capitalist societies, never mind to Russia and the former Soviet Union. 5 ‘For a foreign company to work here it has to be 100 per cent foreign owned and run. Like McDonald’s.’ From an interview with director of new political party, Kazan, 14 November 2000 6 However, this does not mean that neoliberalism is as dominant as some analysts claim. There are some definite concerns about the effectiveness of transition and free-market policies in development circles, to the extent that the ‘Washington Consensus’ is finally being threatened as the be-all and end-all of development economics. See Rodrik (1997), Sual and Leys (1999), Sapir (2000). 7 To use an example from the locality in which my doctoral thesis was written, the Kent town of Ashford has been dramatically transformed in recent years by the establishment of an international train station there on the London–Paris– Brussels Eurostar link. In have come large new hotels, a giant retail outlet centre and a full-scale overhaul of the surrounding road and rail infrastructure. The nearby county capital, Maidstone, has been left largely untouched by this development, as has the region’s main tourist and cultural city of Canterbury. To reiterate, ‘globalization’ is of course dependent on regional nodes and is highly selective of where it takes off. Sassen and Castells have proved this beyond doubt. But can we use the same logic to say that globalization also causes isolation? This is a major leap of faith that globalization struggles to sustain in the light of in-depth grounded data. ‘Globalization’ has not caused isolation, poverty and disconnection – years of underinvestment, a lack of legal clarity, a generalized absence of capital, and historical–geographic linkages have caused them instead. (My thanks to Larry Ray for the Kent example.) 8 In the words of the Tatar Chamber of Commerce Chairman, they are ‘gone with the wind’. (From interview with author.)

Notes

187

9 Bauman is also prone to this error. As a description of Westerners in advanced capitalist societies, his use of ‘we’ probably describes his readership quite well. ‘Nowadays we are all on the move’ (1998: 77). However, far from ‘all of us’ are on the move, as indeed Bauman himself goes on to argue. Globalization is far from ‘global’ in its span or its impact as Castells, Hirst and Thompson, Martin, Jessop, and precious few others argue. 10 The same point can be made about networks. ‘Network’ is emerging as one of the central terms in the globalization discourse. However, there are many kinds of network in the world and they do not all approximate to the technological, computerized, communicative networks so important to globalization theories. Tatarstan’s economy is built on networks, but on local and physical, not global and fluid ones. Castells (2000) talks of crime networks as an alternative form of network. However, he contends that the reason they are so pervasive and effective is because mafia and terrorist organizations have appropriated the globalized, flexible techniques of Western business networks. Local development networks (such as those in Tatarstan) do not work like this. They lack international width, mobility and flexibility. They are largely static and locally fixed. But they are equally as vital to the growth of the region. 11 Articles by Meiksins Wood (1996, 1997) and Gordon (1988) in the Marxist journals Monthly Review and New Left Review do provide some counterarguments to globalization theory. Meiksins Wood argues that globalization is not a causal force, but is really a collection of largely negative effects that have always existed in capitalism. She argues that there are problems surrounding two key globalist assumptions. First of all, she questions whether the developments often known as globalization are as widespread as globalists say they are. Second, can these developments be accurately described as ‘globalization’? The evidence of this book certainly supports the argument that both of these problems are acute for global theory. 12 Although Lockwood weaves a rich historical tapestry of economic life in Soviet Russia, he is unprepared to deal in any meaningful way with today’s postsocialist conditions. Close analysis of the lack of globalization in contemporary Russian regions tends to turn one’s view away from the globalization model as causing the collapse of the Soviet Union. 13 With the notable exceptions being Jessop’s work (1999, 2001) and that of Altvater and Mahnkopf (1997). However they are all mostly concerned with how globalization, both as process and result, is theoretically unobtainable in any ‘totalist’ fashion. They pay less attention to the realities of regions where globalization has largely failed to emerge, or where its emergence is partial and contradictory. Nevertheless, these theoretical approaches do provide an appropriate conceptual base in which one could potentially embed local qualitative research. As such, they are a vast improvement on the overly abstract and highly Eurocentric mainstream globalist theories such as those of Giddens and Beck, for which such embedding of local qualitative research is impossible. 14 Hence the critical edge of Hirst and Thompson is dulled by their mainstream orientation towards the need for stability against global market risks. Their ultimate policy suggestion, that talk of globalization should be ditched in favour of rehabilitating the nation-state as a potential regulator and controller of international capital flows, is highly reminiscent of the ideas of Soros, Hutton, Giddens, Sassen, and Bauman, and even the extreme conservative Gray. Fear for the future seems to be a strand that unites all globalization theorists, even those who are sceptical about the concept’s empirical existence. Hutton makes the same comments in his reviews of the books of Hirst and Thompson, and of Gray. On Hirst and Thompson he writes: ‘One of the best and most iconoclastic attempts yet at

188

15

16 17

18 19

20

21 22

23 24

25

26 27 28

Notes

mapping the new global economy. Their [. . .] critique of the notion that they should remain ungoverned because the least global governance is the best global governance is a welcome challenge to conventional complacencies’ (comments on back cover of Hirst and Thompson, 1996, 1999 editions). And on Gray: ‘We need a powerful challenge to the simple-minded advocates of globalization. Now we have one’ (comments on back cover of the 1998 Granta edition). Of course, if sufficiently monied, one can easily buy foreign products in Tatarstan’s cities, but this does not represent real global integration or convergence, just an extension of centuries-old notions of international trade. Moreover, imports and sales of these products often goes undeclared and untaxed, so these sales are hardly Western in their economic and legal form. The reception of these ideas by the people in the places where they arrive is another matter entirely. However, the central point of this book is that increased FDI into this region is not likely in any case. If this prediction proves to be correct, then the conclusion is roughly the same – foreign capital expansion (or ‘globalization’ if one prefers) does not really change the existing social structures of post-Soviet Tatarstan. From interview with Deputy Director of Kazan office of Tatneft, 12 January 2001. See also Lane 1999: 21. The globalization models constructed around environmental issues are perhaps more convincing than some of the economic–political models examined here. Unfortunately, the environment was not an issue I set out to examine, and any comparison of Tatarstan’s environmental situation in relation to globalization is beyond the scope of this book. The concept of ‘the West’ although frequently referred to in this study, is really highly problematic. Within ‘the West’ there are highly differentiated ‘models’ with characteristic features. Scandinavian social democracy, European union federalism, US, Japan and Oceania are not even geographically located in the West yet are often included with talk of the ‘West’. Thanks to Sarah Busse, University of Chicago, for pointing this out to me. Magazines for new Western-style living abound in Moscow and St Petersburg. OM is perhaps the best known: http://www.om.ru/magazine.shtml. Kazan’s publishing companies are some way behind this, but ape their general, ultra-Western style (Davis and Yerofeev 2001). See the definition of regionalization in Chapter 4. This also explains why Russians (particularly in the perestroika era) can be so disbelieving of Westerns who talk of problems in Western advanced economies. Russians’ own apologetic accounts of their own country’s problems when interacting with Westerners can be tragic (see Hixson 1993, Ries 1997). A major error of analysis is to equate development with globalization. This is often done in the media, particularly when cultural forms are focused on. If we see Russians wearing Prada, buying Western music, or building a Formula One circuit in Moscow, we assume that Russia is ‘at last joining in with the world economy’. This kind of approach mistakes internal developments for global ones. Development need not have anything to do with global processes. It may ultimately lead to a world with fewer borders and more interaction, but this would be a utopian end-result, not a process of change. The indefinite continuation of state ‘bankruptcy administration procedures’ for many smaller FSEs is a relatively common phenomenon in Tatarstan. From Scania documentation, ‘Mastering Euro 4, Euro 5 and beyond’, available at: http://www.scania.com/Images/10_39205.pdf Places where globalization does not exist Burawoy calls ‘the hidden abode of underdevelopment’ (Burawoy 1985). Tatarstan is a prime example of such a place.

Notes

189

29 See the reactions of the foreign actors in Tatarstan, such as the interview with the Australian investor in Chapter 5: ‘Russia and Tatarstan are not places I’d recommend to investors’. 30 Tatarstan Chamber of Commerce Chairman, Kazan. See interview excerpts in Chapter 5. 31 Something also needs to be done about the fallacious nature of ‘free market’ concepts in the West. There is really no such thing as a free-market economy (Polanyi 1992 [1957], Altvater and Mahnkopf 1997). Even George Soros would agree: ‘We have this false theory that markets, left to their own devices, tend towards equilibrium. It’s not, fortunately, believed in practice [. . .]. [T]here are financial authorities who know that markets are not stable, and they try to maintain stability by exercising controls’ (Soros, in Giddens and Pierson 1998: 221). 32 American sociologist James Coleman, in R. Swedberg Economics and Sociology, p. 57. 33 In the words of the director of the Kazan representation office of Tatneft: ‘We have two fundamental problems. The first is the reserves of oil. ‘n tomorrow’s day we will exhaust the reserves of oil [zavtrashnii den’ obespechivaetsia izvlekaemimi zapasami nefti]. Today we have reserves for 30 years. The second fundamental problem is investment.’ (From an interview with the Director of Kazan branch of Tatneft, Tatarstan.)

Bibliography

Russian sources Akhmadeyeva, A. (1998), ‘Nekotorie aspectki formirovaniya novikh institutov v Rossii’ [‘Some aspects of the formation of new institutions in Russia’], in various authors (1998), Obschestvo i ekonomika: voprosi teorii, Sbornik rabot molodikh uchenikh ekonomicheskogo fakulteta KGU, Kazan: Menedzhment. Bikbov, D. (1999), ‘Realizatsiya programmi privatizatsii v Tatarstane’ [‘Realization of the privatization plan in Tatarstan’], in Khakimov, R. (ed.) (1999a), Ekonomika Tatarstana posle 17 Avgusta. Bikchantaeva, A. I. (1998), ‘Mesto finansovo-promishlennikh grupp v ekonomike Rossii’ [‘The place of financial-industrial groups in the Russian economy’], in various authors (1998), Obschestvo i ekonomika: voprosi teorii, Sbornik rabot molodikh uchenikh ekomicheskogo fakulteta KGU, Kazan: Menedzhment. Fazullina, G. (2000), ‘Eksperimenti Tatarstana’ [‘Experiments of Tatarstan’], Ekspert, 37, 2 October 2000. Galeev, R. (1997), ‘Neftyanaya otrasl Tatarstana: Sostoyanie i perspektivi’ – [‘Tatarstan’s oil sector: Conditions and prospects’], in various authors (1997), Tatarskaia Model’ – Mifi i Realnost, Kazan: Ekopolis. Glebova, I. S. (1998), ‘Investitsionnaya privlekatelnost respubliki Tatarstan’ [‘Investment attraction of the Tatarstan Republic’], in various authors (1998), Obschestvo i ekonomika: voprosi teorii, Sbornik rabot molodikh uchenikh ekonomicheskogo fakulteta KGU, Kazan: Menedzhment. KamAZ (1999), Godovii Orcherk [‘KamAZ Annual Report’]. Khakimov, R. (ed.), (1996) ‘Razvitye konkurentnikh premushchetv Tatarstana’ [‘Development of competitive advantage of Tatarstan’], Panorama-Forum, 2, 5: 52–61. Khakimov, R. (ed.), (1999a) Ekonomika Tatarstana posle 17 Avgusta, Kazan: Panorama-Forum, 1999 no. 21 – spetsialnii vipusk [special issue] [Economy of Tatarstan after 17 August]. Khakimov, R. (1999b), ‘Budushii Tatarstana – vizor vremeni’ [‘Tatarstan’s future – a forward view], in Khakimov, R. (ed.) (1999a), Ekonomika Tatarstana posle 17 Avgusta. Khamidullin, F. (1999), ‘Ekonomika Tatarstana posle avgustovskogo krizisa’ [‘Economy of Tatarstan after the August crisis’], in Khakimov, R. (ed.) (1999a), Ekonomika Tatarstana posle 17 Avgusta.

Bibliography

191

Kostin, I. (1997), ‘KamAZ: vremya radikalnikh peremen’ [‘KamAZ: time of radical change’], in various authors (1997), Tatarskaia Model’ – Mifi i Realnost, Kazan: Ekopolis. Lavrentiev, A. (1999), ‘Kazanskii vertoletnii zavod na vnutrehhem u vneshnem rinkakh’ [‘Kazan helicopter plant on internal and external markets’], in Khakimov, R. (ed.) (1999a), Ekonomika Tatarstana posle 17 Avgusta. Marciogianis, N. (1996), ‘Respublika Tatarstan glazami zarubezhnogo investora (viderzhki)’ [‘The Tatarstan Republic through the eyes of a foreign investor (extracts)’], Panorama-Forum, 2, 5: 51–2. Mukhametshin, F. (1996), ‘Ekonomicheskii priorititi Tatarstana’ [‘Economic priorities of Tatarstan’], Panorama-Forum, 2, 5: 3–11. Rossiiskoe Stroitel’stvo (1998), ‘Tatarstan – Strategiya Obnovleniya’, (1998). Rossiiskoe Stroitel’stvo, April 1998 [Russian Construction, ‘Tatarstan – Strategy of Renewal’]. Shaimiev, M. (1999), ‘Osnovye itogi i zadachi v oblasti ekonomiki’ [‘Fundamental features and problems in the economic sphere’], in Khakimov, R. (ed.) (1999a), Ekonomika Tatarstana posle 17 Avgusta. Sparta, G. (1999), ‘Kak rabotaet inostrannii investor v Tatarstane’ [‘How a foreign investor works in Tatarstan’], in Khakimov, R. (ed.) (1999), Ekonomika Tatarstana posle 17 Avgusta. Various authors (1997), Tatarskaia Model’ – Mifi i Realnost, Kazan, Ekopolis. [Tatarstan Model – Myths and Reality]. Various authors (1998), Obschestvo i ekonomika: voprosi teorii, Sbornik rabot molodikh uchenikh ekonomicheskogo fakulteta KGU, Kazan: Menedzhment. [Society and Economy: Questions of Theory, Collection of Work of Young Scholars of the Economics Faculty of Kazan State University]. Zamova, N. N. (1998), ‘Bankovskaya sistema Tatarstana: Sovremennoe sostoyanye i perspektivi’ [‘Banking system of Tatarstana: Contemporary condition and prospects’], in various authors (1998), Obschestvo i ekonomika: voprosi teorii, Sbornik rabot molodikh uchenikh ekohnoicheskogo fakulteta KGU, Kazan: Menedzhment. English sources Adelman, D. (1991), The ‘Children of Perestroika’, Moscow Teenagers Talk about their Lives and the Future, Armonk, NY: M. E. Sharpe. Akmetov, R. (1998), ‘Kama Automobile Factory: Clinically Dead at the Age of 29’, Prism, Jamestown Foundation, Vol 8, 17 April 1998, available at: www.jamestown. org/pubs/view/pri_004_008_003.htm Altvater, E. and Mahnkopf, B. (1997), ‘The World Market Unbound’, in Scott, A. (ed.), The Limits of Globalization, London: Routledge. Amsden, A. H., Kochanowicz, J. and Taylor, L. (1994), The Market Meets its Match, Restructuring the Economies of Eastern Europe, Cambridge, MA: Harvard University Press. Anderle, V. (1976), Managerial Power in the Soviet Union, Lexington: Saxon House. Anderle, V. (2001), ‘The Buoyant Class: Bourgeois Family Lineage in the Life Stories of Czech Business Elite Persons’, Sociology, 35, 4: 815–33. Appadurai, A. (1990), ‘Disjuncture and difference in the global cultural economy’, in Featherstone, M. (ed.), Global Culture, London: Sage.

192

Bibliography

Archer, M. (1995), Realist Social Theory: The Morphogenetic Approach, Cambridge: Cambridge University Press. Arnason, J. P. (1993), The Future that Failed, Origins and Destiny of the Soviet Model, London: Routledge. Arthur, B. (1989), ‘Competing Technologies, Increasing Returns and Lock-In by Historical Events,’ Economic Journal 99, No. 394 (March): 116–31. Åslund, A. and Layard, R. (eds) (1993), Changing the Economic System in Russia, London: Pinter. Åslund, A. (ed.) (1994), Economic Transformation in Russia, London: Pinter. Bauman, Z. (1991), Intimations of Postmodernity, London: Routledge. Bauman, Z. (1998), Globalization, the Human Consequences, Cambridge: Polity. Beck, U. (1992), Risk Society, Towards a New Modernity, translated by Mark Ritter, London: Sage. Beck, U. (2000), What is Globalization?, translated by Patrick Camiller, Cambridge: Polity. Berger, P. L. and Luckmann T. (1967), The Social Construction of Reality: A Treatise in the Sociology of Knowledge, London: Allen Lane. Berman, M. (1983), All that is Solid Melts into Air, London: Verso. Bilenkin, V. (1996), ‘Russian Workers Under the Yeltsin Regime: Notes on a Class in Defeat’, Monthly Review, 48, 6, November 1996. Blum, D. W. (ed.) (1994), Russia’s Future: Consolidation or Disintegration?, Oxford: Westview. Boden, D. (1990), ‘Reinventing the Global Village: Communication and the Revolutions of 1989’, in Giddens, A. (ed.) (1997), Sociology: Introductory Readings, pp. 379–83. Boswell, J. (1976), Social and Business Enterprises, London: George Allen & Unwin. Bradshaw, M. (2002), ‘The Changing Nature of Foreign Investment in the Russian Federation’, Russian Economic Trends, 2002, 1: 33–41. Broxup, M. B. (1994), ‘Tatarstan and the Tatars’, in Smith, G. (ed.) (1994), The Nationality Question and the Post-Soviet States, London: Longman. Bukharaev, R. (1999), The Model of Tatarstan: Under President Shaimiev, London: RoutledgeCurzon. Burawoy, M. (1979), Manufacturing Consent, Chicago: University of Chicago Press. Burawoy, M. (1985), The Politics of Production: Factory Regimes Under Capitalism and Socialism, London: Verso. Burawoy, M. (1992), ‘The End of Sovietology and the Renaissance of Modernization Theory’, Contemporary Sociology, 21 (6): 774–85. Burawoy, M. (1996), ‘The State and Economic Involution: Russia Through a China Lens’, World Development 24, 5: 1105–17. Burawoy, M. (1997), ‘The Soviet Descent into Capitalism’, American Journal of Sociology, 102: 1430–44. Burawoy, M. (ed.) (2000), Global Ethnography, Berkeley: University of California Press. Burawoy, M. and Hendley, K. (1992), ‘Between Perestroika and Privatisation: Divided Strategies and Political Crisis in a Soviet Enterprise’, Soviet Studies, 44 (3): 371–402. Burawoy, M. and Krotov, P. (1992), ‘The Soviet Transition from Socialism to Capitalism: Worker Control and Economic Bargaining in the Wood Industry’, American Sociological Review, 57: 16–38.

Bibliography

193

Burawoy, M. and Krotov, P. (1993), ‘The Economic Basis of Russia’s Political Crisis’, New Left Review, 198: 49–69. Burawoy, M. and Verdery, K. (1999), Uncertain Transition: Ethnographies of Change in the Postsocialist World, Oxford: Roman and Littlefield. Burrough, B. and Helyar, J. (1990), Barbarians at the Gate, London: Arrow. Busse, S. (2000), ‘Social Capital and the Informal Economy in Novosibirsk, Russia: Some Preliminary Observations’, paper presented to the ASA Annual Meeting, Washington DC, August 2000. Callinicos, A. (1989), Against Postmodernism, Cambridge: Polity. Callinicos, A. (1991), The Revenge of History: Marxism and the East European Revolutions, Cambridge: Polity. Caplan, P. (ed.) (2000), Risk Revisited, London: Pluto Press. Cardoso, F .H. and Faletto, E. (1979), Dependency and development in Latin America, translated by Urquidi, M. M., Berkeley: California University Press. Castells, M. (1996), The Rise of the Network Society, Oxford: Blackwell. Castells, M. (1998), End of Millennium, Oxford: Blackwell. Castells, M. (2000a), The Rise of the Network Society, second edition, Oxford: Blackwell. Castells, M. (2000b), End of Millennium, second edition, Oxford: Blackwell. Cawthorne, P. (2001), ‘Identity, Values and Method: Taking Interview Research Seriously in Political Economy’, Qualitative Research, 1, 1: 65–90. Clark, B. (1996), An Empire’s New Clothes, London: Virago. Clarke, S. (ed.) (1996), The Russian Enterprise in Transition, Cheltenham: Edward Elgar. Clarke, S. (1999), The Formation of a Labour Market in Russia, Cheltenham: Edward Elgar. Comisso, E. (1997), ‘Is the Glass Half Full or Half Empty? Reflections on Five Years of Competitive Politics in Eastern Europe’, Communist and Post-Communist Studies 30 (1): 1–21. Cordonnier, C. (2002), ‘The Political Economy of Foreign Direct Investment in Russia, What Prospects for European Firms?’, European Business Club Working Paper, available at: http://www.ebc.ru/news/docs/fdiebc.pdf Craib, I. (1992), Anthony Giddens, London: Routledge. David, P. A. (1986), ‘Understanding the Economics of QWERTY: The Necessity of History’, pp. 30–49 in Parker, W. N. (ed.), Economic History and the Modern Economist, Oxford: Blackwell. Davis, H. (1989), ‘Crisis and Conflict in East European State Socialism’, in Scase, R. (1989), Industrial Societies, London: Unwin. Davis, H. and Yerofeev, S. (2001), ‘Cultural Power, National Identity and Change in a Russian Region’, paper presented to the BSA Annual Conference, Manchester, April 2001. Dicken, P. (1998), Global Shift, Transforming the World Economy, third edition, London: Paul Chapman. Dienes, L. (1993), ‘Prospects for Russian Oil in the 1990s: Reserves and Costs’, PostSoviet Geography, 34, 2: 79–110. Dore, R. (2000), Stock Market Capitalism: Welfare Capitalism – Japan and Germany vs the Anglo-Saxons, Oxford: Oxford University Press. Durnitsiya, I. (2001), ‘American Express is Keen for Long-Term Involvement’, News Agency Tatar-Inform, 3 May 2001, available at: http://www.elemte.ru/en%2Dus/ news/economy/news00299.htm?ID=7&ID0=1

194

Bibliography

EBRD (1999–2002), Transition Report, London: EBRD. Eisenstadt, S. N. (1966), Modernization, Protest and Change, New Jersey: PrenticeHall. Elias, N. (1991) [1939], The Society of Individuals, Oxford: Basil Blackwell. Featherstone, M. (ed.) (1990), Global Culture, London: Sage. Figes, O. (1997), A People’s Tragedy, The Russian Revolution 1891–1924, London: Pimlico. Filtzer, D. (1991), ‘Contradictions of a Marketless Market: Self-Financing in the Soviet Industrial Enterprise, 1986–90’, Soviet Studies, 43, 6: 989–1009. Filtzer, D. (1992), Soviet Workers and de-Stalinization, the Consolidation of the Modern System of Soviet Production Relations, 1953–1964, Cambridge: Cambridge University Press. Freeland, C. (2000), Sale of the Century: The Inside Story of the Second Russian Revolution, London: Little, Brown. Fukuyama, F. (1996), Trust, the Social Virtues and the Creation of Prosperity, London: Penguin. Gamble, J., Morris, J. and Wilkinson, B. (2003), ‘Japanese and Korean Multinationals: The Replication and Integration of their National Business Systems in China’, Asian Business and Management, 3, 2: 347–69. Germain, R. D. (ed.) (2001), Globalization and its Critics, Perspectives from Political Economy, London: Macmillan. Germain, R. D. (ed.) (2001), ‘Introduction: Globalization and its Critics’, in Germain, R. D. (ed.) (2001), Globalization and its Critics, Perspectives from Political Economy, London: Macmillan. Gerschenkron, A. (1962), Economic Backwardness in Historical Perspective, Harvard University Press. Gerschenkron A. (1970), ‘Industrial Enterprise in Russia’, in Mason, E. S. (ed.), The Corporation in Modern Society, New York: Atheneum. Gerschenkron, A. (1992) [1952], in Granovetter, M. and Swedberg, R. (eds) (1992), The Sociology of Economic Life. Giddens, A. (1986), The Constitution of Society: Outline of the Theory of Structuration, Cambridge: Polity. Giddens, A. (1990), The Consequences of Modernity, Cambridge: Polity. Giddens, A. (1991), Modernity and Self-Identity, Self and Society in the Late Modern Age, Cambridge: Polity. Giddens, A. (ed.) (1997), Sociology, Introductory Readings, Cambridge: Polity. Giddens, A. (1998), The Third Way: The Renewal of Social Democracy, Cambridge: Polity. Giddens, A. (1999), The Runaway World, How Globalization is Reshaping Our Lives, London: Profile. Giddens, A. and Pierson, C. (1998), Conversations with Anthony Giddens, Making Sense of Modernity, Cambridge: Polity. Giuliano, E. (2000), ‘Who Determines the Self in the Politics of Self-Identity? Identity and Preference Formation in Tatarstan’s Nationalist Mobilization’, Journal of Comparative Politics, April 2000. Gordon, D. (1988), ‘The Global Economy: New Edifice or Crumbling Foundations? New Left Review, 168: March–April 1988. Granick, D. (1960), The Red Executive; a Study of the Organization Man in Russian Industry, London: Macmillan.

Bibliography

195

Granovetter, M. and Swedberg, R. (eds) (1992), The Sociology of Economic Life, Oxford: Westview. Gray, J. (1998), False Dawn: The Delusions of Global Capitalism, London: Granta. Grossman, G. (1989), ‘Informal Personal Incomes and Outlays in the Soviet Urban Population’, in Portes, A. et al., The Informal Economy. Gustafson, T. (1999), Capitalism Russian Style, Cambridge: Cambridge University Press. Gustafsson, B. (ed.) (1970), Post-Industrial Society, London: Croom Helm. Hall, P. A. and Soskice, D. (eds) (2001), Varieties of Capitalism, the Institutional Foundations of Comparative Advantage, Oxford: Oxford University Press. Hamilton, G. G. and Biggart, N. W. (1992) [1988], ‘Market, Culture, and Authority: A Comparative Analysis of Management and Organization in the Far East’, in Granovetter, M. and Swedberg, R. (eds), The Sociology of Economic Life. Handelman, S. (1997), Comrade Criminal, New Haven: Yale University Press. Hardt, M. and Negri, A. (2000), Empire, Cambridge MA: Harvard University Press. Harvey, D. (1990), The Condition of Postmodernity, Oxford: Blackwell. Harvey, D. (1992), ‘Capitalism: The Factory of Fragmentation’, in Timmons Roberts, J. and Hite, A. ( eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Harvey, D. (1995), ‘Globalization in Question’, Rethinking Marxism, 7–8, 4: 1–17. Hausner, J., Jessop, B. and Neilsen, K. (eds) (1995), Strategic Choice and PathDependency in Post-Socialism: Institutional Dynamics in the Transformation Process, Aldershot: Edward Elgar. Held, D., McGrew, A., Goldblatt, D. and Perraton, J. (1999), Global Transformations, Cambridge: Polity. Hill, R. J. and Zielonka, J. (eds) (1990), Restructuring Eastern Europe, Towards a New European Order, Aldershot: Edward Elgar. Hirst, P. and Thompson, G., (1996) Globalization in Question, Cambridge: Polity. Hirst, P. and Thompson, G. (1999), Globalization in Question, second edition, Cambridge: Polity. Holmes, L. (1997), Post-Communism, an Introduction, Cambridge: Polity. Hosking, G. (1992), A History of the Soviet Union, 1917–1991, final edition, London: Fontana. Hubbard, L. E. (1942), Soviet Labour and Industry, London: Macmillan. Hughes, J. (1994), ‘Regionalism in Russia: The Rise and Fall of Siberian Agreement’, Europe–Asia Studies, 46, 7: 1133–61. Hutton, W. (1995), The State We’re In, London: Jonathon Cape. Hutton, W. (1997), The State To Come, London: Vintage. Hutton, W. and Giddens, A. (eds) (2000), On the Edge, Living with Global Capitalism, London: Jonathan Cape. Inkeles, A. (1968), Social Change in Soviet Russia, Cambridge MA: Harvard University Press. Inkeles, A. and Bauer, R. A. (1961), The Soviet Citizen, Everyday Life in a Totalitarian Society, Cambridge MA: Harvard University Press. Inkeles, A. and Gieger, K. (1961), Soviet Society, London: Constable. Interfax International, (2000), ‘Parliamentary Committee Proposes State Guarantee for EBRD Loan to KamAZ’, available at: http://www.interfax-news.com/ FSUIndustryNews/Automotive-fullstory/html

196

Bibliography

Jameson, F. (1991), Postmodernism or the Cultural Logic of Late Capitalism, London: Verso. Jameson, F. (2000), ‘Globalization and Political Strategy’, New Left Review 4, July–August 2000. Jessop, B. (1999), ‘Reflections on Globalisation and its (Il)logic(s)’, in Olds, K. et al. (eds) (1999), Globalisation and the Asia-Pacific: Contested Territories, London: Routledge. Jessop, B. (2000), ‘The Crisis of the National Spatio–Temporal Fix and Ecological Dominance of Globalizing Capitalism’, published by the Department of Sociology, Lancaster University, available at: http://www.comp.lancs.ac.uk/sociology/soc043rj. html Kaldor, M. (1999), ‘The New Ideas that Freed Europe’, The Independent, 22 October. Kampfner, R. (1994), Inside Yeltsin’s Russia – Corruption, Conflict, Capitalism, London: Cassell. Kataev, V. (1995/1933), Time, Forward!, translated by Malamuth, C., Evanston: Northwestern University Press. Khakim, R. (1998), ‘Russia and Tatarstan: At a Crossroads of History’, Anthropology and Archaeology of Eurasia, 37, 1: 30–71. King, L. (2000), ‘The Developmental Effects of Foreign Direct Investments’, paper presented to the ASA Annual Meeting, Washington DC, August 2000. Kiselyova, E. and Castells, M. (2001), ‘Russia in the Information Age’, in Bonnell, V. E. and Breslauer, G. W. (eds) (2001), Russia in the New Century: Stability or Disorder?, Boulder: Westview Press. Klein, N. (2000), No Logo, London: Flamingo. Kochan, L. and Keep, (1997), The Making of Modern Russia, third edition, London: Penguin. Kornai, J. (1981), Growth, Shortage and Efficiency: A Macrodynamic Model of the Socialist Economy, Oxford: Blackwell. Kotkin, S. (1991), Steeltown, USSR, Berkeley: University of California Press. Kotkin, S. (1996), Magnetic Mountain: Stalinism as a Civilization, Berkeley: University of California Press. Kotkin, S. (2001), Armageddon Averted, Oxford: Oxford University Press. Kumar, K. (1983), Prophecy and Progress, Harmondsworth: Penguin. Kumar, K. (1995), From Post-Industrial to Post-Modern Society, New Theories of the Contemporary World, Oxford: Blackwell. Lane, D. (ed.) (1995), Russia in Transition, Politics, Privatization, and Inequality, London: Longman. Land, D. (ed.) (1999), The Poltiical Economy of Russian Oil, Oxford: Rowman and Littlefield. Lankes, H. P. and Venables, A. J. (0000), ‘Foreign Direct Investment in Economic Transition: the Changing Face of Investments’, in Economics of Transition, 4 (2), 1996: 331–47. Lash, S. and Urry, L. (1987), The End of Organized Capitalism, Cambridge: Polity. Lash, S. and Urry, J. (1993), Economies of Signs and Space, London: Sage. Lash, S. and Wynne, B. (1992), ‘Introduction’, in Beck, U., Risk Society, London: Sage. Ledeneva, A. V. (1998), Russia’s Economy of Favours, Blat, Networking and Informal Exchange, Cambridge: Cambridge University Press. Ledeneva, A. V. and Kurkchiyan, M. (2000), Economic Crime in Russia, London: Kluwer Law International.

Bibliography

197

Ledeneva, A. V. and Seabright, P. (1998), ‘Barter in Post-Soviet Studies: What Does it Look Like and Why Does it Matter?’, unpublished paper, Cambridge University. Lerner, D. (1958), The Passing of Traditional Society: Modernizing the Middle East, Glencoe: Free Press. Lewis, N. (1997), ‘Capitalism’s Modern Mystics’, LM 93, available at: http://www. informinc.co.uk/LM/LM93/LM93_Books.html Lindsay, M. (1996), ‘After the Soft Landing’, Worldlink, January/February 1996: 201–11. Lockwood, D. (2000), The Destruction of the Soviet Union, London: Macmillan. Lonkila, M. (1997), ‘Informal Exchange Relations in Post-Soviet Russia: A Comparative Perspective’ Sociological Research Online, Vol. 2, No. 2, available at: http://www.socresonline.org.uk/socresonline/2/2/9.html Lowell, S., Rogachevski, A. and Ledeneva, A. V. (2000), Bribery and Blat in Russia, London: Palgrave. Lyotard, J.-F. (1984), The Postmodern Condition: A Report on Knowledge, Manchester: Manchester University Press. Martin, R. (1998), ‘Central and Eastern Europe and the International Economy: The Limits of Globalisation’, Europe–Asia Studies, 50,1: 7–26. Martin, R. (1999), Transforming Management in Central and Eastern Europe, Oxford: Oxford University Press. Martin, R. (2002), ‘Politicized Managerial Capitalism: Enterprise Structures in PostSocialist Central and Eastern Europe’, Journal of Management Studies, 39, 6: 823–39. Marx, K. and Engels, F. (1848), Manifesto of the Communist Party, in Timmons Roberts, J. and Hite, A. (eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Marx, K. and Engels, F. (1953), Selected Correspondence: 1843–1895, London: Laurence & Wishart. May. T. (1996), Situating Social Theory, Buckingham: Open University Press. May, T. (1998), ‘Reflexivity in the Age of Reconstructive Social Science’, Journal of Methodology, Theory and Practice, 1, 1: 7–24. May, T. (2001), Social Research: Issues, Methods and Process, third edition, Buckingham: Open University Press. McCann, L. (2000), ‘The Informal Economy and the Informal State in Tatarstan, Russia’, International Journal of Sociology and Social Policy, 20, 9: 5–31. McCann, L. (ed.) (2004a), Russian Transformations: Challenging the Global Narrative, London: RoutledgeCurzon. McCann, L. (2004b), ‘Introduction’, in McCann, L. (ed.) (2004a), Russian Transformations: Challenging the Global Narrative, London: RoutledgeCurzon. McCann, L. (2004c), ‘Globalisation and Post-Socialist Development: The Tatarstan Variety of Capitalism’, Post-Communist Economies, 16, 3. McMichael, P. (1996), ‘Globalization: Myths and Realities’, in Timmons Roberts, J. and Hite, A. (eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Meiksins Wood, E. (1996), ‘Modernity, Postmodernity, or Capitalism?’, Monthly Review, July–August 1996. Meiksins Wood, E. (1997), ‘ “Globalization” or “Globaloney”?’ Monthly Review, February 1997.

198

Bibliography

Mestrovic, S. (1998), Anthony Giddens: The Last Modernist, London: Routledge. MFERRT (1993, 1995), Introductory brochures on Tatarstan. MFERRT (1996), Tatarstan Investors Guide, Kazan: ABAK. Miles, M. B. and Huberman, A. M. (1994), Qualitative Data Analysis, second edition, London: Sage. Mingione, E. (1991), Fragmented Societies, A Sociology of Economic Life beyond the Market Paradigm, translated by Goodrick, P., Oxford: Blackwell. Misztal, B. (1996), Trust in Modern Societies: The Search for the Bases of Social Order, Cambridge: Polity. Morawska, E. (1999), ‘The Malleable Homo sovieticus: Transnational Entrepreneurs in Post-communist East Central Europe’, Communist and Post-Communist Studies 32: 359–78. Murrel, G. D. G. (1997), Russia’s Transition to Democracy, and Internal Policy History, 1989–1996, Brighton: Sussex Academic Press. Murrell, P. (1993), ‘What is Shock Therapy? What did it do in Poland and Russia?’, Post-Soviet Affairs, 9 (2): 111–40. Nekipilov (2000), ‘The Washington Consensus and Russian Economic Policy’, International Social Science Journal, 166: 467–77. O’Brien, M. (1998), ‘The Sociology of Anthony Giddens: An Introduction’, in Giddens, A. and Pierson, C. (1998) Conversations with Anthony Giddens, Making Sense of Modernity, Cambridge: Polity. Ohmae, K. (1994), The Borderless World, Power and Strategy in the Interlinked Economy, London: HarperCollins. Olds, K., Dicken, P. and Kelly, P. F (eds) (1999), Globalisation and the Asia–Pacific: Contested Territories, London: Routledge. Outhwaite, W., (1979) Understanding Social Life: The Method Called Verstehen, London: Allen and Unwin. Outhwaite, W. (2001), ‘In Defence of Social Structure’, Studies in Social and Political Thought, 4, March 2001. Parker, T. (1991), Russian Voices, London: Jonathan Cape. Parsons, T. and Smelser, N. J. (1956), Economy and Society, a Study in the Integration of Economic and Social Theory, London: Routledge. Pirani, S. (1999), ‘Russia’s Oil-powerful Rulers’, Observer, 8 August 1999. Polanyi, K. (1992) [1957], ‘The Economy as Instituted Process’, in Granovetter, M. and Swedberg, R. (eds) (1992), The Sociology of Economic Life. Portes, A., Castells, M. and Benton, L.A. (1989), The Informal Economy: Studies in Advanced and Less Developed Countries, London: Johns Hopkins University Press. Rao, S. (1997), ‘First Russian-GM Blazer Sold’, The St. Petersburg Times, 12–18 May 1997, available at: http://www.sptimes.ru/archive/times/260–261/first-russian.html Ray, L. J. (1993), Rethinking Critical Theory – Emancipation in an Age of Global Social Movements, pp. 107–27, London: Sage. Ray, L .J. (1995), ‘The Rectifying Revolutions? Organizational Futures in the New Eastern Europe’, Organization, 2, 3/4: 441–65. Ray, L. J. (1996), Social Theory and the Crisis of State Socialism, Cheltenham: Edward Elgar. Ray, L. J. and Sayer, A. (1999), Culture and Economy after the Cultural Turn, London: Sage. Ray, L. J. and Outhwaite, W. (forthcoming 2005), Social Theory and PostSocialism, Buckingham: Oxford University Press.

Bibliography

199

Reddaway, P. and Glinsky, D. (2001), The Tragedy of Russia’s Reforms: Market Bolshevism Against Democracy, Washington DC: United States Institute of Peace Press. Reed, M. (1997), ‘In Praise of Duality and Dualism: Rethinking Agency and Structure in Organizational Analysis’, Organization Studies, 18, 1: 21–42. Reed, J. (1977), Ten Days that Shook the World, London: Penguin. Ritzer, G. (1999), The McDonaldization Thesis, London: Sage. Robertson, R. (1992), Globalization, Social Theory and Global Culture, London: Sage. Rodrik, D. (1997), ‘Has Globalization Gone Too Far?’, in Timmons Roberts, J. and Hite, A. (eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Rootes, C. and Davis, H. (eds) (1994), Social Change and Political Transformation, London: UCL Press. Ronson, J. (2001), Them: Adventures with Extremists, London: Picador. Rosenberg, W. G. and Siegelbaum, L. H. (eds) (1993), Social Dimensions of Soviet Industrialization, Bloomington: Indiana University Press. Rutland, P. (1996), ‘Tatarstan Opens Chevrolet Plant’, RFE/RL Research Report, 245, 20 December 1996, available at: http://www.friendspartners.org/friends/news/omri/ 1996/12/961220I.html(opt,mozilla,unix,english,,new) Sagers, M. J. (1996), ‘Russian Crude Oil Production in 1996: Conditions and Prospects’, Post-Soviet Geography and Economics, 37, 9: 523–83. Sakwa, R. (1996), Russian Politics and Society, second edition, London: Routledge. Sakwa, R. (1999), Postcommunism, Buckingham: Open University Press. Sakwa, R. (2004), ‘Russia and Globalisation: Concluding Comments’, in McCann, L. (ed.) (2004a), Russian Transformations, London: Routledge. Sapir, J. (2000), ‘The Washington Consensus and the Transition in Russia: History of a Failure’, International Social Science Journal, 116: 479–91. Sassen, S. (1996), Losing Control? Sovereignty in an Age of Globalization, New York: Columbia University Press. Sassen, S. (1998), Globalization and its Discontents, New York: New Press. Saul, J. S. and Leys, C. (1999), ‘Sub-Saharan Africa in Global Capitalism’, Monthly Review, July–August 1999. Scase, R. (ed.) (1989), Industrial Societies, London: Unwin. Schaeffer, R. K. (1997), Understanding Globalization, Oxford: Roman and Littlefield. Schwartz, G. (2003), ‘Employment Restructuring in Russian Industrial Enterprises: Confronting a “Paradox” ’, Work, Employment, and Society, 17, 1: 49–72. Scott, A. (ed.) (1997), The Limits of Globalization, Cases and Arguments, London: Routledge. Sedaitis, J. B. (1997), ‘Network Dynamics of New Firm Formation: Developing Russian Commodity Markets’, in Stark, D. and Grabher, A. (eds) (1997), Restructuring Networks in Post-Socialism, Oxford: Oxford University Press. Sennett, R. (1998), The Corrosion of Character – The Personal Consequences of Work in the New Capitalism, London: W. W. Norton. Service, R. (2000), Lenin: A Biography, London: Macmillan. Shevchenko, O. (2001), ‘Bread and Circuses: Coping and Adaptation in Russia Before and After August 1998’, Communist and Post-Communist Studies, 34: 77–90. Shevtsova, L. (1995), ‘The Two Faces of PostCommunist Russia’, Journal of Democracy, 6, 3: 56–71. Siegelbaum, L. H. and Walkowitz, D. J. (1995), Workers of the Donbass Speak: Survival and Identity in the New Ukraine, 1989–1992, New York: SUNY Press.

200

Bibliography

Sik, E. and Wellman B. (1999), ‘Network Capital in Capitalist, Communist, and Postcommunist Countries’, in Wellman, B. (ed.) (1999), Networks in the Global Village. Silverman, D. (1985), Qualitative Methodology and Sociology, Describing the Social World, Aldershot: Gower. Sklair, L. (1995a), ‘Social Movements and Global Capitalism’, in Timmons Roberts, J. and Hite, A. (eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Sklair, L. (1995b), Sociology of the Global System, second edition, London: Prentice Hall. Sklair,. L. (2001), The Transnational Capitalist Class, Oxford: Blackwell. Slider, D. (1994), ‘Privatisation in Russia’s Regions’, Post-Soviet Affairs, 10, 4: 367–96. Smelser, N. (1963), The Sociology of Economic Life, Englewood Cliffs: PrenticeHall. Smith, A. (1993) [1776], The Wealth of Nations, Oxford: Oxford World Classics. Smith, C. and Thompson, P (eds) (1992), Labour in Transition: The Labour Process in Eastern Europe and China, London, Routledge. Smith, G. (1995), ‘The Ethno-politics of Federation Without Federalism’ in Lane, D. (ed.), Russia in Transition, London: Longman. Smith, G. (ed.) (1996), The Nationalities Question in the Post-Soviet States, second edition, London: Longman. Solanko, L. (2003), ‘An Empirical Note on Growth and Convergence Across Russian Regions’, Bank of Finland Institute for Economies in Transition, Discussion Paper no. 9., available at: http://www.bof.fi/bofit/fin/6dp/03abs/pdf/dp0903.pdf Soros, G. and Giddens, A. (1998), ‘Beyond Chaos and Dogma . . .’, in Giddens, A. and Pierson, G. (1998), Conversations with Anthony Giddens, Cambridge: Polity. Soros, G. (2000), ‘The New Global Financial Architecture’, in Hutton, W. and Giddens, A. (eds) (2000), On the Edge, London: Jonathan Cape. Southworth, C. (1999), ‘The Making of the Russian Working Class: Workplace Conflict and Economic Development in Post-Soviet Factories of the Urals’, paper presented to the ASA annual meeting 2000, available at: http://www.sscnet.ucla.edu/ soc/groups/ccsa/southworth.htm Spiridonova, N. (1999), ‘Bigger money – lesser problems’, Report on Nizhnekamskneftekhim, available at: http://www.nknk.ru/eng/news/170200.html Stark, D. (1995), ‘Not by Design: The Myth of Designer Capitalism in Eastern Europe’, in Hausner, J., Jessop, R. and Neilson, K. (eds), Strategic Choice and PathDependency in Post-Socialism, Aldershot: Edward Elgar. Stark, D. (1999), ‘Ambiguous Assets for Uncertain Environments: Heterarchies in Postsocialist Firms’, available at: http://www.sociology.columbia.edu/faculty/stark/ papers/publications.html Stark, D. and Bruszt, L. (1998), Postsocialist Pathways, Transforming Politics and Property in East Central Europe, Cambridge: Cambridge University Press. Stark, D. and Grabher, A. (eds) (1997), Restructuring Networks in Post-Socialism, Oxford: Oxford University Press. Stiglitz, J. (2002), Globalization and its Discontents, London: Allen Lane. Stoner-Weiss, K. (1998), Local Heroes: The Political Economy of Russian Regional Governance, Princeton: Princeton University Press. Suny, R. (1993), The Revenge of the Past, Stanford: Stanford University Press. Sutela, P. (1990), ‘The Marketization of Eastern Europe’, in Hill, R. J. and Zielonka, J. (1990).

Bibliography

201

Sutton, A. C. (1973), Western Technology and Soviet Economic Development, 1945–1965, Hoover Institution Press. Swedberg, R. (1990), Economics and Sociology, Redefining Their Boundaries: Conversations with Economists and Sociologists, Chichester : Princeton University Press. Taylor, A. J. (1972), Laissez-faire and State Intervention in Nineteenth Century Britain, London: Macmillan. Thompson, P. (2003), ‘Disconnected Capitalism: or Why Employers Can’t Keep Their Side of the Bargain’, Work, Employment, and Soceity, 17, 2: 359–78. Thompson, P. and Warhurst, C. (eds) (1998), Workplaces of the Future, London: Palgrave. Thornhill, J. (1996), ‘Tatar’s Turn’, Financial Times, 8 March 1996. Ticktin, H. (1980), ‘The Ambiguities of Ernest Mandel’, Critique, 12, pp. 127–37. Timmons Roberts, J. and Hite, A. (eds) (2000), From Modernization to Globalization, Oxford: Blackwell. Tucker K. H., Jr. (1998), Anthony Giddens and Modern Social Theory, London: Sage. Urry, J. (2000), Sociology Beyond Societies, London: Routledge. Van Tulder, R. and Ruigrok, W. (1998), ‘European Cross-National Production Networks in the Auto Industry: Eastern Europe as the Low End of the European Car Complex’, BRIE Working Paper 121, available at: http://brie.berkeley.edu/ ~briewww/pubs/wp/wp121.htm Varese, F. (2001), The Russian Mafia: Private Protection in a New Market Economy, Oxford: Oxford University Press. Volkogonov, D. (1999), The Rise and Fall of the Soviet Union, London: HarperCollins. Vvedensky, R. (2002), ‘Regional focus: Republic of Tatarstan, Russian Federation’, publication of Bisnis consultancy, available at: http://www.bisnis.doc.gov/bisnis/ country/0204Tatarstan.htm Walker, E. W. (1996), ‘The Dog That Didn’t Bark – Tatarstan and Asymmetrical Federalism’, The Harriman Review, 9, 4: 1–35. Wallerstein, I. (1983), Historical Capitalism, London: Verso. Waters, M. (1995), Globalization, London: Routledge. Watson, J. (1996), ‘Foreign Investment in Russia: the Case of the Oil Industry’, Europe Asia Studies, 48, 3: 429–55. Weber, M. (1930), The Protestant Ethic and the Spirit of Capitalism, London: Routledge. Wellman, B. (ed.) (1999), Networks in the Global Village, Boulder: Westview. Wellman, B. and Berkowitz, S. D. (eds) (1988), Social Structures, a Network Approach, Cambridge: Cambridge University Press. Went, R. (2000), Globalization: Neoliberal Challenge, Radical Responses, London: Pluto. Whitley, R. (1999), Divergent Capitalisms: The Social Structuring and Change of Business Systems, Oxford: Oxford University Press. World Bank (2002), Transition: Ten Years, Washington, DC: World Bank. Zukin, S. and DiMaggio, P. (eds) (1990), Structures of Capital, Cambridge: Cambridge University Press.

Index

Altvater, E. 13, 158–9, 175 Andrle, V. 38 Arnason, J. P. 16 Åslund, A. 2 Astrakahn 20 Bashkortostan 19, 20, 92 Bauman Z. 3, 5, 7, 25, 72, 74, 107, 128, 144, 148, 155–7, 158–9, 165, 175, 176, 177 Beck, U. 2, 10, 12, 128, 141, 170 Berman, M. 24, 165 Biggart, N. W. 15, 95 blat 15, 48, 137 Bradshaw, M. 19 bribery of government officials, see also corruption 58–64, 121 Bukhariev, R. x, 121 Burawoy, M. 1, 4, 5, 6, 9, 10, 12, 13, 16, 23, 26, 27, 77, 139, 145, 146, 158–62, 163, 166, 168, 170, 171, 174, 175, 176 Castells, M. 4, 6, 7, 12, 15, 26, 43, 46, 53, 55, 60, 62, 64, 72, 74, 75, 83, 84, 85, 95, 105, 112, 129, 148, 154, 156, 157, 160, 166, 170, 175, 176 China 14 Clarke, S. 76, 169 Coca-Cola 112, 115, 129, 150, 161 corruption 47, 50, 58–64, 73, 121, 128, 134 cross-cultural management communication 117–19, 124–5, 138, 149–50 Davis, H. 25, 131 Dore, R. x

EBRD (European Bank for Reconstruction and Development) 2, 14, 79, 110, 131, 142, 143, 154, 166 Ekaterinburg 132 electronics industry, see also Kameks 43–4, 90–1, 96, 117–19, 120, 133 elite economic actors 43–7, 67, 69, 71, 75, 88, 101, 118–19, 120 Engels, F. 11 Filtzer, D. 102, 103 foreign direct investment (FDI), see Tatarstan: foreign direct investment in; and Russia: foreign direct investment in Gamble, J. xi General Motors 112, 130 Giddens, A. see also structuration 2, 3, 5, 7, 10–11, 16, 25, 27, 30, 31, 32, 38–9, 42, 45, 46, 49, 53, 55, 58, 59, 60, 65, 72, 75, 77, 94, 95, 96, 100, 104, 105, 107, 108, 125, 126, 128, 134–5, 140, 141, 143, 147–9, 153, 154, 155, 156, 158, 161, 170, 174, 177 globalization: collapse of USSR and 11, 13, 16, 143, 152–3; difficulty of critique of 3, 155; definition of 3; dominance of media 4, 171–2; emergence of theory 1; explosion of literature 5, 171; of ideology and imagery 5, 129, 146, 150, 161, 163, 164, 166, 167; international finance and 17; limits to x, xi, 1 24, 26, 70–2, 166–9; Russia and 23–35, 127–8, 144, 161–2, 177; state legislation to support it 13; supposed inevitability of 11, 149–54; summary of theorists’

Index positions 6–13; Tatarstan and 143–79; ‘winners and losers’ 3, 12, 72, 155–7, 175 Glinsky, D. x Granovetter, M. 25, 26, 137 Gray, J. 7, 10, 11–12, 14, 16, 71, 107, 128, 140, 154–5, 167, 168 Gustafson, T. 4, 16, 18, 48, 63, 81, 92, 103, 131, 140, 177 Hall, D. 4, 43 Hamilton, G. 15, 95 Hardt, M. 43, 172 Harvey, D. 2, 7, 11, 16, 24, 71, 74, 104, 107, 112, 141, 149–54, 170, 177 Hirst, P. 4, 5, 6, 9, 12, 27, 60, 85, 139, 141, 158–62, 167, 172–3 Hutton, W. 53, 128, 147, 153, 167 India 14 informal economic networks 42–75 institutional theory ix, x, 23–4, 26–8, 171 Japan 15 Jessop, B. 6, 9, 12, 72, 74, 85, 107, 158–62, 175, 176 Kaldor, M. 13, 143 KamAZ (Kama Automotive Works) 15, 19, 32, 33, 35, 43–4, 49, 55, 56–7, 88, 91, 97,101, 104, 105, 112, 130, 161, 164, 166, 167 Kameks (electronics plant) 33, 35 Kazan xi, 15, 22, 33, 35, 40, 54, 67, 82, 113, 115, 117, 144, 150, 157, 164, 170, 178, 179 Kazan Helicopters 15, 34, 35, 101 Kazan Motor 35 Klein, N. 2, 145–6 KMIZ (Kazan Medical Instrument Plant) 80, 88, 123 Korea 15 Kotkin, S. 11, 14, 15, 16, 65, 147 Ledeneva, A. 15, 46, 48, 63, 70, 94, 116, 125, 137, 138, 140, 177 Lockwood, D. 8, 15, 16, 25, 71, 143, 149–54 Mahnkopf, B. 13, 158–9, 175 Mari-El Republic 19, 132 Martin, R. 6, 160

203

Marx, K. 11, 24 Melita (furs company) 33, 35 McCann, L. x, 5, 78 ‘McDonaldization’ x McDonald’s 20–1, 89, 114, 117, 150, 151m 161 military–industrial complex (MIC) see also Kazan Helicopters, Tupolev aircraft factory 54, 99 Morris, J. xi Moscow 2, 11, 13, 18, 19, 20, 22, 48, 82, 85–92, 106, 146, 148, 179 Naberizhnii Chelny 32, 170 Negri, A. 143, 172 Newly Industrializing Countries (NICs) 14 Nizhnekamskneftekhim (Nizhnekamsk Oil and Gas) 44, 56, 88, 91, 123, 124, 179 Nizhnekamskshina (tyre production company) 57, 98 Nizhnii Novgorod 19, 22, 129, 179 Novosibirsk 48, 179 Ohmae, K. 25, 53 oil, see also oil companies: Sakhalin II 14; Salym 14; Tatarstan’s oil see also Tatneft 15, 32, 35, 51, 55, 56–7, 106, 124, 127, 128, 140, 143, 174, 178 oil companies: BP (British Petroleum) 14; Royal Dutch/Shell 14, Tatneft 15, 19, 33, 48, 49–50, 88, 98, 178 organized crime 14, 61, 63, 66–9, 71, 93–4, 134, 139 OMZ (Optical-Mechanical Plant) 35, 88, 123 Oriflame (Swedish cosmetics company) 22, 129 Orgsyntez (Organic Synthesis Plant, Kazan) 33, 35, 123 Outhwaite, W. 72 path-dependency 23–4, 25, 28, 30, 45, 46, 48, 56–61, 63–4, 74, 75, 100, 108, 111, 124, 144, 174 Pepsi Cola 113–14, 129 Perm 20 petrochemistry see Orgsyntez, Nizhnekamskneftekhim Philip Morris (Altria Group) 129, 150, 161

204

Index

postmodernism 3 Proctor & Gamble 112 Ray, L. 3, , 16, 18, 27, 72, 84, 95, 104 Reddaway, P. x Reed, M. 27 Ritzer, G. 27, 104, 109, 143 Robertson R. 4, 5, 8, 27 Rodrik, D. 3 Russia: development of capitalism since post-1991 x–xi, 1, 13–18, 77, 118, 154, 167, 177; financial crash of August 1998 13, 17, 19, 91–2, 140, 154; Financial Industrial Groups 44; foreign direct investment (FDI) in 14; 22–3, 126, 154, 167 Saint Petersburg 2, 18, 19, 20, 22, 179 Sakwa, R. 44, 86, 120 Samara 19, 22 Santel (private mobile phone operator) 35, 100 Sassen, S. 2, 8, 12, 72, 107, 127, 144, 145, 148, 152, 155–7, 158–9, 165, 175, 176 Sayer, A. 3, 4, 27 Schwartz, G. 76, 169 Scott, A. 9, 12–13, 158–62 shadow economy 64–6, 71, 74, 133, 144 Shaimiev, M. (President of Tatarstan) 51, 52, 53, 57, 78, 86, 88, 91, 98, 100, 112, 119, 121–3, 126 Siegelbaum 61 Sklair L. 2, 8, 11, 27, 71, 107, 145, 149–54, 165, 170, 177 Smolensk 20 sociology of economic life 28, 166, 170, 174–5, 178 Solanko, L. 20, 125 Soskice, D. 4, 43 Southworth, C. 34, 92, 176 Soviet Union: economy of 15, 76; informality in 15; management in 50, 83, 118–19; scientific-technical sector 15 Sparta, G. 22, 34, 116 Stalin, J. V. 15 Stark, D. 4, 16, 23, 28, 49, 59, 81, 108, 120 Stiglitz, J. x, 28 Stoner-Weiss, K. 13, 99, 161 structuration, see also Giddens, A. 27, 31, 45, 60, 98, 100, 108, 125, 133, 134, 144, 147–9, 174

structure vs. agency, see also structuration 18, 170–9 Swedberg, R. 25, 30, 170 Tatarstan: availability of Western consumer products 20, 22, 54, 97, 112–17, 129, 140, 144, 150, 161; bankruptcies in 51–2; economic development 18–23, 108–42, 163–6; economic performance compared with other Russian regions 20, 77, 100, 132–3; ethnic minorities in 79; foreign direct investment (FDI) in 18–19, 56, 74–5, 84, 88, 95, 98, 106, 108, 110–11, 112, 126, 128–9, 130–1, 132, 144, 146; industrial profile of 15, 18–23, 46; infrastructure of 82, 83–4, 99–100, 124, 131, 157, 164; isolation from globalization 56, 70, 74, 84, 88, 98, 101, 104–7, 126–30, 132, 136, 139–42, 154, 162–3, 166, 169; joint ventures with foreign companies 45, 55, 56, 57, 63, 95 110–11, 130, 136, 138, 151, 173; local bureaucracy 53, 60, 63, 94–9, 120–6, 132; management of former state-owned enterprises in 50, 59–60, 71, 102–4, 117–19, 124, 130–3, 138–9, 140–1; physical inheritance from Soviet era 54–8, 60, 70, 71, 78, 80–1, 96–7, 99, 104–5, 129, 130, 141; population of 19, 79; powerful families in 33, 47–9, 62, 73; privatization in 49, 84, 142; public sector services in 131, 142, 143–4; regionalization and 76–107; relations with Moscow 19, 85–92, 106; small and medium-sized enterprises (SMEs) in 54, 59, 64–5, 67, 69, 71, 93–4, 113, 116, 128, 133–9, 142, 177; Soviet era in 15, 118–19, 144; ‘standard view’ of 78–85; Tatar state’s role in governing economy 13, 19, 44–5, 49–58, 85, 94–9, 100–2, 120–6, 118–19, 121, 123–6, 127,134, 139, 142, 143–4, 151, 166; unregulated markets in 133–9 Tatinkom (state-owned Tatar telecoms company) 35, 82, 100 taxation and illegal tax evasion 65, 67–9, 78–9, 93–4, 120, 139 telecoms, see also Tatarstan: infrastructure of, Tatinkom 82, 100, 128, 164, 169

Index Thompson, G. 4, 5, 6, 9, 12, 27, 60, 85, 139, 141, 158–62, 167, 172–3 Tupolev aircraft factory 15, 35 Turkey 88–9, 157 Ulyanovsk 132 Urry, J. 2, 3, 8, 10–11, 25, 26, 43, 60, 72, 77, 101, 104, 105, 113, 143, 145, 147–9, 156, 157, 161, 170, 172, 177 USSR see Soviet Union Varese, F. 46, 59, 64, 81, 94 varieties of capitalism ix–xi, 12–13, 19

205

Volkogonov D. 16, 135, 147 Voronezh 20 Waters, M. 8, 10–11, 53, 72, 77, 97, 126, 141, 145 Went, R. 27, 125, 154 Westernization, see also Tatarstan: availability of Western consumer products 13, 97, 104, 109–19, 129, 136, 140, 144, 150, 161 Whitley, R. 15, 43, 73, 95 Wilkinson, B. xi Yaroslavl 22 Yoska-Ola 132–3