Dear David, Did I ever send you the conclusion of my book The Russian Mafia (Oxford UP, publication date August 2001) for circulation in the list? I remember I wrote you about it but then never saw it on the list. I attach a copy.
best
Federico
 

'Conclusion' to Federico Varese, The Russian Mafia, Oxford University Press,
pp. 187-191. Publication date: 31 May 2001. (see
http://www.oup.co.uk/isbn/0-19-829736-X)
Federico Varese is currently William H. Orrick Visiting Assistant Professor
at Yale University.

The Russian Mafia

The Russian Mafia is not a single crime group. One national organization did not emerge from the collapse of the Gulag system and the increase of criminal opportunities that accompanied the end of the Soviet Union. There are several reasons why this should have been the case. First, information gathering becomes more complicated as the number of people one needs to gather information upon increases; as a result of this, a mafia group might have to 'subcontract' part of the work to individuals it trusts but then the chain of authority stretches and the risks increase. As a consequence, recruitment into the organization becomes more risky and uncertainty over the identity of members higher. Like any other organization, a mafia group is based on a chain of hierarchical relationships, and problems of asymmetric information, imperfect monitoring and opportunistic behavior arise. But the longer the chain, the harder it is to monitor agents. On the contrary, the shorter the chain, the easier it is to solve the governance problem.

Second, a mafia group stretched across a vast country would find it difficult to operate. As the range of operations increases, the number and the complexity of disputes also increase. It will be harder to oversee all transactions and extract a cut from each of them. It also becomes more likely that clients both in the overworld and in the underworld will make deals without the intervention or the knowledge of the mafia group. Criminals in the underworld, as individuals in the overworld, might develop relations of trust and reciprocity that escape the mafia as a guarantor of transactions, thus bypassing it. Such an overstretched mafia would need to rely on an army of enforcers able to intervene in troublesome spots around the country, protecting the 'legitimate' representative of the organization, in ways that do not differ significantly from sending troops to crush a rebellion in a breakaway region. Ceteris paribus, such a 'foreign' legion would be at a disadvantage compared with the locals.

The picture that emerges from post-Soviet Russia is one of many gangs with a grip on a specific bit of turf, such as a neighborhood or a number of 'clients'. Each group is organized hierarchically and has its own army of enforcers who are recruited from a pool of trusted aspirants.  Some Russian crime groups have succeeded at forging common trademarks. The trademarks derive from past Soviet criminal history, the rich baggage of norms and rules that the vory-v-zakone developed over the Soviet period. Leaders of single crime groups are initiated into the fraternity of vory-v-zakone. The marks of the vory are shared across different crime groups, even if each one enjoys a high degree of independence and may even compete with another over territory and businesses.

The Russian Mafia is the sum total of the criminal leaders who went through the vory ritual. The vory initiation is reserved to the leaders, not recruits. It is a marker of quality and commitment to the underworld, and evokes - in the eyes of other criminals - an honorable and distinguished tradition. Thus, the Russian Mafia shares crucial similarity with the Sicilian Cosa Nostra. Sicilian crime families have been highly successful at forging shared marks of identity, while at the same time maintaining the independence of each family. Moreover, although some lesser opponents exist on the island, the Sicilian Mafiosi have been able to prevent the formation of powerful competitors, who do not share their marks of identity. Have the Russians been equally successful? The answer is no. Competitors are the ethnic crime groups that do not share the vory marks. These groups can be best described as non-Russian mafias. I have also argued that the Cossack brotherhood is likely to emerge in the future as another competitor, also grounded on a rich baggage of rituals and norms, alternative to the vory.

The peculiar Russian transition to the market has allowed legal and semi-legal providers of protection to flourish. Private protection firms, police departments, fragments of the security services moonlighting on their working time on behalf of private employers, respond to market incentives and offer protection to legitimate and non-legitimate businesses. Thus, they all compete with the mafias of Russia. These protectors are only partially independent of the state. Although they do not qualify as autonomous suppliers of protection, the state itself is hardly a unitary entity in Russia.

The Russian Mafia has been able to forge political alliances, for instance with the LDPR of Vladimir Zhirinovsky, and has penetrated politics to a degree.

What is the future of the Russian Mafia? First, one should not exaggerate its role. It has not dominated the transition to the market. Powerful economic lobbies of the Soviet era and newly formed conglomerates run by the 'oligarchs' have captured the state, aptly defined by Janine R. Wedel as a 'clan state'. Colossal economic concerns control property and resources and are identified with particular ministries or institutional segments of government to the point that agenda of the administration and the clan overlap. This state of affairs is likely to continue. Police forces, security services and private protection firms are likely to dominate the market for protection.

The privatization of protection need not be an entirely unwelcome outcome. State protectors turned private suppliers will be less inclined to stage a coup d'йtat to turn the clock back to Soviet-era economic planning and state socialism. A by-product of the fragmentation and privatization of protection, however, is that disputes between clients will not be adjudicated by an independent third party, a liberal state. The conflict will transfer right at the heart of the state machinery. When an entrepreneur protected by an FSB unit has a dispute with a competitor under the wings of the MVD, sensitive files, confidential information, state secrets, compromising materials (the well known kompromat), and state military resources will be used in the fight. Such conflicts among state agencies are potentially destabilizing and further reduce trust in the administration as a fair supplier of dispute resolution and protection for all.

For its part, is the Russian Mafia a bad for society? Criminal groups collect debts, settle business disputes, at times help businessmen obtain special credits, and have even shown the ability to restrain their demands and take into consideration the ups and downs of the economy. Entrepreneurs in Perm complain that criminal protection is far from perfect: in the Visim sub-district of Perm, the racket is not always able or willing to prevent theft and retrieve stolen goods. Still, shop-keepers and kiosk owners resent the police and tax inspectorate the most.

Some criminal protectors do behave in a predatory fashion. Predation, however, can be a matter of perspective: what looks predatory from the point of view of the new entrant in a market, may well be a genuine protection against competition for those who are already in that market. Nonetheless, predatory criminals do exist. They extract a vast amount of money from the business they protect and lead the business into bankruptcy. Over time, these groups are likely to disappear, since they destroy their own source of revenue. In the meantime, entrepreneurs in Perm know that, once they have opened a shop, they might come under the spell of predatory gangs and choose the protector in advance, before starting their business operations. Such a choice reduces uncertainty and ensures better protection. When disputes arise between protected businesses, rudimentary tribunals with embryonic judicial rituals adjudicate.

Prima facie, criminals perform a function and one might be tempted to conclude that, "the net impact of organised crime in Russia today is beneficial" (Leitzel, Gaddy and Alexeev, 1995: 28.) This is hardly the case. Criminal protection includes protection against competitors or business rivals and the acquisition of soft credits. In a world protected by the mafia, sellers compete, not by improving quality or reducing prices but by acquiring more efficient violent skills in order to enlarge their share of the market. This is a hazardous and uncertain environment, "perturbed by anomalies, uncertain borders, incongruent circumstances, breached norms, and biased information" (Gambetta, 1993: 256). Also, no absolute rights are established and enforced in the mafia world. In one case, a Perm criminal group switched client and start protecting somebody else. As a consequence, the first client was murdered. In the case of Evgeniya, the group protecting her first inquired into the standing of the family she had a dispute with. Only when they discovered that this family had no significant connections in the city, did they freely victimize it. Banditskaya krysha does not supply protection on the basis of universal criteria.

The criminal tribunals are a parody of the justice system: intricate legal disputes cannot be evaluated and adjudicated in such settings. Ultimately, the military standing of one's protector is the strongest legal argument. Some entrepreneurs might decide to exit the Russian market, either by immigrating to a different country or by choosing a different profession. In the dry language of economics, 'human resources' are wasted in the process. Those who continue to do business in such a world must be prepared to face potentially severe consequences. Alternatively, an entrepreneur can decide to limit the expansion of operation, as in the case of Inna and Alla described in Chapter 4. A limited activity is less likely to come under the scrutiny of criminal rackets, but also hampers economic growth.

One need not ask whether the Russian Mafia is a bad for society: That we know. One should ask rather whether the remaining institutions of authority, which are supposed to enforce universal rights and secure protection to the Russian people, behave according to a logic entirely different from those of the mafias. Doubts remain.