Economics of Russian Crime; Y. Maltsev

THEFREEMAN IDEASON UBERlY Economics of RussianCrime by Yuri Maltsev Introduction The issue of crime is of the utmost im portance for Russia and other formerly So viet republics undergoing transition from a centrally administered economy to a market economy. Today the mafia is a prominent feature of a Russia in transition.! The shock ing 1994 murders of Duma deputies Andrei Aizderdsis and Valentin Martemyanov at tracted public attention to the inability of the State to cope with the crime. Gangland slayings, daylight robberies, hostage-tak ing, rape, and bribery of officials have all become part of life in the new Russia. Calling Russia a crime "superpower," President Yeltsin has declared that he will make law and order his top priority. Leaders of opposition from "democrat" Grigory Yavlinsky to ultranationalist Vladimir Zhiri novsky are calling for harsher measures and more resources for law enforcement. While many pundits point to the rise in crime as evidence of the social cost wrought by the transition to the market, it is more appro priate to focus our attention on the institu tional incentives that resulted in this rise of criminal activity.

Dr. Yuri N. Maltsev, Associate Professor of Economics at Carthage College, Wise., and a Peace Fellow of the United States Institute of Peace, held, over a 15-year period, various teaching and research positions in Moscow, Russia. Before coming to the U.S. in 1989, he was a member of a senior team of Soviet econ omists that worked on President Gorbachev's reforms package and a Chief Consultant of the USSR Bank for Foreign Trade. With the collapse of the USSR in 1991 there was little, if any, change in the orga nization of the criminal justice system in Russia.2 The Russian criminal code is so oppressive and pervasive that "one must virtually retire to hermitage in order to avoid committing a crime.,,3 Russia's prisons, probably the worst in the world, are still filledwith over 100,000entrepreneurs, most of whom were convicted for commercial and business practices absolutely legal in civilized countries. Private production and exchange-the most natural of human ac tivities-are still criminalized through a con fiscatory tax system and monstrous regula tory mechanism.