Postcommunist Oligarchs in Russia: Quantitative Analysis
2009 academic paper by Serguey Braguinsky providing quantitative analysis of 296 first-wave Russian postcommunist oligarchs, distinguishing insider nomenklatura from outsider entrants
Postcommunist Oligarchs in Russia: Quantitative Analysis is a 2009 scholarly article by economist Serguey Braguinsky that examines the careers of the 296 most prominent first-wave postcommunist business tycoons in Russia - Russian Oligarchs - through systematic empirical analysis.[1]
The paper documents how the transition produced "oligarchic capitalism" rather than a clean shift to market democracy. It distinguishes insider oligarchs (43 percent of the sample) who derived status from privileged nomenklatura backgrounds under the Soviet regime from outsider oligarchs without such ties.[1]
Outsider oligarchs were younger, better educated and disproportionately of Jewish ethnicity. They initially succeeded in sectors neglected by the planned economy but the vast majority later forged special relationships with the postcommunist government and adopted similar behavioural patterns to insiders.[1]
Author
Serguey Braguinsky was born in Moscow in the former Soviet Union. He earned his Bachelor’s degree from Moscow State University and his Doctor of Economic Sciences from Keio University in Japan.[2]
He held earlier positions at the Institute for Oriental Studies of the USSR Academy of Sciences, Yokohama City University, the University of Chicago and the State University of New York at Buffalo. He served as Associate Professor at Carnegie Mellon University before becoming Professor and Dean’s Professor of Innovation and Firm Growth at the University of Maryland Robert H. Smith School of Business, with a cross-appointment at Osaka University. His research centres on industry evolution, entrepreneurship, innovation, institutions and the economics of transition from planned to market economies.[2]
Publication and data
The article appeared in the Journal of Law and Economics in May 2009. Braguinsky assembled data on 296 oligarchs from the LABYRINTH database (Panorama 2005), expert rankings from 1995–1999, Moscow income and tax records for 1999–2004, and additional biographical sources. The sample covers the period spanning the Yeltsin era and the first transition of power to Vladimir Putin in 2000.[1]
Core argument: insider versus outsider oligarchs
The paper’s central contribution is the quantitative distinction between two sources of supply into the postcommunist business elite.
"Forty-three percent of them were insider oligarchs deriving their status from a privileged nomenklatura background dating back to the previous regime. The rest were outsider oligarchs with no such background."[1]
Insider oligarchs gained entry through continuity with the Soviet ruling elite:
"The first rule deems an oligarch an insider if he or she had been the top manager or one of the top managers in charge of the main asset that qualified him or her to become a member of my sample prior to the collapse of the Soviet Union in December 1991. These members of the postcommunist business elite have also been called 'red directors'."[1]
A second category covers former politicians and nomenklatura functionaries:
"The second rule assigns an oligarch to the insider category if he or she was a prominent politician or a nomenklatura functionary before the end of 1991. These include ministers, deputy ministers, and department heads in the former Soviet government; members and staff of the Central Committee of the Communist Party apparatus; regional party and government bosses; managers of the State Bank of the Union of Soviet Socialist Republics (USSR); and military and secret-service top brass who supervised the production and export of military-related goods and equipment."[1]
A third rule adds relatives and long-time colleagues of the above. The total of insider oligarchs reaches 132.[1]
Outsider oligarchs lacked pre-1991 nomenklatura positions:
"My examination of the pretransition biographies of the remaining 164 oligarchs reveals that they either had not been in any particularly noticeable position before the onset of transition or had prospered in the late years of the Soviet regime owing not to nomenklatura ties but to exceptional personal talent (for example, Svyatoslav Fyodorov, the eye surgeon who founded the Microsurgery of the Eye Institute, or the popular fashion designer Anatoly Klimin). Even though many of these oligarchs (especially those who were particularly successful) subsequently bolstered their careers by close relationships with insider oligarchs and political ties to the postcommunist government, I classify them as outsider oligarchs when those relationships cannot be traced to their pretransition nomenklatura careers."[1]
The category also includes reformist politicians turned oligarchs such as Anatoly Chubais and those whose primary source of power was organised crime.[1]
Demographic and sectoral differences
Table 2 in the paper quantifies sharp contrasts. Outsider oligarchs averaged 37.7 years old in 1995 versus 47.8 for insiders. They were far more likely to be Jewish (23.2 percent versus 2.4 percent), born in Moscow, and graduates of elite colleges. Their start-up sectors were concentrated in finance and consumer goods and services—areas largely absent from the planned economy—while insiders dominated energy and metallurgy.[1]
"Almost half the outsider oligarchs made their first fortunes in finance and banking... The share of outsider oligarchs who made their initial fortunes in the consumer goods and services sector is more than three times higher than the corresponding share among insider oligarchs."[1]
"23.2 percent of outsider oligarchs were of Jewish ethnicity, while just 2.4 percent of insider oligarchs were Jewish (1.7 percent among red directors). We can think of the collapse of communism as a natural experiment that (at least temporarily) destroyed the mechanism of nomenklatura-determined selection of business elite."[1]
Political ties and convergence
Despite initial advantages in human capital, most outsider oligarchs converged toward insider patterns by forging privileged relationships with the Yeltsin administration, especially during the 1996 re-election campaign. Seventy-eight oligarchs in the sample were classified as active Yeltsin supporters or their close associates.[1]
Regression analysis of expert influence ratings shows that being a Yeltsin supporter raised influence by approximately 23 percent, outweighing the outsider background effect.[1]
Behavioural differences
Outsider oligarchs, particularly Yeltsin supporters, reported significantly lower incomes to tax authorities than insider oligarchs, even after controlling for influence ratings used as a proxy for actual wealth.[1]
"the estimates imply that outsider oligarchs who were active Yeltsin supporters reported about 90 percent less income than insider oligarchs who were not active Yeltsin supporters."[1]
Outsider oligarchs were also more likely to operate as behind-the-scenes owners and to seek elected political office.[1]
Expropriation and the Putin era
Expropriations peaked between 1998 and 2003. Under Yeltsin, insider oligarchs were more often expropriated to make way for politically connected outsiders. Under Vladimir Putin, many outsider oligarchs with close Yeltsin-era ties lost assets and faced ostracism, while some insider oligarchs in state companies were retired. Lack of transparency in income reporting made outsider oligarchs particularly vulnerable.[1]
The fate of Mikhail Khodorkovsky, former owner of the largest Russian oil company, illustrates how even highly successful independent oligarchs could lose everything after falling out of favour.[1]
Conclusion of the paper
The study finds that outsider oligarchs initially possessed characteristics associated with a new entrepreneurial class but were largely absorbed into the existing incentive structure of political patronage. The basic rules of the game from the decaying communist regime carried over into the transition period.[1]
"As noted by Baumol (1990, p. 894), '[H]ow the entrepreneur acts at a given time and place depends heavily on the rules of the game—the reward structure in the economy—that happens to prevail,' and the salient feature of oligarchic capitalism is that political support is the precondition for exercising effective property rights."[1]
Named oligarchs in the study
The 296-oligarch sample includes prominent figures such as Vagit Alekperov (Lukoil, insider red-director category), Yelena Baturina (wife of Moscow mayor Yuri Luzhkov), her brother Victor Baturin, Vitaly Malkin (Roskredit), his senior partner Boris Ivanishvili, Svyatoslav Fyodorov, Anatoly Klimin, reformist-turned-oligarch Anatoly Chubais, and Mikhail Khodorkovsky (cited in discussion of expropriation risks).[1]
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See also
External links
Journal of Law and Economics abstract
Notes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 1.22 Serguey Braguinsky, Postcommunist Oligarchs in Russia: Quantitative Analysis Journal of Law and Economics, vol. 52, no. 2 (May 2009), pp. 307-349.
- ↑ 2.0 2.1 University of Maryland Robert H. Smith School of Business, Serguey Braguinsky University of Maryland, accessed 9 June 2026.