Russia’s Legal Transitions: Marxist Theory, Neoclassical Economics and the Rule of Law

Abstract

We review the role of economic theory in shaping the process of legal change in Russia during the two transitions it experienced during the course of the twentieth century: the transition to a socialist economy organised along the lines of state ownership of the means of production in the 1920s, and the transition to a market economy which occurred after the fall of the Soviet Union in the 1990s. Despite differences in methodology and in policy implications, Marxist theory, dominant in the 1920s, and neoclassical economics, dominant in the 1990s, offered a similarly reductive account of law as subservient to wider economic forces. In both cases, the subordinate place accorded to law undermined the transition process. Although path dependence and history are frequently invoked to explain the limited development of the rule of law in Russia during the 1990s, policy choices driven by a deterministic conception of law and economics also played a role.

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“…104 In this context, what is called 'corruption' and routinely identified with an excess of state power, 105 is better understood as the intrusion of the market into the domain of the state, a consequence of the erosion of the public-private divide. 106 In the wake of the experience of transition systems exposed to 'shock therapy' in the early 1990s, even some of the foremost advocates of shrinking the state in the name of economic freedom came to the belated realisation that market was not self-sustaining: 'privatisation is meaningless if you don't have the rule of law' . 107 While the extremes of 'shock therapy' were confined to transition systems, the 'austerity' pursued across the global North following the global financial crisis of 2008-09 followed a similar pattern of cutting back state capacity in the name of protecting the market.…”