I have already written that the communist regime of truth was explicitly teleological. History has a direction, man has a mission, knowledge has a purpose—the advancement toward communism. By the early 1970s, the divergence from reality had become so substantial that a shadow economy began to form, eventually reaching up to 10% of the official economy. This shadow economy emerged from the inability of state planning to establish a true balance between supply and demand, which created opportunities to speculate on the difference between official prices and black market prices. The profits were large enough to corrupt any official, up to and including the Minister of Internal Affairs. Having been exposed, he committed suicide by gunshot to his head using his own hunting rifle from his collection of rarities at his suburban mansion in Serebryany Bor on 13 December 1984.
After the collapse of the USSR, all that remained was to launder this shadow capital through fictitious privatization and move it to safety in the West. This was not difficult, since all Russian officials up to ministerial level had already long been bought, and deliberately corrupting their Western counterparts required no great effort.
Compradization can be endogenous—growing from within, out of the contradiction between the official model of reality and reality itself. In both cases the mechanism is identical: the gap between the official price and real value generates rent, the rent finances those positioned to control where the gap is largest, and those who benefit from the gap acquire the means to preserve it. The Soviet case is simply a version of the same mechanism without foreign capital as the initial catalyst.
I’ll make a small correction regarding Russia.
I have already written that the communist regime of truth was explicitly teleological. History has a direction, man has a mission, knowledge has a purpose—the advancement toward communism. By the early 1970s, the divergence from reality had become so substantial that a shadow economy began to form, eventually reaching up to 10% of the official economy. This shadow economy emerged from the inability of state planning to establish a true balance between supply and demand, which created opportunities to speculate on the difference between official prices and black market prices. The profits were large enough to corrupt any official, up to and including the Minister of Internal Affairs. Having been exposed, he committed suicide by gunshot to his head using his own hunting rifle from his collection of rarities at his suburban mansion in Serebryany Bor on 13 December 1984.
But shadow capital continued to accumulate. Gorbachev understood this − 800 criminal cases were brought, with 4,000 individuals prosecuted—yet the shadow economy defeated even Gorbachev.
After the collapse of the USSR, all that remained was to launder this shadow capital through fictitious privatization and move it to safety in the West. This was not difficult, since all Russian officials up to ministerial level had already long been bought, and deliberately corrupting their Western counterparts required no great effort.
Compradization can be endogenous—growing from within, out of the contradiction between the official model of reality and reality itself. In both cases the mechanism is identical: the gap between the official price and real value generates rent, the rent finances those positioned to control where the gap is largest, and those who benefit from the gap acquire the means to preserve it. The Soviet case is simply a version of the same mechanism without foreign capital as the initial catalyst.