16 Feb 2010

Investigating the Russian Mafia -- The Review

I was pleased to run into this book at the book exchange. The author, Joseph D. Serio, writes from experience, having spent about ten years in Russia, working on organized crime as an academic and consultant.

This book will interest water wonks in the ways that it describes how the three players in the Iron Triangle (bureaucracy-businesses-criminals) can overlap and merge in their roles and actions: a businessman working as a criminal, a bureaucrat making money as a businessman, etc. (See my paper on the bureaucrat-politician-developer triangle.)

In the US, we are lucky that most of our police, politicians and bureaucrats are honest. In this book, you start to understand how the world turns upside down when people go outside their defined roles as well as the laws that supposedly constrain them. Economists who study strategies in such a lawless realm use what we call "conflict theory," a superset of game theory. Game theory, of course, has rules. A game with no rules (except perhaps that the one to strike first or hardest is the winner) is quite different in play. Serio therefore clarifies how foreigners hoping to make a killing in the "developing markets" of the ex-USSR were turned from hunter into hunted. They were ambushed, robbed, and deceived at every turn by "partners" who had spent decades surviving -- and winning -- in the bizarre petri dish of the Soviet economy.

Serio pleas for understanding of how different -- and similar -- organized crime is in Russia. He points out that bureaucrats and politicians in the US can also be thieves, but then shows how deep and developed -- the history goes back hundreds of years -- the Russian talent for deception is. More important than anything is your relationships (Chinese are familiar with guanxi). If you now powerful people, you will do well -- unless you are in the way and need to be discarded. It is in this sense, therefore, that Russia really is "Upper Volta with nukes." (See this post for more on this primordial "Natural State.")

Serio's eleven chapters provide an excellent tutorial on crime statistics (nobody has any idea), 80 percent plus police corruption, above- and under-world political maneuvering, the elasticity and loopholes in laws, how criminal, business and political classes interact, and so on. Most important is his claim (totally justified) that the new bosses are the same people as the old bosses. Thus we understand how Putin and other FSB/KGB agents have managed to regain all of the power and wealth that they had in the final years of the USSR.*

Bottom Line: The mafia in Russia is made up of politicians, businessmen, bureaucrats, security forces and criminals who ignore laws (the ones they make!) as they exploit the nation's resources and citizens. If you work or live there, protect yourself as if no law exists and pay attention to your colleagues and partners interests -- especially if they are not your own! I give this book FIVE stars.

* At one point, I was convinced that the Soviets were good for citizens, since their ideological goal of helping the working classes was so different from the Tsars' goal of supporting the aristocracy. Unfortunately, Soviet collectivization probably harmed more people, since it destroyed a rural economy that the Tsars has mostly ignored. Then it got worse, as the communists became the new aristocrats.

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