book report: violent entrepreneurs.

With one visit to a post-soviet country one develops the ability to differentiate between individuals belonging to the mafia and mere businessmen. Cars with tinted windows and sturdy men sporting gold jewelry indicate identities of one certain group. Volkov refers to these criminal groups as ‘violent entrepreneurs.’ These violent entrepreneurs used force as a means for economic gain, and served a critical role in Russia’s economic development and the emergence of the state. Throughout this book Volkov reconstructs the evolution of violent entrepreneurship, and explores specific violent entrepreneur groups and mechanisms used for protection and enforcement of economic subjects. Volkov’s main purpose is to explore the non-state use of force in relation to state formation and development of a new economic order.

Prior to violent entrepreneurs, Volkov describes Russia as possessing Thomas Hobbes fundamental state of nature ideology. The most defining feature of the state of nature is the lack of a central governing authority. An absence of laws to limit ways and means of individuals also characterizes the state of nature. What takes place instead is the assertion of natural rights. Individuals use any means (force) to obtain interests and ideas. No laws exist, therefore means to obtain desired goals could not be deemed ‘illegal’ because no state exists to enforce or judge individual action. Volkov asserts those who were supposed to enforce the law in Russia were acting as private enforcers or entrepreneurs. The definition of crime was constantly changing. What began as deviant and questionable behavior eventually became the norm and accepted way Russian economy worked.

Violent entrepreneurship refers to the economic dimension of activities embraced by wielders of force. Groups organized themselves and maintained a certain threat level of force, and actual use of force for economic purposes. These groups were different than just regular thieves and robbers because many actions of violent entrepreneurs were sanctioned by legitimate agencies.

Private entrepreneurship sprung into Russia around 1987, expanding rapidly between 1987 and 1992. The need of businesses for protection, and the need of individuals for work were two contributing factors to the emergence of violent entrepreneur groups. Extortion spread quickly and was the main business of organized crime. From 1986-1989 the rate of extortion increased by a factor of three. From 1990-1995 the rate of extortion grew 20-30% each year. Determining what was extortion and what was not constituted a large problem in Russia during this time.

What constituted mere blackmail and extortion? It was decided extortion defined activities which appropriated others property or property rights using a violent threat or physical damage to property, or a threat to divulge harmful information. Extortion groups brought many young men into the occupation of racketeer. Volkov expands on the social origins of racketeering activities as he points out specific physical and psychological characteristics of racketeers. Individuals needed a strong incentive to engage in violent activities and some social mechanism that facilitated racketeers mobilization.

With the fall of the Soviet Union many individuals who dedicated their lives to professional sports found themselves without a source of income. Sports had originally been a way for social advancement, and now that chance of advancement was lost. Individuals who pursued sports held three key characteristics which made sportsmen prone to become violent entrepreneurs: Discipline, network and need. Sportsmen were disciplined in physical exertion and trained to work through pain. Sportsmen learned how to work together on a team with close commodore. Because sports were an elite group in Russia, a strong network with other sportsmen was easily developed and maintained. Without sports to exert physical frustration, Volkov points to a strong emerging need within sportsmen to release frustration, which led them to form these organized violent entrepreneur groups. Volkov also points to ex-militia men returning from the Afghan war as individuals who made up a large portion of these ‘new’ large criminal organizations.

All these groups were considered ‘new’ criminal groups, as opposed to the ‘old’ and underground groups which sprung from the old Soviet camps in the 1920’s. This underground group, called ‘vory’ (or translated as ‘thief), is more of a fraternity organization which organized relations among thieves. Individuals identified as ‘vory’ have an entire subculture including language, ideology, initiation and exclusion rituals. These ideologies include such rules as forbidding a wife and family, and absolutely no cooperation with state authority. Often vory were referred to as ‘the blue ones’ because of the numerous tattoos which told stories of past accomplishments in the criminal world. Most spent a majority of their live in the prison system. Conflict arose within the vory as some wanted to engage in activities similar to the new criminal groups, while others wanted to maintain the strict code developed in the Soviet prisons. Spending extended time in prison was not conducive to investing in the economy and becoming more businesslike.

What did these violence managing groups look like? What did they do? Basically what developed was an informal tax placed upon new businesses by various criminal groups. Individuals involved in these organized groups would drive around the city to identify new businesses. Once a new business was found they would hassle the manager until they either showed adequate evidence a different group was ‘protecting’ them, or until the manager agreed to be pay for the new group’s protection. Once a business has paid a specific group, it was assumed to be a lifelong deal. The individuals returned each month to gather a percentage of the businesses profit, usually 20-30% of the month’s earnings. Criminal groups would also create competitive advantages for their clients. This could occur by coercing different companies to buy products from their client, or perhaps by limiting action of another competitor. These criminal groups also were often involved in debt recovery. All these services were available for a price, in addition to the monthly protection fee.

Criminal groups held certain informal norms and values amongst themselves. While not as strict as the vory, these rules were adhered to because of the economic consequences if they were ignored. An unjustified use of force was a serious offense with consequences from other criminal groups. Also, individuals were responsible for their speech. If they made a promise, you can be sure it would be kept. If a threat was made, it would be carried out. Any deviation from a threat or promise would undermine others trust in the group. That is why these criminal groups were often taken more seriously than state authorities. While the state could threaten with words, they had no force to back up their words. Criminal groups were able to make threats and carry them out if needed.

In 1992 a law passed which made private protection agencies legal. Activities which emerged from organized criminal groups were now sanctioned by government led initiatives. The legalizing of protection agencies led to an exponential growth of agencies, which led to fierce competition between different agencies for clients. Violence within this sector hit a peak around 1995, and slowly private protection and enforcement became institutionalized. The competition within different violence managing agencies began to have an effect upon the way agencies developed and continued to manage their clients. No longer was it effective to hassle a businessman and scare him into needing protection, but it was important to have a strong name amongst all the different agencies. Economics was the motivation behind force and also the constraint behind force. Violence was only implored when absolutely necessary. With all the protections agencies competing for clients, violent acts became too costly. More sophisticated ways of dealing with problems emerged and private security agencies became institutionalized. While criminal groups seemingly controlled the market in the early 1990’s, slowly the market began to control and transform criminal groups. The client preferred to have a fixed monthly fee instead of a percentage of the profit. And with the criminal groups increased investment in commercial companies, a more set and stable relationship between clients was desirable.

If these criminal groups developed under a regulated environment, or a state which used force, the expansion of these violence managing agencies would have remained strictly criminal in nature. With the lack of central authority, the development of these criminal groups could expand in many different ways. For peaceful economic conditions to exist the state needs to have a monopoly on force. The competition amongst different protection agencies sparked the need and created the atmosphere for the emergence of a strong state control.

While Volkov does not glorify criminal groups, he does implore a different perspective on the presence of criminal groups. Without the return investment of many of these violent entrepreneurs, Russia’s economy would not have grown as fast. Volkov conducted personal interviews with members of criminal groups, heads of protection companies, and businessmen to obtain information for this book. These first hand accounts usher the reader into a real understanding of activities within Russia during this tumultuous period. Volkov incorporates these first hand accounts as well as empirical evidence and personal observations to weave together a fascinating book which examines corruption from the bottom up, rather than the top down. Volkov removes the state in attempts to show the function criminal activities played in the formation of the state. Volkov does not offer much advice in the way of eliminating corruption today, or how the Russian state should proceed at this point.