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Why Russia’s Mafia State Is So Inefficient

Moscow Times

In “The Godfather,” author Mario Puzo describes criminal boss Don Corleone’s organization as a highly centralized money-making machine. The Godfather is the CEO of an underground business empire, a kind of shadowy Henry Ford who collects all the money and makes all the decisions.

In reality, large criminal enterprises are divided into semi-autonomous crews who have their own territory or specialty and are grouped around a middle-level boss. There are constant rivalries and struggles for influence in which thugs make alliances and seek support from higher-level mafiosi.

As business entities, criminal enterprises are hugely inefficient. The global drug trade, estimated at $300 billion annually, has produced no lasting fortunes. Everything is squandered or lost. Efficiency is achieved by establishing and following rules, but criminals are lawless by nature. The notion that mafia thugs live by a special “thieves’ law” is a legend. For example, Godfather Vyacheslav Ivankov, murdered in Moscow in 2009, was himself the worst offender against the law’s most-sacred precepts.

Over the past 12 years, Russia has become a full-fledged mafia state. One day, historians will chart its exact structure, but it seems clear that it consists of several large families headed by President Vladimir Putin’s close associates and loyal oligarchs. Alongside them, countless crews of siloviki, bureaucrats, gangsters and affiliated businessmen work on their own, their networks varying from local to nationwide.