Financialisation and the authoritarian state: the case of Russia

Abstract

Using the example of Russia, we argue that financialisation in an authoritarian state can take place primarily through formation in financial sector monopoly-like state-related structures controlled by a limited circle of the irreplaceable elite. It occurs because financialisation and new financial technologies in an authoritarian state increase both the opportunities and incentives for dominance of large state-dependent institutions in the financial sector. The authoritarian state and its elite are using financial and information technology developments in accordance with their goals, adopting and enhancing some financial practices and innovations from the experience of developed countries while rejecting, distorting or slowing down others. As a result, on the one hand, within the framework of the formation of such monopoly-like institutions, financialisation is proceeding actively, the role of finance and financial relations in society is increasing everywhere and the use of new financial technologies, digitalisation and financial inclusion are expanding. On the other hand, some financial markets remain underdeveloped because either they imply a certain degree of competition, diversity, institutional quality and independence from state voluntarism, or the state and authoritarian elite have not yet fully elaborated a strategy of integrating these financial markets into the orbit of their interests. Thus financialisation in DEEs with an authoritarian political regime can strengthen and facilitate the dominance of authoritarian elites. We draw these conclusions considering the example of financialisation in Russia in the last two decades, where the banking sector is at the core of the financial system.