The seven bankers myth
I am currently writing a lengthy review of George Monbiot and Peter Hutchison’s The Invisible Doctrine, but there was one specific error that I wanted to deal with separately. When talking about Russia’s economic transition, they say that: “Once the dust had settled, six Russian oligarchs, on one estimate, controlled half of Russia’s economy” (p.37).
The evidence provided for this claim is this NPR article, which in fact states that “Boris Berezovsky bragged to The Financial Times that he and six other Russian oligarchs controlled half of Russia’s economy.” Those seven oligarchs are referred to as the Semibankirschina, or “seven bankers” (see here). Perhaps Monbiot and Hutchison only read the last part of that sentence, and simply neglected to include Berezovsky himself in the count. But given that their “evidence” is Berezovsky’s own brag, this is a problem.
Indeed, the NPR article that Monbiot and Hutchison cite immediately states that “That number [half the economy] seems to have been significantly inflated”. The weblink is now dead, but originally led to this paper by Daniel Treisman, which says:
- “In 1996, the Financial Times quoted one banker’s claim that he and six others controlled half the country’s economy (Freeland, Thornhill, and Gowers 1996). Such assertions were inflated (Treisman 2011). Still, the perception of an unusual concentration of wealth stuck.”
I recommend reading the full paper because it attempts to correct several myths that commentators like Monbiot and Hutchison continue to get wrong. For example:
- “the creation of vast fortunes in Russia occurred not in the early 1990s period of market reform but long afterwards in the mid-2000s. And it followed a global trend that had little directly to do with Russia’s post communist experience”
- “of the 88 Russian billionaires in 2015, only 34 derived their wealth from major Russian privatization deals of the 1990s, and only eight had anything to do with the notorious “loans-for-shares” deals of 1995–1996. Most earned their billions consolidating and restructuring companies acquired after privatization, building retail or real estate empires, or investing in other sectors”
- “in the early 2000s, it was political pressure — and only political pressure — that reduced tycoons to their last billion”
This subsequent “political pressure” is interesting, because Monbiot and Hutchison believe that 7 oligarchs controlling the economy is bad. In fact, the narrative that a small group of oligarchs had profiteered from the implementation of capitalism to control most of the Russian economy was explicitly used by Putin to justify renationalising major industries. At the time, plenty of people supported Putin’s attempts to instill law and order and crack down on the oligarchs who’d profiteered from Russia’s transition. Putin catered to this: he wasn’t an oligarch, he defeated them.
Monbiot mentions Mikhail Khodorkovsky and Roman Abramovich together as if they are examples of the same phenomenon (i.e. too much political power for rich tycoons). In fact, Khodorkovsky has very little political power (and was jailed by Putin), while Abramovich — because he carries Putin’s favour — became free to enjoy his wealth in London. While Khodorkovsky represented the potential for an alternative source of economic power to Putin’s Kremlin, Abramovich’s wealth is a reflection of Putin’s dominance.
This is an important difference.
I recorded a lecture video on how the oligarchs rose to power and have included it in my four part series on transition. You can watch it below:
To summarise the main point:
- The standard narrative: oligarchs get rich and take over the country. Russia becomes an oligarchy/kleptocracy.
- The alternative narrative: Yeltsin cut a deal with the oligarchs to retain power, which Putin reneged on when security services regained control. The oligarchs lost the battle to the FSB. Russia was an oligarchy, but now it is a kleptocracy.
I am not saying that 7 billionaires controlling much of the Russian economy is good. But that’s 6 more than today. It is believed that Putin has a net worth of over $200bn, which makes him the 2nd richest man in the world.* The fact that he has actual control of the Russian economy, combined with political domination, makes him able to engage in reckless and disastrous actions.
With hindsight, it seems to me that the oligarchy that influenced politics in the mid 1990s was less of a problem for the Russian people than the kleptocracy that emerged out of it. George Monbiot has a habit of combining oligarchy and kleptocracy as though they are ultimately the same thing, but they are not: a small group of wealthy billionaires managing to direct tax policy (as happens in the US) is categorically different from state owned enterprises being run to furnish the pockets of political leadership. An oligarchy poses a problem, but a kleptocracy is far more dangerous.
Monbiot and Hutchison may be relieved to learn that there is no need to worry about how much control Berezovsky has over the Russian economy any more — he mysteriously died in 2013.
*For some reason Forbes don’t include politicians in their Rich List, so no wonder that people’s fury about billionaire wealth gets concentrated on business leaders rather than dictators.
References
Monbiot, G. and Hutchison, P., The Invisible Doctrine, Penguin Books, 2025
Rosalsky, G., How ‘shock therapy’ created Russian oligarchs and paved the path for Putin, NPR.org, March 22nd 2022
Treisman, D., Russia’s Billionaires, American Economic Review: Papers & Proceedings 2016, 106(5): 236–241
