The Privatization Movement Of The Perestroika Reform Essay

1354 Words Dec 3rd, 2014 6 Pages
However, perestroika did not occur without consequences. The privatization movement of the perestroika reform allowed for the formation of a new class the oligarchs. The lack of legal safeguards of privatization allowed the mafia, which had the financial means and the political connections, to gain ownership and control over key industries of the Russian economy. “The problem is the economic liberalization in Russia, even in the narrowest sense of legalizing private business activity, is far from complete. Under the practical conditions that prevail, it still remains virtually impossible for a Russian entrepreneur to operate entirely within the law.” (Leitzel, Gaddy and Alexeev). But some of the illegal activity of organized crime has proven to be beneficial in modern Russia. The mafia may be very threatening to people and businesses, but because of their intimidation tactics they have been able to persuade businesses to enter into risky contracts. In a capitalist economy it is important to take risks because it can prove to be highly beneficial to the economy.
Although, much of organized criminal activity can be blamed on the Russian government. The government is reluctant to loosen its control over the economy. So, as a result many businesses try to avoid unacceptable tax rates and restrictive regulations. The avoidance of business taxes and regulations is achieved through help of the Russian mafia, and in turn the mafia continues to thrive fueling organized crime.…

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