The Economic Origins of Organized Crime: The Russian Mafia

Conclusions
It is noted that political and economic changes create favourable environment for organised crime to thrive. The statement is applicable to the case of Russia as well. Political and economic inefficiencies that led to the collapse of the Soviet Union in 1991 followed by complicated and late transition to the market created incentives and opportunities for organised crime to emerge (Varese, 2001).
The Russian Mafia is known to provide various goods and services including but not limited to smuggling of illegal goods, drug trafficking and money laundering (Serio, 2008); yet, the most significant activities are provision of protection and extortion (Varese, 2001). Numerous authors including Kumar and Skaperdas (2008) identify provision of protection as a fundamental activity of most organised criminal groups. Just like any legal businesses require protection so do illegal businesses and operations which cannot be protected by legal institutions. Analysing the Russian Mafia in context of protection it was identified that organised criminals provide protection not only to participants of shadow economy but also to legal businesses. Varese (2001) emphasizes that this was possible because of the flaws in privatization that took place in the beginning of the 1990s. Property rights were weakly defined and lacked enforcements. Moreover, contract enforcements were poor noting that even though Arbitrazh courts were able to solve cases turned to them the enforcement of court rulings was below efficient.
Literature suggests that organised crime in Russia emerged rapidly and soon reached its Golden age. McCarthy (2011, p.58) states that ‘it is hard to imagine a more favourable environment for private organised crime than the period from 1991 until Vladimir Putin became President of the Russian Federation in 1999.’ After becoming a president Putin set a goal to create a strong, efficient government and fight organised crime. Plekhanov (n.d.) notes that while organised crime was still increasing during Putin’s presidency, it was increasing at a lower rate. Volkov (2013) argues that nowadays Russian organised crime is practically extinct due to three factors. First, there is a competitive pressure due to a massive increase in private security industry. …