Authors

Tetiana Vodotyka¹;  ¹ Kyiv School of Economics, Ukraine

Discussion

Relations between the state and business are almost always a discussion (or monologue) about basic things like rules, resources, and freedom. "Resources" encompass a wide range of advantages, including access to government contracts, natural resources like minerals and land, financial assistance through loans and special programs, and influence over policymaking, which could significantly affect a business's trajectory. These resources also extend to informal networks, influence, prestige, reputation, and social status.
Economists Daron Acemoglu and James Robinson use the term "paper Leviathan" to describe a "paper state," characterised by weak governance, bureaucratic incoherence, fear of public mobilisation, corruption, and the omnipotence of the bureaucracy despite its inefficiency. This concept aptly describes the nature of the Russian Empire in its dealings with the business community in the early twentieth century.
The interactions between business and the state during the nineteenth and early twentieth centuries were intricate and multifaceted. They evolved over time but followed a discernible pattern in which any entrepreneur could engage, should they wish to do so. Entrepreneurs often saw the state as a client, a means to elevate their social standing, a financial backer, and even a rescuer in times of crisis. Conversely, the state expected entrepreneurs to fulfil multiple roles: driving economic growth, supporting social initiatives, maintaining loyalty, and contributing to government revenues, including, at times, the personal wealth of those in power. In the Russian Empire, authorities viewed entrepreneurs as instruments to solve state problems and subjects to manipulate. By the late nineteenth and early twentieth centuries, the imperial government was leveraging the potential of the entrepreneurial class to address short-term political challenges while neglecting longer-term strategic priorities, such as social protection and security.
Entrepreneurs found themselves in a persistent dilemma. On one hand, they were expected to adhere to liberal economic principles and accept full responsibility for their actions. On the other hand, they had to maintain loyalty to the state to safeguard their positions. Balancing these competing pressures—navigating the proverbial tightrope—remains an enduring challenge for businesses, with the extent of this tension often representing a critical issue for economic development.
The dynamics between business and the state during the Russian Empire reveal early manifestations of unwritten social contracts, lobbying, and corruption. While these practices were not explicitly labelled as such at the time, they were nonetheless pervasive, with officials unlikely to face any punishment for what we might now consider corrupt behaviour.