THE RED MAFIA: A LEGACY OF COMMUNISM

Annelise Anderson

Abstract

The mafia is a major feature of Russia's experience in making the transition to a market economy. This article inquires into the nature and origin of this phenomenon. The evidence suggests that the Russian mafia phenomenon is a direct outgrowth of the informal economy and related corruption that was a significant part of the economy of the Soviet Union. Economists have usually concluded that the informal economy improved efficiency and consumer satisfaction in the Soviet economy. As aspects of this informal economy have developed into mafia activity, it has become less benign and is a possible threat to the success of the market economy in Russia because it threatens to defeat competition and thus the major benefit of a market economy.

In Lazear, Edward P., ed. Economic Transition in Eastern Europe and Russia: Realities of Reform. Stanford, Calif: The Hoover Institution Press, 1995.