The virtual economy was the system of informal rent distribution that arose in postSoviet Russia in the 1990s as nonviable Soviet-era manufacturing industries sought to protect themselves from the discipline of the market. Enterprise directors and their allies throughout the economy (including government officials) colluded to use nonmarket prices and various forms of nonmonetary exchange such as barter to transfer value from resource sectors to manufacturing industry. The article discusses the system’s historical roots, describes some of its characteristic phenomena, and outlines a model for behaviour of enterprises.
KeywordsArrears Barter Barter in transition Command economy Corruption Non-market prices Non-monetary exchange Relational capital Rent sharing Soviet Union, economics in Tax offsets Virtual economy
- Gaddy, C., and B. Ickes. 2002. Russia’s virtual economy. Washington, DC: Brookings Institution Press.Google Scholar
- Grossman, G. 1998. Subverted sovereignty: Historic role of the Soviet underground. In The tunnel at the end of the light: Privatization, business networks, and economic transformation in Russia, ed. S.S. Cohen, A. Schwartz, and J. Zysman. Berkeley: University of California Press.Google Scholar
- Hewett, E. 1988. Reforming the Soviet economy. Washington, DC: Brookings Institution Press.Google Scholar
- Karpov, P. 1997. On the causes of the low rate of tax collection (nonpayments in the fiscal system), general causes of the ‘payments crisis’, and the possibility of restoring the solvency of Russian enterprises. Report of the Inter-Agency Balance-Sheet Commission, chaired by P.A. Karpov. Moscow (December). [In Russian].Google Scholar