(table 4)

For the involuntary insiders, compliance with sistema dominates the rebellion against it, as, given the uncertainty about other players' actions, and the severity of punishment, which can vary from the expulsion from informal networks to imprisonment, it is less harmful. Hence, the only possible balance is the obedience of both participants. Thus, although each involuntary insider behaves rationally, together they come to an irrational decision: if both obey, they will get a smaller payoff than if they breach the informal commands and signals. i.e. the emerging equilibrium in this game does not lead to a Pareto-optimal solution.

Nash Equilibrium.

The Nash equilibrium concept, which is a state of game where no participant has the incentive to deviate from the action plan available to him until other participants in the game do so, is central to the treatment of institutions as the equilibrium outcome of the game (Nash, 1951). Here, the expectations of the participants of the game regarding the behaviour of other players are important. The concept of Nash equilibrium is interesting for two reasons: it explains the logic of the self-enforcing social phenomenon, and shows that the “social agreements” are not a state of harmony that should be looked for (ibid., p.19). Sometimes Nash equilibrium can be a catastrophically bad equilibrium for all participants. However, even though they understand this, often no one has the incentive to deviate from the plan of action available to him, until someone else does not do so.

Nash equilibrium for voluntary sistema insiders is the option of complying, which not only allows them to obtain personal benefits, but also encourages the perpetuation of the informal system of governance. Driven by self-enrichment, they obey informal commands and signals, which ensures the preservation of the “hand that feeds” them. Similarly, although involuntary insiders disagree with the established rules and norms of sistema, they also choose the option to comply, as costs of disobedience exceed the benefits. Indeed, their uncertainty about potential actions of other players in the game, i.e. whether they would support the resistance or not, substantially reduces their incentive to go against the system, as individual costs increase. Thus, although the rewards of players A and B in both scenarios differs, i.e. the former strive to achieve material gain while the latter - personal protection, in both games they would choose to comply, as it is the optimal strategy that maximizes their own benefit under considering other players' possible strategies. However, the theory of strategic interaction guides the players of the game towards the most “reasonable” equilibrium, where their choice depends on the individual analysis of short-term and long-term costs and benefits of their actions (Lipman, 1983, p.316). Depending on the cost-benefit analysis of players, as well as other factors that are analysed in the third chapter, there can arise an alternative Nash equilibrium point where involuntary insiders breach the rules of sistema, which has a potential to destabilize it, creating the base for its transformation.

2.4.2 The Durability of External Management

Although the above-described methods of external stabilization and control of the society help to foster the perpetuation of sistema, the durability of their effectiveness is questionable. In order to produce the desired effects on the society, they need to be constantly updated, i.e. new political myths, new pseudo-oppositional political figures and parties, and new criminal cases need to be produced (Wilson, 2005). Simultaneously, sistema insiders need to control the flow of information, which is not always possible. The advances in mobile communication technology, marked by the rise of Internet access, have undermined the `non-transparency' feature of sistema, exposing its practices and their consequences to the society (Castells, 2006; Ledeneva, 2013). There have emerged several oppositionists of sistema, including Alexei Navalny, who not only reveal illegal acts of the ruling elites, but also organize mass protests. For instance, on 26 March 2017 in more than 80 cities of Russia there were protests of people, rallies, processions and single pickets, against corruption (Miridonov, 2017). The reason for them was the latest anti-corruption investigations of Navalny. In early March 2017, his Anti-Corruption Fund published an investigation into the property, which was possibly owned by Russian Prime Minister Dmitry Medvedev, and his possible involvement in corruption (ibid.). In connection with the lack of reaction of the Prime Minister, Navalny called on his supporters throughout Russia to unite and participate in protests. Subsequently, activists in almost 100 cities announced their intention to hold anti-corruption rallies (ibid.). Moreover, even though the authorities of many cities refused to agree on protests there, including Moscow, under various pretexts, marches were still arranged and held there, including the march along the central Tverskaya Street in Moscow (Ibid.).

Indeed, with time political technologies become less effective, given the lack of profound changes in the living standards and conditions of the Russian citizens, and the increased ability of people to communicate with each other, to acquire previously hidden information, and to organize protests (Wilson, 2005, p.73). Moreover, such public events, caused by the alleged corruption in the highest echelons of power, which are headed by Vladimir Putin, and by the fact that these echelons do not change, are gaining momentum (Robertson, 2011). There were several mass political protests of Russian citizens, which began after the elections to the State Duma of the VI convocation on 4 December 2011, and which continued during the presidential campaign in Russia, and after the presidential elections on 4 March 2012 (Mamonov, 2016). The participants of the rallies declared that the elections were accompanied by violations of federal legislation and massive falsifications. One of the main slogans of the majority of actions was "For Fair Elections!" (ibid., p.34). The movements also had anti-Putin orientation. For instance, on 6 May, there was a massive march held in Moscow, also known as "People's March", "March of the Million" or "March of Millions", which was against the inauguration of Vladimir Putin (ibid.: 35). Similarly, mass political protests of Russian citizens, under the slogan "He is not our king", occurred prior to the next inauguration of Vladimir Putin on 5 May 2018 (Kommersant, 2018). These unrests were provoked by the results of parliamentary and presidential elections that aroused serious controversy and doubts, which, according to the protesters, demonstrate an obviously overestimated assessment of the popularity of the political party "United Russia", and Vladimir Putin.

Hence, modernization of sistema, which is the preservation of its content and a simultaneous change of its outlook, can ensure its sustainability and perpetuation in the short and medium run. However, without any `real' profound changes of sistema institutions and practices, which facilitate corruption and other abuses of power, create economic inefficiencies and inequities, limit investment and growth, and eventually lead to a more and more ineffective government (Rose-Ackerman, 1999), both external and internal pressures can potentially lead to its destabilization.

3 

3. COALITION AS AN INSTRUMENT FOR EVOLUTION

For the first time the term “evolution”, from Latin evolutio - development, was used in biology by the Swiss scientist Bonnet in 1782, which, according to him, is slow and gradual quantitative and qualitative changes in the object (Bonnet, 1782, p.2). Thus, each new state of the object must have a higher level of development and organization than the previous one (Eldredge and Gould, 2014). In biology, evolution is determined by hereditary variability, the struggle for existence, and by natural and artificial selection (Bonnet, 1782, p.3). It leads to the adaptation of organisms to the conditions of their existence, to a change in the genetic composition of the species population, and to the dying off of unsuitable species (Ibid.). In science, adaptation is understood as the process of accumulation and use of information in the system, aimed at achieving its optimal state, with initial uncertainty and changing external conditions (Kay, 2003).

The evolution of a political system is somewhat similar to the biological evolution of organisms, in terms of a slow change and development, which corresponds to the needs and demands of the surrounding context (Eshel, 1977). As opposed to the modernization of sistema, which stands for an illusion of reforms that aim to mask the preservation of the content, in this paper, evolution implies its `real' transformation, i.e. a change of norms, rules, and practices that govern insiders' behaviour and allow for the abuse of their official positions and power for self-interested purposes.

This chapter looks at the process of evolution, which occurred in the formal political system of Russia after the dissolution of the USSR in 1991, and in the informal one, marked by a monetization of blat, and an increased personification of power. Secondly, we conduct a mathematical analysis of the drivers of voluntary and involuntary obedience, and how they change with the time one spends within sistema. It has been inspired by the analysis of prostitution of Levin and Pokatovich (2015). The findings are that if in the beginning the benefits of complying outweigh the costs, thus making obedience a more favourable option, with the time the costs start to outweigh the benefits, which give rise to a new group of insiders, i.e. voluntary-frustrated. Finally, the chapter analyses the role of cooperation, which is considered as a vital base for the formation of the coalition of the `unwilling' that can foster the bottom-up endogenous evolution of sistema, and what are the requirements for its occurrence.

3.1 Evolution of Russian Formal and Informal Political Systems

The evolution of the political system of Russia began after the collapse of the Soviet Union. The literature generally distinguishes the following stages in the formation of the modern Russian state (Bobbyer, 2005). The first stage, during which the institutions of planned regulation of the economy were liquidated, and its denationalization began, dates from 1992 to 1993 (ibid., p.46). The period was marked by the privatization of state property, the liberalization of prices, the creation of market economy institutions, e.g. commercial banks, etc., which were thought to lead to the formation of economic entities independent of the state, and to corresponding social changes: the formation of a class of private owners and the middle class. In the social sphere, the state retained the support of education, healthcare, pensions, and assistance to the unemployed (Morris and Polese, 2013).

The second stage took place from 1994 to 1998 (Bobbyer, 2005, p.51). During these years, the illusoriness of the reformers' intentions to limit state interference in the economic sphere was revealed. The state did not leave the economy, but changed the nature and ways of its influence on economic processes (Morris and Polese, 2013). Some experts note that these changes produced extremely negative consequences for both the state and society. Indeed, the process of privatization of state property became the basis for the merger of the state bureaucracy with the emerging class of private owners, accompanied by a fantastic surge of corruption, and the emergence of nomenclature-oligarchic clans seeking to subordinate the state to their interests (Bobbyer, 2005). During this period, the trend towards a socioeconomic crisis in the country increased. The state, having lost a significant part of its property, and unable to collect taxes in the amount that was necessary for fulfilling its most important functions, found itself in a situation of acute crisis. This crisis manifested itself in the state's inability to consolidate society, in which social polarization and the opposition to power sharply increased.

The third stage began in the fall of 1998, when the new government, headed by Primakov, announced the need to adjust the course of reforms (Bobbyer, 2005, p.59). The main purpose of this adjustment was to increase the role of the state in reforming Russian society and, above all, its economy, in order to increase the effectiveness of reforms (ibid.). This did not mean a return to the methods of strict state regulation inherent in the Soviet era. The task was to ensure an optimal balance between the mechanisms of society's self-development and state regulation, which is inevitable for complex social-economic systems (Morris and Polese, 2013). Ideological and radical liberal reforms have made a significant mistake in assessing trends that determine the logic of development of modern states. This logic was evaluated by them in terms of "decreasing - increasing" role of the state, whereas in reality it did not reduce or strengthen its role in the society, but changed the methods and means of its impact on it, remaining the main factor that ensured stable development of complex socioeconomic systems (Bobbyer, 2005, p.53).

Alongside the formal political system, evolution also occurred in the informal one. The informal networks of the late Soviet time have gradually transformed in their nature after the collapse of the USSR in the 1990s (Morris and Polese, 2015). Informal practices comprised an important part of the Soviet regime, which not only depended on them, but also used them as a compensation for its own rigidity (Ledeneva: 2013; Henig and Makovicky, 2016). One of the know-hows of the Soviet system was blat, which is the use of personal contacts and networks to obtain access to public resources: goods, services, privileges, and sources of income, including education and jobs (Ledeneva, 1997, p.3). Thus, it was a practice to circumvent the formal procedures governing access to resources, usually related to personal consumption. However, after the dissolution of the USSR, in the context of the emerging market economy, blat has lost its previous relevance. Indeed, prior to 1991 there was an economy of shortage, and blat was essential in obtaining various consumer goods (Ledeneva, 1998, p.14). In the post-Soviet period, where such an economy has been replaced by markets of goods and capital, there emerged a new shortage, i.e. money (Ledeneva, 2013, p.31). Thus, blat not only became a less prominent feature in the new system, but also had to adjust to the new state of things (Henig and Makovicky, 2016). During the period of market reforms, there took place the monetization of the former Soviet relations of blat. According to Satarov (2005, p.57), in the year of 2005 it comprised only 10% of the overall corruption market, while the rest 90% were primarily bribes paid by businessmen, de facto criminals, for privatisation deals, tax transfers, state budget transactions and so on. The emerging institutional defects of the economic transition have been, thus, compensated by new informal practices, including creative accounting and tax evasion (Ledeneva, 2006). Yet, despite the fact that blat has lost its former importance at the present time, and the word itself has ceased to be used with the same regularity, the use of personal contacts and informal procedures continues to be a preferable and an effective way of solving problems (ibid, 2013, p.85).

The transformation of the informal networks continued with the coming of President Vladimir Putin in the 2000s. From the beginning of his presidency the reliance on informal practices, that were used to govern the country, became known as “Putin's Sistema” or “manual control”, which is widely characterised as a monolithic pyramid (ibid., p.5). It has been described as neo-Soviet due to its features and properties, including a particularly strong leadership, superpower ambitions, and the re-creation of the `party of power', i.e. United Russia (UR) (ibid., p.26). However, there are several substantial differences. Indeed, although Putin's sistema resembles the `administrative-command' system of governance that existed during Brezhnev's tenure, there are several significant differences including: “the party ideology has given place to market interests, state property to privatised assets, informal exchange of favours to monetised kickbacks, planning to the constraints of global finance, local-bound infrastructure to hi-tech technologies and overtly command methods to more subtle informal signals” (ibid., p.248). Another important characteristic of the Putin's sistema is a completely different scale and nature of personification of power. Personification of power lies in the fact that high state posts are occupied by people personally associated with the head of state, i.e. those who are in personal, friendly, or family relationships with him, tied with him by the common past, by the history of coming to power, or general affairs, which are not always legal (Henig and Makovicky, 2016, p.75). Therefore, with the change of the head of state in Russia, all or almost all the top ruling elites change, as (s)he would appoint to high official posts his friends, acquaintances, relatives, and accomplices. During the Soviet era, on the other hand, to high posts were appointed party comrades whose “party friendship” was based on the ideology (ibid., p.76).

3.2 From obedience to disobedience: a mathematical analysis

The obedience of sistema implies the use of informal practices for the purpose of achieving personal and/or higher standing authority's benefit at the cost of the wider society. In the sphere of public procurement such practices may include bribery, embezzlement, and abuse of official position for the purpose of concealing and executing anti-competitive agreements. While compliance brings benefits to the involved individual, e.g. personal profits, the preservation of position and power, which allow for the future enrichment, as well as the possibility for an upward movement in the vertical of power, it also bears certain costs. There can be highlighted three kinds of costs of obeying the informal system of governance. Legal costs, which arise due to the illegal nature of the informal practices, include the possibility of being punished, and imprisoned. Physical costs of compliance, which increase with the time an individual operates within sistema, are marked by a growing dependence on informal practices and interdependence with other sistema insiders, as well as by the rising insecurity of the individual, given the growth of kompromat that can be used against them. Considering sistema's unpredictable nature and constant rotations of cadres, which come from the top leadership in the Kremlin, each individual may not only rise up in the vertical of power, but also go down. Thus, there is a risk of becoming “irrelevant” tomorrow, and being replaced by others. The third category comprises moral costs of using informal practices, which are marked by self-criticism of the involved individual, as well as by the criticism coming from a wider society, which directly suffers from them.

The behaviour of sistema insider, whether (s)he is voluntary or involuntary, can be modelled on the basis of a standard microeconomic model of labour supply, with reference to the specific nature of the type of employment in question. The utility received by an insider from complying is denoted as , and is measured in monetary terms. F is the total available time, including free time , and working time of compliance . For the simplicity, it is assumed that . It is also assumed that the preferences of an insider towards the utility received from complying, and free time are described by a function where and .

At the same time, the costs of complying with sistema produce a negative impact on the insider's utility. The moral costs of using informal means to achieve one's own or someone else's benefit, , which have a negative impact on his welfare, depend on the time of obeying the system, . In other words, the more time an individual obeys, the lower his moral costs become, due to the adaptation. Let's assume that all sistema insiders are uniform, with the only difference in their level of morality, , which depends on the upbringing, the relations within a family of one's upbringing, and other factors.

The higher the level of moral standards, the higher the costs of obedience. Thus, moral costs can be written as:

where and .

As have been previously mentioned, obedience implies legal costs,, such as a complying insider may be detained by law enforcement agencies and incurred legal costs, for example, to pay a fine, or to be sentenced to imprisonment; and physical costs, , including a growing dependence on sistema and insecurity, which are positively dependent on the amount of time spent complying. Both legal and physical costs are considered as exogenous factors.

Thus, the budgetary constraint of the obeying individual is:

,

where is the official salary of the insider, and - additional profit, arising from obeying sistema.

Thus, the task of the insider, who is an economic agent, aiming to increase his personal benefit, is:

,

where is the utility function of the obeying insider.

On the other hand, if an insider decides not to comply with informal rules, norms, and practices of sistema, his welfare depends on aggregate consumption , and free time, . Like previously, is the cumulative available time, which is equal to 1. Thus, , where is the working time spent by a non-complying individual within sistema. The legal costs of non-compliance, , include the potential punishment of a system's `traitor'. The existing kompromat, as well as the artificially created one, can be used against such an individual in order to teach him a lesson, and to show the rest of insiders that disobedience is not accepted within sistema. Physical costs in this case, , include the potential loss of trust from other insiders, the subsequent potential loss of job, and a deprivation of an ability to find a decent alternative. The official profit of such an insider remains the same as the official profit of the obeying one, i.e. . Thus, the supply is described by the following model of labour supply:

.

Now let's find indirect utility functions in cases of obeying and disobeying sistema, i.e. and respectively, as functions of the appropriate salaries and exogenous parameters of the model.

.

Now let's consider the function representing the difference between the maximum attainable level of welfare in cases of compliance and noncompliance with sistema:

.

The problem of choice of whether to obey or not is solved as follows: an individual chooses to obey if , and not to obey if . Now let's find the critical level of moral standards of individual sistema insiders as a function of wages and exogenous parameters of the model. Thus, if an insider has a level of personal morale below the threshold value, (s)he will prefer to obey, and if higher - to disobey sistema's norms, rules, and practices. In other words, assuming a distribution of the level of personal morality across all members of the system is general, and considering moral costs play a decisive role in the choice between compliance and noncompliance, we can determine the aggregate supply of the obedience:

.

However, the moral costs also depend on the proportion of those, who comply with the rules, norms, and practices, . In other words, the bigger the proportion of complying sistema members, the lower the moral costs faced by individuals within it. Thus, the function of moral costs is as follows:

where and .

Consequently, the critical level of moral standards of individual sistema insiders is also a function of : .

Therefore, the choice between accepting and following the informal rules, norms, and practices of sistema, and rejecting them, depends on a variety of aspects. For instance, the lower the official salary of sistema members, the lower the moral costs of obedience, as it encourages an individual to use formal channels to maximize personal profit. Similarly, the bigger the material gains from obeying sistema, the lower the moral costs, and the higher the likeliness of an individual to comply. The proportion of those, who comply with the rules, norms, and practices of the system also influences an individual in terms of his choice, i.e. the larger the proportion, the more likely (s)he is to comply. And, finally, the more time an individual spends as an insider of sistema, the more used he gets to the informal practices, which raises the likeliness of his obedience by slowly reducing his moral costs. Given that , and that , the likeliness of becoming a voluntary sistema insider is high.

However, the reliance upon and the obedience of sistema, also has a strong impact on its members' emotional state. The distrust of the judicial system, and the fear for one's safety in the context of uncertainty and unpredictability of sistema, are not only the sources for its domination and perpetuation, but also sources of its vulnerability (Ledeneva, 2013). Obeying insiders become bitter about being chronically dependent on sistema. Indeed, their feelings of insecurity, fear, and subordination to sistema, transform into frustration, , which can result in legal nihilism, search for strategies for exiting sistema, and also in the potential individual and/or collective revolts against it (Ledeneva, 2013). Today, there is not only a lack of trust in the domestic rule of law, which has resulted in an upward trend in the use of English law to resolve domestic disputes of Russian oligarchs and ruling elites, but also the movement of wealth and capital from Russia.

It is assumed that the higher the level of individual frustration, , the higher his costs of obedience. Thus, emotional costs can be described by the following function:

were and .

Therefore, the utility function for the obeying insider is:

.

The indirect utility function of disobeying sistema, i.e. , as a function of the appropriate salaries and exogenous parameters of the model, remains unchanged:

,

however, the indirect utility function of the obeying one transforms into:

.

Thus, the function representing the difference between the maximum attainable level of welfare in cases of compliance and noncompliance with sistema is:

.

Once again, an individual chooses to obey if , and not to obey if . Now let's find the critical level of frustration of individual sistema insiders, , which is necessary for an individual to switch from obedience to disobedience, as a function of wages and exogenous parameters of the model:

.

Thus, if an insider has a level of frustration above the threshold value, (s)he will choose not to comply to signals sent by sistema, and if below - to continue obeying its commands and signals. In other words, assuming a distribution of the level of frustration across all members of the system in general, and considering it plays a decisive role in the long-term choice between compliance and noncompliance, after an individual has been obeying the system for a certain period of time, we can determine the aggregate supply of the obedience:

.

Therefore, if in the beginning the benefits of obeying the informal system of governance may outweigh the costs, given that that , and that , and that an individual level of morality decreases with the time he spends within sistema, with the time the costs outweigh the benefits, due to the emergence and the increase of frustration, . The longer an individual obeys sistema, the more frustrated he becomes. The dependence on sistema results in the growth of physical costs, i.e. the growth of kompromat on the insiders, as well as in the growth of legal costs, given the illegal nature of informal practices. The fear for one's own safety, which flourishes in context of rigid subordination, reproduces the “cage” of double standards within which obeying sistema member is trapped, and encourages him to find the “way out” (Ledeneva, 2013, p.245). Hence, there emerges a new category of the insiders, namely voluntary-frustrated, which can potentially switch back to the involuntary group (figure 5).

3.3 Game Theory and the Potential of Cooperation

Evolution is based on a competition between individuals, and hence should reward selfish behaviour, i.e. the promotion of personal success at the expense of others (Fisher, 1930; Dawkins, 1976). However, it also requires cooperation, which can be found on many levels of biological organization (Hamilton, 1972; Chase, 1980). Cooperation is not only the basis of the emergence of cells, but also of human society (Boorman, Scott and Levitt, 1980). Indeed, it is the decisive organizing principle of human society, which can be found in both hunter-gatherer groups and in modern states (Testart, 1988, p. 5). A top-down evolution of a political system requires those, who occupy a higher position in the institutional hierarchy, to start the process of reform. For example, a dictator can initiate a change in legal norms. However, a bottom-up evolution cannot be achieved by one individual, as he simply lacks the power to do so. For him, legal norms are exogenous man-made factors that guide and influence his behaviour, as opposed to a dictator, who stands above the law and has the power to impose such norms (Greif, 2004). Hence, the bottom-up evolution of sistema is also a process, which requires a coalition and a subsequent collective actions of its insiders, which can be reinforced by the development of their cooperation.

In game theory, cooperative games, as opposed to non-cooperative ones, are a class of games, in which players can make decisions in coordination with each other, and have the right to join coalitions by concluding mutually binding agreements (Chase, 1980, p.10). Their behaviour maximizes the overall winnings of the group, which is then distributed among its participants (Fitzgerald, 1975). Collective actions can be divided into three stages of interaction: information exchange; joint selection of participant strategies, i.e. joint action agreement; coordinated pooling of resources and the subsequent joint actions on their basis (Rasmusen, 1989). In repeated prisoner's dilemma, involuntary and voluntary-frustrated sistema insiders can form a coalition, as it would lead to the maximization of their personal gains, including the transformation of the informal system of governance, and a change of their position and power in it, as well as would reduce their costs, which arise from their involuntary obedience to the current sistema, i.e. legal, physical, moral, and emotional ones. However, although continuing chance of interaction is important in order to develop cooperation, it is not necessarily sufficient (Axelrod, 1984). Indeed, involuntary and voluntary-frustrated insiders interact with each other numerous times, and there is yet no evidence of their collaboration. Thus, the issue becomes the discovery of the precise conditions that can encourage its emergence, which is necessary for the formation of their coalition that can foster the transformation of the system.

In repeated prisoner's dilemma, cooperation can emerge from instances of mutually altruistic acts, i.e. doing service to a person, who possesses advantages arising from it, fosters him to pay in kind, thus, returning the original service, as foreseeing the consequences of his refusal (Hume, 1739, 1748). In other words, the logic behind cooperation in the repeated prisoner's dilemma is that my decision to cooperate today may lead to his decision to cooperate tomorrow (Kurz, 1977). In a situation of repeated interactions, each time a player faces a choice between cooperation and defection. The acts of cooperation can include support and defence of one's policy proposal, an official statement, or an act, which goes against the prescribed norms and rules of sistema, i.e. which can undermine its existence. Defection, on the other hand, implies no such support, but the obedience of informal signals and commands, which on the contrary, perpetuate its existence. Cooperation among involuntary and voluntary-frustrated sistema insiders would encourage their further collaboration, creating the potential for sistema's transformation. This, in turn, would reduce their moral, legal, physical, and emotional costs, which positively depend on the time they spend within it, and also would maximise their collective welfare. Additionally, the sistema's punishment of the `rebels' would be diffused over the participating players, thus reducing individual costs, depending on the scale of cooperating bodies (Dawes, 1980). Defection, on the other hand, produces no punishment from sistema, but also no benefit for the insiders in question. On the contrary, it discourages any further cooperation, and hence reduces the possibility of sistema's transformation, which, subsequently, leads to the enlargement of the above-mentioned costs.

Cooperation may foster a positive domino effect, developing a pattern of mutual support among players (Hamilton, 1963). This is possible due to the fact that players not only recognize each other through the process of interaction, but also remember their previous interactions (Fudenberg and Levin, 1998). This ability to recognize and to remember induces them to take into account the history of interactions, which, subsequently, affects their future choice. Thus, if an insider supported another one's initiative, which challenged sistema, the likeliness of the latter individual paying the former one back in kind is high. Furthermore, in the repeated prisoner's dilemma, cooperation between players can be sustained due to their unwillingness to violate agreements for moral reasons, and due to the emergence of a self-policing social contract, i.e. each player can “punish” another one for his/her defection (highlighted in red in Table 6) (Hardin, 1982). Hence, given the costs and benefits of cooperation and defection, involuntary and voluntary-frustrated insiders have strong incentives to choose the former option.

(Table 6)

Moreover, in practice, players have other options of behaviour, in addition to simultaneously choosing one of two above-mentioned strategies. This is facilitated by the minimization of the information gap among insiders. Indeed, individuals can learn and update their information through observations of each other's behaviour (Rasmusen, 1989). This, in turn, can reduce `unwilling' insiders' uncertainty about each other's potential actions and encourage their cooperation. Furthermore, the ability to secretly communicate and share information can lead to the creation of a shared understanding of their goal and means of achieving it, thus making their strategies more effective. Let's modify the game by adding each player an additional strategy “informal contract” and define the payoff matrix as follows (Table 7):

(Table 7)

The additional strategy can be interpreted as follows: player B, choosing this strategy, and invites player A to conclude a joint informal contract/agreement to help each other out in their policy initiatives. Player A can support player B's policy proposal, and vice versa. If A rejects the contract, choosing defecting strategy, i.e. situation “informal contract”/ “defects”, B also threatens to apply a defecting strategy, which leads to zero winnings for both of them. If A chooses to cooperate, i.e. situation “informal contract”/ “cooperates”, the terms of the informal contract may be more favourable for B, e.g. A would have to support a more challenging initiative, statement or action of B, which increases the potential costs. If both players simultaneously come up with the initiative of concluding the contract, i.e. situation “informal contract”/ “informal contract”, their winnings equal to winnings of mutual cooperation. Subsequently, there arises the possibility of joint actions between players that can bring the game out of the non-optimal Pareto Nash equilibrium.

In this game, there are already two situations of Nash equilibrium - “defects”/ “defects” and “informal contract”/ “informal contract” - and the latter has a higher Pareto efficiency than the former. In addition, you can notice that, under the defection of either one of players, the other one does not care whether the strategy is “defects” or “informal contract”. But if he chooses the latter option, it will also be beneficial to the other player. Indeed, the “defection” balance is a non-strict balance of Nash, as there is a possibility for both players to switch their strategies to those, which can improve their payoff, i.e. to the `contractual' balance. Thus, the possibility of joint actions between sistema insiders leads to the expansion of a variety of their strategies, and can bring the “game” out of the non-optimal Pareto Nash equilibrium. Moreover, such cooperation, as a form of behaviour, can generate a coalition of the involuntary and voluntary-frustrated insiders. Indeed, enabling the exchange of information that encourages the reduction of behavioural asymmetry, and promoting collective actions, it can lead to a stable coalition, which is an important factor in the achievement of sistema's transformation.

Although the negotiation process, the process of forming a coalition, and the mechanisms for developing a joint strategy for involuntary and voluntary-frustrated insiders are difficult in the context of sistema's opposition to any such formations, it is not necessarily impossible. Informal agreements and acts of mutual reciprocity can be minor, thus not threatening sistema and, hence, the insiders in question. Yet, with the time and the joining of other insiders, they can sustain and progress in scale, inserting a greater pressure on the system from within. The bigger the number of the members of the coalition of the “unwilling”, the bigger the challenge they pose to the informal system of governance. Moreover, the costs of each individual for participating in this challenge decline due to the decreasing likeliness of him/her receiving a punishment. Therefore, a formation of a coalition of the involuntary and voluntary-frustrated insiders, and the establishment of the cooperation among them with the goal to transform sistema, can potentially lead to its actual evolution.

CONCLUSION

Sistema's existence and perpetuation are driven by the ruling elites, i.e. voluntary insiders, who apply measures in order to preserve internal and external stability and obedience, and supported by involuntary insiders' compliance. This is the process of the modernization of sistema, i.e. preservation of its features and practices, while simultaneously creating an illusion of their change. Internally, the informal system of governance is maintained and perpetuated via a closed type of recruitment into networks, which is based on inheritance and loyalty, a system of rewards and punishments, where the latter varies from an expulsion from informal networks and the country to imprisonment. Externally, it is perpetuated by the use of legislation, including the adoption of laws that prohibit and substantially limit the possibility of organizing public events, e.g. protests. Political technologies, including a creation of political myths, pseudo-oppositional political parties and figures, and a modification of the image of Putin's oligarchs, serve to produce cosmetic changes of sistema, enhancing citizens' approval of it.

The ability to use informal power networks for the purposes of self-enrichment, as well as for the achievement of other benefits, serves as the material base of the voluntary insiders for the struggle against any `real' changes to sistema. Corruption in Russia is not a product of acts of individual greed, but a system, which operates and functions as a well-coordinated mechanism. Indeed, it has ceased to be a problem, but has become a system, metastasizing the economic and social life of the country (Morris, and Polese, 2015a, p.78). By looking at public procurement, the paper has shown how the officials abuse their positions and power, using formal mechanisms and rules to achieve their informal private interests. The use of certain “gaps” in the law on public procurement allows customers to implement a variety of corruption schemes, turning contests into a "legalized" way of selecting “their” supplier (Makarin, 2008, p.35). Although there is a certain order in the contract system, e.g. the main processes in it are regulated, and the place of participants is defined, all these rules do not reflect the real state of affairs in the real economy, as the volume of inefficiently used funds continues to grow (Timoshenko, 2017, p.2). The growth of tariffs and prices is also partly related to the corruption of the officials (Haller and Shore, 2005, p. 85). Splitting profits and paying kickbacks, otkat and raspil, often reach 50 or more percent of the actual cost of work (ibid.). For instance, the laying of oil pipelines is also accompanied by theft and kickbacks of tens of billions of rubbles. That is partly the reason why building gas pipelines in the Gazprom system is three times more expensive than in Europe (Korchemkin, 2010). In the cost of housing construction bribes amount to 30% (Haller and Shore, 2005, p.86). Hence, the raising tariffs for gas, heat, electricity, and so on, to some extent result from the need to cover all these constantly growing sizes of corruption.

Game theory helps to effectively model and explain obedience of both voluntary and involuntary insiders of sistema, analysing the drivers of their behaviour that prevents its “real” change. For the voluntary insiders, i.e. those who actually hold the power within the informal system of governance, their aim is to preserve it, thus to be able to continue using its networks and channels in their own best interests, which may differ from the interests of the wider society. Given that they are rational individuals who aim at achieving their personal interests, i.e. profit maximisation or a non-material benefit, including an upward movement in the vertical of power, they face a competition for the resources and their distribution, i.e. a `piece of a pie' gained by one insider becomes unavailable for the other. Hence, being in a zero-sum game, they obey in order to gain the most out of sistema. The involuntary insiders, on the other hand, are in the prisoner's dilemma situation. Being uncertain about other involuntary insiders' actions and fearing possible sanctions for a `misbehaviour' they choose to comply despite their reluctance to do so. In other words, their compliance, which also reinforces sistema continuation, is a manifestation of their reluctance to receive the punishment from the informal system of governance, which can even include imprisonment.

However, it is important to acknowledge that game theory, like any other mathematical model, has its limitations. One of them is the assumption of complete "ideal" intelligence of opponents. In a real-life situation, the optimal strategy is often to guess the weakness of the opponent, i.e. where he is “stupid”, and take advantage of it in one's own favour. Another drawback of the theory is that each of the players should be aware of all possible actions/strategies of the enemy, with the only uncertainty regarding the exact strategy that will be used in this game. In a real conflict, this is usually not the case: the list of all possible strategies of the opponent is not known, and the best solution in a conflict situation is often to go beyond the limits of his known strategies. In addition, in game theory there are optimal strategies are determined by one indicator/criterion. However, it is often necessary to take into account not one but several criteria, as a strategy optimal for one indicator may not be optimal for others.

Nevertheless, even though the modernization of sistema, which is driven by the voluntary insiders' desire for self-enrichment and involuntary insiders' reluctance to be punished, and which is supported by measures of internal and external control, can be successful in short and medium terms, its effectiveness in the long one is questionable. Internally, sistema is not homogenous, i.e. it comprises various clans who struggle with each other for resources and power, e.g. siloviki and liberals, as well as those individuals who obey without their willingness, i.e. involuntary and voluntary-frustrated insiders. Moreover, the more time obeying insiders spend in sistema, the higher the likeliness of the rise of their frustration about their dependence on it. Their growing fear for their own safety, which flourishes in context of rigid subordination, reproduces the “cage” of double standards within which they are trapped and fosters them to find “ways out” (Ledeneva, 2013, p.248). Hence, there emerges the possibility for their collaboration against the informal system of governance that can lead to its change. Externally, political technologies that are aimed at influencing people's behaviour, also face various challenges, which undermine their effectiveness. The rise of modern technologies and the Internet access allow people to acquire information, which reveals sistema's practices and their consequences, leading to their discontent and frustration. Furthermore, there is a growing popularity of Internet bloggers and `detectives', who expose illegal practices of sistema insiders and even organize public demonstrations and protests. For instance, two days prior to the inauguration of Vladimir Putin on 5 May 2018, there were public events, organized by the supporter of Navalny, under the slogan "He is not our king". Hence, the persistence of sistema is also undermined by the external pressures (Kommersant, 2018).

Considering all the factors that ensure sistema's existence and reinforce its continuation, the paper attempted to answer the question of how its `real' change can come about, which is defined as the evolution of sistema. Unlike modernization, it refers to the `real' change of the informal governance, its rules, norms, and practices, being somewhat similar to the biological evolution of organisms, in terms of a slow change and development, which corresponds to the needs and demands of the surrounding context. The focus of this paper was the examination of the possibility of and requirements for the endogenous bottom-up evolution of the informal system of governance. The mathematical-economic approach to the analysis of individual's choice of whether to obey sistema or not showed that if in the beginning the benefits of obeying exceed the costs, which encourages insiders to turn into voluntary ones, with the time their cost-benefit analysis transforms, leading to the change of the nature of insiders, i.e. previously voluntary insiders become voluntary-frustrated. Hence, there arises a niche for the enlargement of members of sistema who disagree with its rules, norms, practices, and who can potentially form an alliance to bring its change.

Given the scale of the opposition to the evolution of the informal system of governance, the initiation of the process of its reform requires a collaboration of the forces that disagree with its current rules, norms, and practices. Challenging it individually inevitably leads to some form of a punishment, which can vary from expulsion from informal networks to imprisonment, while a collective force dilutes the costs of disobedience and simultaneously raises the chances to trigger the process of sistema's evolution. Being in the repeated prisoner's dilemma, there is a potential for the collaboration of involuntary and voluntary-frustrated insiders, given that individual costs of preserving sistema exceed the collective costs of changing it. Cooperation, which is a form of behaviour that can generate the formation of the coalition of the `unwilling', can emerge from instances of mutually altruistic acts, i.e. doing service to another person, and respecting a service in return (Lipman, 1983). The ability of individuals to recognize each other and to remember their previous interactions induces them to take into account the history of interactions, which, subsequently, affects their future choice. Additionally, cooperation between players can be sustained due to their unwillingness to violate agreements for moral reasons, and due to the emergence of a self-policing social contract, i.e. each player can “punish” another for his/her defection. Moreover, in addition to simultaneously choosing one of the two strategies, i.e. comply and defect, insiders have an ability to make informal agreements to support each other, due to the ability to share and exchange information, which also can lead to their cooperation. Indeed, the achievement of Pareto-optimal situations often requires the exchange of information between players, the coordination of their actions or even compensation payments to some players for their choice of certain strategies (Fitzgerald, 1975, p.478).