Freed from doing official portraits of Communist grandees, contemporary artists in Russia have turned to scandal to make their mark. Rosie Millard went to Moscow to find out the story behind the new avant-garde

Moscow, autumn 2005. The city is a living homage to the joys of rampant consumerism. Banners for Moschino stretch across seven-lane highways streaming with BMWs. A Bulgari boutique jostles up alongside a Lego Star Wars shop and a wild casino, rigged up like an illuminated lily. Posters for Ikea adorn Red Square. Hoving into view behind the white stone walls of the Kremlin, a vast Samsung neon sign blinks. Anything that can be sold, invested in, or gambled for, is.

Naturally, this includes contemporary art. Having wasted the best part of the 20th century producing canvases backing moments from Communist mythology (Marc Chagall is a notable exception), or herded by the dead hand of government sponsorship, thanks to official inventions such as the Union of Artists (created in 1933 by Stalin), Russian artists are behaving with the frenzy of a starving person unleashed in Harrods Food Hall.

Perhaps the most famous is Oleg Kulik. Kulik, who tells me he wakes up each morning ready to devise "something scandalous", is best known for his "dog" performances. Naked save for a collar and lead, Kulik in dog mode roams on all fours terrorising art folk. Ten years ago on the steps outside a contemporary art show in Zurich, he behaved so authentically he was arrested, led off on his lead and put into a police animal van. Anyone who comes within reach is attacked; indeed, Kulik as a dog is perfectly capable of biting an art critic, and has done.

Today, however, he is in charming artist mode, dressed in silver trainers, Levis and shades. "Putin's government is a gift for me," says Kulik, "because it is so conservative." He seems to come from the same training camp as the Chapman brothers, Dinos and Jake, but without the pompousness. Photographs in his study include one in which he appears to be licking the anus of an unidentifiable farm animal.

At a recent show, guests watched his videos through the vagina of a giant plastic cow. He last appeared in Britain in 1999 as Armadillo Man, naked bar a smattering of some small Polaroids, dangling in Tate Modern's Turbine Hall like a human mirror ball.

Kulik has recently been the subject of anti-Semitic criticism, because his defiantly scandalous work, which some say tries to destabilise the Russian status quo, has been bought by some Jewish collectors. Destabilisation discourages investment by banks and multinationals, goes the double-think. So Kulik, whose opus includes pictures of a small rabbit sitting on his penis, has been deemed an enemy of the state. All of which has probably helped him become a cause celebre, represented by the hip XL Gallery in Moscow and Galerie Krinzinger in Vienna.

Kulik's ambition to be scandalous appears to be shared by many Russian artists. Since perestroika, it seems as if their first reaction is to take all their clothes off, and blow raspberries. At the "Russian Pop Art" show at the New Tretyakov Gallery, whose stance seems a mite desperate ("Let us emphasise an indubitable fact: that Russia does have pop art today," reads the introduction), the "scandalous" artistic duo Blue Noses have a key spot.

Waiting patiently for us beside their exhibit, the Blue Noses are a pair of beefy Siberians who gained their sobriquet due to a habit of putting blue lids from vodka bottles on their noses. I think. As soon as we arrive they switch off their official film and put on a DVD made for us. This shows them capering about pulling down their trousers, and so on, to a soundtrack of Khatchaturian. A gallery official storms up and starts shouting. The Blue Noses (Vyacheslav Mizin and Aleksandr Shaburov) are a little taken aback, and relocate us all outside.

"We are official pranksters," they say smil- ing. "We are unsophisticated provincial guys, insatiable gluttons of ads, trailers, serials, great lovers of visual space offered by television." They smile a lot, admit they have created a brand and attempt a laborious gag about being collected by Roman Abramovich. Why are they like this? "Before perestroika, the position of artists was a high one," they say. "Art was supposed to be grand. Official artists were magnificent. But when the Berlin Wall came down, it was apparent the world was actually full of small people." This sort of Wizard of Oz approach explains much. It is quite refreshing, as anyone who has ever attended the Turner Prize ceremony, whose pomp has actually driven artists to a breakdown, might appreciate.

But surely art is about more than letting the fresh air of freedom play about one's bottom? At sunset we are driven out to a tatty tower block. A perilous lift creaks us to the 25th floor and the studio of Leonid Tishkov, an artist born and bred in the Urals.

His studio is full of canvases, easels and a battered sledge, which he touches with the air of handling an icon. He shows me a series of small balls of cloth, each decorated with a photograph of a relative. "It's a collection of souls," he says. Each ball is made from strips of clothes. In the Urals, clothes are recycled this way, and knitted into rugs. Warm domestic furnishings are essential, and waste is not recommended. Enlisting the help of his mother, Raisa Tishkova, then in her mid-eighties but now deceased, Tishkov embarked on a project using strips made of family garments. Raisa knitted them together, and talked about it on camera as she did so.

The result is extraordinary: an old lady telling the story of her life in clothes. "This is my green A-line skirt, and this, my silk dress I wore in the war," she quavers, pointing out strips of cloth with a knotty finger. "This was my dowry. And this red material was your Young Pioneer tie. You were one of the last. Everyone threw them out in the end." What a way to describe the collapse of a superpower. Out of the rags, she knits a giant jumpsuit for Tishkov. The video shows him roaming through the woodlands, a striped yeti clad in the cultural history of his country.

The Romantic Tishkov, the scandalous Kulik and the naughty Blue Noses, and others including the political artist Gosha Ostretsov are coming over to London for "Moscow Breakthrough", a show of Russian contemporary art from the past decade. But can Moscow, in reality, support a proper contemporary art scene, with its symbiotic layers of collectors, galleries and studios? It's a moot point.

Currently, the only living Russian artists most westerners are familiar with are the married couple Ilya and Emilia Kabakov, who collaborate to make complex "total installations". Their work has been so successful one could say it is almost a franchise; they have just opened their "House of Dreams" in a blanched-out Serpentine Gallery, at the same time as having a piece in the Guggenheim New York's "Russia!" exhibition, an installation in Copenhagen, a second in Graz, a third in Milan, and a fourth in Moscow. They are shortly to go to Egypt to build another.

The Kabakovs have lived outside Russia for 17 years; their home is on Long Island. "Part of my mentality is Russian, but more than that, it is Soviet," admits Ilya. "I lived in the Soviet civilisation. I know what that is. A collective mentality, with communal apartments. We never had the collective mentality, which was why we had to leave the Soviet Union." Did they operate totally outside it? "No, of course not," sniffs Emilia. "We had to join the Union of Art- ists. Without joining, you could not buy materials, or have a studio." What do they think of the Russian art market now? "There has only been one for the past five years," says Emilia. "That's as long as collectors have been around in Russia."

Back in Moscow, I meet Mikhail Gnedovsky, director of Russia's Cultural Policy Institute. We are at a private view in a newly created cultural "hub". It's the sort of place that is now a British city-centre cliche. This is the first one in Russia. "We have looked at creative clusters in England," he explains. "There is a post-industrial policy which has made Huddersfield a centre of multimedia production. We have creative people here, but they could not form an economic sector."

Gnedovsky's initiative is funded by the Soros Foundation. He is on year three of three years' money. "This arts centre was an old silk factory. There are designers, architects and multimedia creatives here. It could be a model for the whole of Russia, but we need official help. In the UK, you have had a cultural policy on a national level since 1998."

The allure of Russian art has been growing in the west for some years, but what Gnedovsky needs is for Russian culture to be deemed sexy within Russia. "Will we accept a post-industrial mode of development, where the creative industries can provide economic development? Or will we assume control of the industries that Europe is throwing out? Like China has." In effect, will Russia start exporting contemporary art, design and intellectual property, or will it turn its creative zeal to making and exporting silver trainers?

"Moscow Breakthrough" runs from 4-18 November at the Bargehouse, Oxo Tower Wharf, London SE1 (020 7401 2255); 19-30 November at the Wapping Hydraulic Power Station, London E1 (020 7680 2080); and ties in with a conference at the Courtauld Institute, London WC2, on 18 November. www.academia-rossica.org

"Ilya and Emilia Kabakov: the house of dreams" is at the Serpentine Gallery, London W2 (020 7402 6075) to 8 January. A concurrent exhibition is at the Albion Gallery, London SW11 (020 7801 2480) to 22 December

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