In her book, Susanne Wengle offers a detailed account of the marketization of Russia’s electric power monopoly. This endeavor was pushed by an alliance of President Vladimir Putin with liberal reformers led by Anatolii Chubais. Chubais sought to create a common national infrastructure of market-oriented organizations for generating, transmitting, distributing, and selling electric power. For his part, Putin used the overhaul to break the administrative stranglehold exercised by regional governors and the regional electric power monopolies. In this, Putin was also backed by the “silovik” faction rooted in the security agencies of the central government.

Wengle makes the important point that in the early 2000s, Putin’s regime advanced a strong developmental agenda aimed at technological modernization and economic growth. It is often forgotten that when he entered office, first as prime minister in August 1999 and later as acting president and elected president in 2000, Putin launched a sweeping agenda of market-oriented reforms. Between 2000 and 2003, he pushed a comprehensive package of reforms through parliament: land reform, tax reform, a business-friendly labor code, and administrative and judicial reform, among others. Breaking up, deregulating, privatizing and liberalizing the electric energy sector was part of that agenda. At the same time, this agenda was deeply political as well, because it was designed to eliminate one of the most important power resources of the regional governments: their control over the vertically integrated energy monopolies that supplied heat and electric power in each region. Wengle emphasizes the political nature of the effort to create new markets for electric energy and calls our attention to the shifting alliances that lay behind the transformation of this sector. Putin’s drive to centralize power was in part motivated by the objective of overcoming regional governors’ resistance to reform.

One of the most valuable aspects of Post-Soviet Power is its attention to regional variation in the composition of political alliances backing reform. Wengle divides Russia broadly into three macroregions according to the distribution of power and interest in the energy sector. In European Russia, electric power companies were the largest domestic customer of the natural gas giant Gazprom. Because Gazprom was forced to sell its gas at below-cost prices to many state customers, it wanted to recoup costs by liberalizing prices on the electric power market. It therefore favored deregulation and price liberalization. In Siberia, the aluminum producer Rusal wanted electric power cheaply, and so it acquired control over the electric power industry as it was broken up. In the Far East, on the other hand, the electricity market was not likely to be profitable, and its customers tended to be loss-making state-owned companies. Therefore, the federal government kept prices for power low and subsidies high.

Case studies of the privatization and price liberalization of three of the regional energy companies (those in Moscow, Irkutsk, and the Far East) provide rich illustratative detail about the battles to wrest control away from the local governments. The power companies ended up, however, under the control of oligarchic firms that integrated them into their own production chains. Wengle rightly argues that to contrast “state ownership” with “private ownership” of such important assets as electric power companies is not useful as a guide for understanding the distribution of power and interest that determined each side’s stakes in the electricity sector. More important in determining the behavior of firms in the electric power sector are such factors as relative cost of generating and providing power and the relationship of a power company with its suppliers and customers.

Wengle threads a larger argument throughout the book. Asserting that both the “state capture” and “predatory state” frameworks for understanding the relationship between government and enterprises in reform-era Russia are too schematic, she argues instead that diferent “development pacts” have determined the path of restructuring the power industry. She shows that more than predation and rent seeking underlie post-Soviet political economy. This is an important and useful point.

On the other hand, in several places she employs a constructivist framework in discussing efforts by government officials to create new market institutions; markets, she argues, are “political and contingent constructs” (p. 6). Likewise, in arguing that the geographic distribution of natural resources, manufacturing and extractive industry, and human settlements should not be treated as a final explanation for the nature of the economic relations that formed after the transition, she sometimes tends to dismiss too readily the importance of physical constraints on cost.

Overlooked in metaphorical language about “materiality” is the very real problem of relative cost. For decades, the Soviet planned economy had made it nearly impossible to calculate what the cost of producing good X was relative to the cost of producing Y. Prices had been set administratively for so long, and incentives to raise efficiency suppressed for so long, that there was no immediate way after the end of central planning to measure and compare the opportunity costs of production. As many writers have argued, Russia’s immense size and harsh geography likely require more state regulation and redistribution than would be the case elsewhere. Moreover, the inheritance of the Soviet planners’ decisions to build cities in remote locations to be near natural resources has meant that much of the state budget continues to be spent subsidizing human settlements in the northern and eastern regions of the country. Wengle is surely right to imply that human ingenuity can overcome some of the barriers that geography imposes on economic exchange, but some basic geographic facts cannot be ignored. Some production costs in Russia will be higher per unit of output than in smaller and more temperate countries. (Fiona Hill and Clifford Gaddy’s The Siberian Curse: How Communist Planners Left Russia Out in the Cold (2003), analyzes this problem well.)

Market institutions are, of course, socially constructed, and political choices can affect the efficiency of market exchange. Nonetheless, we should not lose sight of the fundamental distinction between market and administrative mechanisms for allocating resources. Chubais wanted to introduce competition into the power industry in order to lower costs, raise productivity, and improve the well-being of the populace. Other actors had quite different goals. For many of them, what was at stake was not development but opportunities for rent seeking and predation.

Overall, Post-Soviet Power is an unusually well-researched and significant study. By analyzing the reform of the electric power sector both at the central and regional levels, Wengle makes a powerful case for identifying the shifting alliances of political interests that lay behind the effort to overhaul Russia’s power sector.