Postcommunist transitions have produced widely varying outcomes. Among former Soviet republics, the degree of variation has been far greater than in Eastern Europe: Highly authoritarian polities and state-dominated economies were preserved in most of Central Asia and Belarus, while the Baltic states established market economies with consolidated democratic systems. In between the extremes with mixed records lie Russia, Ukraine, Moldova, and the Caucasus republics. There are multiple explanations for the different outcomes that point to differences in pre-Soviet history, level of economic development, leadership qualities, culture, and geography. Scholars who favor an institutional approach have attributed the outcomes to institutional design, with failures linked to poorly structured institutions or compromises that undermined the transition process. Alena Ledeneva and Christoph Stefes each have combined several of these approaches through a focus on the embedded nature of institutions, and they both argue that even well-designed institutions can function (or malfunction) differently because of informal practices that were prominent in the functioning of the Soviet system. For Stefes, corruption is the main focus, and he deals with two cases in depth—Georgia and Armenia. Ledeneva limits her study to Russia but covers a broader range of behavior relevant to the political and economic spheres. Both books rely on interview data to substantiate their claims, and both offer a wealth of interesting details that help put “failed” transitions in a broader context.

How Russia Really Works is an extension of Ledeneva's previous work on the Soviet era, Russia's Economy of Favours, (1998) which examined the critical role of blat, the informal networks of influence and exchange that operated at all levels of society. Ledeneva relies heavily on ethnographic methods and incorporates data from interviews with 50 participants in, or knowledgeable observers of, the practices that she examines. She defines informal practices as “regular sets of players' strategies that infringe on, manipulate, or exploit formal rules and that make use of informal norms and personal obligations for pursuing goals outside the personal domain” (p. 22). These practices paradoxically support the operation of the formal institutions while simultaneously undermining their effectiveness.

Each of six chapters examines a set of informal practices in post-Soviet politics and economics. Three chapters focus on the political realm. Chapters on “black PR” and kompromat—compromising materials—describe the use of leaks or planting of false information in the media with the purpose of altering the outcomes of elections or discrediting individuals in the political realm. These derive in part from the methods used for decades by the Soviet KGB, veterans of which quickly found a niche in post-Soviet Russian politics. While these methods are similar to “dirty politics” in other democracies, their impact is magnified in a Russian context where the public is easily misled (again a product of the Soviet period) and where there are almost no professional, independent media. Krugovaia poruka—shared responsibility or guilt—undermines accountability; members of a group protect those who violate the law in order to protect themselves from similar prosecution. The Soviet antecedent was the existence of such groups within the Communist Party and among regional officials. Their shared interests frustrated both central administrative control and legal accountability. Under conditions where party subordination has been replaced, supposedly, by the rule of law and democratic accountability, krugovaia poruka continues to provide a mechanism for impunity for officials at all levels.

Ledeneva's last three chapters deal with economic/legal behavior. “Shadow barter,” which took the form of often complex payment-in-kind schemes, was a common practice in the 1990s. Nonmonetary transactions between multiple economic actors allowed enterprises and businesses to continue operating in an economy that had a shaky banking system, high inflation, and excessive taxes. Enterprise managers avoided paying taxes by covering up real revenues. In the Soviet economy, where cash had relatively little value, barter was a crucial, though illegal, method for obtaining scarce goods. It was widely used by enterprises to obtain material or technology necessary to meet their plan targets. Double bookkeeping and a multitude of financial schemes became essential elements of Russian business practice in the 1990s, largely due to predatory behavior by the state, corrupt bureaucrats, criminals, and competitors. In Soviet times, deliberate misreporting of economic data was also a common managerial strategy to reduce exposure to punitive measures by the state. The tolkach, or “fixer,” was a shadowy figure in the Soviet distribution system; he negotiated transactions that could never take place officially and yet were necessary for the enterprise. Ledeneva uses the concept broadly to describe unofficial intermediaries who provide services that are normally the obligation of the state, such as security and contract enforcement. The new tolkachi also help achieve favorable outcomes by influencing prosecutors, the courts, or law-enforcement agencies. It is only when someone exceeds the understood, informal limits that he or she is singled out for punishment. The oil magnate Mikhail Khodorkovsky was arrested and imprisoned by Vladimir Putin, not because he broke the law but because he violated the informal understanding of what practices were permissible.

In developing this approach, the book presents a convincing description of much that went wrong in the 1990s. But relatively little attention is given to the problem of how reformers might have overcome these phenomena. Like the now little-used concept of political culture, the ethnographic approach to informal practices offers few insights into how, or even whether, this aspect of Russian reality can be changed.

Stefes discusses many of the same phenomena that are presented in greater detail by Ledeneva. Unlike Ledeneva, though, he folds almost all informal and criminal behavior into the concept of corruption. Stefes begins with an overview of theories on corruption and provides background on political developments in Georgia and Armenia in the post-Soviet era. The core argument of Understanding Post-Soviet Transitions is that different outcomes in the two countries are best explained by differences he finds in patterns of corruption. Georgia's more tumultuous post-Soviet transition is seen as a cause of a breakdown in the centralized nature of elite corruption. A lack of state capacity and the struggle of rival groups for power allowed corruption to develop unimpeded, in a decentralized form. Paradoxically, these divisions ultimately opened the way for a potential democratic breakthrough in the form of the “Rose Revolution” of 2003. The new president, Mikhail Saakashvili, immediately embarked on a series of steps to reduce corruption in Georgia, with considerable success if one believes annual rankings by Transparency International, Freedom House, and the World Bank. In Armenia, political stability and a relatively unified elite retained control over corrupt networks. This more centralized form of corruption permitted greater economic growth and restrained the level of corruption, but it also meant the disappearance of any signs of democracy.

Stefes places the origins of corruption in the Soviet system, and he attributes the problem to the ability of the Soviet-era republic elites to preserve their positions in both Armenia and Georgia. His thesis of continuity in informal patterns seems to demand that the level of corruption in the Soviet system be overstated. His argument on the Soviet period is derived not from specialists on Soviet politics and economics but from writers who focused on Soviet crime. Especially prominent among these is Konstantin Simis, a former Soviet lawyer who emigrated to the West in the 1970s. Clearly, though, the scale of corruption in the post-Soviet period has far exceeded that of the Soviet era in countries such as Russia, Ukraine, Georgia, Azerbaijan, and Armenia. This would be especially evident if it were possible to measure the percentage of a republic's GDP that was diverted by corruption in the Soviet and post-Soviet periods. The Soviet ban on most forms of private property, particularly of land, apartments, and most buildings, created a fairly low limit both on what could be stolen and what could be diverted to private use.

The core of Stefes's argument—that the differences in post-Soviet development in Georgia and Armenia were largely a product of whether corruption was decentralized or centralized—is also problematic. Overall levels of corruption can be approximated by survey data on perceptions of corruption, such as those produced by Transparency International. But types or patterns of corruption are virtually impossible to specify and apply due to the nature of the phenomenon. The data that Stefes uses are mostly impressionistic, gathered from interviews and journalistic accounts. Many analysts would argue that Georgia also had elements of centralized systemic corruption in the 1990s, and that the main difference between the two cases was the level of corruption, not its basic nature. What Stefes seems to be capturing in his distinction is actually related to differences in state capacity. Georgia under Eduard Shevardnadze was simply a much weaker state than Armenia. Those reservations aside, Stefes effectively synthesizes a large amount of material on both Georgia and Armenia concerning corruption. His is thus an important resource on the various roles that corruption has played in post-Soviet transitions.

Both books, through their use of interviews and insider accounts, deepen our knowledge of how postcommunist transitions in Russia, Georgia, and Armenia stalled or turned the wrong way. At the same time, both would have benefitted from a somewhat broader and more systematic comparison with other postcommunist transitions. Since communist-era practices were common across the Soviet space, how did more successful post-Soviet republics avoid these traps?