Leaving the overall assessment of success or failure for others, he chooses to tell a more specific story, and to use that story to advance our understanding of an important field in social science theory, namely, that of institutions and the problem of social order. The factual story, which has great merit in itself, covers the rise of three types of markets in post-Soviet Russia: currency futures, commodities, and corporate equities. The accounts are based on a combination of published materials and personal face-to-face interviews with brokers.

The aim of the five case studies presented is to explain differing degrees of success among brokers seeking to establish functioning systems of self-governance. It is also here that we may find the author's claim to originality: The absence of state agents from existing theories of self-governance constitutes a hole in the literature.

In a broader sense, Frye's undertaking represents a continuation of a large body of literature. Those who are not familiar with the field are given a very quick tour, ranging from Hobbes onward to Ostrom, Putnam, North, and new institutional economics.

The main thrust of his argument, however, is not to refine but to challenge the predictive value of previous economic and sociological theories of self-governance, arguing that his “political” approach is better suited to explain the cases at hand. Based on factors such as taxation and delegation, his discussion of the interaction between brokers and bureaucrats sheds valuable new light on the processes at hand. He deserves credit for highlighting the roles that may be played by state agents in promoting or hindering the emergence of institutions to support self-governance. But to what extent does he succeed in advancing the main body of theory? My problem here is chiefly one of presentation, of claims to have climbed mountains that really turn out to be hilltops.

From an institutional point of view, the role of the state as an outside enforcer is to promote such norms that we may achieve sustainable progress. If self-governance emerges in association with methods that go clearly against that longer-term goal of the state, then we have a mixed outcome indeed. By ignoring this dimension, Frye in some sense flushes the baby out with the bath water.

In a narrow sense, he presents an interesting analysis of factors that decide whether actors will rely on self-governance or turn to private protection, but he fails to note that in the broader picture even a formally successful case of self-governance will depend for its sustainability on the functioning of the surrounding state. More specifically, we must question the validity of Frye's critique against those who have argued that the roots of social capital are “lost in the mist of history” (p. 107). While he is correct in saying (on p. 154) that “culture is too broad a variable,” he clearly goes too far with claims that his technical explanations of organizational competition offer a “more general explanation for the rise of the racket in Russia.” If it is true that culture cannot explain specifics, then it is equally true that exactly the same set of formal rules will have very different outcomes in different cultural contexts. From a policy point of view, these are important distinctions.

More generally, the political approach based on state agents can be held up as “better” than, say, the criticized economic approach only in a very narrow sense. By failing to incorporate the dynamic aspects of institutional change, as laid out by North and others, it has little to say about the broader issue of how the newborn social order will evolve. Thus it also has limited policy relevance.

In this sense Frye also greatly overstates when arguing (on p. 155) that his technical explanations are better suited to explain the weakness of the Russian state than arguments relating to the neoliberal ideology of the reforms. He is right only if we ignore completely the formation of social norms to support the formal rules of the reforms.

Turning to another problem, much emphasis is placed on the corporate equities market, as a prime example of successful self-governance. Again, the interplay between brokers and bureaucrats is given an interesting and certainly valid interpretation. But perhaps it might be better in this case not to speak of “state agents” at all, but of the interplay between foreign operators with clear money-making strategies and young Russian reformers eager to impress their foreign benefactors. The mechanics of formal rule setting would remain the same, but we would also capture all those problems of moral hazard that, inter alia, have led the U.S. government to file a law suit against Harvard University for activities undertaken by Harvard-employed advisors to the Russian government. What “state” did these “state agents” represent?

Throughout, the text also has a certain gloss of success. Chapter 8, in particular, which details the process leading up to the crash in 1998, studiously avoids any mention of bad behavior by Russian actors. I have no problem with this, but it does go against the declared ambition of staying clear of any broader assessment of success or failure.

My real problem with this book is that it ends up a halfway house of sorts. By neglecting to deal with some of the more unsavory aspects of Russia's emerging markets, such as the protection of minority shareholder right, it fails really to come to grips with the broader story, which is a pity. At the same time, by neglecting to deal with the full scope of theory, such as the formation of norms and the consequent risk of institutional traps, it also fails to derive real benefit from the Russian example, which, perhaps, is even more of a pity.