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An account is given of the transition from a state-run to a market economy in Russia, since the crucial argument presented in the book is that the Russian Mafia emerged as a consequence of an imperfect transition. The chapter explores the extent to which the post-Soviet Russian state emerged either as an impartial protector of rights or, on the other hand, as an erratic, predatory, and non-impartial supplier of protection. The first section of the chapter looks briefly at the emergence of the legal and tax systems, and the rise in crime and corruption, and the second discusses property rights and the growing demand for protection. The last section presents the main actors involved in the transition – enterprise managers, industrial ministers, workers, and local governments and Boris Yeltsin’s reform team, and attempts to see which of these lobbies were best positioned to engage in collective action to determine some aspects of the transition, and the final outcome.

The crucial importance of property rights in the transition from a centrally planned economy to a market economy is explained as the basis for emergence of mafia groups: if trust is scarce, and the state is not able or willing to protect property rights, then there is a demand for non-state, private protection. The emergence of the Sicilian Mafia (the Cosa Nostra) is briefly described, for the study of the emergence of the Russian Mafia presented in the book is largely informed by the Sicilian case. The author explains that he treats the term ‘mafia’ as a species of a broader genus of organized crime, which is willing to offer protection to both legal and illegal transactions – although this study is mainly concerned with legal rather than illegal markets (and also does not include the role of ethnic networks as a source of protection services). The reasoning behind the choice of the city of Perm for the location of the study, the type of evidence collected there, and methods of data collection used, are outlined. A summary of the contents of each chapter of the book is also included.

If mafia groups are present in a market, they must be organized in some form. Two questions have generated a heated and long-running debate among scholars of the mafias: first, are criminal groups organized in a hierarchical and military fashion or, on the contrary, are they loose networks of individuals, getting together to perform a specific task; second, are these groups territorially or functionally organized? Chapter 6 addresses these two questions with reference to the city of Perm, which is in the Gulag Archipelago in the Ural region of Russia. It pieces together some elements in the history of Perm’s criminality at the time of the transition from the Soviet economic and political system to the market economy, discussing the legacy of the Gulag (in the shape of the criminal fraternity of the vory-v-zakone – thieves-with-a-code-of-honour – that flourished in the Soviet labour camps between the 1920s and the 1950s, and re-emerged in the 1970s) in relation to the contemporary criminal situation, the post-Soviet criminal groups that emerged in the city, and inter-group relations and conflicts. Lastly, it analyses the organizational arrangements (structure, size, and internal division of labour) of the mafia groups in Perm, and compares them with other gangs and mafias (principally the Sicilian Mafia or Cosa Nostra).

Chapters 1 and 2 point to the fact that the demand for protection that accompanies the spread of market transactions is met by the Russian state only in part: a significant sector of the business world does not use state-supplied protection services. A demand for alternative sources of protection is then expected to arise. Some authors, especially economists, have been quick to conclude that, since the state does not provide a service, the market inevitably will. It cannot, however, be argued that demand will inevitably be met; a supply of people trained in the use of violence and easily available weapons must also be present. This chapter focuses on the availability of people trained in the use of violence and of weapons, and the varieties of private protectors available in Russia at the time of the transition to the market, ranging from segments of the state apparatus (privately sold state protection), to private security (protection) firms, the internalized protection systems of major economic conglomerates, and criminal groups (banditskaya krysha: krysha, literally ‘roof’, is Russian slang for protection).

A variety of actors operate in the market for protection in Russia, and in order to establish how they interact with each other and with their clients/victims, this chapter and the next present an in-depth study of a particular Russian setting: the city of Perm, in the Ural region. Chapter 4 starts with a brief sketch of Perm’s history and traces the impact of market reforms on the structure of the city economy; further information on Perm is presented in Appendix B. This gives a sociological profile of those who benefited most from the transition to market in Perm, in particular the destination of the former Soviet elite, and shows that members of the former nomenklatura (a detailed list of posts in the Communist Party, Government, or elsewhere, to which individuals may not be appointed without personal interview and prior Party approval) entered the new economic elite. Based mostly on evidence from interviews carried out in 1994–95, and between 1996 and 1999, the chapter then traces the sources of harassment that small kiosk owners and businessmen are exposed to, and their search for effective protection, including their encounters with bogus and predatory ‘krysha’ (literally ‘roofs’ – the Russian slang for protection). Although this discussion is mostly devoted to criminal protectors, the market for protection proved to be populated not only by criminals: fragments of the state apparatus and private protection firms were also significant players.

Various explanations of the transformational recession are discussed and an alternative explanation is suggested: the collapse of output was caused primarily by several groups of factors, all of which were linked to institutional capacity. First, by greater distortions in the industrial structure and external trade patterns on the eve of the transition: it was possible to overcome these distortions under the gradual transition strategy, but under shock therapy a deep recession was inevitable. Gradualism, in turn, was possible only with a strong institutional capacity. Second, by the collapse of state and non-state institutions, which occurred in the late 1980s–early 1990s and which resulted in chaotic transformation through crisis management instead of organized and manageable transition. And third, by poor economic policies, which basically consisted of bad macroeconomic policy and import-substitution industrial policy. Strong institutional capacity was a necessary, although not a sufficient, condition for good policies.