KREMLIN RULES: "In Hard Times, Russia Moves In to Reclaim Private Industries," by Clifford J. Levy, New York Times, 8 December 2008.

Recalling the William Baumol et al. book, Good Capitalism, Bad Capitalism, you've got--in terms of evolution--oligarchic (elite family-dominated) capitalism, then state-directed capitalism, then big-firm capitalism, and then truly entrepreneurial capitalism. The sweet spot is a combo of the latter two: big firms surrounded by a sea of small start-ups. The counter-intuitive analysis of Russia right now--meaning mine--says the 1990s Yeltsin firesale that generated an oligarchic-style capitalism is now being subverted/improved by a state-directed form, meaning, oddly enough, that Russia took a step backwards in the 1990s from what it had. China has purposely sought to cannibalize its state-run enterprises into big firms, encouraging start-ups as new technology/product providers. That was the next best step forward from socialist ownership. Russia's collapse under Yeltsin was to let the robber barons basically buy up government-owned companies for a song and then get fabulously rich. In a culture not ready for that disjuncture, a huge populist backlash was created (not well reported here) that welcomed the return of the "siloviki" ("power/security agency guys") and the reassertion of state control over the commanding heights of industry. In short, Putinism was preordained by the way socialism collapsed in the USSR. Gorby chose poorly; Deng chose wisely. Gorby did politics first and Deng focused on economics first. The former yielded Putinism, the latter yielded the far more successful single-party state (please, don't pretend its "communist") called the CCP. Do I regret the way the Soviet centrally-planned economy collapsed under Yeltsin? No. I was all for Gaidar's strategy of snipping all the vertical lines of authority. Better to have the collapse be severe so as to disallow any rapid recovery. Do I thus accept the inevitability of a Putinesque phase as a cost? Absolutely. Pennies on the dollar, in grand strategic terms. Do we now face the requirement of house-breaking Putinism? Yes, but that's the best possible problem we can have right now, given the trajectory. Plus, it's easily accomplished--to wit, the economic penance self-inflicted by Putin's smackdown of Georgia. My God, thanks to Russia's economic connectivity, the behavior mod program operates like a self-licking ice cream cone. Is today's Russia the preferred Russia? Of course not. But I don't live in an ideal world, just an improving one.