Brokers and Bureaucrats Building Market Institutions in Russia.(Review)

Timothy Frye, Brokers and Bureaucrats Building Market Institutions in Russia (Ann Arbor, MI: University of Michigan Press, 2000).

Even when states cannot enforce private agreements, Timothy Frye argues in this excellent book, they can both hinder and help private efforts to make exchange secure through group self-governance. Frye demonstrates and deepens this thesis through impressive in-depth studies of five markets in post-Soviet Moscow--two currency futures exchanges, two commodity exchanges, and a stock market--that will be a landmark in the appropriation of the New Institutional Economics (NIE) by political scientists.

Self-governance requires that information about business dealings be transparent to members of the group, so they may identify and avoid malefactors. However, "revealing information about trading practices to group members makes it difficult to hide the same information from the tax collector" (35). Faced with fiscal rapaciousness, brokers at two ill-fated commodity exchanges Frye studied hid from tax collectors--and each other's violent contract enforcers--in a netherworld of obscurely located offices, even as the …