A common mistake Western observers made was to think the Soviet Union's fundamental problem was a lack of democracy. They completely overlooked that the institutional structure of the political system cannot overcome the problem inherent in an economic system with no means of rational calculation. The Soviet Union had a number of leaders who promised political reform, but none was able to put bread on the table. In fact, the primary problem in the Soviet Union was socialism, and it is still far from being dismantled in the nations that once made up that evil empire.

The present "capitalist revolution" in Russia was best described by Russian publicist Viktor Kopin: it is a "quasi-democratic society with a quasi-market of quasi-legality and quasi-morality. The predominant conclusion out of this is that freedom leads to the destruction of spirituality, crime, pauperization of the masses, and the emergence of a class of fat cats."

The decades-long effort to eliminate markets destroyed the work ethic, the mass misallocation of resources through centralized investment, the demolition of the base for private capital accumulation, distorted means of economic calculation, and technology so obsolete that the capital value of industrial enterprises is zero or negative. Most heavy industries were built during Stalin's Industrialization Program in the 1930s and have not been updated since. A huge part of Russian industrial stock is as productive as an industrial-history museum.

I'm about a quarter into the book. I am very impressed. It is riveting. I went on a tour of Russia in June and wanted to know more about what is going on. I have talked my husband and sister into reading it. I think Americans get some insight into a country we know little about.

Daniel Hoffman of the Washington Post has written a good introduction to the interregnum between the reign of the Commununist Party of the USSR and the Presidency of Vladimir Vladimirovich Putin. When Communism and the Russian legal system collapsed, the boldest and brashest quickly amassed fortunes in rather unusual circumstances.

Hoffmann's account is a good introduction to these times and to the "oligarchs" who shaped these times. His book is by no means a work of investigative reporting, being liberally littered with phrases along the lines of "we'll never know the whole story", "there must have been more going on, but there are no authorative sources," "we can only surmise that much of the episode is opaque." Nor do I understand why Hoffman considers mayor Luzhkov of Moscow, Moscow's answer to Richard Joseph Daley of Chicago, an "oligarch."

All the same, this is a well-written and entertaining book about an extraordinary time.

This book provides a great background to understand Russia and the current situation today. If you want to know about business and the history of Russia from the 80's forward, written in a way that reads like a novel, read this book.

David Hoffman, the author of this fascinating book, intends to give us a portrait of dynamic, progressive entrepreneurs. But he actually gives us a picture of greedy criminals.

Russia's privatisation programme was huge, rapid and unprecedented. By 1996, 18,000 industrial enterprises, 80% of the total, employing 80% of Russia's industrial workers, producing 90% of Russia's industrial output, had been privatised.

Russia's 1992 Privatisation Programme, which the Russian Union of Industrialists and Entrepreneurs fought for, allowed directors and workers to buy 51% of the voting shares in their organisation, at a nominal price, using the enterprise's own funds. All were given vouchers, which could buy shares.

All too often, workers agreed not to interfere with the management, in exchange for promises of job security. Often, managers bought workers' shares before they had any market value, or outbid the workers, in collaboration with banks. In some cases, President Boris Yeltsin issued special decrees, excluding outsiders.

Factory managers used cooperatives, joint ventures and later, shell companies and offshore havens to leach cash and raw materials out of public enterprises. They created banks and trading companies that seized the factory's output and put the profits into their offshore accounts. Law and order were shredded.

These management buyouts led to short termism, parasitic profits (not productive investment, not rebuilding), asset stripping and capital flight (totalling possibly $150 billion between 1991 and 1999). Russia's wealth, produced by its workers, went into thousands of offshore bank accounts, real estate holdings and offshore companies.

For example, in 1993 Boris Berezovsky, Yeltsin's friend, bought 35,000 Ladas at low export prices from the producer Avtovaz, Russia's largest car factory, paying 10% down, the rest to be paid 30 months later in a time of huge inflation, nearly bankrupting the producer. He then sold them to Russians at high market prices, making $3000 a car, in a $105 million deal. Later, Berezovsky bought a third of the company for just $3 million, in a one-bidder auction. Berezovsky loaned the government $100 million for 51% of Sibneft, Russia's sixth biggest oil company, in 1995, and sold it to himself 18 months later for $110 million.

Anatoly Chubais, head of the State Privatization Committee, said of Russia's capitalists, "They steal and steal and steal. They are stealing absolutely everything and it is impossible to stop them." By 2002, five capitalists controlled 95% of Russia's aluminium, 18% of her oil, 40% of her copper, 20% of her steel and 20% of car production. The Mafia ran nearly half the private sector and owned half of Russia's largest banks. Criminal gangs controlled 80% of Avtovaz's output, which did not deter General Motors from starting up a joint venture with the giant car company.

"In sum, neither the workers nor their unions have much power over privatisation", said a US privatisation adviser. By 1999, 38% of Russia's people existed below the poverty line. 90% of the people endured worsening conditions, while the handful of arrogant capitalists made colossal profits by crime and corruption.

Hoffman did a good job. Six main characters, Smolensky the Banker, Luzhkov the Mayor, Chubais the Economist-reformer, Khordorkovsky the oligarch, Berezovsky the Master Mind, and Gusinsky the TV Media King, controlled the Russia Yeltsin-regime economy. Many of them are Jewish, started from humble beginnings and got rich at the right place at the right time. Unfortunately, with 1998 stock crash, ruble devalutaion, Putin as the new president, their wealthy empires quickly fizzled. It is a must read for any one doing business in Russia.

The Oligarchs of Russia are a special breed and this excellent book brings them to light. Hoffman excellently details the various men who came tot he fore in the New Russia under Yeltsin. From Mayor Luzhkov to Gusinky, Khordorovsky and Berezovky among others this book paints a wonderful picture of the hustlers, gangsters, politicians and Bankers that recreated Russia in the 1990s, making it mirror more 1920s America then the past soviet empire. This wonderful account details the back story of the various super-rich who came to dominate Russian Industry from Yukos to Aeroflot and the Russian Central Bank, from oil to automobiles. These men started poor, many were of Jewish ancestry and subjected to the prying eyes of the vast soviet bureaucracy. In one oligarchs case he started out selling Bibles on the black market and another pioneered the building of Dacha's over and above his quota for production. A wonderful tale about the horrors of communism, for instance the story of Russia's disgusting massive warehouse for vegetables, and the story of the cowboy capitalists, most of whom are now in prison or under indictment and forced to flee abroad.

Seth J. Frantzman