This book starts with the experience of Russia since the end of central planning. It covers the great contraction of 1992-98 and the subsequent recovery in 1999-2006. It offers and empirically supports a uniform explanation of both the contraction and the recovery. It views Russia’s economy as a new economic system that evolved from central planning after liberalization and privatization in 1992 and adapted to the policy shift in late 1998. Russia inherited the entire array of enterprises from central planning where they formed a unified assembly line, a veritable nation-enterprise. With few newfangled enterprises, unlike China, these inherited enterprises evolved by default into a ubiquitous network, akin to a vertically integrated super-cartel. The inherited enterprise network was able to extract massive subsidies from the government and the public and redistribute national income. We call this new economic system Enterprise Network Socialism.
Failing to fix Russia's banks risks further economic stagnation or decline and financial catastrophe. Bernstam and Rabushka's bold, intriguing, provocative proposal—resting on an elaborate strategy of debt-for-equity swaps—would fix the banks, reduce government debt, strengthen the independence of the Central Bank, and lay a solid foundation for sustained economic growth.