The Russian Crisis, Perils and Prospects for Post-Soviet Transition Peter J. Boettke* Abstract Since 1992, the rhetoric of Russian economic reformers has been one of full-speed ahead to a free- market economy. The reality, however, has diverged significantly from this rhetoric at both a broad “rules of the game” level and specific “policy within rules” level. The resulting ambiguity of the economic environment and the lingering effects of the previous system which is supposed to be reformed has led to a continued deterioration of the Russian economy. This paper offers a modified defense of “shock therapy” as a path to a cure for Russia’s economic malaise, as opposed to the cure itself. *Professor Boettke is an Associate Professor of Economics at George Mason University, Fairfax, VA. His research interests include comparative political economy, market process theory, and history of economic thought and methodology. He has published The Political Economy of Soviet Socialism , (Kluwer, 1990); Why Perestroika Failed , (Routledge, 1993); The Collapse of Development Planning , (NYU Press, 1994); The Market Process , (Elgar, 1994); The Elgar Companion to Austrian Economics , (Elgar, 1994); and Market Process Theories ,2 Volumes, (Elgar, 1998). In addition, Boettke has published numerous articles and chapters in books in the areas of comparative market process theory and history of thought and methodology. This lecture was given as the Henry George Lecture at St. John’s University on October 27, 1998. Boettke would like to thank the Robert Schalkenback Foundation for support of this program and Professor Joseph Giacalone for the invitation. He also gratefully acknowledges the financial support of the J.M. Kaplan Foundation. He has benefitted from the research assistance of Daniel Lin and Andrew Farrant and technical assistance from Mrs. Kathleen Spolarich. He is also grateful for the insightful comments from the editor of this journal. The usual caveat applies.