In the account thus far we have placed much emphasis on the combined role of opportunity and self-interest, as determinants of economic development, and we have recognized a need to go beyond the assumptions of hedonism and rationality that underpin the neoclassical economic tradition. In line with our ambition to capture the broader institutional context of transactions, we have also suggested that a distinction will have to be made between forward-looking instrumental rationality and such informal types of motivation that are somehow embedded in social structures.

It is when we investigate how the latter may influence the way in which choices are made that it becomes necessary to incorporate the role of factors we may refer to as “cultural.” As this in turn entails considering the long run and possible path dependence, the essentially ahistoric focus of transaction cost analysis must be completed with insights into the driving forces of historical progression. For such insights to be of real value, it is, moreover, essential that they be distinctly different from the common Western tradition that has produced what we presently know as democracy and rules-based market economy.

As we have repeatedly argued, the case of Russia is admirably suited to fit this ticket. It offers poignant illustrations of critical junctures, of pressures for reform that lead to actions followed by reversal, of causes that drive institutional reproduction over time, and of governance that is distinctly market-contrary.