Privatization, not just in Russia but in all formerly socialist economies, is fraught with charges of corruption, favoritism, and unfair power of the former elite. Since the credibility of property rights depends in part on public acceptance , such charges, particularly if they are true, weaken property rights. Macroeconomic stability depends on relatively stable tax revenues, while perceptions that the tax administration is arbitrary, unjust, and corrupt promote non-compliance with the tax code and tax revenue crises. More generally, the economic reforms have opened a new range of freedoms for individuals and prompted a flowering of entrepreneurial initiative and energy. The reforms have also created large incentives for unethical behavior and prompted a massive struggle over the distribution of wealth.
Economic transactions require mutually understood, credible rules of behavior.
A major challenge for economic reform in Russia is to develop and preserve such rules.