Vladislav Inozemtsev, a leading Russian economist, says Russia’s system is not so much true capitalism, or even classic authoritarianism, but rather “neo-feudalism.” Government corruption, he argued in an essay published this spring, is the system’s central trait—bribes aren’t an exception, they determine how the economy operates and how the country is ruled. Inozemtsev wrote:

What Westerners would call corruption is not a scourge of the system but the basic principle of its normal functioning. Corruption in Russia is a form of transactional grease in the absence of any generally accepted and legally codified alternative.

The main function of the state is to divide the country’s natural-resource wealth among an interconnected group of oligarchs and apparatchiks.

According to the Russian think tank Indem, bribes accounted for 20 percent of the country’s GDP as of 2005. To put that number in perspective: in 2010, United States federal tax revenues were about 15 percent of U.S. GDP. Georgyi Satarov, a Russian sociologist who is one of the country’s leading experts on corruption, estimates that the value of bribes paid annually in Russia rose from $33 billion when Putin came to power at the turn of the millennium, to more than $400 billion at the end of his presidency in 2008. Thanks to WikiLeaks, we know that in private, American diplomats agree that government predation is a defining feature of Russian life. One leaked cable, for example, explains that in Moscow, the Ministry of Internal Affairs and the federal intelligence service have crowded out the private mafia as a source of “protection” for private business, “since they not only have more guns, resources, and power than criminal groups, but they are also protected by the law.”

Many Russians, even within the elite, now look back upon the past 20 years with ambivalence—or at least the sense that Russia’s transition from a planned economy remains incomplete. Anatoly Chubais was the architect of Russia’s privatization program and market reforms in the 1990s, when the big national project was the wrenching shift from central planning to capitalism. I met with him in his Moscow office just past 9 o’clock on a Friday night last fall, after a busy day that included a visit from Prime Minister Putin (“He sat right where you are now!,” I was informed). Reflecting on Russia’s recent history, and his own role in it, Chubais said, “I am not judging whether we did it well, or we did it badly, but the fact is that the mission was accomplished—a market was built.”

The chief problem facing the country, he told me, is that while Russia was creating its rough-and-ready version of a market economy, many others took the next step: “I can name you a dozen countries which, during that precise period, built what is called an innovation economy.” Chubais now runs Rusnano, a state-controlled investment fund founded four years ago to finance companies pursuing innovation in nanotechnology and other high-tech realms. It is one of the key sponsors of the Skolkovo project, and Chubais sits on the Skolkovo Foundation Council. In his view, Russia today is at another difficult crossroads: “Innovate, or degenerate.” Turning Russia’s economy into an engine of innovation, he believes, is as important to the country’s future as privatization was—and will be harder to achieve.

Po Bronson, one of the most eloquent chroniclers of Silicon Valley’s great burst of creativity in the 1990s, titled his classic 1999 book The Nudist on the Late Shift. The naked programmer of his title was a guy who happened to prefer working without any clothes on, and his insistence on exercising that harmless personal choice—on the late shift, when few others were around—struck Bronson as characteristic of the Valley’s famously libertarian and individualistic ethos.