THERE is no better place to contemplate Russia's perennial ambivalence about modernity than St Petersburg—and not only because the city is ravishing and the sun shines for 19 hours a day at this time of year. This was the city that Peter the Great founded to force Russia to look to the west. But it was also the city Lenin used as his base to launch Russia's disastrous experiment with “socialism in one country”. Today the St Petersburg International Economic Forum (SPIEF) provides an annual window to Russia's still-divided soul. This year, the sixteenth since it was founded, the forum attracted the bosses of such global giants as Goldman Sachs and McKinsey, as well as everyone who is anyone in the energy business. Vladimir Putin delivered his first big speech on the economy since recapturing the presidency.

There was much that looked familiar to habitués of the World Economic Forum at Davos. The likes of PepsiCo and Mercedes-Benz pitched lavish hospitality tents. Henry Kissinger delivered of his wisdom and young global leaders networked furiously. But there was also much that was different. Russian giants such as Gazprom and Sberbank loomed over everything (Sberbank got the prize for the most eye-catching display, filling a huge glass case with €500 notes and applying a wind machine to them). Some $11 billion-worth of deals were done. The panels consisted almost entirely of middle-aged men in suits. Yet this sartorial uniformity proved deceptive: SPIEF man is far more ambivalent about the building-blocks of global capitalism than Davos man.

The Russian delegates were strikingly equivocal about free enterprise. Yes, everybody agreed that Russia is far too dependent on the energy sector. The oil price can go down as well as up—and has been doing just that lately—while the fracking revolution is changing the gas business dramatically. Everybody also agreed that Russia needs many more entrepreneurs to spark innovation and to turbocharge business creation. But no sooner did people start to debate enterprise in St Petersburg than the doubts began to crowd in.

These doubts were partly practical. The country's 30 biggest companies account for more than 40% of GDP. The World Bank's annual survey of ease of doing business ranks Russia 120th in the world. It takes two years and innumerable bureaucratic procedures just to get permission to build a warehouse—each stage giving some bureaucrat a chance to extract a bribe. Howard Stevenson of Harvard Business School once argued that the essence of enterprise is the pursuit of opportunities regardless of the resources you currently control. Kirill Androsov, a Russian who runs Altera Capital, an investment firm, says the essence of enterprise in his country is to keep hold of the resources you control.

But that is only half of it. Russians have a deep suspicion of rich and successful people—a suspicion nurtured by communism and reinforced by the oligarchs of the 1990s, who owed their wealth to political connections and acted like Soviet caricatures of capitalist robber barons. More than a million young Russians have fled the country in the past decade. “The only place to do business is somewhere else,” one young Russian told this columnist as they waited in an interminable queue at the airport.

The delegates were ambivalent about the West. A legion of public-relations flacks boasted that Skolkovo, a science park under construction outside Moscow, is Russia's Silicon Valley in the making (500 companies have reportedly signed up to open offices there). Finnish entrepreneurs such as the man behind Angry Birds were treated with awe. But admiration for the West was qualified by doubts: not since the Soviet Union was in its pomp have so many powerful Russians expressed such blood-curdling thoughts about the crisis of capitalism. America was dismissed as a debt-fuelled Potemkin village. Europe was likened to Russia in the late 1980s, strangled by government and capable of making only two kinds of decisions: wrong ones and glacial ones.

Whatever you say, Mr Putin

The delegates were equally ambivalent about political reform. In private a striking number of businesspeople admitted to embarrassment about Mr Putin's return to the presidency. Sberbank sponsored a panel on the wonders of crowdsourcing in both politics and business. But when Mr Putin turned up to deliver his speech the delegates, Westerners included, were transformed into slavering sycophants. The hall was packed—the bigwigs up at the front and their underlings at the back.

The scepticism about Western capitalism was matched by an equally marked equivocation over Russia's own model of state capitalism. Mr Putin went out of his way to argue that the country does not practise state capitalism—indeed, that it is on the crest of another wave of privatisation. Russian businesspeople talked about their companies as if they were just like Western companies with a few Russian characteristics thrown in. But you only had to look around to realise that this was an illusion. The Russian hospitality tents all bore the names of state-controlled giants. A striking number of the Russian businesspeople present owed their careers to their connections with the Kremlin.

Mr Putin delivered a vigorous speech about making Russia more business-friendly. But under his rule state-backed behemoths have strengthened their grip. And later that day Mr Putin made a point of keeping the bosses of four Western energy companies waiting to see him in a dark, chairless foyer for three hours. Mr Putin needs to recognise that delivering on his promises to create a more business-friendly environment, not least by simplifying regulations, tackling corruption and privatising some state giants, is in his own interests as well as the country's. The cost of continued ambivalence will be political instability as well as economic stagnation.

Economist.com/blogs/schumpeter