ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book presents the framework of the New Institutional Economics to emphasize that a nation’s limited resources must be allocated between activities involving production, protection or predation. It analyses the problem of tax evasion from the perspective of the design of tax policy. The book describes how the criminalization of Russia's economy poses a national crisis with international ramifications. It focuses on the political economy of underground activities, namely the role of the state and regulation. The underground or 'second' economy was a critical component of the pretransformation planned systems of Central and Eastern Europe and of the Former Soviet Union. Consisting of prohibited economic activities involving arbitrage, speculation, and private production and distribution employing public resources, the second economy functioned in a salutary manner to circumvent many of the inefficiencies and incentive incompatibilities.
