The article touches upon some of the important problems that face the Russian economy which need to be addressed in order to stimulate economic growth. Monetary instruments play an important role in creating the overall financial environment with some of the sectors (mortgage market, etc.) being a potential driving force behind the growth. Stable and growing economy in turn makes it possible to look more closely at the possibility of introducing the convertibility of the ruble.

     The main modern problems of Russian NIS development are considered in the article. They concern manufacturing of goods and services, processes of knowledge production and knowledge transfer. Measures of economic policy directed at solution of these problems are offered. The basic point is made on creation of significant motivation of economic agents and the institutional environment that provides their interaction. The motivation must be directed at innovations in industry and scientific and applied activity oriented at creating innovation potential for industry in science engineering.

     The phenomenon of the soft budget constraint (SBC) in a competitive environment is analyzed in the second part of the article. Its consequences for banks and the role played in developing financial crises are considered. Political intervention in firms is studied. The conclusion is made that the SBC syndrome can arise in any economic system.

     The process of privatizing state-owned property assets such as agricultural or manufacturing enterprises is considered in the paper. An optimal timing model is employed to investigate the question of the best time to privatize a state-owned property asset. Beyond the optimal timing question, the author also analyses the simultaneous question of the optimal amount of new fixed investment that should accompany privatization. In both cases, comparative static analysis is employed to determine how fluctuations in net income streams before and after privatization and tax rates that apply to land and capital improvements affect the optimal timing and capital investment decisions. The results provide important insights for the design of privatization policies.

     In 1987 K. Arrow suggested to define the theory of economic behavior of individual economic agents in market or nonmarket conditions as nanoeconomics. In 1996 we considered nanoeconomics for the first time as an independent branch of the economic theory and as a description of special condition of the Russian economy ("economy of physical persons"). In the given paper features of nanoeconomics in comparison with micro-, meso-, and macroeconomics are investigated, characteristics of the Russian economy essential from the nanoeconomic point of view are analyzed. It is shown that the stage of the "economy of physical persons" in the modified form still exists in Russia up to this day.

     Various ways of state participation in the mechanisms of transaction management are considered in the article. Differences between compensation and elimination of the market failures are identified. Opportunities and risks of non-regulatory alternatives usage as a mean of market failure compensation are described. Based on classification of goods correlated to relative cost of their useful characteristics evaluation (search, experience, merit) questions of institutional alternatives in three areas (political, financial and commodity) are examined.

     Substantive provisions of the Marx-Engels-Lenin economic theory in comparison with vital realities of XX century are critically considered in the article. Theories of surplus value, labor value, general law of capitalist accumulation, absolute and relative impoverishment of proletariat are examined. The author points to utopianism and inconsistency of Marx's theory and calls Russian economists for creation of new economic theory adequate to challenges of XXI century.

     Karl Marx saw only one aspect of the whole variety of relationships between labor and capital - the conflict leading to revolution. These relationships can be viewed as a game under the "prisoners' dilemma" situation where two main strategies of both parties are to conflict or to cooperate. Within this theoretical framework, different outcomes from partial and general equilibrium point of view are considered in the article. The cooperative outcome is treated as the only Pareto-efficient.

     In this article the labor behavior of representatives of mass trades of the Russian intelligentsia under conditions of the transforming economy is analyzed. Neoinstitutional concepts concerning social embeddedness of economic behavior have served as a theoretical framework for this work. The author tries to answer the question why a new configuration of rules of economic life has so weakly affected labor strategies of a significant part of "Soviet specialists" and has not resulted in total reorganization of the labor market. The research project "Organization of daily life and reproduction of social structure in Russia (the case of St. Petersburg)" is the empirical base for this article.