In this paper we discuss some of the institutional obstacles to the implementation of free market systems in Russia and the newly independent states of Central and Eastern Europe. However, we do not mean institutional in the sense of laws or governmental activities. We are, instead, referring to definitions and practices that are shared by members of a social group and that form the foundation of social activity. We argue that the chaos of a free market economy requires a particular kind of institutional arena and that without these definitions and practices - what we call the institutional requisites of capitalism - a free market system cannot function. We apply this general theoretical perspective to the former Soviet Union and discuss the implications of these obstacles for transnational trade.