(FORTUNE Magazine) – The American press has a terrible record of reporting on the political and economic state of Russia. From the salad days of Josef Stalin in the 1930s (when news of the dictator's genocide was suppressed) into the 1980s (as the looming economic collapse of the evil empire went unreported), Americans have learned about the reality of Russia only years after the fact.

As Russia began its uncharted journey toward a market economy in 1992, stories in U.S. newspapers and magazines tended to stress the bad news--often suggesting that Russians had simply been better off under communism. More recently, headlines have focused on Russia's disorder and the rise of organized crime. As for the privatization of Russia's old state-owned businesses, if you read only U.S. publications, you probably think it hasn't worked. The overall impression is that Russia's move toward capitalism is a failure.

The reality is more complex--and a lot more positive. The Russian economy is in fact a mess in many ways, and it's surely true that many Russians pine for the old Soviet Union (especially those who had configured their lives for success under communism, and lack the skills or desire to succeed in a market economy). But some of the best evidence filtering out of Russia today, in fact, indicates that capitalism is doing far better than we've been led to believe.

For a balanced anecdotal look at free-market Russia's problems--and its promise--check out Resurrection, by David Remnick (Random House; an excerpt appears in this month's National Geographic). A Moscow correspondent for the Washington Post from 1988 to 1991, Remnick was "thunderstruck" by the commercial bustle of the old Soviet capital when he returned recently. While he writes feelingly about the grim lives of retirees and the ugly pervasiveness of organized crime, he also conveys the energy and optimism of Russia's brash new capitalists and--especially--of its young people.

Another recently published book, Kremlin Capitalism (Cornell University Press), provides a drier but very detailed account of Russia's massive privatization effort. Written by a trio of Rutgers University economists--Joseph R. Blasi, Maya Kroumova, and Douglas Kruse--and based in part on a survey of 2,000 workers that ran from 1992 to 1996, the book brings to life the vastness and complexity of Russia's economic upheaval. It's been quite a transformation: Some 18,000 industrial firms have been privatized and a million new businesses created, and today the private sector accounts for more than half of Russian output, more than in many Western European nations.

That swift privatization--by putting an end to central planning and thus destroying the roots of the Soviet state--was "Russia's decisive step into capitalism," writes Harvard economist Andrei Schleifer in a foreword. Kremlin Capitalism warns that socialism could come creeping back unless companies restructure faster and open their doors to foreign investors. But given the progress made so far, there's certainly reason to hope that Russia's road to economic normalcy will become smoother from here on.

RESEARCH ASSOCIATE Kerry L. Hubert