This study focused on the following properties of informal systems: the unit of decisionmaking is the informal group; informal groups and networks operate in, mediate, and blur different spheres (state and private, bureaucracy and market, legal and illegal); and informal groups and networks operate in the multiple domains of politics, economics, and law. These informal dimensions are especially critical in economic and political development, particularly in newly forming governmental, electoral, financial, and commercial structures. A much more explicit and informed analysis of informal systems, the structure of influence, and the nature of the state is called for in Central and Eastern Europe and the former Soviet Union. In the legal, administrative, political, and economic flux that followed the collapse of communist governments, many informal groups, empowered by the erosion of the centralized state and enticed by myriad new opportunities for making money and wielding influence, took advantage of the many new opportunities. Far from disappearing, informal systems played a pivotal role in many reform processes of the 1990's, from privatization and economic restructuring to public administration and the development of nongovernmental organizations (NGO's) and civil society. Informal systems became integrated with the reforms themselves and helped shape their development. By providing unrestrained opportunities for insiders to acquire resources, some reforms fostered the proliferation and entrenchment of informal groups and networks, including those linked to organized crime. This paper identifies two models that are developing: the "partially appropriated state" and the "clan-state." These models share a number of features; both imply a fragmented state privatized to some extent by "institutional nomads" whose economic opportunities remain contingent on political connections. In this scramble to get a "piece of the pie," those positioned in the informal networks under communism had more opportunity, skill, and resources to take advantage of emerging capitalist opportunities. The application of "mafia" to such people and networks is the result of the complaints of the majority who are kept poor by the mysterious manipulations of the wealthy few. Talk of the mafia stems from a sense that sinister forces beyond the public's understanding and control are contributing to their misfortune. 69 notes and 16 references