Who is this elite? They're politically conservative, distrustful of democracy, and patriotic. They are businessmen of medium and large companies, military officers, members of the police and security organs, and perhaps most importantly the 1.5 million strong members of the state bureaucracy. Like any good capitalist class, the Russian elite knows that capitalism without a state, moreover a state that doesn't possess a monopoly on violence or can peacefully adjudicate elite disputes is one that inevitably descends into civil war. No one wins in that scenario. The "grand bargain" that McFaul refers to in his Slate piece is a bargain indeed. It's just not between Putin and the population as a whole (though many in the population think it is). It is first and foremost a class bargain between and within the Russian elite.
The propensity to point to the social ills that plague Russia as a way to crack Putin is to assume that the Russian elite ever gave two shits about those who inhabit society's lower rungs. They don't. Nor have they ever. At least no more than any elite class does anywhere else. All they understand is the need to declare that "Life has become more joyous, comrades," and give the masses enough scraps off the table of capital to keep them from burning down their mansions. Putin's role in all this is to keep the various elite groups from cutting each other's throats, maintain their corruption within acceptable boundaries, and to act as a postmodern embodiment of intra-class Law. Granted, Putin's grip over society is far from omnipotent. Capitalist-fueled violence still rages. Every once in a while Putin has to play to the masses and crack some uppity member of the elite over the head. But the elite as a class can live with that. As long as Putin doesn't get to uppity himself and threaten the overall stability of the robber baron system, everything's cool as a cucumber.
Two conclusions can be made from all this. First, the foundations of Putin's rule are rooted in the 1990s. It was Yeltsin with his 1993 Constitution that put the President above everything else. It was Yeltsin that emasculated Russia's parliamentary system with troops and tanks. It was Yeltsin that decreed Russia's violent capitalism into existence. Putin just took the tools Uncle Borya left behind and made them work better. He used them to drive off, co-opt, or imprison the overly cannibalistic and political ambitious oligarchy. He used it to tame Russia's political opposition. He used Russia's natural resources and geopolitical positioning to return it to great power status. All of this has benefitted Russia's ultra wealthy.
Don't think so? Here is an interesting statistic. In 2000, Forbes' Billionaires List didn't include a single Russian. In 2007, it listed 50.
McFaul and others like him want to impose a false historical break between the Yeltsin and Putin eras where there isn't one. That break serves them ideologically. It allows "transitologists" to not only maintain the myth of Russian democracy in the 1990s, but also maintain liberal democracy as some sort of natural endpoint that all states must and will go through. This view is part of a much more sinister ideological project. It's the project that says you can smash a state with violence or pick up the pieces after its implosion and recast it in your own neoliberal image.
Second, and this is the dirty little secret that shock-therapy peddlers like McFaul will never admit: post-Soviet Russia proves once again that free-market capitalism thrives in authoritarian regimes. In fact, as Naomi Klein reminds us in her masterful Shock Doctrine, capitalism, and in particular its extreme neoliberal variant, always requires force. That force can come in many forms--the limiting of protest, the use of detention, imprisonment and torture, silencing journalists, biometric surveillance, the unleashing of the military and other security organs on its own or other populations, extremist laws, and the removal of habeas corpus. It is no irony of history that even the most so-called liberal democratic states use many of these mechanisms to strengthen and maintain elite power (see under "Georgia" for the latest example). They are built right into their system of class domination.