Markets Versus Hierarchies

Markets Versus Hierarchies

A Political Economy of Russia from the 10th Century to 2008

The Locke Institute series

Ekaterina Brancato

This unique book uses a transaction cost perspective to illustrate how hierarchies influenced the structure of markets and behaviour of individual businesses and cartels in pre-revolutionary, Soviet and present-day Russia.

Chapter 4: Social Norms

Ekaterina Brancato

Subjects: economics and finance, political economy, politics and public policy, political economy

Extract

Some components of the cultural make-up of Russians stalled free markets and advanced hierarchies: networks of civic engagement did not develop but strong ties did. Establishing these aspects of Russian culture and their causes are the subject of this chapter. Geographical composition of a country, such as its size, the presence or absence of waterways, the abundance or lack of natural resources, external forces, such as invasions and religious beliefs, all determine how people of a particular society relate to each other. From repeated previous experience they form an expectation of how a stranger might act and adjust their behaviour accordingly. It appears that a combination of forces produced a culture of a very retrospective people, who carry a tint of negligence in practically everything they do, who generally prefer a collective way of life, yet through their collective activities have not generated norms that ensure the anonymous trust in the society as a whole. Russians rarely act in large organized groups, and when they do, success is seldom. In fact, it seems that Russians would readily participate as a society in only two extreme cases – drinking at holidays or funerals, and war – cases both polar and of immediate danger or satisfaction. When they need to work side by side for a purpose of incremental wealth building, then differentiation by gender, ethnicity, skill, education, social status or generation takes precedence over a common future interest. As noted in the preceding chapter, after the 1800s Russia was catching up with modernized...

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