Economies of favours

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Original text: Nicolette Mackovicky, School of Interdisciplinary Area Studies, University of Oxford, and David Henig, School of Anthropology and Conservation, University of Kent

One of the most pervasive features of ‘actually existing socialism’ across Eurasia and the Eastern Bloc was the use of personalised connections in order to get access to goods, services, and information. Known as blat in Russian, znajomości in Polish, and guanxi in Mandarin, this rich and multifaceted practice combined horizontal and vertical exchange relations to create ‘a distinctive form of social relationship or social exchange articulating private interests and human needs against the rigid control of the state’[1]. Sociologist Alena Ledeneva[2] has coined the overarching term ‘economies of favour’ to describe these social relationships and exchanges. Facilitating the flow of goods and information between private individuals, state enterprises, and the bureaucratic structures of government, such relations of exchange formed part of a ‘huge repertoire of strategies for obtaining consumer goods and services’, including working ‘off the books’, pilfering materials and tools from the workplace, and using enterprise resources for petty commodity production and trade[3]. Beyond the straightforward exchange of scarce goods, economies of favour often consisted of individuals granting ‘favours of access’[4] by making professional connections, skills, education, medical care, and resources available to others. Working to mitigate the shortages and distribution problems of the command economy, economies of favour thus existed in a symbiotic relationship with official economic institutions as a ‘grey’, ‘informal’ or ‘second’ economy which fed off the deficiencies of official economic and bureaucratic structures[5][6].

While describing such practices as diversion of ‘public resources for private’ aims, Ledeneva notes that socialist-era economies of favour ‘resulted from the particular combination of shortages and, even if repressed, consumerism; from a paradox of equality and the practice of differentiation through privileges and closed distribution systems’[7]. Regarding the ‘second’ or ‘informal’ economy as a structural outcome of the political economy of actually existing socialism, scholars and policy-makers expected economies of favour to disappear together with their dysfunctional economic hosts soon after the disintegration of the Eastern Bloc. Perceiving informal economic activities as corrupt, they confidently asserted that economies of favours would disappear as political and regulatory obstacles to free enterprise and globalisation were removed[8]. A number of economists even identified the socialist ‘second economy’ as containing the kernel of free-market exchange, observing a tendency for networking practices to be employed in the service of budding entrepreneurial activities[9][10]. Yet, a quarter century after the end of Communist rule, there is ample evidence that ‘economies of favour’ remain firmly embedded in the contemporary social fabric, practices, and moral values of populations across the region. Informal exchange and personal networks continue to be a major source of foodstuffs, consumer goods, credit, property, and access to employment, education, and medical care across the region[11][12][13]. Scholars are still grappling with how to theorise instances of nepotism, low-level corruption, and pilfering of public resources[14][15]. And most worryingly, research shows that attempts to consolidate liberal, democratic market society across the former Eastern Bloc has been accompanied by the formation of corrupt elite networks and a breakdown of the rule of law[16][17][18][19][20]. In short, rather than dispelling informality from economic and political practices, post-socialist economic and political liberalisation appears to have provided fertile ground for its proliferation.

This persistence and flourishing of everyday economies of favour, as well as large- scale political and economic fraud, has confounded the expectations of academics and policymakers alike. As Gerald Creed[21] has pointed out, Cold War observers viewed socialist-era economies of favour not primarily as a type of economic practice, but rather as a type of civic action: assuming that socialist society suffered from a ‘social vacuum’ created by the lack of civil society, the mistrust of state institutions, and concentration of power in the hands of the Communist parties, scholars saw economies of favours as an alternative political arena enabling the general population to compete for resources. Yet, while they regarded the informal sector as a ‘source of autonomy from the state’ before 1989, they subsequently condemned the same practices as ‘negative social capital’ preventing the establishment of adequate connections between formal institutions of governance and the population[22]. Re-labelled as ‘corruption’, ‘clientelism’, or ‘nepotism’, practices of circumventing official procedures and a preference for face-to-face dealings were now seen as opposition not to an illegitimate state, but rather to the ostensibly democratic and open sphere of public civic culture and the rule of law. Indeed, by recasting ubiquitous practices of making a living and navigating the state bureaucracy in terms of ‘social capital’, development agencies, NGOs, and global financial institutions inserted the terms ‘informality’ and ‘economies of favour’ into a highly normative, globally circulating, deterritorialised language of audit and accountability, together with terms such as ‘corruption’, ‘transparency’, ‘trust’, and ‘legality’[23]. This analytical terminology employed by policy-makers imbued the concept of economies of favour with a moral burden not dissimilar from the use of debt rhetoric as a moral issue and a moral failure[24].

This branding of economies of favour as a toxic legacy of socialism, in short, reflected ideal-type notions of social contract, civil society and community shared by policymakers, rather than the nature of informal practices on the ground. In response, scholars from across the social sciences have sought novel ways to rehabilitate the term and to develop grassroots understandings of the conditions of ‘actually living post-socialism’. Anthropologists in particular have seized on the concept of morality as an analytical device for problematising the dominance of the normative, global language of audit described above[25][26]. One strand of this literature advocates taking local definitions and terminologies of corruption into account, suggesting that people may subscribe to an alternative moral order[27][28] or operate with a ‘contextual morality’ which legitimises socially and legally questionable actions in given situations[29]. Another growing body of work considers ostensibly ‘corrupt’ actions within their wider context of local practices of exchange, obligations of care, and rights to welfare[30][31][32][33]. Drawing on the classical anthropological juxtaposition of gift and commodity exchange, they document how moralities of exchange[34] shift with changing state and class configurations, as well as currency regimes. Beyond anthropology, recent research in the region has sought to recognise the heterogeneity of contemporary informal economic practices by employing ethnographic methods to uncover their role in the everyday, lived experience of citizens across the former Eastern Bloc[13][35]. Some scholars have furthermore argued for the development of a new typology of informal economic practices in the region which include not only self-employment, small- scale enterprise, and paid work undertaken outside the formal economy, but also practices of self-provisioning, unpaid formal and informal employment, and the phenomena of ‘paid favours’ between kin and acquaintances[35].

Alongside efforts to throw light on the full gamut of practices which make up contemporary economies of favour in Eastern Europe, Russia, and Eurasia, there are increasing efforts to rehabilitate the negative image of informal economic practices in the region. Countering the prevailing discourse of ‘informality’ as corrosive to economic and political development, scholars have recently taken a greater interest in examining how such practices might form the ‘seedbed for enterprise development and principal mechanism for delivering community self-help’[36][37]. Rather than subscribing to conventional perceptions of informal employment as exploitative, low-paid labour undertaken by those marginalised by the formal economy, scholars are beginning to acknowledge that informal economic activities are often culturally meaningful to those who undertake them. Whether subsistence farming or unregulated employment, such practices not only support livelihoods under the precarious circumstance of post-socialist restructuring, but carry a certain moral value by virtue of allowing individuals to make ends meet in the face of an increasingly uncaring state. As often as they are part of a ‘survival strategy’ developed by an impoverished population, practices of self-provisioning, domestic production, and petty trade may enact long-standing norms of household reproduction and domesticity[38][39]. Morris[40][13] has shown in the case of Russian workers, some may choose the precariousness of self- or informal employment over the lack of autonomy and benefits of waged employment. With the reality of the post-socialist work environment not enabling the reproduction of a ‘‘normal’ working class existence’, workers’ ‘self-esteem… increasingly comes to be associated with non-dependence on the derisory returns of formal work’[41].

Morris’ observation has recently been echoed by Caroline Humphrey[42], who has questioned the very assumption that informal economic practices are primarily driven by the structural constraints of socio-economic inequality. Querying the degree to which post- socialist economies of favour should be understood in transactional terms of costs and benefits (and should therefore be analysed solely as a matter of political economy), Humphrey argues instead that acts of doing favours form a ‘moral aesthetic of action that endows the actors with standing and a sense of self-worth’[43]. Her observation signals the fact that the study of these phenomena requires more than the re-contextualisation of socialist-era informal economic practices into the market-capitalist present. Rather, it requires a critical re-interrogation of the conceptual relation between the categories of ‘favour’ and ‘economies’ themselves. A new collection of studies has recently been published with the goal of addressing this issue[44]. The contributors to this collection start by questioning what a favour is, rather than employing it as a euphemism for corruption or informality. As such, they move away from asking functional questions of exchange and reciprocity, towards interrogating the ethical and expressive aspects of human life. Examining favours, they posit, is a way of studying the moments of ‘ethical reflection, reasoning, dilemma, doubt, conflict, judgement, and decision’ that punctuate everyday life and experience[45]. Shifting the theoretical emphasis from studying economies of favour to studying favours sui generis does not, however, mean that the contributors regard gratuitous behaviour as uniformly benign or altruistic in nature. Neither do they see favours as operating ‘outside’ or ‘beyond’ the economic sphere. Rather, both Humphrey[42] and Henig and Makovicky[44] suggest that favours constitute a distinct mode of action which has economic consequences, yet without being fully explicable in terms of transactional cost-benefit analysis. Favours – and, by extension, economies of favour – have existential (as well as social and material) significance. They are constitutive of – rather than external to – the persons and relations of those who give and receive[46], being part and parcel of what the Enlightenment economist Adam Smith[47] called the ‘sympathy’ which underpins social relations. These recent contributions to the debate surrounding contemporary economies of favours thus show how favours are a natural part of social life that can arise in a range of situations, and how they are central to the social production of value, as well as pride, respectability, and self-worth.

See also

Notes

  1. Ledeneva, Alena. 1998. Russia’s Economies of Favour: Blat, Networking and Informal Exchange. Cambridge: Cambridge University Press, pg. 7.
  2. Ledeneva, Alena. 1998. Russia’s Economies of Favour: Blat, Networking and Informal Exchange. Cambridge: Cambridge University Press.
  3. Verdery, Katherine. 1996. What Was Socialism, and What Comes Next? Princeton: Princeton University Press, pg. 27.
  4. Ledeneva, Alena. 1998. Russia’s Economies of Favour: Blat, Networking and Informal Exchange. Cambridge: Cambridge University Press, pg. 35.
  5. Seabright, P. (ed.) 2000. The Vanishing Rouble. Barter Networks and Non-Monetary Transactions in Post-Socialist Societies. Cambridge: Cambridge University Press.
  6. Wedel, J. (ed.) 1992. The Unplanned Society: Poland During and after Communism. New York: Columbia University Press.
  7. Ledeneva, Alena. 1998. Russia’s Economies of Favour: Blat, Networking and Informal Exchange. Cambridge: Cambridge University Press, pg. 36.
  8. Åslund, Anders. 2004. ‘Russia’s Economic Transformation under Putin’, Eurasian Geography and Economics, 45: 397-420.
  9. Kornai, János. 2000. ‘What the Change of System from Socialism to Capitalism Does and Does Not Mean’, Journal of Economic Perspectives, 14: 27-34.
  10. Grabher, G. and Stark, D. (eds.) 1997. Restructuring Networks in Post-socialism: Legacies, Linkages, and Localities. Oxford: Oxford University Press.
  11. Bridger, S. and Pine, F. (eds.) 1998. Surviving Postsocialism: Local Strategies and Regional Responses in Eastern Europe and the Former Soviet Union. London: Routledge.
  12. Day, S., Papataxiarches, E. and Stewart, M. (eds.) 1999. Lillies of the Field: Marginal People who Live for the Moment. Boulder, CO: Westview Press.
  13. 13.0 13.1 13.2 Morris, J. and Polese, A. (eds.) 2013. The Informal Post-Socialist Economy: Embedded Practices and Livelihoods. London: Routledge.
  14. Giordano, C. and Hayoz, N. (eds.) 2013. Informality in Eastern Europe: Structures, Political Cultures, and Social Practices. Bern: Peter Lang Publishers.
  15. Morris, J. and Polese, A. (eds.) 2015. Rethinking Informality: the embedded nature of post- socialist informal economic practices. London: Routledge.
  16. Wedel, Janine. 2001. Collision and Collusion. The Strange Case of Western Aid to Eastern Europe 1989-1998. New York: St Martin’s Press.
  17. Wedel, Janine. 2009. Shadow Elite. How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market. New York: Basic Books.
  18. Ledeneva, A. and Kurchiyan, M. (eds.) 2000. Economic Crime in Russia. The Hague: Kluwer Law International.
  19. Ledeneva. Alena. 2006. How Russia really works: The informal practices that shaped post- Soviet politics and business. Ithaca and London: Cornell University Press.
  20. Ledeneva, Alena. 2013. Can Russia Modernise? Sistema, Power Networks and Informal Governance. Cambridge: Cambridge University Press.
  21. Creed, Gerald. 2011. Masquerade and Postsocialism: Ritual and Cultural Dispossession in Bulgaria. Bloomington, IN: Indiana University Press.
  22. Creed, Gerald. 2011. Masquerade and Postsocialism: Ritual and Cultural Dispossession in Bulgaria. Bloomington, IN: Indiana University Press, pg. 113.
  23. Haller, D. and Shore, C. (eds.) 2005. Corruption: Anthropological Perspectives. London: Pluto Press.
  24. Graeber, David. 2011. Debt: The First 5,000 Years. New York: Melville House Publishing.
  25. Humphrey, Caroline. 2002. The Unmaking of Soviet life: Everyday Economies after Socialism. Ithaca; London: Cornell University Press.
  26. Mandel, R. and Humphrey, C. (eds.) 2002. Markets and Moralities: Ethnographies of Postsocialism. Oxford: Berg.
  27. Wanner, Catherine 2005. ‘Money, Morality and New Forms of Exchange in Ukraine’, Ethnos, 71: 515-537.
  28. Werner, C. 2002. ‘Gifts, Bribes, and Development in Post-Soviet Kazakhstan’, in J.H. Cohen and N. Dannhaeuser (eds.), Economic Development: An Anthropological Approach. Walnut Creek: Rowman and Littlefield: 183-208
  29. Polese, Abel. 2008. ‘If I Receive It, It is a Gift; If I Demand It, It is a Bribe; On the Local Meaning of Economic Transactions in Post-Soviet Ukraine’, Anthropology in Action, 15: 47- 60.
  30. Sneath, David. 2006. ‘Transacting and Enacting: Corruption, Obligation, and the Use of Monies in Mongolia’, Ethnos, 71: 89-112.
  31. Rivkin-Fish, Michele. 2005. Women’s Health in Post-Soviet Russia. Bloomington, IN: Indiana University Press.
  32. Stan, Sabine. 2007. ‘Transparency: Seeing, Counting and Experiencing the System’, Anthropologica, 49: 257-273.
  33. Stan, Sabine. 2012. ‘Neither Commodities nor Gifts: Post-Socialist Informal Exchanges in the Romanian Healthcare System’, Journal of the Royal Anthropological Institute, 18: 65-82.
  34. Parry, J. and Bloch, M. (eds.) 1989. Money and the Morality of Exchange. Cambridge: Cambridge University Press.
  35. 35.0 35.1 Williams, C., Round, J. and Rodgers, P. 2013. The Role of Informal Economies in the Post- Soviet World: The End of Transition?. London: Routledge.
  36. Williams, C. and Round, J. 2007. ‘Beyond Negative Depictions of Informal Employment: Some Lessons from Moscow’, Urban Studies, 44: 2321.
  37. Kideckel, David. 2008. Getting by in Postsocialist Romania: Labor, the Body, and Working- class Culture. Bloomington: Indiana University Press.
  38. Makovicky, N. 2009. ‘The Object of Morality. Rethinking Social Networking in Post- socialist Slovakia’, in H. West and P. Raman (eds.), Enduring Socialism. Explorations of Revolution and Transformation, Restoration and Continuation. Oxford and New York: Berghahn Books: 103-24.
  39. Ries, Nancy. 2009. ‘Potato Ontology: Surviving Postsocialism in Russia’, Cultural Anthropology, 24: 181–212.
  40. Morris, Jeremy. 2012. ‘Beyond Coping: Alternatives to Consumption Within Russian Worker Networks’, Ethnography 13: 1-19.
  41. Morris, J. and Polese, A. (eds.) 2013. The Informal Post-Socialist Economy: Embedded Practices and Livelihoods. London: Routledge, pg. 230.
  42. 42.0 42.1 Humphrey, Caroline. 2012. ‘Favors and “Normal Heroes”: The case of postsocialist higher education’, HAU: Journal of Ethnographic Theory, 2: 22-41.
  43. Humphrey, Caroline. 2012. ‘Favors and “Normal Heroes”: The case of postsocialist higher education’, HAU: Journal of Ethnographic Theory, 2: 23.
  44. 44.0 44.1 Henig, D. and Makovicky, N. (eds.) 2016. Economies of Favour after Socialism. Oxford: Oxford University Press.
  45. Laidlaw, James. 2014. The Subject of Virtue. An Anthropology of Ethics and Freedom. Cambridge: Cambridge University Press, pg. 23.
  46. Englund, Harri. 2008. ‘Extreme Poverty and Existential Obligations: Beyond Morality in the Anthropology of Africa’, Social Analysis, 52: 36.
  47. Smith, Adam. 1759. The Theory of Moral Sentiments. London: A Miller.